AID-FOR-TRADE


by Rosaliene Bacchus
Guyana Journal, May 2009

The United States and nations worldwide continue to grapple with recovery from the global economic meltdown. Small developing countries in Latin America and the Caribbean have been especially vulnerable to the slump in foreign direct investments, revenue from tourism and remittances, and commodity prices. As governments strive to safeguard their local industries and curb rising unemployment, protectionism has become a threat to trade flows.

Protectionist policies - such as increases in import tariffs, subsidies for exports, and other hindrances to trade - can spur retaliation as occurred between the US and Mexico in March this year. When the US Congress scrapped a test program allowing Mexican trucks to use US highways, the Mexican government considered the action protectionist and a violation of the North American Free Trade Agreement (NAFTA). In retaliation, they placed tariffs on ninety American agricultural and manufactured exports.

The World Trade Organization (WTO) estimates that world trade will contract by 9 percent this year. To prevent further decline with the spread of protectionism, the WTO is monitoring trade-related measures implemented by its member states. In his opening address to the Latin American and the Caribbean High-Level Aid for Trade Meeting in Montego Bay, Jamaica, on 7 May 2009, WTO Director-General Pascal Lamy urged participants “to work together to keep trade open by resisting protectionism.”1

The WTO Director-General noted that the majority of countries in the Caribbean region were more susceptible to external shocks due to their dependency on a narrow range of export products and limited access to export markets. The results are evident in the reduction in trade between the United States and select Caribbean States: Barbados, Guyana, Jamaica, St. Lucia, and Trinidad and Tobago.2 When compared with the same period in 2008, total trade during January to March 2009 has fallen for all countries, except Guyana which remained stable at US$89.4 million. Percent declines in total US trade figures for selected countries are outlined below.

o St. Lucia - 70.5 percent from US$112.7 (2008) to US$33.2 (2009)
o Jamaica - 40 percent from US$797.5 (2008) to US$478.4 (2009)
o Trinidad and Tobago - 38.3 percent from US$2,850.2 (2008) to US$1,757.4 (2009)
o Barbados - 11.8 percent from US$125.5 (2008) to US$110.7 (2009)

With the exception of St. Lucia, these declines were due to reduction in US imports from the above-listed countries.

To overcome its drawbacks to trade, the Region will need to diversify its export bases and expand trade flows within the Region. Additional funding will be of crucial importance. Aid for Trade to the Latin America and Caribbean region increased 34 percent from US$1.6 billion in 2002-2005 to US$2.2 billion in 2007. The WTO, with the help of the Organization for Economic Co-operation and Development (OECD), will be monitoring the Aid-for-Trade programs at the global, regional and national levels. Effective programs will help developing countries to build their productive capacity. In this way, they will be able to take advantage of existing and new trade opportunities.

1 Speech by WTO Director-General Pascal Lamy is available at www.wto.org.
2 U.S. Census Bureau, Foreign Trade Statistics, March 2009, published on May 12, 2009.
Rosaliene Bacchus
Los Angeles, CA
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