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Address at the 18th Annual General Meeting
of the
Saint Lucia Industrial and Small Business Association
By
Permanent Secretary in the Ministry of Trade, Industry and Commerce
Titus Preville
August 19, 2007
Fox Grove Inn, Mon Repos
Theme: Strategic Positioning in the CSME
Salutations
Context The CARICOM Single Market and Economy came into force on January 01, 2006. The establishment of this arrangement was driven by the need to create more competitive companies and firms throughout the CARICOM region in order to be able to compete with the goods and services produced by firms from the more developed world. Given that the WTO, of which CARICOM countries are members, have agreed to a process of progressive reduction in the level of tariffs that we can impose on goods imported into Saint Lucia and the rest of CARICOM from the advanced economies (trade liberalization), it became evident that the Governments of CARICOM would no longer be able to protect their domestic industries by such means. Even more critical than tariff reduction it has become extremely difficult to impose quota restrictions on the importation of goods into CARICOM economies from the developed world. We all know that quota restriction is a more effective means of protection than high tariffs. However since imposition of quotas is deemed more discriminatory than the use of tariffs, quota restrictions have been identified as incompatible with the process of creating greater efficiency in production. Hence the WTO has virtually outlawed the use of quotas as a means of protection.
In the face of the eminent increase in competition that would arise from trade liberalization the Heads of Government decided that the best way forward for the Region is to improve on the competitiveness of their domestic firms and companies and the general level of competitiveness of the Region as a whole. But what would this really mean?
With respect to improving the level of competitiveness of firms it was envisaged that there must be the free movement of all factors of production. This meant that labour should move freely throughout the region thereby encouraging competition in the labour market so that the quality of labour would improve so that firms would benefit from this factor. Better quality labour means better workers and greater productivity for firms thereby improving on the level of competitiveness of firms.
Free movement of capital would mean that firms would have access to the cheapest capital under the best conditions possible. Given that the cost of and access to capital are two factors inhibiting the establishment and growth of businesses in the Region it is reasoned that with free movement of capital the Regions businesses would benefit from a more efficient capital market.
Another factor that is critical to production is access to land and production space. The right of access to land for the purpose of establishing a commercial presence and for establishing a home is guaranteed in the Revised Treaty.
The final aspects of the Revised Treaty establishing the CSME are the right of any and every CARICOM national to establish a business in any member state and that there must be no discrimination on the basis of nationality of the CARICOM National.
Analysis of Implementation of the Revised Treaty
If an analysis of the conditions outlined
above is carried out the following would emerge:
The EPA Negotiations
There is one other factor that should be
borne in mind as one seeks to position oneself in a post CSME environment. This
is the current negotiations with the European Union in the establishment of an
Economic Partnership Agreement with CARIFORUM. Under this Agreement the European
Union has insisted that there will be no distinction among member states of
CARIFORUM as it related to how the EU will treat CARIFORUM members. This means
that the countries identified as less developed within the CSME are not
recognized as such in the EPA. Competition from goods and services into OECS
markets will be of the same order of magnitude as with the rest of CARIFORUM.
Opportunities
Against this background what are the opportunities and possibilities for survival for micro, small and medium enterprises.
The small business sector should therefore seek to consolidate firstly among themselves within the OECS as the Revised Treaty offers some level of protection for the LDC(s) vis-à-vis the MDC(s) through Article 164. Secondly, although not yet fully functional, the Revised Treaty makes provisions for the use of the Regional Development Fund by Disadvantaged Countries Regions and Sectors. In that regard, the Regional Development Fund serves as a buffer for companies with in the LDC(s) which may not be successful in the first instance as a result of the impact of the CSME. If members were to establish in the MDC(s) then they would not have the benefit of the Fund.
The Way Forward
The way forward for the small business sector therefore calls for a change in approach to business and a change in mindset. I am aware that what is being asked of you may be difficult but I dare say that these are only some the changes that have to be studied and implemented if the small business sector is to succeed in this post CSME environment.
Now I am aware that some of you may be asking about is the role of Government in this new dispensation. Government to me must do the following:
I believe that this is only the beginning of the things that have to be done. Let me take this opportunity to wish the new executive the very best and I look forward to working with you in the next year. |
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