. r -" .,,r.
•
SPEECH
BY
RT. HON. P. J. PATTERSON. Q.C., M.P.
PRIME MINISTER
AT
EXPORT WEEK LAUNCH
JAMAICA EXPORTERS' ASSOCIATION
"MEETING THE GLOBAL CHALLENGE
WITH INNOVATIVE PRODUCTS AND SERVICES"
MONDAY, JUNE 10, 2002
UWI LIBRARIES
•
SALUTATIONS
■ Delighted to be invited once again to launch Annual Export
Week.
■ Can claim to be a Foundation Member.
■ My first Ministerial Assignment included the JNEC and, by
virtue of that, direct responsibility for the Export Sector.
■ Our encounters have on occasions witnessed some
turbulence.
■ Your Annual Report recognises that important gains have
been made in moving the economy forward.
Judging from this, I hope the wicket tonight will not prove
too sticky. UWI LIBRARIES
,. NATURAL DISASTERS
Before proceeding further, we must observe with great sympathy and
concern the setbacks, which the Export Sector has suffered, because
of the flood rains last October and November in Portland and St. Mary,
followed by the devastation during the last fortnight, due to
unprecedented rainfall levels.
These two natural disasters have caused widespread damage which
will have adverse effects on agricultural production, sugar, bananas,
domestic food crops and export produce.
We will have to devote special attention to assist a recovery in
• production and we enlist your active support.
UWI LIBRARIES
JAMAICA EXPORTERS' ASSOCIATION
No one can question any longer the special role of Exporters in a
modern global economy.
■ Several of our products are among the world's finest.
■ A few are unique.
It is essential that we fully exploit our areas of natural and competitive
advantage.
In gaining this national acceptance, let me pay tribute to the sterling
• contribution over years of the Jamaica Exporters' Association (JEA).
In partnership with the Government, the JEA has been able to offer an
impressive catalogue of services to its members.
The Government of Jamaica (GOJ) and the JEA, working in close
collaboration, have been able to access a number of facilities extended
by overseas international and bilateral institutions to a range of export
sectors. Several support mechanisms have been targeted to medium
and small businesses in the areas of loan funding and technical
assistance.
3
UWI LIBRARIES
•
ECONOMIC TRANSFORMATION
If anyone doubts the economic revolution we have fostered, or
questions the progress made in the most dramatic and far-reaching
programme of reform and restructuring in our history since
Independence, pause for a moment to reflect on the difference in our
Agenda today from 12 years ago.
The dominant concerns are no longer about trade licences and quotas;
price controls or imported raw materials.
You no longer bother about foreign exchange controls; the fears of
devaluation; NIR levels .
Our Banks and Insurance Companies have been restored to good
health and FINSAC is about to close its doors.
The signs of macro-economic stability are clearly evident.
Our local currency is now more than fully backed by
external reserves
We have built up Net International Reserves of nearly
US$2billion, enough to cover about three months of imports.
For the last six years inflation rates have been in single
digits
4
UWI LIBRARIES
•
•
The foreign exchange market has been stable and there are
no payment arrears.
Interest rates are trending down and Cash Reserves have
been reduced to 9% - an all-time low.
Once again, I urge the commercial banks to match the
efforts being taken by the Government to take them to levels
which will facilitate an acceleration of productive activity
and entrepreneurial investment .
5
UWI LIBRARIES
• A LEVEL PLAYING FIELD
The virtues of globalization and liberalization are continuously touted
by the developed countries and various international organizations.
And yet, there is ample evidence that the global playing field remains
uneven. Developing Countries, and moreso small economies such as
ours, continue to be at a considerable disadvantage.
Even a "Kinder, gentler form of protectionism" will damage our
prospects for growth and send the wrong signals as Administrations
like mine seek to build support for market oriented reforms.
• We cannot be expected to open our markets for cheaper subsidized
imports when any developed country is allowed to set up barriers
which make it impossible for us to penetrate their markets.
•
When Jamaica invokes safeguard measures, legitimately allowed by
the WTO, there are those who would scold us.
When handling requirements and arbitrary standards are invoked by
others, to impede or delay the entry of our products, we seem to
complain only in vain .
6
UWI LIBRARIES
•
•
•
Despite these hurdles, we will not shift our resolve to build a
competitive export sector or alter our focus in every negotiating fora
to ensure that the interests of our farmers and manufacturers are taken
into fu II account.
7
UWI LIBRARIES
•
•
•
DEVELOPMENT OF TRADE POLICY
Current trade negotiations will have a lasting impact. In keeping with
a need to be responsive and relevant in its approaches, the
Government has crafted a Trade Policy which recognizes the new
demands of globalization and liberalization.
One central element of this new trade policy is the recognition of the
imperative of exporting. Jamaica's new Trade Policy is defined by
three main objectives, the primary of which seeks to:
"Create new, diversified exports by facilitating the growth of
domestic capital as the basis for diversifying exports and
facilitating market penetration."
I commend this Trade Policy to you for compulsory reading. I invite
you to digest both its requirements and potential.
I applaud those members of the private sector who have accepted the
importance of participating in this process of developing meaningful
_positions on matters of trade policy.
By becoming involved in the process of formulating our negotiation
positions, private sector members will be kept apprised of the issues
and possibilities .
8
UWI LIBRARIES
By being able to shape trade policy, and quickly transform it to trade
• practice, you will be first off the block in positioning your firms to
compete internationally .
•
• 9
UWI LIBRARIES
• NEW GLOBAL TREND
A central challenge which we face is that of making a successful
transition from a regime of trade preferences, which favours our
exports - notably traditional items, such as sugar, rum and bananas -
towards a more open multilateral system.
Jamaica and other countries of the Caribbean Region will have to
compete for our share of export markets on a more or less equal basis
with other countries in the global economy.
In the complex negotiations, taking place within the FTAA and those
with the European Union, we have been seeking to ensure that the
• phasing out will not unduly disrupt production and trade in the region,
but we already know that these preferences will no longer exist after
2008 in any successor of COTONOU Agreement.
•
t This makes it imperative that we find new and profitable lines of
j production which can trip in to secure export growth.
This will only be possible by becoming competitive.
10
UWI LIBRARIES
At the macroeconomic level, countries have to ensure that their key
• prices - their rates of inflation, interest rates and exchange rates -
remain more or less in line with that of their principal trading partners,
to which they sell exports and from which they source capital in its
different forms.
•
•
But countries do not compete among themselves. It is firms and
enterprises that do.
One must therefore examine a country's production and trade
performance at the industry and firm level to see whether they are
maintaining, if not enhancing, their market shares, vis-a-vis firms in
other countries .
Here in Jamaica, the relative stability in inflation and exchange rates,
the downward movements taking place in interest rates, are all positive
indicators of macroeconomic competitiveness.
At the industry and firm level, strenuous efforts are being made to
reduce costs in the traditional industries.
11
UWI LIBRARIES
The Government is acting on a broad front to support these
• endeavours. We are in constant touch with the farming community -
both large and small farmers to see what else can be done to assist
them with the transition - whether by action to increase the efficiency
of existing production and/or to diversify into other crops.
•
•
We are beginning to see several success stories at the firm level.
The most impressive of these is the tourist industry.
We have problems to solve in tourism, and the Government is pursuing
solutions in close consultation with industry interests, but we have a
solid foundation on which to build .
There are distinct export possibilities in other sectors, such as fruit and
vegetables, processed foods, soft drinks, fishery products, garments
and selected areas of manufacturing.
I reserve a special comment for entertainment services, where our
performers - our singers, our songwriters, our musicians, our dancers,
as well as other categories - have been making a major impact in the
world. Reggae and other forms of Caribbean music, such as Soca, are
making a distinctive contribution to world music .
12
UWI LIBRARIES
As we compliment our musicians, we must encourage those in other
• parts of the economy to aspire to higher levels of performance.
•
•
Apart from entertainment, incipient -progress is being made in
developing exports of other professional services - educational, legal,
accounting and other business services, construction, engineering and
design - all providing good illustrations of what we hope will be a
broader and more substantial thrust in the future .
13
UWI LIBRARIES
• INFORMATION TECHNOLOGY
The global market for services has been rapidly expanding over the last
decade, and in particular, the market for Information Technology has
been growing at an annual average rate of 8%, thereby creating
opportunities for many developing countries like Jamaica.
We must spare no effort at the level of the Government, the private
sector, the educational and learning institutions to ensure the
transformation of our economies to learning societies characterised by
computer literacy and lifelong learning.
In order to capitalise on these developments, the Government has
• developed a number of initiatives to upgrade and expand the IT
industry and the export of services.
•
We have recently enacted the Export Industry Encouragement Act
(EIEA). Exporters of services are now able to benefit from the same
incentives offered to Manufacturers under the original Act.
This would include duty free importation of equipment related to
services export, and a ten-year tax holiday on returns from export of
services such as accounting, engineering, architecture and medicine .
14
UWI LIBRARIES
• These services have become increasingly attractive as a means of
generating additional foreign exchange, given advances in technology
that facilitate the instant exchange of information across country
borders.
Cabinet has already approved the amendment of the existing
International Financial Corporations (Income Tax Relief) Act of 1971 to
apply to a broader range of International Business Companies.
Jamaica with its professional expertise and financial network, could
become a leading Business Centre within the region, facilitating
increased investment and foreign exchange earnings for the country.
• I have earlier adverted to the indispensability of absorbing information
technology at all levels of the economy, but there are other areas of
technology that deserve attention.
•
I think particularly here of areas such as plant and animal
biotechnology, standards and scientific testing, educational and
medical technology. In these and other areas we have to aim at stateof-
the-artcapabilities, not only to supply our own needs but eventually
to export to others, especially neighbouring countries .
15
UWI LIBRARIES
• NEW APPROACHES
Traditional methods of selling exports through overseas agents or
representatives are increasingly giving way to firms singly or in a group
setting up business offices abroad.
This is an area to which we are giving close attention in our
international trade negotiations - the so-called commercial presence,
otherwise known as the third mode of supplying services.
Likewise, we shall be pushing hard for access to overseas markets for
services through the movement of natural persons - business
representatives or services providers - themselves referred to as the
• fourth mode of supply. We aim to ensure that if we negotiate market
access for goods and services we shall be able to use every modality
to take full advantage .
• 16
UWI LIBRARIES
• A NEW APPROACH TO INCENTIVES
The National Industrial Policy (NIP) recognized the need for reviewing
our entire method of granting investment incentives as paramount.
The WTO agreements will render many of our current incentives
inappropriate by the year 2008. The direction of these agreements will
place other mechanisms by which we stimulate investments in
jeopardy.
These new global trade conditions have presented us with significant
challenges but have also created numerous opportunities. We have
decided to use this opportunity to formulate an incentive package,
• which will take advantage of our unique characteristics and give
Jamaica a "first mover" advantage amongst our main competitors.
•
The new incentive package is designed to minimize unwanted market
distortions whilst creating an environment, which will foster the
Jamaican entrepreneurial spirit.
In seeking to eliminate unnecessary bureaucracy, we also have to
vastly improve our data collection mechanism to permit periodic
assessments of performance .
17
UWI LIBRARIES
•
•
In so doing, the effectiveness of the package will be maximized .
The new incentives scheme will have two key components:
Firstly, there is a GENERAL PACKAGE of incentives, which
consolidates the objectives of the current incentives programmes.
This will allow for automatic qualification and a broader cross-section
of recipients.
Secondly, there is a SPECIAL PACKAGE, which will be accessible only
by those firms whose activities are in keeping with the development
objectives of the country.
• This package will be governed by a clear set of development criteria,
such as location, employment, level of investment and improvement in
the country's Research and Development (R&D) capacity.
•
There will also be a clear set of guidelines indicating the form that
these incentives will take.
The Development Council, over which I preside, has already accepted ·
the scheme, in principle. I have instructed that before the matter is
taken to Cabinet, the Secretariat should conduct a series of
consultations with the private sector .
18
UWI LIBRARIES
•
•
These consultations are now taking place.
We expect full participation from the JEA leadership and memberhsip.
Other meetings are being organized with other groups such as the
Chamber of Commerce, the Tourism sector, the Agricultural sector and
the small businesses.
CONCLUSION
The rapid and constant changes taking place in the international
economy will require increased vigilance, knowledge and application
of new measures and technologies by all the critical stakeholders in
• the Jamaican economy.
•
Perhaps the most important in this regard are those who are engaged
in the manufacture and production of goods and services for the export
market.
As such, the proactive role of the Jamaica Exporters Association in
strengthening, deepening and improving the welfare of the country's
exporters cannot be underestimated .
19
UWI LIBRARIES
•
•
•
\ y
The series of activities organized by your Association to celebrate
National Export Week will go a long way in helping your Members, as
well as the wider export sector, to focus on the progress and also the
challenges which constantly preoccupy your every thought and
actions.
Motivated by considerations of national interest, I wish you well for the
future.
It gives me great pleasure to once again launch the Annual JEA's
National Export Week. if\ {1e,c,(_!Lu f;JL_ ~d-J1c,v,. 1{,C,(_~
20
UWI LIBRARIES
