Looking back to look ahead – protectionism, tariffs, uncertainties

Legislative initiatives and trade development programmes between the USA and Caribbean countries

By Mike Jarrett

Post-election utterances in the USA and specifically those from the President-elect warning of his plans for trade restrictions and punitive tariffs have created discomfort and uncertainty in diverse places around planet Earth.

Having declared in pre-election speeches that he would be using trade tariffs to protect and stimulate industrial production in the USA, President-elect Trump threatened two of the USA’s closest trading partners with a 25% tariff to be imposed on all commercial imports from Canada and Mexico. He also threatened to place a 10% tariff on Chinese imports into the USA.

Immediate reaction to threats that could seriously affect USA-Canada and USA-Mexico trade had the Canadian Prime Minister making a hurried trip to Florida for a face-to-face meeting with President-elect Trump. Not to be outdone, Mexican President Claudia Sheinbaum spoke publicly in defiance, threatening to retaliate with tariffs on American exports to Mexico. Meanwhile, President Macron of France planned a special invitation to the U.S. President-elect to visit Paris for the re-opening of Notre Dame Cathedral, apparently to create an opportunity for a one-on-one conversation about the future relationship between their two countries.

Uncertainties

Meanwhile, in the Caribbean and Latin America, as elsewhere, uncertainty about the future trade relationship with USA is clearly evident.

Statistics from the Economic Commission for Latin America and the Caribbean (ECLAC) for the first six months of 2023 estimated exports from this region to the USA at US$258 billion. Imports from the USA for the same period were approximately 19% higher at US$308 billion. This value of trade, although slightly less than that recorded in the corresponding period of 2022, was significant, accounting for 22% of U.S. foreign trade in the period January to June 2023.

To put this in perspective, in 2022, while U.S. trade in goods with Mexico was 68% of total trade with Latin America and the Caribbean, South America accounted for about 21%. Central America’s share was 7%. The Caribbean countries’ share was 4% or US$22.7 billion… a relatively small but hardly insignificant amount. Of greater significance, perhaps, is the continuing drift from “globalisation” and the growth and empowerment of small states that it fuelled, back to the discarded models of protectionism.

Among the first to make this observation publicly was former World Maritime University President, Dr. Cleopatra Doumbia-Henry, LL. B, LL.M, PhD, LLD, h.c, International Law. A Caribbean woman by birth, Dr. Doumbia-Henry expressed grave concern that the period of rapid global expansion and measurable gains in alleviation of poverty in the 20th Century, from which Caribbean nations among other former European colonies benefitted significantly, could be halted by a return to long-discarded models of protectionism. In this age of globalisation, the world is going back to the old principles of the Westphalian state, she warned.

Caribbean Basin Initiative

Caribbean countries, having spent much time and resources planning and developing Special Economic Zones, with reasonable expectations of income from Business Process Outsourcing, may now be experiencing some unease as a result of recent utterances from the incoming administration in the USA. However, such feelings of doom and gloom could well be too soon, thanks to a range of legislative initiatives and trade development programmes between the USA and Caribbean countries. These include (but not limited to) the Caribbean Basin Initiative (CBI) launched in 1983 through the Caribbean Basin Economic Recovery Act (CBERA). It was expanded in 2000 by the U.S.-Caribbean Basin Trade Partnership Act (CBTPA) and again by the Trade Act of 2002. The CBTPA is scheduled to expire on September 30, 2030.

There are 17 CBERA beneficiary countries: Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, British Virgin Islands, Curacao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, Saint Lucia, St. Vincent and the Grenadines and Trinidad and Tobago. Eight of these are also beneficiaries under CBTPA, including Barbados, Belize, Curacao, Guyana, Haiti, Jamaica, Saint Lucia and Trinidad and Tobago. CBTPA countries are a subset of CBERA countries with expanded Duty-Free access to the U.S. market.

Governments of Caribbean territories that are beneficiaries under U.S. trade regulations should come together in urgent conversation to formulate an intra-regional strategy for formal discussions with the USA come January 20.[]