Remarks at the CARICOM Council for Trade and Economic Development (COTED)

22 April 2016
ITC News

Speech delivered by ITC Executive Director Arancha González at the CARICOM Council for Trade and Economic Development (COTED)

Georgetown, Guyana

Minister Alva Baptiste, Minister of External Affairs, International Trade and Civil Aviation of Saint Lucia and Chair of the 42nd Meeting of the COTED
Honourable Ministers
Ambassador Irwin LaRocque, Secretary-General of CARICOM
Deputy Secretary General  Dr. Manorma Soeknandan.
Assistant Secretary General for Trade and Economic integration,
Mr. Joseph Cox
Ambassador Gail Mathurin, Director General of the Office of Trade Negotiations
Ladies and Gentlemen

Today is both my first time in Guyana and first time addressing the CARICOM Council for Trade and Economic Development (COTED). I thank you for this opportunity to liaise with you and share the work of the International Trade Centre and to further cement the partnership between the ITC and CARICOM and with the member states.

This is also part of my concerted outreach to small vulnerable economies (SVEs) and to show that ITC is here to assist. Earlier this year I had the benefit of visiting St. Lucia and Barbados and just last week I was in Fiji where I witnessed first-hand the vulnerabilities of SVEs to climate change.

The focus of your discussions this week is very much related to this issue of minimising vulnerability- specifically economic vulnerabilities. And the Caribbean single market and economy (CSME) is an incredibly powerful means to achieve this.
For the region’s small, vulnerable economies, integration is not a mere policy option:  it is an economic survival guide.

Cutting barriers to trade, investment, and labour across the Caribbean make possible economies of scale that cannot be achieved within individual domestic markets.

Real integration is crucial to the region’s goals of greater international competitiveness, economic diversification, and enhanced external trade relations. It would help lower fixed costs for the region’s micro, small, and medium-sized enterprises (MSMEs). It would encourage economic, environmental, and social resilience.

At ITC, we firmly support COTED’s goals, both for the single market, and for fostering the growth of MSMEs. Working with local institutions to connect micro, small, and medium-sized enterprises to international markets is at the heart of ITC’s mandate.

Trade matters because businesses that import or export, or sell to firms that do, tend to be more productive, grow faster, and generate higher-quality, better-paying jobs.

MSMEs matter because they account for around 95% of all business and 60 to 70% of all jobs. If they can tap into the gains from trade, the benefits are spread more equitably across society. My understanding is that you are currently considering a regional MSME policy. This is very timely.

Allow me to suggest four areas that you could consider in this debate. In 2015 ITC launched its first flagship report on SME Competitiveness. Our research shows that firms able to connect to international value chains register particularly high productivity, wage, and employment gains.

But to be part of value chains, firms need to produce quality goods and services competitively. They need to meet often demanding technical standards and regulations. And they need to be able to move goods in and out of the country swiftly and predictably. In the inaugural edition the report featured dedicated country profiles of Jamaica and Trinidad and Tobago. For the 2016 version we have also added Barbados. See this report as a tool and an input in your policy discussions.

This report – which we have termed ‘connect, compete and change for inclusive growth- brings fresh analysis and empirical evidence on the constraints many SMEs face.  It helps us understand which constraints are most relevant in a given setting, and points policymakers to reforms that would yield the highest bang for the buck in terms of creating virtuous cycles of MSME productivity and trade competitiveness. Address these constraints and you already give your businesses a head start.

One, is standards. It is crucial to enhance SMEs’ knowledge of both public and private standards, and increase their ability to adopt and comply with such standards.

Compliance is a feature of 21st century competitiveness but many SMEs often have difficulty complying with standards due to a lack of information, unnecessarily complex technical requirements, costly compliance procedures, and inadequacies in the national quality-infrastructure.

ITC provides a database of over 200 private standards where companies can have access to information on these standards and codes of conduct. This standards map is part of ITC’s suite of public goods and tools which are freely available and can help give SMEs access to the trade and market intelligence they need to be able to make competitive business decisions.

Two is non-tariff measures.

For the most part tariffs are the trade barriers of yesterday. It is NTBs that should become a priority on your trade agenda and which will be important constraints to address if your SMEs are to enter new markets. There are many well founded NTMs that apply to health, plant and environmental safety.

The key is transparency. Transparency to allow SMEs to meet these legitimate NTMS and transparency to open a dialogue on those measures which become undue barriers to exports and imports. ITC’s work in the area of NTMs aims to provide an objective assessment on these barriers to trade from the perspective of the private sector. 

From complicated customs paperwork to problems getting international safety and technical certifications, businesses connected to international value chains grapple with a variety of non-tariff measures every day.

In the Caribbean and elsewhere, ITC has been surveying MSMEs to understand the challenges they are facing, and working with governments to set up policy processes that respond to businesses’ day-to-day needs.

A powerful message to emerge is that trade-related problems often begin at home – not at the border of a potential export market. For example our surveys in Jamaica show that small firms face particular challenges with customs clearance times, licensing foreign technology, and access to finance. Small firms in Trinidad and Tobago struggle with getting quality certification, using websites, and accessing foreign technology.

Understanding the constraints that SMEs face both at home, in the region and on international markets is the first step to developing a realistic policy that removes these barriers to trade.
Third is trade facilitation. The costs related to moving merchandise to and from the market are major factors in business competitiveness, especially for MSMEs. This is why ITC is working to support governments in implementing the WTO Trade Facilitation Agreement.

I’d like to salute the Caribbean for its leadership on trade facilitation. The WTO agreement has already been ratified by Trinidad and Tobago, Belize, Guyana, Grenada, Saint Lucia, and Jamaica. I would urge other governments here to ratify it, so that it can swiftly enter into force. As importantly, I urge you to implement the agreement, so that MSMEs can reap the benefits of simplified customs procedures and lower border and port costs. ITC can work with you to develop bankable projects in this area.
Fourth is digital trade and e-commerce. Trade in goods and services via electronic networks have created huge new business opportunities. In 2013, global B2B e-commerce was estimated at about US$ 15.5 trillion. However, businesses and especially SMEs in developing countries are unable to capture the full benefits of this trend.

The potential for Caribbean SMEs to use e-connectivity to tap into larger regional and international markets is great.  But SMEs are often unable to trade through e-commerce channels as they have limited awareness of opportunities, access to payment and logistics solutions, and suffer from legal and fiscal requirements in target markets.

ITC’s work in this area in helping SMEs to legally sell their goods and services via digital channels, and in establishing arrangements and technical solutions to send and receive international payments in a transparent and cost-effective manner would be important tools for SMEs in the region to benefit from.

And this is very much related to trade in Services. Services are an increasingly important part of goods production and with the region’s focus on tourism and its educated and skilled populations, this presents an enormous opportunity.

Services like business process outsourcing offer great potential to drive growth and job creation. For an app developer in Dominica or Saint Lucia, being on an island doesn’t matter: what counts is creativity and a good internet connection.

Facilitating intra-regional services trade across the Caribbean single market would help the region integrate into international value chains. Indeed CARICOM has recognised this with a regional development strategy and action plan for the “services industries.” ITC stands ready to support both this services action plan and COTED’s broader work towards regional integration.
We should also not forget agriculture. My visit to Georgetown also involves the launch of a coconuts value chain project that ITC, together with the Caribbean Agricultural Research and Development Institute (CARDI), is working on with many of your countries.

This project is symbolic in many ways - it takes a traditional agriculture product which many had dismissed, and finds ways to revitalise the industry creating value addition and market linkages. Agriculture in the Caribbean should not be relegated to history. Agro-processing and linking the agriculture industries to the tourism industry and creating the relevant backward and forward linkages can be a viable, innovative economic growth platform for the region.

At ITC, we have a model for value chain development that works. Our approach can be summed up as “from farmers to markets, and from markets to farmers”.
We identify and address problems on the demand side, mapping market opportunities, as well as on the supply side, from production and processing challenges through to trade-related issues such as health and safety standards. 

I believe it is a template for how the ITC can work within the Caribbean- taking the agriculture products of the region and turning them into marketable and in-demand products that link to the tourism industry, to food security and to job creation.

Similar approaches could be applied to other key crops in the Caribbean, such as cocoa in Trinidad and Tobago, black pineapple in Antigua & Barbuda, soursop in Grenada, arrowroot in St. Vincent and the Grenadines, pepper sauces in Barbados and spices in Grenada. I invite you all to attend the launch cocktail event this evening where you will see first-hand just how viable and varied the coconut industry can be.

Before I close, a word on the trade negotiations front.

Engaging in the Multilateral trade discussions at the WTO remains important. The Ministerial Conference in Nairobi has been successful in confirming the multilateral trading system can deliver.

You should continue to invest both in the MTS and in your presence in Geneva. The Caribbean needs to strengthen its engagement especially at a period when there is an opening to pursue issues which are important to you such as in the fisheries subsidies negotiations. It is an opportunity to have a more in depth discussion on the relevant trade issues of today such as the digital economy, trade and climate change, NTMs, and SMEs.

ITC is working with many developing countries- at their request- on raising the knowledge bar on these areas and I pledge the ITC's commitment to do the same with the Caribbean.

As small economies you are left on the periphery of many of the plurilateral discussions in and outside of the WTO. You may not be involved in the TPP for example but it will have implications on your regional trade policy. You may not be involved in the TISA discussions on services but you should be. The opening is there to engage and the Caribbean- who has much to offer to and benefit from services- has a space to occupy.

I urge you to be more proactive and engaged in these platforms and to commit to strengthening the multilateral trading system at the WTO, which in a sea of plurilaterals and regional agreements, will be your safe haven to have a seat at the table. 

I thank you for this opportunity and I look forward to dialoguing further with you on these issues.

Thank you