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Trading with Spanish world

AS the Caribbean’s leading producer of oil and gas, tiny T&T, with a population of just over 1.3 million, has to compete yearly with larger, more powerful nations both regionally and internationally.

A small population means a small domestic market. Therefore, our manufacturers and exporters must have access to foreign markets for T&T to become a serious international competitor. According to Minister of Trade and Industry Kenneth Valley, “The Government has been working diligently to lay the foundation for sustainable economic growth by seeking to integrate our economy into the Latin American economy.”

Bilateral trade

One of the ways the Government achieves this is by bilateral trade agreements. Given our close proximity to Latin America and with the Cabinet-mandated Spanish As the First Foreign Language (SAFFL) initiative, it is no wonder that all of the bilateral trade agreements to which this country is a signatory are with Spanish-speaking countries.

As the name implies, a bilateral trade agreement is basically a trading arrangement whereby two countries, referred to as the parties, agree to reduce tariffs and quotas on goods imported and exported between them. These arrangements are also often aimed at solving specific trade problems between the two parties and capitalising on specific market opportunities available in the respective countries.

T&T signs these agreements as a more developed country (MDC) of the Caribbean Community (Caricom) and as a result has to make reciprocal market access concessions to its bilateral trade partners. Less developed countries (LDCs) do not have this obligation but still benefit from duty-free access to the partner’s markets.

T&T’s bilateral trade agreements are normally

designed to promote investment and development in the region in order to increase the international competitiveness of the region.

Venezuela

Additionally, considering the desirability of developing a more dynamic and balanced commercial economic relationship, they also facilitate joint ventures between the two signatory parties and foster the use of mechanisms to promote and protect the investments of nationals from both parties.

Under each bilateral trade agreement, a joint council or a joint commission, comprised of representatives from both Caricom and the respective country, is often formed. Its primary function is to ensure that both parties comply with the provisions of the agreement and to resolve any problems or disputes which may arise in relation to the agreement. However, it may also be assigned additional functions by the parties. Meetings are usually held once a year or at the request of either party.

Situated just ten km off the coast, Venezuela is T&T’s oldest bilateral trade partner. Signed on October 13, 1992, the Caricom/Venezuela Agreement on Trade and Investment is a one-way preferential agreement designed to promote Caricom exports to Venezuela.

Consequently, goods like spices, by-products of iron and steel and propane, proceeding from Caricom countries including T&T, now have duty-free access to the Venezuelan market of more than 25 million people, via the implementation of programmes of tariff reduction and the elimination of non-tariff barriers.

Columbia

Another neighbouring country with which we have a bilateral trade agreement is Colombia, which offers a market of over 43 million. The Agreement on Trade, Economic and Technical Co-operation between Caricom and the Colombia was signed on July 24, 1994.

This agreement provided for preferential tariff rates to Caricom goods entering Colombia. However, this was later amended to also allow for tariff reductions on imports from Colombia into Barbados, Guyana, Jamaica, and T&T.

Naturally, the primary objective of the agreement is also to strengthen the trade and economic relations and technical co-operation between the parties. However, unlike the one with Venezuela, this agreement clearly identifies as one of its objectives the promotion of the active participation of the private sector, including business exchanges between the parties.

In addition, the first free trade agreement signed by Caricom was with the Dominican Republic on August 22, 1998. It allows duty-free access for all goods, excluding those listed in the appendices to the agreement, to the Dominican Republic market, which at present represents more than nine million consumers.

The goods listed in the appendices are either subject to phased reduction of the most-favoured-nation (MFN) rate over a specific period or are goods which will remain subject to this rate of duty.

Cuba

Caricom signed another important bilateral trade agreement on July 5, 2000, with the Cuban Government. This comprehensive trade and economic co-operation agreement shares most of the objectives of the aforementioned agreements and like the one with the Dominican Republic, also seeks to liberalise trade in services.

However, it also seeks to discourage anti-competitive business practices between the parties and to promote an ongoing system of consultation and co-ordination for the exchange of information and views on economic and social matters of mutual interest.

Other significant aspects of this agreement are specific provisions made for the tourism industry, intellectual property rights, and trade promotion and facilitation.

Costa Rica is also a country with which Caricom has a free trade agreement, established March 9, 2004.

In addition to increasing trade and diversification between the parties, the agreement also aims to promote conditions of fair competition and promote regional integration in the Americas, which in turn will assist in gradually eliminating trade and investment barriers. Therefore, it provides for either free trade or preferential access for a wide range of goods.

Trade co-ordinators

At the end of 2005, some 95 per cent of products were eligible for duty-free trade. However, some items like cigarettes and chocolate are still subject to duty while the duty on others is gradually being eliminated.

This agreement establishes free trade co-ordinators to monitor its implementation and standing committees on market access, trade in services and investment, and anti-competitive business practices, unlike the other agreements.

T&T also has a bilateral investment treaty with Cuba and as recently as October 3, signed a similar treaty with Mexico, allowing our manufacturers and investors easier access to a market of over 107 million individuals.

Spain is one of five European countries targeted for investment promotion by the Government and bilateral trade negotiations are underway with Argentina and Chile. This trend in using bilateral trade agreements with the Spanish-speaking economic powerhouses to boost trade and investment opportunities is increasing as T&T adopts Spanish as its first foreign language.

For more information about the Spanish As the First Foreign Language initiative, please contact the Secretariat for the Implementation of Spanish (a division of the Ministry of Trade and Industry) at 624-8329/627-9513 or fax us at 623-0365

 

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