The current public debate on the EU-Cariforum Economic Partnership
Agreement (EPA) is over both process and content of the negotiations.
One key missing element in the process was initial regional
dialogue on what ought to be our overall trade policy.
If the principles and objectives of such trade policy were
clearly established and widely endorsed regionally, this would
have then provided a framework within which negotiations could
take place.
Trade policy itself has to be derivative of the larger national
and regional economic objectives, with trade seen as a supporting
vehicle.
On this score, the ultimate goal of economic policy ought
to be the achievement and maintenance of a fully employed
labour force, including (though not necessary limited to)
globally competitive industries with equity in economic, socio-political
and environmental terms (within and between generations):
or what could be otherwise summed up as sustainable development.
The question is what trade policy and negotiated trade deals
would support and/or hinder such an economic goal?
Laissez faire requires laissez passé
The dominant economic trade theory of comparative advantage
proposes that a free movement of economic goods and services
will leave all participating countries and the world economy,
as a whole, better off, relative to national controls on such
cross-border flows.
This is the international expression of the case for the unrestricted
movement of capital, goods and services within economies.
Within the national borders (except, perhaps, in China: and
even that seems to be breaking down), there are no restrictions
on the movement of labour.
In other words, going with laissez faire is laissez passé
(free movement of people).
This is the first limitation of so-called free trade theory.
It accepts and seeks to get countries to sign on to agreements
that permit free movement of financial capital, goods and
non-labour services.
The labour markets, however, are protected (ie there is no
laissez passé). The problem is that a liberalised market
for goods is simultaneously permitting free movement of labour
embodied within these goods.
A liberalising economy that is uncompetitive in goods production
(particularly if experiencing a temporary foreign exchange
windfall with all of its distortions like T&T today) will
experience a flood of people coming into the country hidden
within the goods in which their labour was utilised.
One critical area in which this is likely to happen is that
of food, where the so-called major advocates of laissez faire
simultaneously subsidise their agricultural sectors, including
provision of export credits.
These metropolitan countries place a high value on food security
for legitimate reasons, but then seek to have other countries
accept trade agreements that deprive them of a similar right.
Moreover, the historical evidence also shows that every country
that is now at the frontier of global competitiveness (including
the fast-growing China) enjoyed an earlier period of domestic
protection to provide the breathing space for “infant”
industries to grow up.
This is as true of Britain (as the first industrial country
in the world and the one from which the theory of comparative
advantage originated later) as of 19th-century Germany and
USA and 20th-century Japan, South Korea, Taiwan and even,
in their own special ways, Singapore and Hong Kong.
And now, of course, it is also true of China.
Further, small economies are hard-pressed to find the requisite
resources for effective trade negotiations and the management
of the subsequent administrative requirements.
One aspect of negotiations that seems to be lost in much of
the current discussions is that they ought not to be so defined
if one cannot walk away.
If one cannot entertain this option, then this is not a negotiation;
it is a sophisticated form of begging.
There is a case for small economies—particularly small
islands—insisting that our realities be taken into account
as a condition for our participation in all trade negotiations,
including the World Trade Organisation (WTO).
There are those whose response to this would be that we have
no choice but to be in the WTO.
In which case why pretend to be negotiating? Walk with the
begging bowl and save us all the millions funding so-called
negotiations.
(Incidentally, the Bahamas was the only Caribbean country
that did not originally sign on to the WTO, although it is
reported to be now seeking entry).
