A Trade Strategy for Guyana Craig Van Grasstek

A Trade Strategy for Guyana Craig Van. Grasstek Washington Trade Reports

Part I Introduction

Mainstreaming trade policy into the development strategy Trade policy is merely one aspect of a broader national undertaking that will require a sustained and coordinated national effort to reduce poverty through economic opportunity. Globalisation sets the context in which this strategy is to be pursued, presenting risks and opportunities.

Risks and opportunities of globalisation n n Globalisation is an inevitable trend The main opportunities are in the reciprocal removal of trade barriers The main risks are in the loss of preferential market access Guyana has little time to position itself to make the most of the opportunities and deal with the risks

The short, medium, and long terms Short term (2003 -2004): Preparation & conduct of negotiations n Medium term (2005 -2008): Absorbing the changes of 2005 n Long term (After 2008): Implementation and exploitation of trade and investment opportunities n

2005 is the key year n n Regional: Completion of the Caribbean Single Market and Economy Hemispheric: Ratification of the Free Trade Area of the Americas agreements Global: Conclusion of the Doha Round of World Trade Organisation negotiations Sectoral: Final phase-out of the apparel quotas

Globalisation means an expanded definition of trade policy’s scope “Trade” no longer means just the movement of goods across borders and border measures such as tariffs: n Services (not the “invisible” or “untraded” sector any more) n Ideas (intellectual property rights) n Capital (investment measures) n People (movement of natural persons)

All ministries have responsibilities in trade policy A few illustrative examples: n Finance: Trade-related taxes account for about 40% of revenue, so liberalisation must be budgeted n Tourism, Industry and Commerce: Promotion of tourism, administration of export-processing zones n Agriculture (& NGMC): Exports of traditional & nontraditional agriculture n Transportation: Shipping costs pose a greater barrier to Guyana’s exports than do tariffs

Cost of Importing Goods From Selected Countries and Regions into U. S. , 2002

Globalisation means shifting from preferences to reciprocity n n n Guyana must be prepared for the transition from one-way to two-way bargaining For tariffs, the margins of preference are being diminished by negotiations Apparel quotas are being phased out by 2005 Sugar quotas face both dispute-settlement and a negotiated phase-out The value of preferences is often overestimated

Changes in U. S. Imports of Non-Oil, Non-Apparel Goods, 1992 -2002

Changes in U. S. Imports of Apparel, 1992 -2002

Strategy: More than a set of tactical instructions n n n Tactical directions for specific negotiations have a limited shelf life The strategy establishes general principles for the conduct of policy Each negotiation or other initiative needs to be seen in the broader context

Follow-up to the strategy n n n WTO’s Trade Policy Review FTAA Capacity-Building Strategy (Hemispheric Cooperation Programme) Improved coordination with the donor community Increased presence in Geneva Enhancing the resources of MOFTIC Promoting closer collaboration between ministries and with civil society

Part II The Strategy

Structure of the strategy Section I: Principles and objectives -- What Guyana should seek in its trade policy n Section II: Principles and resources -- What Guyana needs in order to attain these objectives n

Mapping Guyana’s Existing Rights and Obligations Guyana has made commitments to its trading partners (and vice versa) in CARICOM, the WTO, and other fora. The country must ensure both that its own trade laws and agreements, as well as those of its partners, are devised and executed in accordance with these commitments. Principle I. A

Guyana’s commitments n n Commitments made in the WTO The Trade Policy Review CARICOM commitments Bilateral, regional, and hemispheric agreements

Prioritisation of Future Objectives MOFTIC’s investigative, coordinating, and negotiating resources should be allocated according to a hierarchy of objectives, with sectoral objectives in the lead. Principle I. B

Primary Issues: Market Access In addition to tariffs (preferential and non-preferential), these include nontariff barriers imposed for any reason, as well as intellectual property rights and barriers to trade in services. Guyana’s own tariffs and services commitments should be addressed in this same context.

Secondary Issues: Legal defense of Guyana’s trade interests These include trade disputes (either as complainant or defendant), defense against actions taken under traderemedy laws (i. e. , antidumping duties, countervailing duties, and safeguards), and trade-related issues such as intellectual property rights and investment.

Tertiary Issues Matters that do not bear a reasonably close relationship to the primary issues, involve a greater investment in capacity -building than may be justified, or that are best left in the hands of regional Caribbean institutions. These include such matters as the governance of international organisations and traderelated investment measures.

Preferential Access to Foreign Markets Guyana should make the most of existing preferential arrangements, seeking their continuation for as long as possible and even their expansion, but policymakers must be prepared for their gradual diminution in value and eventual disappearance altogether. Principle I. C

Key issues in preferences n n n Sugar and rice Special and differential treatment in the WTO and FTAA Parity with least-developed countries for HIPC countries

Reciprocal Access to Foreign Markets While negotiators should seek whenever possible to include principles of S&D treatment in these agreements, they must also be prepared to make specific requests for tariff commitments on products of interest to Guyana’s exporters, and to make reciprocal commitments for reductions in the country’s own tariff barriers. Principle I. D

Key issues in reciprocal negotiations n n Using bound rates as the base rates in negotiations The meaning of “substantially all” in the context of GATT Article XXIV

A Voice for Trade in Related National Policy Debates MOFTIC has a key role in promoting the principles of competitiveness and compliance. Principle I. E

Defense of Guyana’s Interests MOFTIC must be prepared to defend the country’s trade interests in regional and multilateral bodies Principle I. F

Key issues for the defense of Guyana’s interests n n Dispute-settlement mechanisms in the WTO and elsewhere Antidumping law

Empirical Preparation The most immediate need for MOFTIC is to enhance its analytical capacities in advance of trade negotiations. Principle II. A

Key issues in empirical preparation n n Identification of sectoral-based negotiating objectives (primary issues) Identification of rules-based negotiating objectives (secondary and tertiary issues)

Internal Cooperation, Coordination, and Colaboration Coordination between ministries, and between the government and the private sector, is essential at all stages of trade policymaking. Principle II. B

Key issues in internal coordination n n Inter-ministerial coordination at the Cabinet and working levels Consultation with the private sector

External Coordination Negotiations with other countries involve not only the exchange of commitments, but also the establishment of coalitions in larger negotiations. MOFTIC must work closely with like-minded countries in general and its CARICOM partners in particular. Principle II. C

Enhancement of MOFTIC Resources The financial, physical, and human resources available to MOFTIC must be increased to a level commensurate with the ministry’s responsibilities. Principle II. D

Key issues in MOFTIC’s resources n n n n Enhanced representation in Geneva Increase in MOFTIC staff size Improvement in MOFTIC staff capacities Improvement in MOFTIC information technology Establishment of a trade reference library Improving MOFTIC’s dissemination of information Improvement in the trade data system Better coordination with the donor community