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Biography - F.A. Baron
Freedom to be Greedy
Farewell & Welcome
DA Response to Grenada
And, We were Misled
Local vs Privy Council
Thank You Dame Eugenia
Big Bad John
Travels and Travails
Trade Gap - USA & DA
In Case You Missed It
".. Your Love to Town"
Mad Men not to be trusted
Politics of Lies & Deception
Wide, Deep Transparency
Petrocaribe $ Bird Island
Nations Shall War No more
My Feeling of Insecurity
China, Admiration & Envy
Capitalism: Wounded ...
© Gordon Moreau
TRADE GAP BETWEEN THE U.S.A. AND US
October 20, 2005 - Look at how Dominica traded (in EC$) with the rest of the world in 2004:
TOTAL EXPORTS - $ 111.5m
TOTAL IMPORTS - 391.9m Mr. Kelvin Thomas of the Central Statistics Office, thank you for the statistics.
This means that we imported $280.4m more than we exported, and that our imports were three and a half times more than our exports.
I do not know how we expect to sit on our heavy duty bottoms, produce little, export much less, and expect to earn foreign exchange and develop our country. We must do better.
The negative amount of $280.4m is called the balance of visible trade. Our negative balance with Trinidad/Tobago was $62.9m. In 2004 we exported $8.3m to Trinidad and Tobago, and imported $71.2m from them. That is 8.5 times more.
If you think that is bad, consider the United States data:
We exported $3.3m (or 3% of our total exports) to the U.S. But we imported $137.9m from the U.S. That was 35% of our total imports. We imported some $134.6 m more from them than we exported, and that represented 48% of Dominica's total negative balance.
In 2004 we imported over 41 times more from America than America imported from us. Put this in context of the local media, a couple of weeks ago, announcing gleefully that the United States gave us some $2m in assistance!!!!
Thank you Mr. President, but the available statistics suggest that you should do much better. After all, consider how you yourself, your Treasury Secretary John Snow, and American manufactures have for years been complaining about your unfavourable balance of visible trade with China.
The U.S. has insisted that China re-value its currency. Recently, Mr. Snow retreated, not verily for his own sake, but because the Chinese refuse to succumb to American bullying.
You may recall the name LOUIS BERTRAND, B. Sc. (Management) of U.W.I., and M.B.A. (Marketing) of Cornel University. Last week in Port-of-Spain we did a little review of a well-trodden facet of Economics 101. I refer to the theory of comparative advantage.
At the simplest level, the theory holds that a country should produce what it can produce more efficiently and sell to others. By the same token that country should buy from others what others produce more efficiently than itself.
It follows that if China - thanks to its cheaper labour - can produce clothing more efficiently than Europe and the USA, then those latter trade groupings, however powerful, should buy clothing from China. China, in turn, should buy, and does buy, white goods and aircraft from Europe and the USA, who may have the comparative advantage by virtue of technology.
If the trade gap between the US and Dominica is not the problem of the US, but Dominica's problem, it follows that a trade gap between China and the US is not China's problem. It is America's problem.
There is a deliberate illusion that China is "dumping" its goods on the West. In layman terms, dumping is a pernicious practice, whereby a country sells below cost to ensure the collapse of competitors. When competition is so destroyed that country raises prices.
We do not believe that China is dumping. We believe that the Chinese have a good faith, genuine and long-term comparative advantage in certain economic activities.
If the US insists that China has the legal and moral responsibility to narrow the trade gap between China and the US, it should follow that the US has a similar responsibility to close the (relative) wider gap in trade between the US and Dominica; and between the US and other countries.
Armed with that kind of statistics and logic, the so-called third world should not be afraid of coming together to negotiate with the US on trade issues.
Forty-one times amount to plenty.