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TRADE, TRADE AND MORE TRADE !

TRADE, TRADE AND MORE TRADE !
March 08
16:19 2019

By: Major Lloyd Jones (Ret’d)

On February 28th the Ministry of Economic Development, Petroleum, Investment, Trade and Commerce [why do we have to give these ministries such long names?] launched Belize’s first ever National Trade Policy. The Policy is well thought out and well crafted; and it has the potential to jump start Belize’s economy if the government ensures its implementation.

Since the Policy covers the period 2019-2030 buy-in for its successful implementation must also come from the People’s United Party! The PUP’s shadow minister for foreign trade [Senator Eamon Courtenay] was not at the launch and it is unclear whether or not he was invited.

A great deal of congratulations must be given to the Hon. Tracey Panton and her team for this important accomplishment. The Director General of Foreign Trade, Mr. Andy Sutherland, was beaming with pride at this landmark accomplishment, as well he should be. Too often in our frustration we flog our public officers for what are really policy failures; and policy is the sole province of politicians.

Despite policy failures, there are a great many public officers who serve us with distinction and with honour; Andy is one such public officer.

The development of a Trade Policy Framework started under the leadership of Mr. Yashin Dujon. Dr. Leroy Almendarez later took over the reins, completed the Framework and got it approved by Cabinet. It is upon the shoulders of these two former Director Generals that Andy stands and they thusly deserve their share of kudos.

There seem to be a renewed sense of purpose at the Directorate General of Foreign Trade and this can be properly attributed to the Hon. Minister and to the Director General himself. If sustained, Belize can benefit tremendously from this energy. Belize’s trade stakeholders must therefore support the Minister and the Director General by maintaining pressure on GOB for the full implementation of the Trade Policy.

Since our independence Belize has had a trade imbalance due mainly to our low productivity and an over reliance on primary products [agriculture-based products that are exported in their raw form]. Whereas it is difficult to correct such an imbalance overnight, it is certainly within our reach to narrow the gap. In fact, we must do so if we are to avoid economic collapse as the trade deficit is undoubtedly unsustainable.

Regrettably, over the last 5 – 7 years we have seen a widening of the trade imbalance: imports continue to outpace exports. This is so because the merchant class are major contributors to the political campaigns of both the PUP and the UDP. Any move towards a trade balance means either increased production [exports] or decreased importation or both. It is the latter that is the political minefield and so our governments have given very little trade support to our productive sector.

The lack of trade support to our productive sector all but guarantees the need for the importation of items that we could so easily produce ourselves. In fact just a few days ago our potato farmers were wailing at the state of the market after GOB awarded import permits for potatoes. But who cares? The importers, no doubt staunch supporters of the ruling Party, get to make money and some of that money will somehow find its way back to the Party.

Whereas the new Trade Policy seeks to make trading easier and more beneficial within the rules based system of the WTO, Belize still need goods/services with which to trade. Export-oriented industrialization is key to Belize’s sustainable development therefore the development of sound sectoral policies are crucial to our economic survival.

Trade is at the core of the modern day state as it underpins one of the key elements of national power: the economy! A strong economy influences the other elements of national power because as wealth increases more resources can be expended to the other areas that build a strong nation: diplomacy, information, military and technology.

Foreign trade is important for several reasons but the two prominent ones are that (1) it generates much needed foreign exchange and (2) if exports are robust it can drive GDP growth.

However, just as exports earn foreign exchange, imports deplete our reserves. Because Belize has a trade imbalance (deficit) we spend more foreign exchange than we earn putting significant pressures on our foreign reserves. The solutions to our current account deficit are therefore grants or loans and we seem to have developed an insatiable appetite for both.

Perhaps my only criticism of the new Policy is that it does not put sufficient emphasis on trade logistics. Perhaps this will be fleshed out under “Trade Facilitation” pillar. The importance of producers to be able to get their products to market efficiently and cost effectively cannot be overstated.

According to the World Bank national logistics costs in Latin America and the Caribbean accounts for about 18%-32% of total value of goods when compared to OECD’s bench mark of 9%. Such additional costs clearly affect competitiveness, further dampening our export potential. Greater focus must therefore be conscientiously made to smooth out our logistical challenges.

The new Trade Policy is a refreshing step in the right direction. Now if only we could see progress in the public transportation arena.

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