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

I am not looking for anything major to come out of this meeting between AJ Nicholson and Dookeran, the Trinidadian Foreign Minister after-all the PNP folks have no idea how to negotiate. I expect Trinidad to leave with everything in tact and Jamaica will continue to hold the bag as AJ Nicholson who is seeking a place in Caricom after he retires hangs on for dear life to Caribbean integration.

The solution to the trade imbalance between Jamaica and Trinidad does not require any trade war instead a number of simple steps can be taken, which result in Trinidad coming to us begging for us to come to some agreement and in so doing open up their ports.

So what are we supposed to do, to address this issue and what is the real issues.

1. Trinidadian manufactures have access to electricity at approx US$0.12 – $10.15 per KWH, while Jamaican manufacturers are paying up to 400% more at US$0.42 per KWH, that price difference is one way that manufacturers in Trinidad have been able to produce at a much lower cost.
2. Two, the Trinidadians have spent years providing free education up to University level and today boast a literacy rate of 98.9 % and a very skilled , educated and productive work force.
3. Three Trinidad spent the last 20yrs ( 1989- 2009) re-tooling their manufacturing sector and purchasing some of the most efficient manufacturing tools available .
4. Four the Trinidadian exchange rate has been pretty stable over the last 20 yrs or so.
5. Five , University lectures and students in Trinidad are given projects in their final year, that seeks to solve a problem that Trinidad has be in road network, a bridge design, a manufacturing issue etc. In so doing they engage the students and after they graduate some are employed to work and resolve the problem they presented a solution for in their final year.

What has Jamaica done during this period of time 1989 – 2009

1. We sold JPS to Mirant, who used JPS to make a ton of cash,  off the back of Jamaican and ended up bailing our their parent company from bankruptcy.  During that period of time,  Mirant did virtually no upgrades, cut maintenance hrs and brought in equipment, which was later shipped out of Jamaica before they left. They left Jamaica with an aging plant and high generation cost hence higher electricity rates.  Virtually nothing has been done over the last 20 yrs to lower energy cost and today we see the effects.  If electricity prices today were to fall to US$0.12 per KWH, Jamaica would still not be as competitive as Trinidad.
2. Our literacy rate stands at a low 87.5% well below Trinidad and we have “cost sharing”, which has served to increase the cost of education of the most vulnerable, leaving many without schooling. We have “upgraded” schools without the necessary upgrades required to ensure their  success and so the results are in keeping with our investments in the educational product. We boast a very unskilled , semi-literate and unproductive work force and the decline in our productivity levels are there for all to see.
3. Jamaican manufacturers ( Except for a handful) have spent very little to upgrade their manufacturing process equipment, with more  efficient  machinery and cannot now improve output beyond current capacity. The covered car park ( Managers  & Directors car park), is where most of significant upgrades have taken place as one can see gleaming BMW’s, Prado, Pajero’s, Audi’s adorning these areas, you would think its a car show room. The outward manifestation of upward mobility and success are promptly replace every 4-5 yrs, but the old creaking production machine suffers from lack of maintenance and continues to chong along until it fails. Once that occurs we go in search of a “new” old replacement made in the 1950’s, which is an energy hog, but is cheap.
4. The tale of the exchange is their for all to see, in the 20 yr period the rate has moved from US$5.50 :$1 to US$86.0 :$1:00
5. We have more Universities today than 20yrs ago, but our lecturers have become talk show host, political hacks for the various political parties and have failed to engage students in doing final year projects that actually seeks to solve a problem in Jamaica. We instead look to engage a foreign consultant and pays them hundreds of thousands of US$ for a job that could have easily been done by engaging our final year students, under the guidance of a lectures and a Jamaican who is in that field, which could have  resulted in significant cost savings and increase local knowledge.

The solution to this trade imbalance with ALL (not just Trinidad) is to begin the work to fix our local challenges, that is where the work must take place.

No amount of meetings of the diplomats is going to solve what is really an economic problem and for the life of me I cannot see what all this hullabaloo is all about, regarding this meeting between the countries two foreign ministers.

Basic economic theory speaks about the law of supply and demand and if that law holds true at all times, then Jamaica will always have a large negative trade balance with most of its trading partners.

Part #2 coming.