Survival strategy
Stabroek News
April 23, 2003

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At a time when attention is overwhelmed by the almost daily kidnappings, murder and the pervasive breakdown in law and order, compounded for good measure by blackouts and water shortages, it may be difficult to focus our attention on such a seemingly remote subject as trade strategy. Yet as a document recently made public emphasises, external trade is vital to Guyana's survival, perhaps more so, according to the study, than any other country in the world. The document is entitled A National Trade Strategy; it has been prepared for the Ministry of Foreign Trade and International Cooperation (MOFTIC) by a Consultant, Dr Craig Van Grasstek. The document asserts:

"Trade is more important to Guyana than to almost all other countries in the world. Even by comparison with other Caricom members, Guyana is exceptional for its high level of dependence upon the external sector. An International Monetary Fund study showed that in the average Caricom member country exports and imports of goods and nonfactor services amounted to 116.9% of GDP (i.e. total value of goods and services produced by the economy of the country) during 1994-1998."

Guyana at 211.3 of GDP was far more dependent on trade. These figures, the Consultant states, demonstrate that Guyana can ill afford to neglect the opportunities or the risks presented by the external sector.

Indeed, the earnings of trade will every day become more vital to survival as there is likely to be a steady deflection of economic assistance from Caricom states - including Guyana - towards the reconstruction of Iraq and meeting the desperate needs of Africa. The temporary dropping of Guyana from the PL480 wheat assistance programme is an augury of what may happen in the future.

Making a careful distinction between strategy and tactics, the document outlines an overall plan with overarching objectives within which specific steps (tactics) can be taken to achieve the objectives. The execution of such strategy would enable Guyana in changing circumstances to maintain the external trade on which it is so overwhelmingly dependent.

Confronted by an international economic system in which the gains accrue mainly to the developed and powerful states, Guyana and other small developing states in Caricom and elsewhere have been stressing, in negotiations, weakness and smallness and vulnerability. In this connection Consultant Van Grasstek makes the startling but persuasive point that, "the benefits of the trading system depend more upon the ability of negotiators to exercise their bargaining power than the appeals that they make to the generosity of industrialised countries."

Given present lack of the required degree of competence not only in the trade field (where the tendency has been to leave everything to the Regional Negotiating Machinery (RNM) but in other areas of external relations including border problems) this contention of the Consultant should be taken to heart.

"Bargaining power," he insists "consists of more than the absolute size of a country's market, its budget, or other measures of an economy's overall magnitude. A country's capacity to bargain is determined in large measure by its ability to obtain, analyse and make effective use of information, as well as by its ability to coordinate action with partners that share common interests. While Guyana can do little in the short term to expand its economic power there is much that can be done to improve the country's ability to engage effectively in trade negotiations."

This is surely an admonition that must extend over the whole gamut of external relations and its supporting diplomacy; in short it must be recognised that foreign policy and its instrument of diplomacy must play an inescapable role in Guyana's growth and survival.

Indeed, much of what the document identifies as techniques in trade negotiations reads like maxims for small state diplomacy. For example, the key task " to manage the threats and opportunities of a global market." What the consultant is now drawing attention to is that small state diplomacy is essentially an exercise in steering, or evading or avoiding risks and hazards, and taking advantage of opportunities as they emerge.

Pool leverage and negotiating expertise in a single body, as in the case of the RNM.

Establish clear priorities in order to direct energies where they can have the most impact.

Pursue objectives on a coalition basis whenever possible.

To quote the Consultant's words:

"Guyana shares a community of interest with at least some other countries on almost every conceivable issue. Depending on the topic at hand, an alliance might variously be founded upon membership in formal groups (especially Caricom) or based on its geographic place in the world, its sectoral composition, its level of economic development and indebtedness."

As culled from the Trade Strategy document the above maxims, among others, are clearly valid not only for trade diplomacy but for the wider practice of diplomacy by a small state.

The document has wise and definitive things to say about the main issues which currently preoccupy Guyana's diplomacy, including the urgent necessity for the maintenance of Special and Differential Treatment for sugar and other export products.

The Consultant contends that nonreciprocal preferential access to foreign markets cannot be seen as a permanent feature in the world trading system; it is being undermined by the liberalisation of trade barriers. He identifies the prosecution of preferential access to the EU market as the most obvious, simple and perhaps most important objective for Guyana's trade strategy in the medium term. However he points out that it is an issue over which Guyana has least control. It depends on the willingness of the EU to continue paying high prices for these commodities and also on the forbearance of other WTO members. On the latter point there is the action being pursued by Australia and Brazil against the EU sugar regime. So he recommends that while every effort should be made to obtain the best and most prolonged terms for preferential access to the EU market, it would nevertheless be prudent to plan for programmes that may ease the burden of adjustment for farmers and field workers through retraining and diversification.

Van Grasstek further makes a proposal that should be very urgently considered for adoption as a new negotiating objective. He points out that Guyana is denied the various forms of special treatment extended to the fortyeight countries designated as Least Developed Countries (LDCs), nearly all in Africa. However, Guyana is in another grouping of 24 countries identified by the World Bank as eligible for eventual debt write-offs under the Highly Indebted Poor countries (HIPIC) initiative. He recommends promotion for a principle under which HIPIC countries are given LDC parity as there is in any case considerable overlap between the two groups i.e., LDCs and HIPICs.

One can only touch on a very few of the points which enrich this strategy document. The document identifies the need for increase in MOFTIC's staff size, and for specialist training and for the particular need for some representation in Geneva, HQ of the WTO and where Guyana presently has no Mission. But what the report does not deal with, as it fell outside the scope of the consultancy, is the need for deepening coordination between the Ministry of Foreign Affairs (MFA) and MOFTIC at policy levels. The usual arrangement of portfolios in other states provides for international trade to be a division within the Foreign Ministry as in Jamaica, even though it attracts its own Minister. In response to criticism on this point it is reported that both Ministers stated that they had a clear idea of their separate responsibilities. One can hope that this is so, but alas in the world outside a dominant characteristic is the linkage and inter-linkage of nearly all issues, including trade issues. It is for this reason that the MFA must continue to provide a kind of overarching framework of alliances, agreements, common acceptances of norms and understandings in the context of which Guyana's external relations could be effectively pursued whether in trade, or health cooperation or competition in sports.

The inter-linkage of issues could be highlighted in the following emerging situation. The Consultant Van Grasstek points out that Guyana should be prepared for possible contingencies e.g., the potential for the FTAA negotiations to fragment into subregional pacts. This is already happening; the US has recently concluded a separate trade pact with Central America. But while such a similar subregional pact may be advantageous for Guyana and Caricom it may be unwise to pursue this proposal at this time in view of the recent difficulties in the Caricom/US relationship over Iraq. There is clearly an urgent diplomatic repair job to be done.

Another example. The Consultant notes that in any given year either Canada or the United States may take first place as an export market for Guyana products, but in each of the past five years, they have together accounted for a large and growing share of total exports. The import data shows that the United States has an even more dominant share of the country's imports. The European Union accounts for a declining share of Guyana's exports.

The relationship with the EU must continue to reflect the continuing importance of sugar and rice and rum which provide jobs for a majority labour force. But Guyana's new export products are going to the North American market, products which include frozen shrimp and prawns and filleted fish and plywood, nonindustrial diamonds and women's track suits, etc., but also including importantly sugar. Such trade relationship must be reflected in wider foreign policy and in the organisation of diplomatic missions; responsibilities of the MFA. Hence the need for clarity and coordination in the work of the two Ministers.

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