Opinion
- Editorial- Commentary
Mary King
:
Trade is key to recovery
The global financial and economic downturns have caused the collapse of the Icelandic government and millions are in the streets of Paris demonstrating against what they see as governmental incompetence in looking after their welfare-their jobs.
All across the globe we are witnessing the impact of the collapsing economies on increasing unemployment, reduction in the value of investments in stock markets etc. and even more so the collapse of the production companies and finance houses. Investors are reluctant to undertake new ventures and even in the region China and Russia have cancelled foreign direct investment in the aluminium industry in Guyana; in T&T there is a hold-up of investment in the energy sector.
Though we had an unequivocal statement from our Government on their intent to continue with Alutrint and the downstream plant, Alutech, there are rumblings in the sector that these projects may also suffer from the global reduction in demand for aluminium and the unavailability of investment funds.
Petrotrin's Trinmar is in dire need of cash input which, despite our Standard and Poors' rating, will be difficult to come by as loans, lease or even sale.
Our Government, who professed that we are immune from the global financial and economic meltdown (CLICO has proven them immensely wrong-more in another article) is engaging in a wait-and-see attitude, and urging belt-tightening as the prices of petroleum and its products continue to be very depressed.
The local tourism industry, particularly in Tobago, has fallen well below normal activity for this time of the year. While other countries are seeking desperately to reconstruct their economies and rebuild their financial systems-the US in particular-we sit hoping that the end of the recession is near and that petroleum prices will rebound with a return to the good times.
But some of our economists are warning that our belt-tightening will include the loss of jobs and with the further loss of Government income, energy sector income, a cutback in the social services-URP, CEPEP, GATE etc. Maybe, our people, like the French, will find themselves in the streets, not to praise the PNM but possibly to politically bury it.
This column has claimed that the economic recession was on the cards because of the global energy crisis. Further, the financial crisis has now reached our shores (because of mismanagement of the financial sector locally and the global reduction in petroleum product prices) and is now a major impediment to the reconstruction of the global economy.
What is very interesting about the economic collapse are the strong inter-relationships of the various economies, both among the developed nations and between these nations and the developing commodity exporting countries.
Recall at the onset of the economic depression there was the view that the Asian nations- China, India, Japan, South Korea, because of their economic power-would not be as affected by the downturn as have the US and the EU. It was expected that Asia would continue to grow at a slightly reduced rate. However, we have witnessed their collapse, domino-wise, as the US and EU economies contracted-China's manufacturing was severely curtailed, South Korea lost major export markets and Australia's mining industry suffered severely from less demand from China. We have seen Japan's motor car industry losing money for the first time ever.
Commodity-exporting nations have seen their foreign incomes plummet.
To some the contagion of the economic depression spread because of international trade. As a reaction, some are also calling for the restriction of such trade, since this is seen as the vehicle that helped spread the economic disease.
But others remind us of the Great Depression of the 1930s in which the US reaction (Smoot-Hawley) to restrict international trade served only to prolong the recession. Still, we hear of President Obama's concern about the trade agreements the US has with other countries and his intention to modify NAFTA and employ Americans to manufacture for American consumption.
We see both Russia and India have moved to restrict imports and China is giving its manufacturers tax rebates to increase their competitiveness. For those who are champions of international trade the hope is that the WTO agreements will discourage attempts at trade insularity.
Developing countries depend on trade to survive-that issue is the reason for the hold-up of the Doha round. We in T&T depend on our petroleum exports and tourism. Hence the Summit of the Americas should include as well our trading relationships in the hemisphere. The FTAA should again be on the table and surely our interests should be larger than housing the FTAA headquarters.
Mary King is a columnist of the Trinidad Express (maryking@tstt.net.tt). Petroleumworld does not necessarily share these views.
This
commentary was originally published by Trinidad Express, Monday, February 2nd 2009
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