WEB PORTAL OF GRENADA GOVERNMENT   |  

Opening Statement on Behalf of the OECS-WTO Members Delivered by Ambassador Dr. Patrick Antoine of Grenada at the Third Trade Policy Review (TPR) by the World Trade Organization in Geneva


Wednesday, June 18, 2014 11:29 AM- George's, Grenada
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Chairperson, Ambassador Mariam MD. Salleh, Delegation of Malaysia, Discussant, Ambassador Dr. John O. Kakonge of the Republic of Kenya, other distinguished delegates, colleagues and the many other friends I see in attendance, thank you for coming to this trade policy review.


Introduction


Let me apologise for the absence of the respective ministers of trade who are unable to be with us today. In their stead we have very senior officials from capital and Geneva and I have been asked to deliver this consensus statement on behalf of our OECS Economic Union.


The Government of Grenada on behalf of the Member States of the OECS economic union welcomes this third Trade Policy Review of the WTO.

We have engaged in substantive consultations with the WTO staff and with our Members over the past year which has resulted in the fourteen reports being prepared which act as the basis for this review over the following two days.


The Challenges of Being Small, Open and Vulnerable
The Organization of Eastern Caribbean States (OECS) consists of very small and highly open economies, consisting of total 2,506 square kilometers and total population 500,000, which are particularly vulnerable to exogenous shocks.

Trade openness measured by conventional definitions exceeds 50% of GDP.

The trade balance exhibits a level of imports which is six times the value of exports with a tendency towards deterioration in the level of imports since 2008. (the ratio in 2007 was 7 times)
After many years of negotiations, OECS Member States recommitted to a deepened integration process and committed to pull sovereignty in some areas such as trade policy, maritime policy, civil aviation and commercial policy thus establishing the OECS Economic Union in January of 2011.

The Economic Union will result in the deepest in the model of all such integration processes within the hemisphere. The OECS States also entered into a new integration arrangement with the European Union.

The CARICOM-EU EPA represents a shift from the maintained position of non-reciprocity as the countries undertook reciprocal arrangement in goods, services and intellectual property among other areas with the EU as well as the Bahamas, Haiti and the Dominican Republic.


The Impact of the Global Financial and Economic Crisis


The six years since the second trade policy review in 2007 has been among the most volatile and tumultuous periods in the post-independence era for OECS countries. As highly open economies, the OECS endured the vicissitudes of a full blown financial and economic crisis with deleterious impact on our financial, goods and services sectors including our services exports. Our primary commodity and light manufactured exports have also responded submissively. We¡¦ve evidenced a decline in the share of our world trade and have suffered marked increases in unemployment, contraction in GDP and overall productivity and competitiveness.


Our economies have also endured declining remittance flows and a decline in foreign direct investment, factors which have increased the burden on states to increase expenditures on social safety net programmes and poverty alleviation.


These are recurrent themes in our overall growth and development strategy; and affords trade an opportunity to truly become the handmaiden of economic recovery and development.

Six years after the onset of the economic crisis and the last review, our economies have begun to evidence signs of rebound. However, the outlook still remains uncertain and the threats of economic reversal and downside risks remains strong.


The performance among the OECS has not been uniform. GDP growth statistics indicate that the region contracted for two consecutive years in 2009 and 2010, with high disparities across the grouping. These disparities ranged from in excess of 15% in the case of Antigua and Barbuda to a contraction of approximately 2.7% in the case of St. Vincent and the Grenadines.
One OECS country suffered a contraction in services growth, while other OECS economies demonstrated tremendous slowdown led by Tourism and construction and virtually no growth in other services owing to a large of domestic services capacity.

The following are features of the last decade:

  • every OECS country experienced a significant fall in the rate of growth during 2000-2010 compared with the previous two decades;
  • rapid declines in export competitiveness resulted in severely contracted foreign exchange commodity earnings:
  • real GDP contracted annually by 1.1% on average over the period 2008-2012, in sharp contrast to an average expansion of 5.1% for the five years just prior.


In responding to the crisis, the OECS economies committed to an Eight Point Stabilization and Growth Programme. At the level of individual states, a myriad of fiscal measures and reforms have been instituted, including the introduction of VAT and debt restructuring, which have become staples of the stabilization programmes.


Economic recovery in the OECS following the crisis continues to be sluggish, and the forecast for return to pre-crisis growth levels now suggest 2016-2017. Notwithstanding, notable progress has been made on some aspects of our Millennium Development Goals (MDGs).

However, low growth and a high debt and rising unemployment continue to threatening the region's developmental and social progress.


Macroeconomic Response: National and Regional Development Strategies; and the Economic Union


In light of this, the OECS in its Growth and Development Strategy Document identifies a number of trade-related development goals and priorities for the OECS Economic Union including the need to improve their supply-side capacities (focus on youth), including their trade-related infrastructure in the areas of transport, ICT, finance and private sector development and investment.


The national development strategies and programmes of the OECS Member States all reflect this imperative. Whether it is ¡¥Growth and Social Protection¡¦ in Dominica or building the ¡¥New Economy¡¦ in Grenada, OECS Member States are all pursuing goals and objectives centred on growth, employment creation, poverty reduction, debt sustainability and reduction in vulnerability to shocks.


Emphasis is placed on structural reforms for boosting private investment and productivity. These include: improving the effectiveness of public investment; improving the ease of doing business and the overall investment climate; increasing efficiency and reducing costs in the product, labour and financial markets; and pursuing deeper regional integration to help overcome size-related disadvantages.

Important core areas that will receive attention in the short term include: the free circulation of goods, completion of ongoing trade negotiations, services trade development, trade and business facilitation, competition law and intellectual property.

Sectoral Performance and Strategies


At the sectoral level, the OECS countries are now predominantly service-based economies with services-related sectors contributing between 60-75% of GDP. Tourism and construction remain the leading drivers. To this end, the OECS has developed a regional Tourism Sector Strategy the main thrust of which is the harmonization of border management systems and the reduction of cumbersome procedures that frustrate the ease of access to and travel through the OECS.

The need to strategically position the construction sector and build its resilience in the face of the protracted global financial and economic crisis with more robust and integrated approaches to stimulating the sector has been recognized. There is also recognition of the need to diversify the broader services sector. Member states have therefore embarked on varying policy initiatives and strategies including establishment of national coalition of services industries.


The dramatic decline in agriculture's contribution to less than 5% of GDP in the OECS since the Year 2000 is well documented. This is largely due to the decline in the production and export of sugar and bananas ¡V traditional agricultural commodities ¡V from the Windward Islands and St. Kitts-Nevis. The prime imperative for the sector remains diversification, improving productivity and reducing production costs and promoting a Market-Oriented Agribusiness approach in order to alleviate poverty and increase Food and Nutrition Security.


The manufacturing sector continues to be a source of employment and an important source of demand for and supply of products and services from other industries. It therefore remains important to the economic health of the region even though it has underperformed in recent years. Member states interventions have been focused on competitiveness, productivity and export development. At the regional level, the top priority for Manufacturing is to approve and implement a comprehensive Manufacturing Policy, Strategy, and Action Plan for the OECS pursued in concert with a regional export strategy geared towards penetrating target markets in the Caribbean, North and South America and Europe.


Trade Formulation and Implementation
The OECS has remained committed to pursuing economic policy aimed at liberalizing trade, market penetration, building more nimble economic structures and more efficient business facilitation. Implementation of trade policy is an area where OECS Member States have continued to tackle collaboratively with the aim of achieving maximum results in a more efficient manner including within the wider Caribbean Community (CARICOM) regional integration arrangement. Through the administrative and technical work of the OECS and CARICOM Secretariats, OECS Member States have utilized regional integration as the underpinning of national and regional trade policy.


The region continues however to be challenged by financial and human capacity constraints as reflected in the small size of national ministries, the OECS Trade Policy units and in trade policy institutions and frameworks that continue to require further strengthening particularly in the area of policy coordination and development at the national and regional level.

OECS perspectives on the MTS, WTO and the DDA negotiations


The OECS WTO Members remain committed to a fair, equitable, rules-based transparent and inclusive multilateral trading system that meets the needs of all its members and in particular developing countries, especially SVEs and LDCs. The OECS-WTO Member States maintain the position that trade negotiations between developed and developing countries must be premised in asymmetry and special and differential treatment for the latter of the two parties.

The OECS Member States remain committed to the successful conclusion of the Doha Development Agenda negotiations in accordance with the mandates and Members¡¦ decision to place development at the core of the outcomes. For this reason the OECS remains concerned at the ongoing impasse in the DDA. The limited outcomes at Bali provided a welcome impetus to the negotiations.



The OECS-WTO Members have participated meaningfully in the DDA negotiations and have contributed to the leadership shown by the ACP and the wider G90 in the negotiations on trade facilitation. The conclusion of the TF Agreement now require that developed countries and developing countries with the capacity to do so provide the needed and additional financial and technical assistance for effective implementation by developing countries particularly LDCs and SVEs.


It is also imperative that the Post Bali work programme be developed to conclude the outstanding areas under the DDA as mandated by Ministers. For the OECS it is important that we build on progress already made and that the flexibilities negotiated for SVEs are entrenched.


One of the continuing challenges in the trade policy of Antigua and Barbuda and by extension all Members of the OECS is the current failure to reach a satisfactory resolution to the case on internet gaming with the United States.


This case is a decade old, and it pits the world¡¦s largest economy against one of the world¡¦s smallest and vulnerable. Despite having won a favourable decision of the Dispute Settlement Board, Antigua and Barbuda is yet to receive a reasonable offer from the USTR that could bring this matter to a successful conclusion.


Antigua and Barbuda believes that this case presents several systemic challenges to the dispute-settlement mechanism of the WTO, and has the potential to undermine the credibility of the Organization.


Antigua and Barbuda is of the view that there ought to be more flexibility in possible options for arriving at a resolution of a case such as this.


Antigua and Barbuda is willing to put forward its ideas on these matters in the appropriate WTO forum, and calls on like-minded states to assist in reforming the dispute settlement system of the WTO.


The OECS WTO Members continue to be challenged with fulfilling its transparency and notification obligations to which they remain fully committed. However it must be recognised that small countries like the OECS face capacity constraints and continues to need and seek technical assistance to aid in the notification process.


The OECS-WTO Member States are also taking steps to implement necessary legislation in the areas of competition, antidumping and subsidies. We are in the process of establishing an OECS Competition Authority. The Authority and the requisite legislation are expected to be implemented by 2015.


Aid for Trade


All OECS-WTO Members remain fully committed to the Aid for Trade initiative in all of its dispensation. The designation of OECS Members States as high middle income developing countries however can make access to many aid for trade opportunities increasingly challenging even though the region remains vulnerable and faces structural economic challenges not captured by per capital economic indicators. This is particularly true when the downside risks or downside disasters and ballooning unemployment particularly among the youth are taken into account.


The CARICOM Regional Aid for Trade Strategy developed in 2013 identified, a number of projects with a sub-regional focus. They include projects to (a) upgrade key economic infrastructure, (b) enhance competitiveness of the private sector and facilitate trade expansion and diversification as well as (c) deepen regional integration and maximise gains from external trade agreements.


The premise of this strategy is geared toward developing a modernized trade policy framework with a broad focus on sectoral issues and cross cutting measures such as information technology and renewable energy initiatives.


Conclusion


The OECS external position has been greatly influenced by the increasing trade deficits, which relate to myriad factors (contestability of global markets, inability to move up the value chain among others). As small vulnerable economies, the OECS recognises the importance of the multilateral trading system, which still holds out the option for first best solutions in the allocation of global trade benefits. However, the MTS is being challenged by plurilateral and regional initiatives some which run the risk of second and third best outcomes for states such as ours which are incapable of participating in some of these negotiations. For these reasons the MTS remains an extremely high priority for the OECS. But we must focus on making the system work better for all its members particularly SVEs such as the OECS.


Chair, in order for the MTS work better I must reiterate some of the issues I raised earlier. We must ensure that we reform the DSB such that compliance with judgements by developed and more powerful nations are not frustrated to the detriment of small economically less endowed members of the house.


We must ensure that the heavy investment made by OECS countries and others in securing a deal on trade facilitation delivers on the promise of bringing concrete finance and technical assistance support to allow them to realise the benefits inherent and clearly articulated in the World Bank doing Business Report.


We must establish a credible work plan for the conclusion of the DDA as an injection of confidence to global markets which will redound to the benefits of the OECS by minimising the downside risks of policy slippage and a return to recession.
The OECS countries maintain among the most open economies in the world.


Consequently, it is the view of the OECS that the multilateral trading system must focus on a more equitable framework for trade and greater sensitivity for the circumstances of SVEs.


Even as we participate in this review our office in Geneva is facing a real existential crisis as a result of financial limitations that threatens the maintenance of a presence here in Geneva. Further the human and financial resource limitations have also negatively affected our capacity to effectively engage in the MTS as reflected very clearly in the less than optimal and desired participation in this review.


We offer our position to this house with the certain knowledge that the value which we add to this process will be somehow sustained.

 

 

 

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