Editorial | New trade strategies

Prime Minister Andrew Holness is right. In the face of Donald Trump’s globally upsetting tariff hikes, Jamaican firms can’t merely sit and whinge, waiting on the Government to fix their problems.

“Before you start to look at the negative, also look at the opportunities,” the prime minister said at the launch of the Jamaica Manufacturers and Exporters Association’s biennial expo on Friday.

“Don’t just sit down and ... complain about all the things that’s going on and all the things that’s going bad. Be the entrepreneur, be the risk-taker. Be the one who is looking for the opportunity,” he added.

But as much as it is the responsibility of private-sector leaders to ensure that their firms are nimble enough to adapt to challenges and to grasp opportunities that might flow from disruptions, that doesn’t obviate the obligation of governments to lead in times of crisis, the situation that the global-trading system finds itself in from Mr Trump’s flirtation with economic nationalism.

Indeed, the circumstance demands more than utilising “every available diplomatic channel” and working with Jamaica’s partners in the Caribbean Community (CARICOM) “to seek to preserve the positions on export that have been secured over decades of deepening trade ties with the United States”.

That, clearly, is an appropriate thing to do given Mr Trump’s imposition of a 10 per cent baseline tariff on exports from Jamaica, and, implicitly, the burial of preferential trading schemes the Caribbean has enjoyed with the United States for more than 40 years.

For even if the status quo is restored for Jamaica and CARICOM, or if Kingston is able to negotiate special trade and investment deals with Washington, it is obvious – as this newspaper has insisted since it became clear that Mr Trump would be America’s next president – that Jamaica has to engage in new, strategic thinking about its global economic relations.

JUST SENSIBLE

It is beyond debate, and just sensible, that Jamaica, a small, middle-income developing country, should have good relations with its neighbour to the north. Which also happens to be the world’s most powerful country, economically and militarily.

Millions of Jamaicans live in the United States. Their remittances to the island are equivalent to 19 per cent of GDP. Americans account for nearly seven of 10 tourists who visit Jamaica, fuelling an industry whose gross income is about a quarter of GDP. Over 40 per cent of the island’s trade is with the United States.

Nonetheless, what Mr Trump’s seemingly cauldron-brewed and conjured tariffs have shown is that Jamaica, as other countries have concluded, can’t afford to continue to place all its proverbial eggs in a single basket. Nothing is certain with the mercurial Mr Trump.

The pivot, however, will require a national partnership, led by the Government, but including the private sector, workers’ organisations, civil society groups, education and training institutions, and, insofar as possible, the political Opposition. Put baldly, Jamaica has to frame an industrial policy, and accompanying global relationships, to meet the challenges that are specific to Mr Trump while establishing the basis for lifting the economy from its low-wage, low-technology, low-productivity, and low-growth confinement.

This should, perhaps, be part of the mandate of the new minister for innovation and efficiency, Audrey Marks.

EXTRACT MORE

While Jamaica works at this initiative (which should be at speed), it must also urgently seek to extract more from existing trade agreements, which it hasn’t sufficiently exploited. The Economic Partnership Agreement (EPA), an asymmetrical free-trade deal between the European Union (EU) and CARIFORUM (CARICOM and the Dominican Republic) is one of these. It is in its 16th year.

In 2023, Jamaica-EU trade was €536 million, out of total EU-CARIFORUM trade of €18.3 billion. Jamaica exported a mere €61 million to EU countries, a 16-per-cent decline on the previous year.

The 2018 five-yearly review of the EPA, the latest that was immediately available, noted: “Consultations showed that there is still a lack of awareness of the EPA and that practical information on the opportunities it offers is scarce. In addition, the number of companies that consider the EU a priority market is limited as the focus of exporters is more on nearby markets.”

Notwithstanding the many implementation issues with the EPA, there are possibilities to exploit the mystique Jamaica carries in Europe by leveraging its name as an exotic and quality brand in food, condiments, drinks, and culture/entertainment.

The emerging circumstances, appropriately channelled, will concentrate minds.

Additionally, Jamaica has duty-free, quota-free access to the UK on terms broadly similar to the EPA’s. This was a carryover to provide continuity in UK-CARIFORUM trade after Britain exited the EU.

Jamaica’s trade in goods and services with the UK for the 12 months up to last September was £512 million, with a £142 million balance in favour of Jamaica. The island exported £327 million in goods and services during the review period.

Now, if Jamaica could only build on that. In Britain and elsewhere.