SOME ISSUES OF TRADE POLICY IN THE WEST INDIES

III. International Opposition to Preferences

 Since the Second World War, and especially since the 1950’s, both Britain and Canada have been subject to international pressure to abandon their policies of Commonwealth Preference. Such pressure has come largely from the United States and Latin America. This was the main reason why Canada reduced some of her preferences at Torquay and Geneva. Britain did not make any concessions in respect of tariffs, but in 1959 she was forced to register her quantitative restrictions on bananas and citrus under Article XII of the G.A.T.T. These restrictions are due to expire this year, because the G.A.T.T. only permits the use of import restrictions for a five-year period. Apparently, this did not even satisfy the United States, because a few months ago she tried to get Britain to remove the restrictions on American citrus in advance of their expiration under G.A.T.T. rules.

International opposition to selective preferences, has been sharpened recently by the new preferences which the European Economic Community has extended to its African associates. Before the Treaty of Rome, unprotected primary producers were at least able to count on non-discriminatory treatment in markets such as Western Germany. In general, those developing countries which do not receive preferences, argue that their unfavourable external position is partly due to discrimination against their exports. They point to the G.A.T.T. report which showed that the exports of non-industrial countries which trade with sheltered markets, have grown more rapidly than those of developing countries which do not receive protective shelter. This, they argue, is particularly evident in respect of commodities such as coffee, where African producers exporting to sheltered markets, have managed to increase their share of world trade.

One may well anticipate therefore, that in the near future, the unprotected developing countries will launch a massive attack against existing preferential systems, joined by influential developing countries such as India and Ghana, the United States, and perhaps other advanced countries such as Japan, Sweden and Norway. Even within the E.E.C. itself, there are countries such as Western Germany which are more disposed towards a multilateral rather than a preferential policy in respect of primary products.

Whichever way one looks at it, the prospects for the future continuance of existing levels of protection on West Indian exports appear rather unpromising. However, it must be admitted that the analysis has so far neglected several important possibilities, which may work the other way around. For example, both Britain and Canada have a long-standing interest in the economic development of the West Indies, and they may be persuaded to resist any pressures for the reduction or abolition of preferences, in cases where this may have very adverse effects on West Indian economic growth.

Again, the exclusion of the U.K. from the E.E.C. may lead Britain to seek a strengthening of Commonwealth trading ties in the future. Furthermore, the return of a Labour Government to office in Britain may result in a general re-adoption of a policy of bulk purchase, since the Labour Party is still committed to a policy of providing guaranteed markets for Commonwealth primary products. Yet another possibility is that Canada and some of the West Indian territories (if not all of them) may forge closer trading links through some form of economic integration such as a free trade area. A final one is that sometime in the future, diplomatic and trading relations may be resumed between the United States and Cuba, which will restore part of the rationale for the Commonwealth Sugar Agreement