World free trade, liberalisation and protectionism

July 20, 2002
By Bukka Rennie

There is a way to play the game. We have to learn to talk in one breath about world free trade, liberalisation of the economy, the removal of all parameters that even suggest "protectionism", while on the ground we do the very opposite to protect our fledgling industries that are strategic to our programme of national development.

In our view, there is burning need to clarify why we would project a hands-off stance in direct relation to Mexican acquisition of Trinidad Cement Ltd, which is probably the most successful regional corporation that is on the border line of take-off into being a global force.

TCL with its Trinidad, Barbados and Jamaican linkages is the kind of example that we in this region should be projecting to the world as an indication of our coming of age.

It has been established in these Caribbean economies that the sector which signals positive growth rate has always been the construction sector.

And if, in addition to what is generated in the construction sector as a result of direct foreign investment in the oil and petro-chemicals, the Government of the day has adopted a policy on housing that earmarks the erecting of 10,000 units a year, why are we not concerned about controlling the supply and price of aggregate of which cement is the most crucial?

Why would we want to gamble with this and probably end up defeating our own housing policy, shelter being the most pressing demand of all today?

On the other hand, one fully comprehends the logic of declaring Lake Asphalt a national treasure, one of the wonders of the world, to be held by the State in the interest of the people via the Corporation Sole mechanism.

Most of all the real possibilities of Lake Asphalt are yet to be explored.

The point is that we must be clear at what stage of development each of the sectors are and what are the prerequisites to guarantee the next level of development before we consider divestiture or not.

Globalisation is nothing new to us. We in this Caribbean region have always been at the centre of the globalisation process and, therefore, it should not generate any fear among us.

Joel Colton in his book History of the Modern World makes the point that the opening up of the Atlantic in the 16th century created a global economy.

In fact, in the centuries that followed, early capitalist development found its best expression within the parameters of the democratic nation state.

It was the ideology of nationalism and "mercantilism" that established the closed-shop economy of Mother Country jealously guarding its colonies, which were its territorial markets for surplus goods and sources of new, raw materials and minerals.

Higher tariffs were placed on all "foreign" imports in an attempt to eliminate or minimise outside competition to ensure maximum returns from capital outlay and investments.

In other words, developing societies required protectionism to one degree or another.

It is not a carte-blanche situation; each sector will require its own analysis in context of the Caribbean and Latin America.

The Caribbean has opened up to our manufacturers in a big way and, therefore, we cannot afford to send the wrong signals. We need a balanced approach that demands reciprocity.

Even the USA, which prides itself as the champion of the world free trade system, is the biggest practitioner of protectionism, particularly in areas such as steel and agricultural products, as well as the garment industry in its early fragile stages.

And it would be the first to insist that in its case, protectionist measures are the direct result of its free democratic process in which its great lobbies act in concert to influence policy that is its own collective interest.

In the mean, we are asked or are forced by certain conditionalities by the multilateral lending agencies to open our markets carte-blanche to the world.

When we look at all the examples of success held up to the developing world ' Singapore, Korea, the Asian Tigers and even China today, which has been able to maintain the highest percentage growth rate in recent times ' there is one common thread: They are not really open economies, and the State sets national policy and guides their industrial economic development programme.

We need to take a page from their book. We are our own centre. And we must be the designers of our own destiny!