The Economy: Intra-Regional Trade & International Trade policies – where Guyana stands?
Last Wednesday, May 23, 2018, at the opening ceremony of the regional dialogue on trade held at the Marriot Hotel in Georgetown, the Caribbean Development Bank (CDB) criticized the lack of implementation of CARICOM’s trade facilitation agenda. The full article on this matter was carried by Newsroom on May 23, 2018, and can be accessed here for ease of reference: http://newsroom.gy/2018/05/23/cdb-lambastes-performance-of-intra-regional-trade/.
Over the last five years or so, Guyana has committed to review and improve its international trade policies and framework aimed at liberalizing and facilitating trade activities. These included: starting the operation of risk management in customs procedures; eliminating some export duties on non-manufactured goods; and concluding negotiations of new or revised (and more liberal) air services agreements with several trading partners (World Trade Organization, 2015).
Trade policy environment
The Ministry of Foreign Affairs is responsible for the development and the administration of Guyana’s foreign trade policies. In this respect, the Ministry implements the national trade agenda in coordination with other trade-related public and non-state agencies. In the last three decades, Guyana’s trade policies have become increasingly linked to the country’s overall foreign policy.
At the regional level and as a member of CARICOM, attaches great importance to its participation in the Community’s regional trade arrangements as the main vehicle to enhance the country’s integration in the world economy and is fully committed to the realization of the CARICOM Single Market and Economy (CSME). Therefore, the country’s trade policy, including its external trade negotiations with third countries, is closely aligned with the overall trade policy of the Community.
At the multilateral level, Guyana remains fully committed to achieving a successful conclusion of the negotiations under the WTO Doha Development Agenda (DDA). Guyana also supports the commitments achieved under the Bali package as a realistic approach to securing the development-oriented and balanced outcomes being advocated for small vulnerable economies (SVEs). The multilateral negotiation is considered important to the sustainable development of a small developing economy such as Guyana with a high degree of trade openness.
Trade policy developments
Guyana recently implemented the following key trade developments:
- Implementation of the Economic Partnership Agreement (EPA)
In January 2011, Guyana commenced implementation of its tariff liberalization commitments under the Economic Partnership Agreement (EPA) between the European Union and the CARIFORUM Group of States. The agreed tariff liberalization under the EPA will be phased through to 2032.
- Review of the EPA
In 2013, Guyana collaborated with its partners in the CARIFORUM Group of States and the European Union to commence the first five years’ review of the EPA as set out in the Joint Declaration on the signing of the said agreement. In this regard, the declaration states that “a comprehensive review of the Agreement shall be undertaken not later than five (5) years after the date of signature at five yearly-intervals, in order to determine the impact of the Agreement, including the costs and consequences of implementation.” The parties also undertake to “amend its provisions and adjust their application as necessary.”
- Trade Facilitation
In September 2013, Guyana conducted a WTO-assisted National Trade Facilitation Needs Assessment to identify the country’s needs and priorities in the WTO Trade Facilitation Negotiations. In April 2015, Guyana established its National Committee on Trade Facilitation to oversee the implementation of the WTO Trade Facilitation Agreement agreed in Bali. The committee is jointly coordinated by the Ministry of Foreign Affairs and the Guyana Revenue Authority and includes representation from other relevant border and trade-related agencies.
The economy largely depends on the exports of primary commodities such as sugar, gold, bauxite, rice, timber, and shrimp. Recently, it was reported that Guyana’s economic report for the fiscal year ended 2017, revealed that the trade deficit in Guyana’s Balance of Payment figures widens from US$53 million in 2016 to US$69 million as at the end of 2017. The illustration below depicts the movements in Guyana’s Balance of Payment figures over the last ten years:
Balance of Payment overall balances
Source: Bank of Guyana Annual Reports.
As can be observed from the data above, over the last ten years, Guyana’s trade balance recorded a surplus in years 2008, 2009, 2010 and 2012 with the highest surplus during that period of US$234.5 million in 2009, and a trade deficit in the years 2011, 2013, 2014, 2015, 2016 and 2017 with the highest deficit of US$119.5 million in 2013.
Mining and quarrying accounted for 18.0% of GDP in 2013, up from 14.2% in 2009. Guyana remains almost entirely dependent on its imports of fuel oil for electricity generation: 95% of electricity is generated by diesel and heavy fuel oil, and 5% by co-generation using bagasse. No electricity is currently generated from hydroelectric power. The authorities have recently recommitted to the Amaila Falls Hydro-electric Project (AFHP). In 2013, manufacturing (including food processing) accounted for 6.7% to GDP. Guyana relies heavily on imports of manufactured goods.
Services accounted for 60.4% of Guyana’s GDP in 2013. The main subsectors identified in the national economic statistics are distribution, transport and communications, engineering and construction, and government services. Regulatory changes were introduced notably in financial services and air transport. In 2010, Guyana adopted the Credit Reporting Act to establish a credit reporting system; in 2014 negotiations of bilateral air services agreements between Guyana and several of its trading partners were finalized.
Empirical evidence suggests that international trade leads to economic growth provided that the policy measures and economic infrastructure are accommodative enough to adapt to changes in the financial and social outcomes that result from it. In addressing the cross-border challenges, a well-functioning, national competition regime is insufficient and there are also problems with developing countries that they lack the resources and/or experience to tackle international competition challenges.
This is so despite the provision of extraterritorial jurisdiction in competition law which also has limitations. As a result, some countries have entered into bilateral or regional treaties to solve these problems – yet, these treaties have limited impact. As such, the competition authorities of many different countries have come together to promote International competition network. To this end, there is need of pushing an international agreement on cooperation on competition (Vijayasri, 2013).
*The author is the holder of a Master of Science Degree from a UK university in Business Management, with specialism in Global Finance and Financial Markets.