Elizabeth Morgan | CARICOM and the USA

At the end of my article last week, I indicated that with the challenges related to energy and climate change, the situation could get worse depending on what happened in our neighbour to the north. Of course, I was referring to the USA and the outcome of its mid-term state and federal elections.

This week, I am also reflecting on two of my previous articles which refer to our relationship with the USA, our major trading partner. These are my January article asking whether we in CARICOM were assessing the threat to democracy in the USA following the January 6 insurrection, and my article in August looking at CARICOM’s mediocre performance in international trade.

Well, it is apparent that a large number of US voters did go to the polls looking at a bigger picture, which included securing democracy in the USA, and voted accordingly. They actually surprised me. I was among those expecting the Republican wave, as Americans considered only the issues affecting their spending power and remained quite parochial in their views.

The Republicans did not completely sweep the elections as historical trends and the polls were predicting. So, at the federal level, the Democrats will keep a narrow majority in the Senate and, for a clearer majority, there is still a seat to decide in the state of Georgia in December.

In the House, the vote counting was still in progress in some states, especially in California, and it remained to be seen whether the Republicans would gain the majority and by what margin. For now, there is no doubt that a high percentage of Americans remain committed to the Donald Trump Republican Party.

IMPLICATIONS FOR ENERGY AND CLIMATE CHANGE

The composition of the Congress has implications for President Biden’s agenda on energy and climate change. Biden told the COP27 in Egypt over the weekend that he remains committed to US leadership on climate change. Of course, climate change and energy are important issues for the CARICOM countries. The USA needs to remain engaged and a party to the Paris Convention, as well as to implement proposals from the US-CARICOM meeting at the January Summit of the Americas.

Also, recall that nothing would happen on gun control in a Congress controlled fully by the Republicans. This region should have an interest in gun control in the USA, including assistance to reduce the illegal trade in small arms.

On trade, at this time, I do not think it matters much which party has control in Congress, as I do not see anything significant happening for CARICOM on trade generally with the USA. In its 2022 Trade Policy Agenda issued in March this year, the Biden administration made it clear that any action on trade has to be within existing trade arrangements or at the multilateral level.

For CARICOM, existing arrangements are the 1983-2000 Caribbean Basin Initiative, 2013 Trade and Investment Framework Agreement (TIFA), and the 2016 US-Caribbean Strategic Engagement Act. The US-CARICOM Trade and Investment Council (TIC) has not met in a while. The hope is that it can convene in 2023.

I have actually audited two webinars this year, looking at how CARICOM could make better use of its trade arrangements with the USA. The region just does not seem to be making much progress in further improving its export trade with the USA under these arrangements.

In merchandise trade, the trend continues in which the trade is mainly in the US’s favour. Looking at the US trade statistics with CARICOM countries for January to September 2022, only two CARICOM countries have a trade surplus with the USA. These are now Guyana and Trinidad and Tobago, due mainly to the export of petroleum products.

Overall, from January to September, the CARICOM region has imported goods valued at about US$14.1 billion and exported goods valued at US$8.9 billion, with a deficit of US$5.2 billion. Remove the exports of Guyana and Trinidad and Tobago and the other 13 CARICOM countries have only exported goods valued US$1.8 billion to the USA.

[See table included with the 2022 merchandise trade figures]. These 2022 figures, up to September, are outpacing the total trade for 2021, when CARICOM’s US imports for the entire year were valued at US$12.3 billion and exports were US$7.7 billion, showing a deficit of US$4.6 billion.

On the services side, primarily tourism, from figures seen it is clear that the tourist arrivals in the region have picked up considerably in 2022 and, as expected, most arrivals are from the USA. For countries such as Jamaica and Barbados, will the earnings from tourism have an impact on the deficit in goods? It has not made a significant difference for Jamaica in years. Let us hope that the tourism figures continue to improve and, in the USA, the Biden administration is able to keep the US economy stable, in the face of high inflation and interest rates globally, as we approach the holiday season.

I note in Jamaica that the Christmas decorations in the shopping centres have been going up since October. Merchants are anticipating consumer spending, which means stocking more imports. Among consumers, there are those anticipating an increase in remittance inflows. There is also the hope that the tourist arrivals will continue to increase for this winter season. So, what happens in the USA, political and economic, is definitely of interest in this region.

Elizabeth Morgan is a specialist in international trade policy and international politics. Email feedback to columns@gleanerjm.com.