SOME ISSUES OF TRADE POLICY IN THE WEST INDIES
IV. Other Arguments against Commonwealth Preference
Even if the future protection of West Indian primary products by the U.K. and Canada is assured, the advisability of the West Indies continuing to rely on these types of overseas protection, may still be questioned. For example, it can be argued that current policies may impede the economic growth of the area in the long run, since the emphasis is on securing protection for primary products rather than for manufactured goods.
At present, exports of West Indian manufactures to the United Kingdom and Canada do qualify for some preference, and in certain cases the margin of preference (namely, the difference between preferential, and General or MFN, rates of duty) in respect of some manufactures is higher than that on individual primary products. However, it can be doubted whether on the whole, manufactures receive a higher level of market concessions than primary products.
In recent years, there have been further manifestations of the intention of both Britain and Canada to protect their domestic production of manufactures from ‘market disruption’ by Commonwealth competitors. So far textiles is the only commodity for which Britain and Canada have taken concrete action against Commonwealth supplies. But no doubt similar policies may be invoked in the future, whenever and wherever the circumstances warrant. As we noted earlier, the Imperial Preference arrangements were essentially designed to facilitate complementarity between tropical and temperate zone production. They did not anticipate that the tropical Commonwealth would develop production which was competitive with those of the temperate zone countries.
It follows from this that if the West Indian territories continue to rely upon the present structure of preferential arrangements, this may impede the structural changes which their economies have to undertake in the interest of their future comparative advantage and economic growth. This is merely another illustration of C. P. Kindleberger’s argument that exports to protected markets may slow down growth, because they permit the economy to evade the necessity for facing structural changes.
The current relevance of all of this to Jamaica is illustrated by the fact that in 1962, the values of exports of light manufactures exceeded those of bananas and citrus. On this ground alone, it can be argued that manufactures deserve greater priority in trade policy than bananas or citrus.
Another argument against Metropolitan Preferences, is that they perpetuate divisions between countries in the underdeveloped parts of the world. This has hindered co-operation between developing countries on matters in which they have a common interest. One of these is the question of securing international agreements for the stabilisation of commodity prices. Insofar as such agreements require the international regulation of production, difficulties arise in bringing both sheltered and unsheltered producers together, since the former have, in part, been expanding their exports at the expense of the latter. This was well illustrated by the difficulties which preceded the final negotiation of the International Coffee Agreement, and it is still too early to say whether the Agreement has managed to reconcile permanently the conflicting interests of these two classes of producers.
Yet another area where co-operation may be desirable is in the field of economic aid. One can hardly blame unsheltered countries for arguing that they should get more external aid than sheltered countries, since the latter receive higher prices for their merchandise exports. This may be one of the reasons why some Latin American countries have argued that Jamaica and Trinidad should leave the Commonwealth before they are admitted into the Organisation of American States. For they may well be asking why Jamaica and Trinidad should be allowed to benefit from Commonwealth Preference and the Alliance for Progress at the same time.
In extension of this point, it can be suggested that Metropolitan Preferences have encouraged the economic balkanisation of the Caribbean. The trade policy of each Caribbean territory is oriented almost exclusively towards its metropole, only scant attention being paid to neighbouring territories. As a result, the opportunities for accelerated development which are offered by regional co-operation, have not been exploited. As we shall see later, these opportunities may be much greater than is usually imagined.
Metropolitan Preferences limit the horizon of even the most enthusiastic supporters of Caribbean regionalism. This is reflected in the position of the Government of Trinidad and Tobago, which is the leading advocate of Caribbean economic co-operation. Trinidad and Tobago has proposed that if all of the British territories in the Caribbean could become associated with the E.E.C., they could then join with the French and Dutch territories in forming a Caribbean Economic Community. While this approach has undoubted merits, one must note that the plan contains no explicit provision for full or partial participation by any of the independent republics in the area. This is probably because none of the independent republics are aligned with western European preferential systems.
Given all of the weaknesses of current preferential policies, there remains the question as to what policy alternatives are open to independent West Indian territories. However, before discussing these matters, it may be useful to outline the precise problems which existing policies are designed to meet.
