JAMAICAN-TRINIDADIAN-TRADE: FIRE SALES, FAILED DEALS

UNCLAS KINGSTON 000509 SIPDIS SENSITIVE DEPT PASS EC CARICOM COLLECTIVE FOR INFO STATE FOR WHA/CAR (DHOFFMANN) (VDEPIRRO) (WSMITH) WHA/EPSC (MROONEY) (FCORNEILLE) EEB/ESC/IEC/EPC (MMcMANUS) INR/RES (RWARNER) SANTO DOMINGO FOR FCS AND FAS TREASURY FOR ERIN NEPHEW USTDA FOR NATHAN YOUNG AND PATRICIA ARRIAGADA OPIC FOR ALISON GERMAK E.O. 12958: N/A TAGS: ECON ETRD ENRG PREL PGOV EFIN EMIN SOCI TRSY OPIC XL JM SUBJECT: JAMAICAN-TRINIDADIAN-TRADE: FIRE SALES, FAILED DEALS AND DETAINED PATTIES REF: A) KINGSTON 471 B) KINGSTON 427 C) 07 KINGSTON 1659 ¶1. (U) SUMMARY: Trade relations between the Government of Jamaica (GOJ) and the Government of Trinidad and Tobago (GOTT) heated up again in May after Trinidad detained a container of Jamaican meat patties for several weeks before releasing them on June 1. An ensuing media debate subsequently broke out over the so-called ?dominance of Trinidad? in the Jamaican market, and Karl Samuda, Minister of Industry, Investment, and Commerce, put Trinidad ?on watch? for their ?unfair? trade practices. End Summary. ¶2. (U) After several weeks of negotiations, GOTT released a container of Jamaican beef patties that had been detained pending certification of compliance with the GOTT?s sanitary and phyto-sanitary standards. A frustrated Samuda said, ?Quite frankly, I tell you here and now, Trinidad is on watch,? and speculated as to what Jamaican product Trinidad would detain next. Minister Frustrated Over Production Drain -------------- ¶3. (U) Samuda pointed out that trade tensions between Trinidad and Jamaica have existed for close to two decades. During Jamaica?s economic crisis in the 1990s, commonly referred to as FINSAC, many Trinidadians bought up inexpensive Jamaican assets and turned quick profits after the downturn. (Reftel A). Trinidad?s per capita GDP is more than triple that of Jamaica?s (USD 5,500 versus USD 17,000),and Trinidad now owns several large firms in Jamaica, including the Caribbean Cement Company, Guardian Life Insurance, the Jamaica Biscuit Company, and RBTT bank. Energy Also A Source Of Tensions -------------- ¶4. (SBU) Former Minister of Industry and Commerce Claude Clarke has accused Trinidad of using its liquid natural gas (LNG) reserves to subsidize energy costs, thereby gaining an unfair advantage over Jamaica. Clarke laments that many products previously made in Jamaica, such as chocolate and biscuits, are now manufactured in Trinidad. (NOTE: Clarke once owned High Gate chocolate company, which failed during the FINSAC period due to competition from Trinidadian chocolate companies) END NOTE. ¶5. (U) In 2004, the GOTT and GOJ signed a memorandum of understanding for the supply of 1.1 million tons of LNG per year over a 20 year span, but the deal broke down and left Jamaica embittered and struggling to find other lower cost energy options. Jamaica continues to explore LNG development and hopes to include such plans as part of a new energy policy to be released in July (Reftel B). More recently, during a Parliamentary meeting on June 24, Trinidad?s Prime Minister Patrick Manning told lawmakers that supplying LNG to Jamaica was a ?national priority.? Manning said falling world demand for LNG has freed up supplies that could become available to Jamaica. In addition, he said technological improvements in the area of re-gasification of LNG make supplying Jamaica more feasible. Manning explained that the new technology allows floating terminals to be used and reduces the need to construct costly re-gasification terminals which would have been needed in Jamaica if it were to buy LNG from Trinidad. CSME and CARICOM -------------- ¶6. (U) Samuda?s comments come just ahead of the Caribbean Community (CARICOM) Summit in Guyana, scheduled for July 2-5 and suggest that the likelihood of a Caribbean Single Market Economy (CSME),originally planned to be in operation by the end of 2008, is receding (SEPTEL). ?The level of frustration that has been relayed to me and to my office in respect of these attempts to export to Trinidad cannot be described in any other language than frustrating, and it serves as a major impediment to the concept of free trade within Caricom,? said Samuda. COMMENT: -------------- ¶7. (SBU) Samuda most likely welcomes this trade dispute as a distraction from Jamaica?s economic woes, and appreciates the increased positive media attention for his Ministry. He had an early win immediately upon taking over the Ministry by successfully cracking down on the illicit scrap metal trade (Reftel C). However, over the past year-and-a-half Samuda has not had many notable victories in promoting trade or attracting new foreign direct investment. Even recognizing the challenges he has faced amid the global economic downturn, his successes have been few. END COMMENT. MOSS