United States President Donald Trump has informed all nations that he will be negotiating trade deals from a position that places US national interests first. During the past 50 years of our Independence, that has always been the US’ trade stance. Our problem appeared to be that our trade negotiators naively thought that the US was pursuing a win-win agreement for both us and them at the negotiating table, only to be later confused with the one-sided outcome.
Our politicians continue to wonder why the abundant fruit of their trade agreements never appear, and have resorted to blaming the private sector for not pursuing the benefits that their advisors promised them were certain. They still seem unwilling to face the reality that they were outsmarted into opening our markets to others, while protecting others’ markets from us. We were outsmarted by the US with the Caribbean Basin Initiative. As if we had learnt nothing, we were again outsmarted by the Europeans with the Economic Partnership Agreement (EPA).
President Trump did not recognize a win for the US in the Trans-Pacific Partnership agreement and withdrew. We were not so fortunate with the EPA. Recognizing the damage that such an agreement can have on profitable Caribbean industries, I repeatedly requested the opportunity to review the draft trade agreement before it was signed. Our negotiators refused. I would eventually obtain a copy from the Europeans and was shocked at what I read. It was perhaps the most one-sided trade agreement that I have ever read – and I have studied all that are relevant to Barbadian service providers.
I strongly advised our negotiators not to accept the draft agreement that would likely damage the competitiveness of the Caribbean’s private sector in the most lucrative service industries. I also published a paper urging our governments not to sign it, and explained the damagingly unfair aspects of the agreement.
We had sacrificed and invested so much in the local and regional industry during the past 50 years in order to build a legacy for the next generation. However, in a few seconds, our children’s inheritance was willingly signed away. I must confess that when our politicians subsequently boasted that they had signed the one-sided agreement on our behalf, I was so distraught that I wept.
Shortly thereafter, I met one of our jubilant politicians, still basking in the glow of their illusory achievement. I explained the foreseen consequences of their decision. He noted that there were sunrise and sunset industries. I remember reading those terms in papers and presentations made by Caribbean economists. They essentially advocated sacrificing sunset industries for sunrise industries in international trade negotiations. I then understood that the EPA was not signed mainly due to incompetence or ignorance, it was intentional. We were outsmarted because our politicians embraced and acted on terrible advice.
In developing countries, it should be an offence for university based economists to offer theoretically based advice to governments, without the balance of experientially based advice from competent and experienced industry practitioners. How could anyone soberly categorize the construction industry as ‘sunset’? Even if such a ridiculous assessment was made, how could anyone actually exchange it for the ‘sunrise’ cultural industries?
Perhaps an example could explain why the Europeans were so excited at their good fortune. The construction of a US$100 million hotel in Europe would likely provide a Barbadian design team of engineers, architects and surveyors, fees of around US$15 million. It may also earn the Barbadian contractor a profit of around $20 million. Therefore, Barbados would benefit from foreign exchange of approximately US$35 million on one such hotel built in Europe.
Barbadian and Caribbean design and construction teams have the capacity to tender, and win, many such projects in Europe. But we exchanged this lucrative, mis-defined ‘sunset’ industry, for the opportunity to allow an entertainer to visit Europe, and perform for a profit of perhaps US$20,000. Of course this is a favourable exchange – for Europe. The Europeans must have been challenged to hide their excitement when our politicians gave away the most profitable and low-risk ‘sunset’ industries for the most risky and least-likely-to-be-profitable ‘sunrise’.
So, how should we deal with President Trump? We should negotiate a successful trade deal. How do other countries negotiate successful trade deals? They simply accept trade advice from their most competent and experienced citizens. How can we secure a win-win trade agreement? By following the proven model of success. How can we secure another ‘they win – we lose’ trade agreement for ourselves? By continuing to accept the advice of inexperienced but faithful political party supporters.
(Grenville Phillips II is the founder of Solutions Barbados and can be reached at [email protected])