Guyana has eight principal export products: bauxite, fish, gold, molasses, rice, rum, sugar and timber. These have been in the export basket in various degrees of importance for nearly five decades.
The composition of our exports is somewhat stable. But despite the stability of our exports, they are highly skewed in favour of agricultural and primary commodities. In fact, the export of services is virtually non-existent.
How do we push past this? To answer this question, several factors must be briefly, yet carefully examined.
World Trade Organization (WTO) and its Rules
The purpose of the WTO and its rules is to create a global trading system that is free, predictable and smooth. At the same time, these trade rules have seen the systematic removal of preference structures, especially non-reciprocal trade preferences, which have been important for developing countries.
This movement to what is called WTO-compatible trading arrangements has led to the destruction of the sugar industry after the denunciation of the Sugar Protocol, which has led to a 37 percent decrease in the minimum guaranteed price for sugar in the EU market and the removal of quotas which guaranteed market access. These are some of the harsh realities that Guyana has to address as a small, vulnerable developing country.
Regional Integration – EPA
One of the main principles of the CARIFORUM-EU Economic Partnership Agreement is regional integration. This was one of the underlying reasons for Guyana signing the EPA, in that it must preserve and complement existing regional integration processing, including CARICOM.
For Guyana, regional integration is seen as an important tool for development and the EPA must result in the strengthening of regional regimes that enable increased competitiveness, enhanced flows of investment, the harnessing of sustained growth and the overarching goal of sustainable development.
Partial Scope Agreements
Guyana has entered into a number of bilateral and regional trade agreements, including the Guyana-Brazil Partial Scope Agreement. Despite the implementation of the Partial Scope Agreement, trade continues to be one-sided, in favour of Brazil. It is believed that there is still a great deal of untapped potential for trade and business between the two sides. It is therefore important for the private sector to take advantage of the various trade agreements.
Treatment of Agricultural Products
and Labour-Intensive Manufactures
Agriculture remains the most important sector for Guyana’s economic development with its links to rural development and industrialization. Unfortunately, the agricultural products face several challenges with both tariff and non-tariff barriers for exports.
Trade Negotiations – New Trends
The new economic realities has created new frontiers for trade and trade negotiations focused on new and emerging areas including Services, Climate Change and Information Communication Technology, including the Digital Economy and E-Commerce. These areas provide an opportunity for collaboration and development, in particular, for youth, women and Micro-Small and Medium Enterprises (MSMEs) and Small and Medium Enterprises (SMEs).
Guyana’s Export Markets
With those factors outlined and explained, it is time to turn our attention to a brief analysis of Guyana’s trade relations. In this regard, research reveals that Guyana has conducted trade with 67 members of the World Trade Organization (WTO). Among the 67 are the 14 other member states of CARICOM.
Since CARICOM is treated as a single market, one is in effect talking about 53 other member states of the WTO with which Guyana does business.
Despite having trade relations with 41 percent of the membership of the WTO, our trade remains stubbornly undiversified, particularly on the export side. Only five of the 53 markets impacted the country significantly between 2006 and 2015.
Those five markets account for 73 percent of Guyana’s GDP, 70 percent of its exports and foreign revenues and 47 percent of its imports. The five markets are CARICOM, the United States of America (USA), Canada, the United Kingdom (UK)/European Union (EU) and Venezuela.
CARICOM accounts for 25 percent of Guyana’s GDP. It is important to point out that trade is concentrated among Barbados, Jamaica, Suriname and Trinidad and Tobago, which collectively represented 92 percent of total trade with CARICOM in 2014 and 2015.
The USA accounts for 24 percent, Canada is responsible for 12 percent, the UK contributes seven percent and Venezuela accounts for five percent of our GDP.
The remaining 27 percent of the GDP comes from 48 other WTO-member countries, none of which individually has a significant bearing on the national output. What this tells us is that the diversity in our trade relations is more on the import side.
Main Technological Trends and their Impact
The age of Information Technology is here. Whilst efforts are being made to bridge the digital divide in Guyana, globally e-commerce and the digital economy has generated 2,272 Billion in revenues in 2015, an increase of 19.9 percent over the previous year and 2,671 Billion in 2016, a 17.5 percent increase over 2015. The Private Sector needs to take note of these developments and move towards using digital platforms to market their products.
On the agricultural commodity side, the recent focus has been on organic cultivation and production, and investing in research for more resilient seed species.
Progress regarding Removal of Trade Barriers
There has been minimal progress in the removal of trade barriers globally. The majority of countries seek to address these issues via the WTO Trade Facilitation Agreement, as well as via other multilateral, continental and/or bilateral trading arrangement.
With regard to non-tariff barriers, these are usually addressed by regulatory reforms and should be non-discriminatory. In recent times, some countries, Mexico for example, have sought to be creative in addressing regulatory reform. They have done this by encouraging wider use of IT tools, use of international standards for technical regulations, etc.
The Government of Guyana is also working with counterpart agencies in destination countries for the removal of these barriers and these initiatives continue.
In addressing concerns of small developing countries, alternatives thus far include joint public-private involvement, cooperation in health and safety matters as well as in agronomic and biological research.
At the regional level, there could be effective public-private coordination, outreach/education activities, training and inspection and, in many cases, the adoption of common standards, as in the case of CARICOM.
There are also efforts being made to access technical assistance for the Private Sector to meet entry and standards requirements at destination markets.
These requirements also have implications for lab and testing facilities required to ensure that our exports reach certain standards required by destination countries. To this end, the GoG has taken initiatives aimed at the establishment of up-to-date testing facilities to improve the quality of exports.
New Markets Opportunities
Unfortunately, it is the belief of many that the Private Sector has not maximized the use of the various opportunities offered under the various bilateral and multilateral trading arrangements to access foreign markets.
Geographically, the UK is Guyana’s largest export market in the EU. With the UK leaving the European Union, there is an opportunity for Guyana to look at developing and increasing trade relations with non-traditional partners in the EU.
There are also opportunities to explore markets in Africa since, historically and culturally, Guyana has had very strong relations with countries in Africa.
There is the urgent need to explore opportunities for diversification of exports, such as coconuts and coconut products, which is a leading non-traditional crop produced in Guyana and pharmaceutical products, which is exported to the CARICOM market and the Dominican Republic.
There is also the need to explore market opportunities within the Commonwealth.
There are presently consultations at the Ministerial level in the Commonwealth for increased trade and investment. Exploring markets in Africa for non-traditional products is also being initiated.
It is important to note that there have recently been new markets for rice in Cuba and Mexico.
Competitiveness
Market demand also turns on competitive pricing. High energy costs linked to fossil fuels have been the bane of Guyana’s ability to produce many goods at competitive prices. To this end, initiatives aimed at reducing the cost of energy have been considered. Hydro-power and natural gases are two such initiatives being explored.
Transport costs are also very prohibitive for products reaching destination markets, due to the low quantities which make the shipping routes less profitable and costly. The end result is high shipping cost, making our products less competitive in destination markets.
The high cost of investment needed for improvements in machinery, plant and the production process to meet quality standards is also a challenge for manufacturers.
Red-tape
It is acknowledged that unconventional policies, procedural requirements and long delays lead to high prices and this, in turn, hampers business activities in Guyana. The Government of Guyana is putting measures in place to improve the regulatory environment for businesses with a view to enhancing and gradually eliminating institutional bureaucracies and bottlenecks that affect business competitiveness.
CONCLUSION
At the level of the Government, policies have and continue to be implemented to create an enabling environment to encourage diversification, increased productivity and investment.
The Government, thus far, has negotiated for increased market access for Guyanese products and assisted in accessing technical support for the private sector to improve the quality of Guyanese products to meet requirements for destination markets.
The Ministry of Foreign Affairs will be embarking on an exercise to update the national trade strategy in keeping with the developments in the global arena and the emergence of the digital age and e-commerce. This is an exercise that will be done in close consultations with the Private Sector.
The Ministry, through the Embassy and Consulates overseas, will continue to promote Guyana overseas as a tourism, investment and business destination.
Under the WTO Trade Facilitation Agreement, Guyana will implement the Single Window initiative, which is geared at improving the time and processing requirements for customs clearance of goods to improve and support trade.
Plans are also on stream for a workshop with the Private Sector on market access through the various trading agreements and how to access these markets.
What should exporters do to improve performance?
* Look at diversifying the line of production in tandem with the market access available through the various trading agreements.
* Optimize the benefits and opportunities provided for market access through various trade agreements.
* Look at entering into joint ventures and partnerships with foreign companies in destination markets to take advantage of the marketing capabilities and distribution channels which these companies possess.
* Look at changing marketing strategy, since the cost of production is relatively high in Guyana due to high cost of power and transportation, and our manufacturers are unable to supply in large quantities, not being able to benefit from economies of scales; manufacturers should not focus on competing against price but on differentiating their products from others and to access the niche market which can pay a premium price for our products.
* Make efforts to have products certified to international standards to increase the quality and competitiveness.
* Increased dialogue between Private Sector and Government is needed to ensure that the enabling environment is created based on the needs of each side.