At the Second CEO Summit of the Americas Panama, 8-10th April, 2015
Bridging the Americas:
Productive Integration for Inclusive Development
The topic we are dealing with is a large one. But the organizers have tried to be helpful by identifying the sub-areas on which they want to focus. These have been described as "opportunities for promoting investment, facilitating trade and fostering development, in particular in agribusiness, finance, information technology and public infrastructural sectors, as well as active participation of the private sector in the social development of our nations".
Now that is a mouthful. And I am not sure that it does not in fact further expand rather than compress the subject. I shall nevertheless try both to follow its markers and remain within the allotted time. But to do that I have had to further distill the theme. I will therefore be concentrating principally on the modalities and strategies necessary to optimize our efforts at the level of regional economic groupings, which groupings are the precursor to Hemispheric integration.
I take it as a given that our current stratification into so-called Regional Economic Communities (RECs)-NAFT A, #CARICOM, #SICA, #MERCOSUR, #UNASUR-is accepted as the best way of proceeding towards the ultimate goal of hemispheric free trade. Indeed, this very Summit had its genesis in the integration process launched by the Enterprise for the Americas Initiative (EAI) and the Free Trade Area of the Americas (#FTAA). But proceeding from that premise, I believe we need to examine and strengthen the operational effectiveness of our current RECs in order to achieve true pan-American complementarity.
Our RECs have been proceeding at three basic levels: North America, South America, and Central America and the Caribbean. And what is clear is that there is now a requirement for each Community's further, intra se consolidation. It is only after each individual arrangement has been made stronger, that the amalgamation can go on to be the durable, sustainable, profitable convergence we desire.
It is this end objective, of course, that mandates the building of the metaphorical bridges needed to transform the various internal markets into one large hemispheric whole.
I want to serve notice right away that in my view equitability is an essential ingredient of the process. There must be a readiness on the part of the putative, giant REC to protect the interests of the smaller economies. Integration cannot simply mean the swallowing up of the lesser by the greater. Asymmetrical treatment where required, a robust policy role and a real voice in decision making for the most vulnerable, would have to be built into any hemisphere-wide REC.
In making this particular case, it is good to remind that none of the countries that are currently developed practiced purist free trade during their industrializing phase. So a call now for special and differential treatment should not be anathema to them. But subject to this sort of guarantee, I believe overarching American integration is accepted by all as the only way to go. That is how even the tiniest among us will be able to secure support in investment, trade and infrastructure development; in energy efficiency; in mitigating adverse climate effects; and in providing the cost savings that can lead to our competitiveness in agribusiness, manufacturing and services.
The new, super #REC must help us build information and communications technology, develop human resource capacity, and participate in a value chain that goes well beyond the agriculture and commodities sector.
But I am getting ahead of myself. That is because, as I earlier indicated, a great deal needs to be done now at the individual country level and within the existing RECs, to ready ourselves for the coming of the ultimate REC. In this regard investment, a focal point for the Summit proper that starts tomorrow, is a key.
Indubitably, the path to any form of economic union presupposes serious investment in strategic areas to drive coherent regional development. And, naturally, the critically needed investment must come from both the public and private sectors. From the public sector there must be a ramping up of spending on road infrastructure; transportation improvements across the board; better border facilitation procedures; properly codified and easily accessible competition law and policy; clarity and efficiency in standards and regulations; and effective sanitary and phytosanitary measures.
With respect to the private sector, there is a clear requirement to invest in the enterprises and systems from which they derive their incomes and profits. And Innovative thinking and the harnessing of new technologies must be employed to boost production and expand trade in the hemisphere.
But in order for our call to action to be fully embraced by the private sector, real-rather than rhetorical-equality has to be accorded to the private sector in all aspects of the campaign. It is only from the material of a true partnership that we will effectively fashion the hemispheric fabric for successful business development and expansion.
In the context of this last point I note my own country's public/private partnership model, complete with a national Economic Development Council and a secretariat housed in the Office of the Prime Minister. I also note SICA's signal emphasis on private sector participation in all its Summits, and the formal space reserved for private sector leadership in driving the sub- regional agenda. It is an arrangement that CARICOM, the other REC to which Belize belongs, would do well to emulate.
Talking about the role of the private sector allows me to segue into some comments about FDI.
We all believe in FDI which, thankfully, is on an upward trajectory in the hemisphere. At the same time it is well to note one Latin American and Caribbean dimension to the trend. Over the past decade, even as FDI flows into the region have grown, they have been outpaced by FDI flows out of the region. To me this suggests the need for a stronger overall climate to facilitate our investment promotion efforts.
In my own country our gateway location between Central America and CARICOM has led, curiously enough, to increasing South American investment interest in Belize. This is so especially in the light manufacturing sector, seen as a potential export base into the Caribbean. There are other examples of this North-South bridging effect, and altogether they point the way to the trade convergence between the two American continents that will help realize our larger hemispheric vision.
I do submit, though, that in this paradigm special attention must be paid to the role of multinational corporations. They are necessary, indeed critical, to our efforts. But they can so easily leverage their financial might to force national development agendas into paths that countries cannot altogether welcome. Globalization and Liberalization have long since been accepted as the lifeblood of increased trade and investment. And for a significant proportion of the population of our countries, these have been positive phenomena. Incomes have risen, more people have been brought into the mainstream of economic activity, goods and services are available from all over the world and technology has radically transformed social activities and relationships. It is no wonder, then, that these two continue to be the pestle and mortar for the integration edifice we are seeking to construct. But as we forge ahead it would be foolish to ignore some downsides that have been exposed. I think in particular of the growing income inequality and divergence in living standards among and within our nations. Thus it is that our preoccupation with benefit for all our peoples, 'inclusive development' in the words of this meeting's topic, can never be relinquished. The disadvantaged among us must not be further prejudiced; and marginalization, whether of individual small states or individual small human beings, must not be further exacerbated. Still, job creation and the provision of employment will always be preferable to joblessness and unemployment. So we are therefore obliged to always welcome foreign investment. But we must become adept at managing the tension that often exists between the interests of the investor and the interests of the host country. Terms and conditions should be worked out beforehand with the flexibility and realism needed to try to accommodate both parties.
I want to close by flagging a last issue that I hope will not strike too sour a note. One of the development areas our topic highlights, is finance. And on that subject this Summit of the Americas demands that we speak frankly and urgently to the global superpower in our midst. The fact is that there are ways in which current US policy is proving existentially damaging certainly to the CARICOM sub-region of which Belize is a member. For one, there are the continuing statements classifying our jurisdictions as harmful tax havens. This is designed to put our offshore sector out of business, denying us one of our few diversification opportunities. Then, despite the fact that we make every effort to comply scrupulously with the plethora of legislative and enforcement measures required of us by big country edicts, there are annual declarations designating even our onshore financial services as vulnerable to money laundering. It is a kind of damnation by innuendo since no bill of indictment listing any specific instances of violation is ever offered. But the implication that doing business with us is fraught with risk, is crippling our jurisdictions. So that even as we speak there is a crisis in my own country and in several others in the Eastern Caribbean, where the big US banks are 'de-risking' by terminating their correspondent relationships with our domestic banks. Indeed, even our Central Banks are being cut off; and our financial and trade architecture cannot survive this phenomenon. It is a reality that therefore threatens to make a mockery of the soaring rhetoric about stability, security and prosperity, sure to be employed at tomorrow's Summit. I do not exaggerate when I say that all our noble goals, all our aspirational imperatives, will be rubbished if this noose continues to be tightened around the necks of our smallest and poorest economies.
That, unfortunately, is the note on which I conclude. But I do ask you to see it as cautionary rather than contentious. And I certainly do not leave off from my belief that the current constructs governing our integration movement are the correct ones, if only they can be adapted so as not to exacerbate power disequilibria, so as not to constrict and degrade the weakest among us. That our economics must not lose sight of our humanity, is a central caveat. But once that is accepted it allows us to declare in all conscience that our manner of proceeding is not just a good way, but the best way.
I thank you.