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Volume
13, Number 23 |
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Also
in this section: The Greater Caribbean This Week Small
economies: the need for special and differential treatment In the framework of the Association of Caribbean States Ministerial Council Meeting that will take place in Panama, in January 2008, a compilation of studies will be launched on the issue of Special & Differential Treatment (SDT), as applied to small economies. This issue has been at the forefront of the activities of the Trade directorate for some time now. Indeed, a study on special and differential treatment had been done in collaboration with the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), and the Economic System of Latin America and the Caribbean (SELA), to analyze how the subject was actually being dealt with within the framework of the regional integration agreements, namely CARICOM and the Central American Common Market (CACM). But how relevant is that issue of differential and more favorable treatment, most commonly known as special and differential treatment, particularly with respect to our small economies? Among the structural problems of small economies are: small population, small markets, limited natural resources, and vulnerability to natural disasters. In general, these economies rely on the exports of a few varieties of primary products. They also have limited local capital available for productive investments. Agriculture is the backbone of many of them, the main source of revenue, and one of the main providers of export products. Consequently, all these characteristics have to be taken into account. As a matter of fact, SDT provisions can be defined as the series of measures that are meant to recognize these specificities, so that small economies and other developing countries are not negatively affected by trade liberalization. Whether it is perceived as a moral obligation of the former colonial powers, or as a politically necessary evil, as the distinction is being made by M. Garcia & R. Safadi, two economists from the Organization for Economic Cooperation and Development, authors of the introductory chapter of the above-mentioned compilation, there is indeed a rationale for the implementation of differential treatment to smaller economies. And indeed, the same observations can be made, either among the CARICOM Member states or the CACM countries. Though they are part of a regional grouping, asymmetries can be noted, and consequently, they will respond differently to the demands of the globalized world economy. Small economies are indeed being challenged. Most of the time their size is further exacerbated by their low level of development and this does not allow them to be able to fairly compete with much wealthier economies. Indeed, the liberalization of the world trade, which has been taking place with the reduction of trade barriers, is seen by many as being beneficial, especially to developing countries. It has enabled some of them to develop competitive advantages in the manufacture of certain products. However, this will be the case only if their vulnerability, low level of resource endowment and economic development are taken into account. When it comes to SDT as applied in CARICOM member states, such provisions were first mentioned in the additional treaty of 1968, and the Treaty of Chaguaramas states that governments of the Lesser Developed Countries can, if deemed necessary, as a temporary measure to promote the development of any industry, impose quantitative restrictions on imports from the other member states. In so doing, their production will be protected. There is also a possibility for them to grant subsidies to stimulate their exports. Lastly, it has to be noted that the World Trade Organization will receive the two studies realized by ECLAC and SELA, so that their outcome and conclusions can be included and taken into account in the upcoming trade negotiations.
Manuel Madriz is the Trade Director of the Association of Caribbean States. The opinions expressed are not necessarily the official views of the ACS. Comments and reactions can be sent to mail@acs-aec.org Also
in this section:
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©
2007 by Eric Jackson email: editor@thepanamanews.com or phone: (507) 6-632-6343 Mailing
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