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US President-elect Donald Trump’s trade team is starting to take shape. A successful billionaire himself, Mr. Trump has so far stayed true to his promise of selecting business people as opposed to the traditional career politician for most of his Cabinet and administrative-level choices, with the selection of billionaire private equity investor, Wilbur Ross, as Commerce Secretary and Todd Rickets as Deputy Commerce Secretary. Former Goldman Sachs’ banker, Steven Mnuchin has been picked as Secretary of the Treasury. Mr. Trump’s pick for the US Trade Representative (USTR) has not yet been announced but it has been reported by POLITICO that Representative Charles Boustany is in the bidding for that post.
Mr. Trump’s pick for the head of the Department of Commerce, Mr. Ross, appears to share the President-elect’s skepticism of America’s current trade deals, calling them “dumb deals”, and to support the President-elect’s broad trade policy proposals. In this interview with Fox’s Maria Bartiromo, Mr. Ross reiterated that theTrans-Pacific Partnership (TPP) “isn’t going to happen” and that the North American Free Trade Area (NAFTA) needs to be “fixed”. Mr. Ross has expressed a preference for bilateral trade agreements perhaps because it may be felt that the US might have more bargaining power in a bilateral deal. Personally, I would submit that this is a non-starter. Because of its economic prowess, large market size and the USTR’s team of skilled negotiators, the US has leverage even when negotiating with groups of countries. As I have argued elsewhere, the TPP’s investment chapter is with few exceptions basically a replica of the US model BIT.
So what does this mean for the Caribbean? As I have stated previously, the US is Caribbean countries’ largest trade and economic partner which means any changes in US trade and economic policy has implications for the region.
Except for the Dominican Republic which is part of the US-CAFTA-DR free trade agreement, US-Caribbean trade and economic relations are framed by the non-reciprocal Caribbean Basin Initiative (Caribbean Basin Economic & Recovery Act and the Caribbean Basin Trade Partnership Act) and additionally for Haiti, the HOPE I&II and HELP Acts, as well as bilateral investment treaties and double taxation agreements where such exist between the US and individual Caribbean countries.
At some point the Caribbean Community (CARICOM) will want to negotiate a free trade agreement with the region’s largest trading partner as the aforementioned preference schemes are unilateral and can by ended by the US at any time, require WTO waivers and also do not include services trade. However, negotiating bilateral agreements with individual Caribbean countries, save maybe for Trinidad & Tobago and Jamaica which have populations (potential markets) of around 1,300,000 and 2,800,000, respectively, will make little economic sense for the US because of the small market sizes of most Caribbean countries.
Either way, this will be the team that regional leaders will have to interface with as we continue dialogue on the issues affecting US-Caribbean trade, as well as the correspondent banking/de-risking issue. Like all cabinet picks, these nominations will need to be confirmed by the Senate but seeing that Mr. Trump will be benefiting from a Republican-controlled Congress, it is unlikely there will be any major issues preventing their nominations.
Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.