The preservation of preferential access to the European Union (EU) market for rice and sugar is the most important objective for Guyana’s trade strategy, says consultant Dr. Craig VanGrasstek.
Unfortunately this issue may be the one over which Guyana has the least control.
VanGrasstek yesterday gave a presentation on the new paper, entitled ‘A National Trade Strategy for Guyana’ at a seminar at Le Meridien Pegasus Hotel.
He said much depended on the willingness of the EU to pay the high prices for these commodities and also the forbearance of the other WTO members.
Just about one year ago, VanGrasstek began working with the Ministry of Foreign Trade and International Co-operation (MOFTIC) and consulting with various other interest groups for the strategy’s preparation.
The high cost of shipping from Guyana continues to pose a very serious impediment to the economy as the average cost for imports into the United States was 11.66% of the value of the goods. Similar costs for items imported to the US from other countries averaged 3.29%.
VanGrasstek found in the study that differences in Guyana’s shipping costs were more than enough to wipe out the advantages that Guyana might enjoy from preferential tariff treatment. He said “inadequacies in Guyana’s current port facilities and harbours...increase the country’s cost of production of exports by 30%.”
In terms of primary objectives, he recommended that policy-makers needed to establish clear priorities in order to direct their energies where they could have the most impact including measures that directly affected Guyana’s access to foreign markets.
He used the reduction or removal of foreign barriers to exports of Guyana’s non-traditional agricultural produce as an example.
He said too that Guyana shared a community of interests with other countries engaged in negotiations with the European Union, hence the country could participate primarily in coalition efforts. Access to foreign markets should be sought on a preferential basis when possible, he said, and this did not mean that the reciprocal exchange of market access commitments was always an unattractive option.
Both producers and consumers in Guyana, he noted, could benefit from further import tariff reductions, especially if that could be achieved in tandem with further reductions in barriers to foreign markets. In addition lower tariff barriers might help to attract new foreign investment by establishing a more predictable and business-friendly environment.
VanGrasstek noted that non-tariff issues in the WTO system could also promote the sale of Guyana’s goods. An example of one such system is the agreement on Trade Related Intellectual Property Rights (TRIPS). He said that the possible creation of a geographic indication for Demerara Sugar offered such an opportunity. While Guyana had not been successful in previous efforts to secure such an exclusive right, the WTO offered a new venue for the pursuit of that right, he suggested.
Also suggested in the study was that the Ministry work with the Ministry of Agriculture (MoA), the New Guyana Marketing Corporation (NGMC) and Go-Invest to identify and eliminate trade barriers affecting agriculture and agri-processing products that might be produced in the future by displaced rice and sugar farmers.
The trade strategy outlined also that Guyana should seek similar treatment to that of LDCs (Least Developed Countries) with a view to gaining LDC parity. Among the additional benefits extended to LDCs along with preferential access to the EU market under the EBA (Everything But Arms) initiative is the exoneration from some obligations under WTO agreements and eligibility for a Swiss government subsidy for the establishment of a WTO mission in Geneva. Such a mission, Guyana could not afford.
Ronald Godard, United States Ambassador to Guyana said that given the significant potential Guyana had for producing traditional and non-traditional commodities, there existed considerable room for making exports the dynamic sector for growth.
Issues such as export promotion, export facilitation and competitiveness must urgently be addressed in order for Guyana to achieve the high growth rates necessary to reduce current levels of poverty.
Godard made the point, too, that the twin processes of globalisation and trade liberalisation had forced many small developing economies, including Guyana, to play a more active role in international relations to avoid being marginalised in the international community.
VanGrasstek is a Trade Policy Expert at Harvard University’s Kennedy School of Government. He also holds the posts of Executive Director, Program on Trade and Development and President of Washington Trade Reports, which provides analyses and consulting services on a wide range of trade issues to various governments and business groups worldwide.
The seminar was sponsored by the MOFTIC in collaboration with the United States Agency for International Development’s (USAID) Guyana Economic Opportunities (GEO) Project.