Politics
JM | Apr 21, 2021

Global trade, the solution for local growth

/ Our Today

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The following is the Sectoral Debate presentation made by Lisa Hanna, Opposition Spokesperson on Foreign Affairs & Foreign Trade, made in the House of Representatives on April 20.

There are significant moments in our lifetime that give us cause to pause and reflect on how we do things; how our actions have been impacting one another and ultimately our country’s development and whether or not our approaches are leading to positively change the course of the people’s lives we were elected to serve.

Since I came to this House 14 years ago, I’ve witnessed a radical shift within our body politic. No longer are our people prepared to wait for solutions predicated on outdated approaches designed 20 years behind 20 years ago. Their understandable impatience for positive transformation to their livelihood (for themselves and their families) does not tolerate tribal dictations of who did what when, or rhetorical excuses for why after decades their road can’t be fixed, or why they can’t have running water in their pipes or worst why they can’t have more money to buy the necessaries they dream of.

Members of Parliament in Gordon House, in Kingston. (Photo: JIS)

For my part, I acknowledge my own dissonance to just how strongly felt these emotions were, even in my constituency of South East St Ann. I was busy doing programmes and projects that I thought the people needed and when the COVID-19 pendulum swung and hit their already fragile socio- economic lives with a sudden catastrophic blow, their palpable hunger for solutions relevant to their survival showed in their apathetic participation in our democracy. These attitudes weren’t unique to SESA, but a reflection of the national frustration which led to only 37 per cent of our population coming out to vote (the lowest in our history of contested general elections).

I want to thank God, and the people of South East St Ann and Jamaica for teaching me invaluable lessons for moving forward in my representation of them.

I also give thanks to my husband, family, friends, my SESA team, my colleagues whose daily support have sustained and consistently inspired me to unswervingly dedicate my life to the harsh vicissitudes of representational politics.

The entrance to the Bank of Jamaica in downtown Kingston. (Photo: Facebook @BankOfJamaica)

Madam Speaker, this pandemic has had a devastating impact on all Jamaicans, but more so on the masses of our people. It would be irresponsible of me, and all of us if we didn’t recognise that our ability to sustain ourselves during this period was in large part due to the stable macro-economic (and particular) low interest rate environment. The ability for banks to adjust and assist businesses in 2020 would have been impossible when I entered this House in 2007 when the Bank of Jamaica treasury bill rate was in double digits at 11.88 per cent. Today, the six-month Bank of Jamaica treasury bill rate is 1.5 per cent.

I use this opportunity to thank the member from South St Andrew and amplify his call for more fiscal space to give our working poor more breathing room so they can feel less stifled and helpless.

Jamaica Must Realign With Virtues of Humanitarianism

Let me use this platform to thank our international community whose assistance to us has been needed and welcomed during this very challenging period – to Japan, India, Cuba, China, Korea, Canada, countries in Africa, the UK and the USA our heartfelt appreciation for your sincere generosity.

Madam Speaker, the magnanimity of these countries and others to step forward and assist Jamaica is indicative of the revered respect we hold within the global alliance of nations.

It is an indictment that we have had to rely on bilateral acts of friendship for our response to COVID. This realisation should be the catalyst to reverse our obsequious patterns of diplomacy which have been practised over the past four years which has been counter-productive to Jamaica’s foreign relations history and if not discontinued will see the costs clearly outweighing the benefits.

You see, Madam Speaker, to make Jamaica and Jamaicans great, we must be friends to ALL and enemies to none; we must reach out more to add value to longstanding bilateral and multi-lateral dialogue, we must forge new alliances with new trade agreements and reset mediocre ones between ourselves and our international partners. We must act with courage; doing what’s in the best interest of our people; rather than follow like sheep to advance the interests of others with unclear motives which are often disguised as defense of democracy, human rights, and rule of law.

Madam Speaker, I’ve had numerous opportunities (especially) over the past year to speak about our recent acts in servile diplomacy; so, rather than revisit history to repeat myself at great length, I’ll use this time to focus on Foreign Trade, which with the right policies provides the greatest opportunity for our citizenry to improve their wealth and their quality of life.

Beyond Resilience

“This low interest rate is the primary reason that prevented our Jamaican economy from being wiped out in 2020 and we should give the credit where it is due. Thank you, Dr Peter Phillips.”

Jamaica needs to go beyond a reactive response. To the extent that there has been resilience it is built on the foundation laid by the member from EC St Andrew our former Minister of Finance (2012-2016) and the PSM led GOJ whose courage reversed a forty-year trend of deficit spending to create an economic environment with a seven and half percent fiscal surplus (reducing our debt to GDP ratio from 140 per cent to manageable levels), which is the foundation on which this low interest environment has been built. This low interest rate is the primary reason that prevented our Jamaican economy from being wiped out in 2020 and we should give the credit where it is due. Thank you, Dr Peter Phillips.

Beyond resilience is socio-economic development, and the failure of the government is the absence of a foreign policy which focuses on economic development. This is best illustrated by the lack of a development promoting international trade policy.

Development Promoting International Trade

Madam Speaker, I’m encouraged to see the member from NW St Andrew, our current Minister of Finance continue this fiscal discipline by staying course and introducing key legislative policies.

But I want my country not only to survive with anemic economic growth, but to prevail as a global titan competing with the best economies on the world’s stage despite our small size and population. I am convinced it can happen if we ALL work together cooperating across the aisle.

Our responsibility as policymakers is to create the economic climate and mindset that will grow the Jamaican economy in a way that increases the per capita income for all our citizens. In the fourteen years I’ve been in here we have not moved the wealth needle for our people and my impatience with inertia has become suffocating.

Our objective should be to move our grass roots to the middle class and the middle class to being internationally wealthy in this term. This will not happen with speeches and what’s more, raw talent alone is simply not enough to monetise the opportunities available. WE need a structured plan that is specific, measurable, actionable, relevant and time bound to take us there.

We have repeated for decades that our national trade policy is export- driven, and this position was reiterated in a recent policy document: “At the national level Jamaica’s trade policy can be said to be always export led, even when the country introduced an import substitution policy in the 1950’s…” (National Trade Policy 2019, Ministry of Foreign Affairs & Foreign Trade)

This is a policy in name only; because in reality we have nothing to show for it that did not exist fifty years ago. Let’s be honest we have a market protectionist mindset which has caused us to be a producer of samples for export.

The offices of the Planning Institute of Jamaica. (Photo: Facebook @Planning-Institute-of-Jamaica-PIOJ)

We have not focused enough on building our proactive approaches in international trade as we consistently import four times more than we export. Our import substitution policy, which is broad-based and still being pursued today, is a dead-end for several industries and has not created an export driven economy or led to any significant export of manufactured goods despite substantial duty protection.

For example: Jamaica started producing rum in 1749 and almost 300 years later it’s still our primary manufacture export.

In 2019 it represented 79% of our manufacture export earnings (PIOJ 2019). Our largest producer & exporter of rum USED to be Jamaican owned. No longer. So the profits are also exported. Our total imports approx. US$6.4 billion, was 4 times larger than our exports approx. US$1.6 billion.

JAMPRO’s offices in New York. (Photo: dobusinessjamaica.com)

Guess which industries still account for our traditional domestic export earnings? Rum, alumina & bauxite, sugar, banana, coffee, mining & quarrying. They’ve remained the same for decades.

In Jamaica, we are still talking about general plans and policies approaching the concept of national growth and employment creation for our people in the same way for 50-odd years. The existence of JAMPRO, the Economic Growth Council, the Ministry of Economic Growth, the Ministry of Foreign Affairs Co-ordinating Unit for Foreign Trade, the Ministry of Agriculture, the Ministry of Industry and Commerce, the National Export Policy, and the National Trade Policy has not done much in producing any real tangible results.

A closer look at the data for 2019 reveals Jamaica lagging behind other countries in the region for exports of goods and services per capita. Trinidad and Tobago, with a population of 1.39 million, exported US$9.1 billion with a per capita figure of US$6,547. Jamaica, with twice the population, exported US$1.5 billion with a per capita figure of US$535. The data of others blessed with less natural resources and agricultural output still beat us. For example: Cayman, US$24,296; The Bahamas, US$3,660; Barbados, US$1,547; and Panama, US$1,317.

The countries that have created true wealth for their people are the ones that have developed their exports in both goods and services. Jamaica will never create true wealth for our three million people by just selling to our three million people. Our market is too small.

Madam Speaker, in a world of free trade, we must establish specialised niche markets. The countries that have created true wealth for their people are the ones that have developed their exports in both goods and services. Jamaica will never create true wealth for our three million people by just selling to our three million people. Our market is too small.

Madam Speaker, we need an urgent plan to structurally transform Jamaica’s economy into an internationally competitive value-added export country focusing on products and services in which we can identify a global competitive advantage; controlling all the inputs in our value chain from raw materials to finished goods. If we don’t the rest of the world will continue to imitate us without flattery, royalties or economic benefit to our people.

It’s Time For Strategic Leadership


Other countries have done it in less time than I have been a member in this House. They’ve increased their people’s wealth by one hundred percent within a ten-year period. Here are just a few examples:

The United Arab Emirates (with non-oil exports), Vietnam, Panama, Ghana, Columbia, Dominica Republic. I could list several more, but the point is that Jamaica, is under-performing based on the value of our brand in the world, the strategic location of our island, our great soil and agricultural flavour, the immense potency of our culture and music, our solid financial infrastructure, the beauty of our island, but most importantly the inherent talent of our people.

Madam Speaker, the world is a very different place today, but we are still thinking small, stuck in the 1950’s trade policy mindset. When will we be confident to take the risk and produce for fifteen, twenty, twenty-five, thirty million people versus three million?

I’m not interested in blaming anyone, the past is the past, it’s time we focus jointly on the future. Which means, Madam Speaker, that the Government, the Opposition and the PSOJ, need to get together to build our exports in goods and services with potential to make Jamaica and Jamaicans wealthy.


Good Things Come To Those Who Get Up and Get Them


Madam Speaker, ‘there is a tide in the affairs of men, which taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat. And we must take the current when it serves, or lose our ventures’


In other words, it’s time for Jamaica to seize the economic growth solutions global trade has made available to us. Good things don’t come to those who wait but to those who get up and get them.

Madam Speaker, with your permission let me present several good opportunities we need to get up and go after.

Value Added Agriculture


There are over 200,000 farmers in Jamaica, representing the largest source of employment.

Logically, if we improve the incomes of our farmers, we’ll improve their purchasing power which will in turn, drive growth in our entire economy. Our goal should be to improve the standard of living for our small farmers and through their linkages with other sectors, increase employment and income in all sectors of the economy. The growth of several developing countries is propelled by agricultural exports.

 In Jamaica we are increasingly dependent on food imports while not realizing our potential for exports. Instead, the prevailing policy has resulted in reduced exports, no rationale in crop selection, price instability for farmers and consumers, little or no cold storage, little or no secondary processing of primary produce, no new technology, and we still end up dumping more than 30% of our small farmer’s production due to a mismatch between demand and supply.

Moving forward we should be laser focused, and provide support to agricultural products which have export markets and value-added potential; our pepper, ginger, cocoa, coffee, ackee, papaya, romaine lettuce, avocados, organic beef, could give us the best global competitive advantage because of our unique Jamaican taste profile.

The majority of money in our budgets in the MAF is being spent on salaries and travel and hardly any on production or stimuli. These old methods aren’t working. The fastest way to grow the economy is to provide guaranteed prices to small farmers for exportable crops.

The ravages to the economy from COVID emphasise the need to stimulate and diversify our economic base now more than ever. We already have a world market for Jamaican scotch bonnet pepper; it is estimated that the global demand for pepper by the 2026 will be US$3.77 billion. What we don’t have is a national processing facility where small farmers can bring their pepper for processing to the value-added products the world needs. Achieving this efficiency would allow us to move up the supply chain into even more specialised markets towards producing more value-added products at premium prices.

Nana Akufo-Addo, president of Ghana.

Madam Speaker, in February the President of Ghana announced his country’s cessation of cocoa beans export to Switzerland ( a commodity which the Swiss have used for decades to make their expensive chocolates) as Ghana would be creating its own value-added products “at the high end of the value chain of the global market-place to create jobs for the masses of Ghanaians”.

We need to follow Ghana’s example. Therefore, rather than exporting our raw coffee beans, for example, we should produce the coffee energy drinks and bars, cosmetics, liqueurs, and other beverages.

Let’s build a National Agro-processing Facility, lets list it on the JA Stock Exchange and seed it with capital, lets appoint competent management to run the place and then divest it to our Jamaican shareholders (similar to the Wigton Farms model).

By taking this decision, we would signal to the world the importance of the Jamaican brand while simultaneously protecting it from been exploited by other countries. The time is urgent for us to become global producers of Jamaican branded products the world loves and yearns.

National Ganja Lab

Madam Speaker, the global ganja/cannabis market is expected to reach US$97.3 billion by 2026. Let me repeat my call for us to build the Jamaica National Ganja Lab responsible for promoting Jamaican Ganja as the best in the world while driving the scientific research for cannabis and facilitating Jamaican nutraceutical products for export.

We need to stand up for our brand. We have the competitive advantage of Jamaican Ganja being the best in the world, but this sentiment is disappearing fast as more and more countries legalize cannabis. If we don’t act fast very soon ganja will become like any other commodity on the world market where larger countries (with first mover advantage) will win.

Therefore, Madam Speaker, rather than the GOJ spending US $50 million or JM$ 7.5 billion to construct a new parliamentary building let us use this money to establish and fund the Jamaican National Ganja Lab in partnership with one of our Universities to allow small farmers to manufacture and process their raw weed for a fee, into value added products that the world wants.

We need to expand our thinking as parliamentarians first which doesn’t require more space; just discipline, research and the urgency to work in the best interest of our people.

Jamaica As A Performance Stage

We’ve been living in a digital world for some time, but COVID-19 has intensely accelerated our inescapable immersion into it amidst lockdown and curfews. One year ago, no one could’ve predicted habitual online work meetings, or ZOOM’s market capitalisation exceeding that of the world’s seven largest airlines combined.

Today, YouTube users (the world’s largest online video platform) account for one third of the world’s population, viewing one billion hours of content every day and uploading five hundred hours of it every minute. That’s a lot of content consumption. Furthermore, with the popularity of sites such as Netflix, Hulu and Amazon Prime, the global streaming market size valued at US$342 billion is projected to grow to US$843 billion by 2027.

There are two convenient truths of living in this digital world; international trade is uncomplicated and content proliferation is constant. We need to be developing Jamaican content for the world to consume.

In 2007, the total value added by copyright-based industries (literature, music, theatre, film, the media, photography, software, visual arts, advertising services) accounted for US$192 billion in exports from the United States of America. By 2017, copy right exports had exceeded USD 2.2 trillion.

The contribution of arts and culture to the USA’s GDP, is valued at US$ 804 billion, exceeding construction, transportation, warehousing, travel and tourism, mining and extraction, agriculture, forestry and fishing (US Bureau of Economic Analysis 2016). This represents a per capita revenue of US$2,436 per person, which based on Jamaica’s population would be US$ 7.3 billion.

Let us for the moment set our target on one tenth of the USA’s per capita revenue. In other words, our culture as an industry would have a potential value of US$731 million. At the very minimum the Ministry of Culture should be allocated two percent of this value per annum, i.e. US$14.6 million for the development of the creative industries. A review of the 2021-2022 Jamaican budget reveals JM$178.4 million or US$1.23 million for the development and promotion of this area; one tenth of the allocation that it needs to be effective, and realize the benefits.

Madam Speaker, our last major investments for cultural performance spaces were in 1912 and 1958 with the Ward and Little Theatre both in Kingston alone. Yet we continue to boast about being a ‘cultural super-state.’

The rhythm to how we do things as Jamaicans makes our culture highly sought after. Our objective over the next five years should be to convert our island into a mega ‘performance stage’ for professionally produced Jamaican overseas talent and lifestyle content, with the goal of creating a Jamaican channel via satellite for the world to access. The rental cost for time on the satellite is the easy part, and relatively cheap, the challenge will be developing the constant source of quality content to remain viable, as viewers, currently have hundreds of channels to choose from.

Let us apply realistic budget to the Ministry of Culture and task them with building state of the art equipped buildings in every parish for daily training, rehearsals and recordings. They should begin in our tourism capital by expanding and converting the Montego Convention Centre into a modern casino and music hall with the necessary digital inputs to broadcast quality Jamaican entertainment.

Simultaneously, the Ministry of Finance should remove all barriers to entry for the entertainment industry and restructure the waiver system for incentives which is currently onerous, bureaucratic and does not seek to grow the market. It’s an unnecessary imposition to ask young musicians for audited accounts (as one of several requirements) before they can receive tax waivers and benefits to buy instruments or studio equipment for their craft. By giving musicians the opportunity to earn a living and improve their output, GOJ will make more money from the GCT of their expenditure rather than on the customs duty levied on their equipment.

Unrecognised Asian Opportunities

Madam Speaker, China’s middle class has been among one of the fastest growing in the world. Between 2000 to 2018 China’s middle class is estimated to have grown from three percent of its population, to more than fifty percent; in other words, seven hundred million Chinese (twice the population of the United States) now have more purchasing power to buy goods and services.

Data suggests that most of the Chinese middle class spend their money on more leisure time and activities for healthy living, traveling, dining out and entertainment with their families and close friends preoccupy their purchasing habits. China sends out the largest numbers of tourist and travelers on the planet – almost 170 million in 2019.

Most international companies have recognized the potential to capitalise on the increased disposable income of the burgeoning middle class in China. One of the largest banks in the world, HSBC, has taken this focus to a new level by hiring three thousand private bankers to actively seek out new customers from that base. Jamaica must act now.

KD Knight, former minister of foreign affairs and foreign trade.

Between 2002 to 2006 FAFT Minister, KD Knight began work in earnest to advance our trade relations with China. He opened our Embassy in Beijing and offered the PSOJ free space and diplomatic status within it to directly develop trade linkages for our private sector. Madam Speaker, we subsequently obtained Approved Destination Status for tourism from the Chinese Government, met with Fidel Castro (Cuba was the only ADS country in the region) to discuss cooperation with air transport, established the Chinese Lab at UWI through the invitation of Madam WuYi then Vice President of China and invited CARICOM Ministers to negotiate ADS status so as to establish the Caribbean as an interconnected tourist destination. Madam Speaker, it’s now fifteen years later, and would appear that successive administrations have not followed through on building out these initiatives. It’s time to follow through.

The Chinese and most Asians rely heavily on their cell phones instead of cash for all their purchases so they need hi speed internet wherever they go and a market that will facilitate those types of transactions. If we want to make ourselves more attractive and consumer friendly to the Asian markets and expand trade with China, we must roll out a first-class digital/WiFi platform across our island.

With interest rates at all-time lows, now is the time to invest in the real economy and not just apartment buildings, but in critical infrastructure to grow our economy. The GOJ should not just operate, but their policy should incentivise, facilitate and stimulate with seed capital if necessary.

Moreover, they should implement the proposals developed by the JMEA that are primarily administrative and have no significant cost impact; namely Adopt and implement the international trademark registration system – the Madrid Protocol, review and remove primary production and export costs applicable to produce administered by JACRA and finalize the implementation of Cabinet’s decision in early 2019 to remove some items from the list of items requiring import/export licenses and permits.

CONCLUSION

Madam Speaker, ‘politics is increasingly divisive, and government is increasingly dysfunctional leading to a number of policies that simply don’t work, the Fault line is inequality. Our own failure to move beyond our differences and self-interest and act for the greater good’ [is making our people suffer] (Wall Street Journal).

Jamie Diamond, CEO of JPMorgan.

Madam Speaker, when Jamie Diamond, CEO of JPMorgan said this recently I thought he was talking about us. He was actually speaking about the USA. The urgency of our crisis is blinding. The direct link between our anemic economic growth and violence and poor education; is demonstrated with Jamaica being in the top three murder capitals of the world, coming second to last in CARICOM for literacy, and ranking second in the world for femicide (the murder of women).

The inequalities within our nation’s education system, barriers to entry for the small man and woman, “terrible” infrastructure planning, wasteful spending, and ineffective social safety nets can all be fixed with the right focus and policies for economic growth over the next three years.

WE MUST GIVE A STIMULUS TO OUR PEOPLE

But, Madam Speaker, we must give a stimulus to our people as we have never done before because it is in their hands that the future of Jamaica rests, and through their hands that the nation’s prosperity will be achieved.

During the nineteenth century, Kodak was the leader in the photography industry throughout the world. At one point, Kodak had 85 per cent market share in cameras and 90 per cent market share in film. For some people, owning a camera was essential to memorialise a special occasion with a “Kodak moment”. The company was doing well up until the early twenty first century when digital cameras began gaining popularity; and even though Kodak’s electrical engineer Steven Sasson invented and patented the digital camera circa 1975, Kodak underestimated just how big digital would become.

Their flawed foresight and over reliance on existing products prevented them from capitalizing on the digital revolution in photography. Subsequently, the iconic Kodak filed for bankruptcy in 2012.

Jamaica must immediately commence a process of strategic global repositioning of ourself based on an accurate “fore-sighting” of global opportunities and a careful analysis of the goods and services in which we have or can develop a sustained competitive advantage in a rapidly changing world. Our unique value-added agricultural, cultural and entertainment products and services from our people’s talent can grow our economy and improve the socio-economic fabric within communities.

We must train our people with the skill sets and give them the incentives on the tools of trade so they can invest in these niches. To succeed in exporting any one of these products, at even a 1% world market share, would transform Jamaica to the country for which we all yearn.

Madam Speaker, we have been operating with our eyes wide shut for too long, relying on the residual spin-offs of ‘Brand Jamaica’ without stimulating its sustainability with realistic resources and enterprising Government policy. Blind optimism has never been a good model for economic success. KODAK, missed their moment of digital opportunity. Let us act fast so we don’t miss ours.

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