No need for a Trade war with Trinidad, the solution to the trade imbalance is simple part 2

The law and supply and demand is said to hold true and for the most part I tend to believe that and this is precisely why I am saying to treaty no amount of talking, no diplomatic missions is going to solve what is an economic problems ie a supply and demand problem.

Let’s face the facts.

Is Jamaica able to compete with Trinidad from both a price and quality level, seriously.  Right now the answer is a resounding no, that does not mean some companies cannot, no that is not what I am saying, instead I am suggesting that at the macro level we cannot at this point in time compete with Trinidad.

1. There is an abundance of oil and gas in Trinidad and as a result the price of the commodity is low, which means manufactures in Trinidad will get low fuel prices and fuel being the major component of the electricity generation cycle, obviously means low electricity prices. That is how the theory of supply and demand work. We here in Jamaica appears to not like this and is calling for the theory to change to suit us. We are calling low electricity prices a subsidy and wants it removed so Trinidad can become less competitive and we can become more competitive.  Had the shoe been on the other feet, would we have welcomed the same suggestion from anyone?
2. There is an abundance of unemployed people ( workers) in Jamaica and a  great supply of jobs in Trinidad. Once again according to economic theory where this exist, something will happen until an equilibrium is reached. It stands to reason therefore that many Jamaicans are looking to Trinidad for jobs having been out in the cold for a long time and the Trinidadians are saying the jobs in Trinidad should be for our people. I recall a few weeks ago Jamaican workers were demonstrating against the fact that the GOJ was allowing the island to be flooded with migrant chinese workers doing construction work, that could easily be done by locals, hmm .
3. Trinidad has  lot of US$ due to their vibrant gas, oil and manufacturing industry and so this has allowed that country to have a rather stable exchange rate, unlike Jamaica. What is instructive is in 1980’s and 1990’s when Trinidad was retooling, locals were forced or the most part  to purchase locally assembled Nissan saving millions of US$ for factory upgrades.

I could site even more examples but I believe that the point has been made regarding the economics of our problems, which treaties and or meetings cannot solve.

Now I have already outlined the major issues affecting us and we really need to begin work today to address these pressing issues.

FDI’s will hardly help Jamaica simply by the nature of the deals we struck, which allows most of the funds being repatriated back to the home country and only menial jobs remaining here in Jamaica.

There is no clearly defined and articulated manufacturing/industrial policy, we don’t know and cannot seem to decide if we want to be a manufacturing nation or a bunch of traders.

Now if we begin the process of changing a of the above, maybe we will be able to compete with Trinidad by 2030, but for now I cannot see what we want from Trinidad.

If  we have products going to Trinidad and they refuse to allow them entry using no tariff barriers, then we can respond as follows until the get the message.

1. All goods coming from Trinidad should be off loaded at the Mobay Port
2. All such goods once off loaded must be kept on site for a minimum of ten days to allow proper inspection of the cargo and determine true source of orgin
3. Reduce the number of custom officers assigned to deal with Trinidad imports.

 

By doing the above, it will result in the following:

1. Goods will be kept on the wharf for an extended period of time, thus racking up storage charges for the importer.
2. There will be increased cost to move the goods from Montego Bay into Kingston.
3. Overall the price of the goods will have increased, thus making them less favourable to purchase.
4. Eventually consumers will start looking for cheaper products and importers will stop importing from Trinidad and either get the stuff local or find new market
5. Trinidad will get the message and will be the ones coming to us, seeking to engage us in how we can make trade between the two countries better
6. Then Jamaica would have had the handle in these discussions.

Right now the meeting between the two foreign ministers is a grand PR event and is a colossal waste  of time and money and will NOT achieve anything.

If for twenty yrs while the PNP was in power and the trade gap was widening, we could not do anything to stop the one way flow, tell me how under heavens we are going to get that done in two days of meeting.

I must hand it to the PNP however, they are damn good at PR aided and abetted by a gullible and PNP friendly media.

We need to get out house in order or nothing will change.

 

A dat me seh.