Budget 2000 - Table of Contents

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Foreign Affairs Minister Hon. George Odlum
(Document 2)

MINISTRY OF FOREIGN AFFAIRS AND INTERNATIONAL TRADE

Mr. Speaker,

The Honourable Prime Minister and Minister of Finance in the introductory part of his Budget Address, pointed out to us that there were features of the changing international environment which we had to take into account in contemplating the position of St. Lucia in the world economy, and hence in also contemplating the provisions of the Budget.  In his words, these "few notable" features …… are inescapable."  I could not agree more Mr. Speaker, for it is extremely important that we in St.Lucia understand how much that changing international environment – and the emphasis is on "changing" - is exerting pressure on St. Lucia, on our economy, and on how we are to move forward as a people.

In his analysis of the changing international environment, the Honourable Minister of Finance looked at the financial aspects of that change – on the nature of today's capital flows, financial markets, inflation, regional economic growth and world economic stability.

But Mr. Speaker, I want to take the analysis further – to broaden the perspective, to look at the other features of this changing international environment which we cannot ignore – that is the trade and political aspects – and to present the foreign policy priorities that the Ministry of Foreign Affairs and International Trade will be adopting in light of those features.  Mr. Speaker, it is more than a coincidence that this budget – the first for the twenty-first century, is also the first since St. Lucia turned twenty-one as an independent nation, a month ago.  There is a particular significance in the juxtaposing of these two milestones – St. Lucia turning twenty-one when the world enters the twenty-first century, for the twenty-first century has ushered in a world very different to what obtained when St. Lucia gained independence twenty-one years ago.  It is this new, different international political and economic environment which is exerting particular pressure on the economies of small states like St. Lucia, and driving the way we have to shape our social, economic, and foreign policies.

How different is that world, Mr. Speaker?  Well, twenty-one years ago, Brezhnev ruled iron-fisted in the Kremlin as the Soviet Communist Party controlled the USSR and Eastern Europe.  Jimmy Carter was in the White House, and Ronald Reagan was knocking at its doorsteps.  The last decades of the cold war were being fought and its political objectives were what fuelled the international relations of the world's states.  There was largesse in the United States development assistance to St. Lucia and the Caribbean.  The CBI was created and there were even US Presidential scholarships for Caribbean students to enter American Universities.

Today, there is no USSR for the Soviet Communist Party to dictate to and to dominate, and there is a Russia which just two weeks ago democratically elected Vladimir Putin to the Russian Presidency.  So the United States and other major western countries no longer provide the kind of financial assistance they made available to St. Lucia twenty-one years ago. The United States of America has continued to reduce its levels of official development assistance to developing countries to such an extent that its USAID office in Barbados, which served St. Lucia and the Eastern Caribbean, was closed down a few years ago.  Can you imagine, Mr. Speaker that today, in these first few months of the twenty-first century, a former American Ambassador to St. Lucia and the Eastern Caribbean, openly admitting during a recent address in Port of Spain, that his country's interest in the Caribbean is diminishing?  According to the Ambassador, in a post cold war world, with US attention focused on other global hot spots, United States relations with the Caribbean will be reduced to what he described as a nagging, somewhat stingy uncle.  What is more Mr. Speaker, whatever interest the United States still has in us here in the Caribbean, is mainly coloured by its desire to stop the flow of illicit drugs to the streets of its cities via the trade winds of the Caribbean.  The cold war spectacles it used for the Caribbean have given way to drug war binoculars.

(Make a reference here to the recent meeting with Albright in NEW ORLEANS if the meeting bore out the sentiments expressed by the former Ambassador)

Mr. Speaker, it is now history, that it was the United States, that the rescuer of Grenada and the Eastern Caribbean in 1983, which, at the WTO, led the challenge to the marketing arrangements for our bananas in Europe  - a challenge which is threatening to destroy our economic livelihood and future. Cold War allies have become hostile post war strangers.

Like the United States, nearly all the major traditional donors have turned their sights elsewhere, and those who still continue to provide financial assistance have reduced the levels of such assistance.  In Europe, the European Union, post LOME, has discarded STABEX and done away with the vast financial assistance it used to make available under that programme. In Europe too, the newly Democratized East European States are receiving the bulk of financial flows that were once destined for Third World economies.

With political ideologies fading into the sunset of cold war international relations, St. Lucia in this Twenty-First century, is confronted with a new ideology in international affairs – the economic one of free trade.  Today, unlike twenty-one years ago, Mr. Speaker, there is something called the World Trade Organisation – The WTO – and International relations are about international trade.  The WTO controls a multilateral trading system whose rules are supposed to ensure fairness and equity. 

But Mr. Speaker, we in St. Lucia and other banana producing countries of our Caribbean, should know now that this new multilateral trading system is hostile to us.  That it does not recognise the implications of our special economic circumstances.  Liberalized trade has become the sole basis for international trade, and small states, whether or not they like it, whether or not they can afford it, have to open their countries to allow the free flow of goods and services in this single globalized market.

Mr. Speaker, it is not only the rules of the new trading system that are stacked against us. The WTO itself is a flawed organization, and in the battle that was Seattle, we discovered just how the process of decision making within the WTO was geared to benefit the rich, powerful and developed countries, and ignore the needs of the poor, weak and the developing world. Fortunately for us all, at Seattle, the poor rallied together, non governmental organizations took control of the streets, the procedures and structures of the WTO caved in on themselves and Seattle was a debacle – giving us some room to try reform the system.

 The working of the WTO and its treatment of the marketing arrangements for our bananas are the most dramatic and vivid example, of how different the world is today, compared to twenty-one years ago, and just how unkind is the international trading environment which we face. But these are not the only examples.

Just two months ago Mr. Speaker, St. Lucia and other ACP countries, prevailed upon the European Union, to agree, under the Post LOME Arrangements, to a second Banana Protocol under which the EU agreed to "examine and where necessary take measures aimed at ensuring the continued viability of their banana export industries and the continuing outlet for their bananas on the community market."  But two weeks ago, the European Union, in seeking a waiver from the WTO for the new ACP-EU Convention, unilaterally changed the text of an explanatory note to the WTO and stated: "There is now a second banana protocol which does not provide for trade preferences for bananas."  This change is extremely damaging to the interests of St. Lucia and other ACP countries and ACP diplomats in Brussels are trying to find ways of limiting that damage.

In the area of international financial services, OECD countries are attacking those Third World States who have successfully developed offshore financial sectors, accusing them of creating tax regimes harmful to the interests of the OECD group.

In the negotiations for a Free Trade Area of the Americas, (FTAA) St. Lucia and other Caricom states are battling hard, with their meager diplomatic resources, to see that the special needs of small economies are considered, far less mentioned.

What we in St. Lucia must understand is that in today's international political and economic environment, we can no longer rely on those whom we had considered traditional friends.  The days of holding out your bowl and expecting it to be filled by international assistance are over.  The globalized system is not a kind system.  There is no time for the weak and dependant.  Our economy is under attack and its destruction by the rules of free trade will not matter to the wealthy that manipulate the new system for their own ends.  We therefore must find creative ways of sustaining our economy in the face of this onslaught.  As globalization proceeds space, the challenges that confront St. Lucia are increasingly enormous and onerous.  Our country has to find its little niche in the world on the basis of increased national productivity, efficiency and innovation.  The critical economic and social infrastructures that will convey St. Lucia through the new global challenges have to be put in place.  We have to position St. Lucia, domestically and internationally to be able to overcome the difficulties of the twenty-first century. 

The Ministry of Foreign Affairs and International Trade has therefore mapped out the following elements of a foreign policy response to these features of this new international system. Clearly our major thrust has to be in the area of international trade. The fight to save our banana industry from the effects of the WTO ruling is far from over. The battle has been long, but there is some hope. The Caribbean has put some proposals on the table, based on the continuation of a Tariff Rate Quota system, which the United States, is at last giving favourable consideration. The USA and the European Union seem to moving closer to a solution to the dispute based on a package revolving around the Caribbean proposals. We urge them, particularly the USA, to continue this constructive approach to the problem. But there are still many pitfalls ahead, as it is our understanding that the American companies, Chiquita and Dole, are opposed to the proposals; and we know only too well the role of Chiquita in bringing about this dispute.

St. Lucia must also focus on the system of liberalized trade brought about by the WTO. Together with other Caricom and developing countries, we have to expunge from the system those aspects that are not in the interest of small economies like ours. We have to help reshape the WTO to ensure that the goal of economic development is not buried in the new found treasure of trade liberalization; to ensure that that there is democracy in its procedures and structures and that its green rooms become a relic of Seattle. In order to achieve this however, we must have some form of permanent representation at WTO headquarters in Geneva. But St. Lucia cannot undertake this alone and the Governments of the OECS, should, as a matter of urgency consider the establishment of a joint mission in Geneva to service the WTO.

Mr. Speaker, in the same way that we must pay attention to the WTO, we cannot ignore the movement towards free trade in this hemisphere. In Toronto last November, Trade Ministers adopted the agenda for the negotiations for the creation of a Free Trade of the Americas. In Toronto, Caricom member states once more had to strive very hard to make the developed countries of the Americas agree that the negotiations for the FTAA must take account of the special needs of the smaller economies of the hemisphere. These negotiations have started and St. Lucia, along with other Caricom countries must be vigilant and ensure that what was gained in Toronto is not rolled back during the negotiations. In the past, St. Lucia has not actively participated in the talks that have set the stage for the FTAA agenda. But we must change this and we can use our newly opened Consulate in Miami as the base for attendance at the many negotiating meetings of the FTAA which will be taking place in Central and South America and in Miami itself.

There is one lesson that we must learn from the creation of the WTO and from this changing international environment. It is that we must not stand aside and simply watch these international events unfold and think that we are too small to influence them.  If we act like innocent bystanders we will be crushed. But if we act positively we can make a difference.  Caricom states, working together, have shown in the Lome and post Lome negotiations and in Seattle, that there is a role for small states, and that their survival will depend not on the goodwill of traditional friends, but on the strength of their diplomacy. We would not be posturing on the international stage.

Mr. Speaker, there is another aspect to international trade with which the Ministry of Foreign Affairs and International Trade will be concerned in the year ahead. For us, priority action in international trade does not only consist of managing trade negotiations; it involves active pursue of trade and investment opportunities for St. Lucia in an era of intense competition. During the past two years we have been laying the infrastructure for our trade and investment promotion strategy. We had opened a new Consulate General in Toronto and placed commercial officers in our High Commission in London and Consulate General in New York. With the Miami Consulate General now opened, the base has been completed and we are now in a position to embark upon an intense trade and investment promotion drive. In pursuit of this, Mr. Speaker, I have to inform you, that the Ministry, in conjunction with the NDC with whom we intend to work quite closely, and with the cooperation of the Canadian High Commission in Barbados, staged a successful workshop recently, on trade and investment promotion, for the staff of our Consulates and the Trade Division of the Ministry.

Parallel with our international trade thrust, Mr. Speaker, will be action to strengthen economic cooperation with friendly countries so as to try to secure more external economic assistance in order to aid St. Lucia's economic development.  In that regard, the Ministry of Foreign Affairs & International Trade will wish to collaborate closely with the Ministry of Planning and Development, and I look forward to dialogue with the new Minister of Planning on this as soon as possible.   Mr. Speaker, you will recall that at the start of my contribution, I pointed out that the focus of major traditional donors had shifted. Recognizing this, the Foreign Ministry will be targeting new countries and regions for economic cooperation; and we will be seeking, in particular for assistance for small grass roots projects so as to impact on the ordinary man as much as possible. There is also the need too, Mr. Speaker, to diversify the nature of some of the economic assistance St. Lucia presently receives from some of its friends.

Mr. Speaker, while the new international system seems to be all consumed with liberalized trade and globalization, there are international political matters, which St. Lucia must still pursue. One of these is the threat to our environment posed by the shipment of nuclear waste through the Caribbean Sea.  Mr. Speaker, St. Lucia and other Caricom states have been speaking out most strongly against this practice by countries that are some of our closet friends. But that friendship does not give them the right to endanger our very survival. So we will continue to call for the cessation of these shipments particularly as recent revelations of unsafe practices in the nuclear industries of some of the very countries shipping the waste, confirms our position that we cannot trust their guarantees of the safety of the ships carrying the nuclear waste. This question of the danger to the Caribbean posed by the transshipment of nuclear waste is tied in with that of the treatment of small, vulnerable countries and small island developing states by the international system. At the special session of the UNGA on SIDS held last October, St Lucia was a strong advocate for more positive action towards small island developing countries by the member states of the United Nations; and we shall continue to maintain that position at the United Nations and in other international fora.

Mr. Speaker, many of the foreign policy priorities that we must now embark upon because of the inescapable new features of the international system, can only be successfully achieved in cooperation with our Caribbean neighbours. In this age of globalization and trade liberalization, the Caribbean integration movement is more important to us than it ever was.  It has to be our bulwark against an international system that we have seen that has little time for small states.

The process of Caribbean integration operates in three concentric circles – the OECS, CARICOM, and the ACS. St. Lucia must not flinch from playing its role in strengthening each of these.  I was particularly pleased therefore to hear the Director General of the OECS declare last week, that the time was right for the creation of a special union among the member states of the OECS – the Eastern Caribbean Union of Independent States, he called it, as a mechanism for operating as a single country in matters of external relations, regional affairs and regional governance.   It reminded me of the days of the Regional Constituent Assembly,  (RCA), in which the Prime Minister was an active participant, and the proposals then for a Union of Eastern Caribbean States.  But the Director General is correct; as the forces of globalization and liberalization tighten around us, the time is right to revisit the spirit, if not the proposals, of the RCA, as we strengthen the first circle of Caribbean integration – the OECS.

It is for this reason that our people must understand and must accept the necessity for the Common External Tariff, despite its apparent initial discomforts, as we move to fortify the second circle, Caricom, through the creation of the Single Market and Economy.  For these discomforts will be short term, as ultimately, a single economy will mean a single people, a single nation, and a single region more capable of dealing with the outside world.

Caribbean integration can also be strengthened through greater bilateral cooperation and closer relations among Caribbean countries.  It is from this point of view that St. Lucia's relations with Cuba must be seen. The people of St. Lucia owe a deep debt of gratitude to Fidel Castro's Cuba for the scores of our children who have received and are receiving an education at Cuba's universities, through the generosity of the Cuban government.  To deepen that cooperation, St. Lucia, in the next few weeks, will be opening a Consulate General in Havana, and Cuba will soon be establishing an Embassy in St. Lucia.  The two countries have also established a Joint Commission between their Foreign Ministries and the Commission began its work of facilitating closer technical cooperation when the Cuban Foreign Minister visited St. Lucia in February.

Mr. Speaker, I have gone at great lengths to explain how St. Lucia should position itself internationally as a result of the trade and political aspects of the changing international environment - an environment whose features, in the words of the Hon. Prime Minister, were essential to take into account, in contemplating the position of St. Lucia in the world economy. Let me now turn my attention, Mr. Speaker, to some thoughts on how St. Lucia should position itself domestically.
 

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