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COMMENTARY
Caribbean should embrace Brazil’s vision of a strong south

by Sir Ronald Sanders, a former Caribbean diplomat, now corporate executive, who publishes widely on small states in the global economy
Tuesday, February 15, 2005

A great opportunity presents itself to CARICOM Heads of Government on February 17 when they formally meet the President of Brazil, Luiz Inacio Lula da Silva.

The meeting with ‘Lula’, as he likes to be called, will be held during the Inter-Sessional meeting of CARICOM Heads in Paramaribo, Surinam’s capital city.

The countries of Latin America and the Caribbean have long needed to build an alliance in both hemispheric and global trade and economic matters.

They have been slow to do so and have suffered as a consequence. The Caribbean in particular has suffered from the failure to build a strategic alliance with large Latin American states particularly Brazil.

The evidence is clear for all to see.

In the negotiations for the Free Trade of the Americas Agreement (FTAA), small economies in the Caribbean have had to contend not only with the US which has been unwilling, so far, to accord them ‘special and differential treatment”, but also with some Latin countries who do not support such special treatment for Caribbean countries without similar benefits to themselves.

In the wider global negotiations at the World Trade Organisation (WTO), Latin American countries have not been an ally of the Caribbean’s call for special treatment, and some of them have taken action that has been hurtful to CARICOM economies.

The term ‘special and differential treatment’ is ill-defined and lacking in consensus, but, put simply, what it means is that Caribbean small states want longer times in which to implement new trade and investment rules so as to give domestic businesses the opportunity to adjust to competition; longer time to remove or reduce tariffs on imported goods so as to allow governments to implement alternative revenue measures; longer times to allow unrestricted rights by foreign companies to compete with local companies for government projects in infrastructural construction and service provision; and longer times to continue to enjoy preferential access and prices for their principal exports to the global market.

Latin American countries have not been supportive of Caribbean concerns in the WTO, and what is more some of them have successfully challenged preferential markets given to African, Caribbean and Pacific (ACP) countries by the European Union (EU), causing loss of revenues, employment and suffering in the banana industry.

This struggle, which has already crippled the Caribbean’s banana industry, is about to continue as some Latin American countries are readying themselves to challenge the increased tariff imposed by the EU on ACP bananas. The Latins hold the view that the tariff is too low and places them at a disadvantage even though they dominate the world market for banana production and sales, and Caribbean production and sales are miniscule by comparison.

St Vincent’s Prime Minister, Ralph Gonsalves, has led an admirable fight in Europe to preserve what’s left of the Caribbean’s preferential access to the EU market, and he has, quite wisely, extended his campaign to Latin American countries to try to work a deal with them.

But, Caribbean sugar exports to the EU is also now under threat. And, this time Brazil has played a direct role, although Lula would argue that hurting Caribbean sugar exports was not his intention.

Brazil is the largest sugar producing country in the world. Huge export subsidies by EU governments to their beet sugar producers, totalling almost US$2 billion annually, have made them the second largest exporters in the world and depressed world prices for sugar.

According to Brazil, it loses US$500 to US$700 million a year because of EU subsidies to its beet sugar exporters.

Rightly, from Brazil’s standpoint, Lula’s government joined with Australia and Thailand in challenging the EU at the WTO. They won the WTO panel decisions, and the EU had to agree to significant reductions in their subsidies.

However, the EU has argued with ACP states that EU subsidies to its beet sugar producers were tied to the preferential price paid by EU countries to ACP states. Consequently, the EU has proposed a drastic reduction in the price paid to Caribbean sugar producers. This will have a disastrous effect on employment and revenues to all of the Caribbean sugar producing nations, but particularly to Guyana and Jamaica.

Lula will visit Guyana two days before he meets CARICOM Heads collectively in Paramaribo. He is scheduled to address the Guyana Parliament, and what he has to say about this matter will be of considerable interest to the Guyanese nation as a whole, as it will to Jamaicans, Belizeans, Barbadians and Kittians – all of whom have some economic reliance on the sugar industry.

His remarks will also be of interest to Trinidad and Tobago even though the Government of Trinidad and Tobago, because of its relatively large earnings from oil and gas exports, is in a better position to prepare for the blow to its sugar industry and to cushion the damage.

CARICOM Leaders will no doubt explore with him effective ways in which small Caribbean countries and their hundreds of thousands of people can work with Brazil to put proposals to the EU and the WTO that might spare the region the suffering that will otherwise come.

To be fair to Lula, he has already demonstrated concerns about the plight of Caribbean countries.

It is Brazil that has contributed the largest component of the UN peace-keeping force in Haiti – the only thing that is keeping that country from bitter civil war. It is also Brazil that came to the immediate assistance of Guyana when recent torrential rains and massive flooding putting more than 200,000 people on the coastland under six feet of water crippling production, spreading water-borne diseases, killing several so far, and creating miserable living conditions.

Brazil’s interest in the Caribbean and its practical assistance should be acknowledged.

But it is Lula’s wider vision of co-operation amongst developing countries that should engage the keen attention of CARICOM leaders when they meet him collectively in Surinam.

In the WTO negotiations for new trade, investment and economic rules, Brazil has led the way in marshalling the forces of developing countries to stop industrialised nations such as the US and the EU from dictating unfair and disadvantageous conditions on comparatively poor countries.

At Cancun in October 2003, Brazil joined in a historic alliance with India, South Africa and China to ensure that the industrialised nations did not get their way in the WTO negotiations on new trade rules particularly in agriculture.

In Cancun, CARICOM was on the periphery of the new alliance between these countries of the South. CARICOM depended on Cuba to advise its member countries of the strategy and tactics that were being employed. But, CARICOM should have been in the thick of it, playing both a supportive role, adding some intellectual content to the deliberations and ensuring that its own concerns were part of this new agenda of developing nations.

Lula clearly has a vision in this regard. He was quick to go to Africa on a five-nation tour to consolidate African opinion behind the new South alliance after Cancun. He also went to China to both strengthen closer cooperation on the international stage and to enhance economic ties between the two countries whose total trade grew five-fold between 2002 and 2003 to a value of US$8 billion.

The Brazilian President’s vision is important and timely.

And, it has a solid foundation on which to build.

As far back as 15 years ago, thinkers from the South, led by the respected former President of Tanzania, Julius Nyrere, produced, The Report of the South Commission: The Challenge to the South.

In this report, the Commissioners emphasised the importance and need for an alliance of developing countries – the nations of the South – in international negotiations with the industrialized world, and for greater trade and economic relations amongst themselves.

Despite the considerable and far-seeing work of the South Commission, the report went largely unattended by developing countries.

In a sense the Commissioners probably knew this would happen for they said: “While moves to promote South-South cooperation have involved much effort and produced many initiatives and schemes, the practical results have been rather limited. In most cases, idealism has not been tempered by a degree of practicality or matched by a commitment to action.”

One of the measures that the Commission had proposed was an inter-governmental institution backed by professional support and financial resources to enhance collective action and negotiations at the global level.

They pointed to the Organisation for Cooperation in Economic Development (OECD) which provided “continuing technical and intellectual support to the already developed countries”. Since then, the OECD has enlarged its work and is actually creating standards, norms and practices that it is imposing globally – some through the threat of sanctions as in the case of its position on cross-border financial transactions.

The Caribbean has only recently felt the weight of the OECD in relation to measures designed to curb its financial services sector.

At Paramaribo, when CARICOM Heads of Government meet Lula, it would be an opportune time to begin the process of deepening the relationship between Latin America and the Caribbean on terms that benefit all in the international community, but takes account of the special circumstances of small Caribbean economies.

Lula has indicated a willingness to join the Caribbean in this endeavour. The Caribbean should embrace his vision of a strong South, and support it. Latin America should be our natural ally.

but here is the twist.. the EU unfairly protect"ed" our bananas, biting the hand that feeds us

Brazil has the largest Black population in the Western Hemisphere, so it's only natural that we develop good relations............wey we go run to when de Tsunami start coming our way?

I've got to print this thread out and come back to make comments.

But it's not a bad idea for the south to stick together and try to become a super power. We got the people, the drive, and the resources to do this.