BARBADOS IS LITERALLY a small player in international trade. Its exports are a drop in the bucket when compared with large economies like the United States and China.
And while there continues to be concern about the amount of foreign exchange that is spent on imports – especially petroleum products and food – even the amount expended for this purpose is minuscule in international terms.
Notwithstanding these observations, limited size has not stopped Barbados from having a voice in international trade, and the island was one of the World Trade Organisation’s (WTO) founding members in 1994.
Barbados has also been an advocate for special and differential treatment for itself and other small island states at the WTO and other international bodies.
But with the so-called “great recession” having taken heavy toll on the Barbados economy between its last WTO trade policy review in 2008 and now, what really are its international trade prospects?
In the Central Bank’s review of the economy for 2014, released recently, Governor Dr DeLisle Worrell said: “Retained imports fell by around 0.4 per cent, with a contraction in food and beverage imports of two per cent, and a three per cent decline in intermediate goods imports. Fuel prices declined by 14 per cent after July, and the volume of fuel imports also fell, by an estimated five per cent.
“Domestic exports of goods rose by four per cent, with electrical components up 27 per cent and chemicals up nine per cent. Rum exports declined by 13 per cent overall, on account of reduced exports for both bottled and bulk rum, by 11 per cent and nine per cent, respectively.”
This information was released at a time when Barbados was preparing for its latest trade policy review at the WTO in Geneva, Switzerland.
It is the third time Barbados has faced such a review, and based on the reports and statements related to this latest review, it was that economic and fiscal issues have challenged its international trade prospects.
“In 2012, the share of merchandise exports in GDP was over 13 per cent, an increase from nearly 12 per cent in 2007. The share of merchandise imports also increased, from nearly 36 per cent of GDP to approximately 42 per cent over the same period. However, this was due primarily to a sharper contraction of other GDP components, particularly investment, which lost share of GDP, and not to good performance of external trade,” the WTO said in its report dated December 16, 2014.
“On the other hand, the share of exports of non-factor services declined from over 33 per cent of GDP in 2007 to under 30 per cent of GDP in 2012. The share of imports of non-factor services also declined. Consequently, the share of trade in good services declined from nearly 95 per cent of GDP in 2007 to less than 85 per cent of GDP in 2012.”
According to recently released information, Barbados’ main export destination in 2013 was the US, followed by Trinidad and Tobago and Europe. While the share of exports to the US grew between 2008 and 2014, the share for Europe and Trinidad and Tobago fell.
In terms of imports, the US was again the main sources for Barbados, followed by Trinidad and Tobago and Europe.
But while it appears that economic hard times have affected output in Barbados, and hence its exports, there is a view that Barbados has not helped itself in some areas, including in relation to the Economic Partnership Agreement (EPA) it and other CARIFORUM countries (CARICOM and the Dominican Republic), signed with the European Union in the same year Barbados had its previous trade policy review.
On this score, the WTO’s latest report on Barbados said: “The authorities noted that there are some challenges for the full implementation of the EPA, one being energising and engaging the private sector to reap possible benefits from the agreement. They considered that for this to be accomplished it was necessary for the business community in Barbados to build better connections with the corresponding communities in EU countries so as to establish a strategic relationship.
“The authorities also identified challenges with respect to domestic export capacity to respond to the new opportunities presented by the EPA.”
