Remarks by Ambassador Odeen Ishmael of Guyana at the regional seminar on the economic relations between the United States and Latin America and the Caribbean within the context of the global crisis - SELA Headquarters Caracas, 31 March 2009

Posted March 31st. 2009

Mr. Chairman, Permanent Secretary of SELA, distinguished panellists, Ambassadors, members of delegations.

First of all, I wish to express appreciation to Ambassador JosÚ Rivera Banuet, Permanent Secretary of the Latin American and Caribbean Economic System (SELA), and the numerous ambassadors speaking on behalf of their governments, who have all expressed sympathies on the death of Mrs. Janet Jagan, the former President of Guyana. Please be assured that I will convey these sentiments to my government and to the children of the late Mrs. Jagan.

As so many of the ambassadors have stated, Mrs. Jagan was well known throughout this region as a valiant anti-imperialist fighter who was very much involved in the struggle for the improvement of the welfare of the citizens of Latin America and the Caribbean. In her role as a journalist, she has in the last days of her life written about the crisis embroiling the world today, and certainly, she would have been very much interested in the topic we are discussing today.

Mr. Chairman, this region has already begun to feel the effects of the economic crisis which was hatched in the developed world. The crisis which owed its origin to all sorts of financial shenanigans in the United States will no doubt have a lasting effect on the economic and social landscape of our region.

In the Caribbean, two significant financial crisis situations have developed recently. In the first instance, the regional insurance giant, Colonial Life Insurance Company (CLICO) has run into serious problems, one of which involves failed investments in the housing market in Florida. Governments in many countries in the region have since intervened in the attempt to protect policy owners and investors in this insurance company, and thousands of people are hoping that they will be able to recoup their financial investments in the company.

And almost at the same time, the Stanford banking empire, headquartered in Antigua and Barbuda, collapsed thus placing financial investments in that business in jeopardy, not only in the Caribbean but also in some Latin American countries as well as in the United States.

On the wider plane, the people of Latin America and the Caribbean are looking closely at how the new administration in the United States is dealing with the economic problems there and hoping that a recovery will generate itself soon. But there are some worrying factors that have since arisen.

In the first place, we hear calls in governing circles in the United States for protectionism. Even President Obama stated that massive spending in the area of rebuilding America's infrastructure should involve the use of mainly, if not only, American products. Obviously, this is worrying to our region which depends on exports of raw materials and manufactured products to the United States. Already, through lower demands, the prices for our raw materials (minerals, forest products, grains, meat, sugar, etc.) have been declining, and pressures are already being felt on the level of employment in our various industries.

We are also alarmed that the United States may want to make changes to the preferential trade agreements which allow some of our products to enter the American market under relatively favourable tariff conditions. We certainly hope that the Obama administration will not curtail these preferential agreements since such action can place added pressures on our economies.

In the United States as well as other developed countries, unemployment is also on the increase, and the first to be laid off are generally the immigrant workers from our countries. There have been recent reports that remittances to our region will decrease drastically this year and, as we all know, these funds play an important role in the economic livelihood of a significant section of the population of our countries. Remittances from Europe have also decreased due to the falling value of the euro vis-Ó-vis the US dollar. Paradoxically, we are also seeing a reversal of the remittance flow in the case of some countries; for instance, we have heard reports of people of the Dominican Republic now sending funds to assist their relatives in the Untied States to pay their rents, etc.

Further, nationals of many of our countries residing in the United States, because of a contraction of the job market, are actually packing up and returning to their countries of origin. Obviously, this engenders another problem especially when their home countries cannot absorb a huge influx of returning nationals in the areas of housing and in various fields of employment. Already, the crime rate has skyrocketed, and there is a belief that this new situation can result in pushing it even higher. And all this has not been helping at all in the battle against poverty.

The fact is that the poverty rate in Latin America and the Caribbean has increased since the crisis erupted. The rapid rise in food prices since last year has also been a detrimental factor in this respect. Our governments have to look at the problem of poverty even more seriously now, and with the added problem of growing unemployment, a social "safety net" is needed to alleviate the human cost of the current crisis.

I want to move to the question of free trade. During the American election campaign, the Obama ticket called for renegotiating NAFTA. Will President Obama do this? Well, I don't think it has been erased from his slate of policies, especially when such renegotiation is tied up closely with the idea of protectionism. Actually, the United States has already unilaterally made move contrary to the NAFTA agreement by stopping the movement of Mexican trucks transporting goods north across the border. Are there any more actions against the NAFTA agreement on the horizon? I guess we have to wait and see what will transpire.

This brings me now to the upcoming fifth Summit of the Americas in Trinidad and Tobago. Will the US, as it did at the previous four summits, push for the Free Trade Area of the Americas? The FTAA negotiations had collapsed way back in February 2004 when the Trade Negotiation Committee met in Puebla, Mexico, mainly over the question of agricultural subsidies.

Then, it is useful to remember that at the last summit in Argentina in November 2005, it was finally decided, after intense discussions, that 29 countries would move forward on the FTAA negotiations. President Chavez was sharply opposed to it, while the four Mercosur Presidents (of Brazil, Argentina, Uruguay, Paraguay) preferred to wait to see if the December 2005 WTO ministerial in Hong Kong would have made a favourable decision on the issue of agricultural subsidies before they could decide on their participation in the FTAA discussions. As we know, that ministerial failed to reach any agreement.

On the other hand, the Presidents of Mexico, the United States, the Andean and Central American countries, as well as Guyana and Suriname, expressed strong support for the FTAA claiming to have benefited tremendously through bilateral free trade arrangements. Since then Ecuador and Bolivia have walked away from the FTAA, and in many of the other countries trade unions, manufacturers' associations and other civil society groups have been expressing reservations.

But, despite the agreement in Argentina, no serious negotiation has continued since that last summit. So it is doubtful that the free trade process will make any serious headway at the summit in Port of Spain.

Actually, the six key commitments of the summit deal with issues surrounding (1) human prosperity, emphasising on small business development, food security, health and education, (2) energy security, (3) environmental sustainability, (4) strengthening public security, (5) good governance and respect for human rights, and (6) strengthening the Summit process.

So, as we can see, the question of hemispheric free trade has been phased out of the picture.

We surely expect that our leaders at the Summit will exchange views on the current global economic crisis with the American President, and we are sure that they will forcefully impress on him the detrimental effects of the American-created problems on the development of our region.

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