GSP Removal of Trinidad and Tobago: Dueling Perspectives

The good news is that Trinidad and Tobago is no longer on the list for the Generalized System of Preferences (GSP). Really. Even the oddly spoken Trinidad and Tobago Finance Minister, Karen Nunez-Tesheria, got that right. She's probably right to say that the macroeconomic indicators all support it. But she's wrong to use the GSP as an indicator of economic strength - that's a circular argument¹ and one that I am pleased that I didn't have to listen to in Parliament. Dog chases tail, tail chases dog, Finance Minister speaks. Half empty, half full, Finance Minister speaks. Film at Eleven.

Being on the GSP is an exemption from Most favoured nation status requirements of the WTO - but that doesn't really say much in English. What it really means is that a nation is considered to be one of the least developing nations and is being given a chance to compete with more developed economies. It's one of the checks and balances that arguably works for less developed nations. That Trinidad and Tobago was removed from GSP status by someone with the economic experience of George W. Bush is, indeed, a dubious (dubyas?) honor.

But there is a different perspective. Certainly, Trinidad and Tobago may be demonstrating higher macroeconomic indicators - but on the street it is difficult to say how that economy is benefiting the citizens other than becoming a more mediocre welfare state. When the economy is used to support those that do not really wish to work, as is often stated as a case in Trinidad and Tobago by those that do work, then the ants who do work are spending more in supporting the grasshoppers while seeing no benefit. And if the working people see no benefit while Trinidad and Tobago enjoyed GSP, then where is the economic incentive to work without the GSP? One argument would be that Trinidad and Tobago could slide back down - but that is an unsubstantiated argument built on more emotion than statistics. In essence, we do not know.

Even with the unsubstantiated argument, the middle class person in Trinidad and Tobago is likely to find the results of GSP removal to be to their detriment. The voting poor, who the politicians cater for, have no economic incentive to become the voting middle class. Trinidad and Tobago seems rather myopic when it comes to these issues.

Consumer prices continue to go up in the country, yet there are strong enough macroeconomic indicators to have Trinidad and Tobago removed from the GSP? Where is the money going? More specifically, who is the money going to, and who will it go to in the future?

¹ See argument, circular.

Technorati Tags: Business Caribbean Latin America and Caribbean Politics Realist Cult Generalized System of Preferences GSP WTO Most Favored Nation Economics Karen Nunez-Tesheria