A LITTLE BIT OF TRADE PHILOSPHY FOR BELIZE

A LITTLE BIT OF TRADE PHILOSPHY FOR BELIZE

By Ray Auxillou, Oct. 09, 2008

The EPA rises it’s ugly head again, because of the dropping Euro and financial crisis in the European Union. Best guesses looks like the EU will have a recession, if not a depression for two more years, at the minimum. So how will that effect the EPA with Belize ?

African ex-colonies are now questioning the value of the EPA to their countries. In Belize we have put a tentative value on the EPA to Belize , which is about $23 million Bz in preferential tariff. This is for the sugar and banana industries. What actual amount of that would stick to the hands of the sugar growers in the North of Belize and to the hands of the few Belizean banana growers in the middle of Belize , we don’t really know? Certainly the banana growers of Belize extraction would realize minimum amounts, compared to the amount that the IRISH profits of FYFES would have. In sugar, how the actual preferential tariff would be divvied up between Tate and Lyle in the UK , the major buyer and value added processing and packaging, marketing of sugar and the actual sugar growers and factory in Orange Walk is also not known. Still it would be a fair assumption that Belizean partners in both bulk commodity exports would probably not get to keep more than $16 million Bz. gross for the two bulk commodity exports.

The EPA is designed to secure markets for European manufactured products and also value added products for the next 15 years, which mostly are food processing items. This of course is where the most mark up and profit is to be made, for any economy that produces such things. We have in past governments talked often about light manufacturing in Belize , plus ADDED VALUE PROCESSING, to try and get some of these larger profits from being both a middle man and a marketing organization, in competition with other industrialized countries in the world. Our major draw back was an education system, that did not teach how to do such things, plus a small labor pool. This is changing and one could say in our small way, we are sort of tipping over the curve, to capability of more competition with the outside world, in both niche market manufacturing and value added food processing. Our education system is also rapidly changing to the Community College system, with two year Associate Degrees that are more valuable to the nation of Belize , as an export, revenue producing and foreign exchange earner. So change is here, it is occurring monthly and it is producing jobs. Jobs change in any economy in technological times. There are no more mule and cart delivery systems in Belize and to think what is being done today, will be done in five years from now, is to ignore CHANGE as a dynamic in our society. Job descriptions will keep changing. Some jobs will die off and new ones will arise.

There are doubters that we can compete. The doubters mostly are port town people who are not entrepreneurs and want the security of a 5 year ( political term ) salaried government job. Let me remind you, that Belize has BUILT three airplanes for the sport aircraft market from plans, from scratch. We have also to my knowledge repaired and rebuilt two aircraft at least, from wrecked airplanes to pass foreign inspections and standards. Using this one technology as an analogy, it does not therefore seem impossible for Belize to do anything in the technical and engineering field. As both our education and population systems grow, our capacity will improve and expand. Especially if the politicians keep a lid on the cost and size of government to under $500 million Bz a year. That will force innovation, experimentation and local investment. Instead of a port town culture intent on social welfare through salaried guaranteed, government jobs, using the foreign loan borrowing method of the past. Admittedly, most of the new technical and engineering skills coming into Belize are from new immigrants. Aircraft technicians for one, airplane pilots for another, though local dredge building has been Belizean. Belizeans though are great copy cats and the lag time of learning in some of these new technological skills does not seem any longer than two years. We also design and build boats to a credible size in all sorts of materials.

Philosphically speaking then, the EPA net income to Belize at $16 million seems too small, to trade our potential future, against a known cash revenue flow, of a mere $16 million Bz, gross return, which is actually illegal according to the WTO and probably will be lost in a few years to legal arguments. For the EPA contract of the European Union is designed; to keep ex-colonies, in Africa, the Caribbean and the Pacific, as markets for THEIR young people in the light manufacturing and value added business, where the REAL money making is found. This EPA works of course in small island countries of Caricom, who only import 200 cases of beer every two months for their populations. They will never be anything but a tourist spot and bulk commodity, small scale producers.

In Belize, the Prime Minister and leader of his party, the UDP; have decided to go for the $16 million Bz for mostly the sugar industry, versus opening our markets for the EU, and basically emasculating the potential for any improvements in Belize from light manufacturing and value added processing. The customs tariffs we impose on European Union goods, allow our entrepreneurs to grow. Should this actually be our decision in Belize ? Government revenues are over $800 million a year. Within the term of this UDP government they probably will reach near to a BILLION. Is $16 million Bz really worth sacrificing all the past hard work to build a future for Belize ? The bogy argument in Belize has always been the fear and intimidation tactic, that we could lose our sugar and banana exports in total, valued at $132 million. This I very much doubt! There have been no studies presented, just propaganda, short on facts to support this conclusion. The most we could lose is that $16 million Bz in my opinion, a sacrifice for a future I think we should make. This is a philosophical decision, what do you think? Port town salaried Creoles excluded.