Trinidad and Tobago Business Overview
Trade
Trinidad & Tobago and Guyana, longstanding economic tie

Separated by just over 200 kilometres, and co-founders of the Caribbean Community (CARICOM) since its founding with the Treaty of Chaguaramas in 1973, Guyana has a longstanding relationship with Trinidad and Tobago.

 

DATE: 15/8/2017

 

Aside from mutual membership in CARICOM, the two countries are also part of several multinational economic and trade organisations, including the US’ Caribbean Basin Initiative focused on economic development, the Canadian CARIBCAN programme centred on duty-free trade and CARIFORUM, which includes sub-Saharan African countries and Pacific island states with CARICOM nations in economic negotiations with the European Union.

 

As of 2015, 2.9 percent of Trinbagonian exports ($316 million) go to Guyana. Not surprisingly, 59.8 percent are mineral products such as refined petroleum, petroleum gas and cement, with foodstuffs and chemical products taking up the rear at 13.9 and 7.44 percent, respectively.

 

Conversely, Guyana accounts for 2.1 percent ($123 million) of all of Trinidad and Tobago’s imports, but nearly a fifth of those from South America, behind only the regional economic engines of Brazil and Colombia. Guyana exports a wide variety of goods to T&T, from railway cargo containers (nearly a third of all Trinbagonian exports) and excavation machines and cranes (23 percent) to commodities such as rice (9.5 percent), seafood (4.69 percent), metals (4.56 percent) and sugar (3.6 percent).

 

 

While there is a great deal of opportunity in Guyanese agricultural exports to Trinidad and Tobago due to the former’s low labor costs and the latter’s agricultural sector only accounting for less than 0.5 percent of its GDP, there have been stumbling blocks along the way in terms of transshipment.

 

One example is the current difference on vessel draft limits between the two countries - six metres for Guyana and ten metres for Trinidad and Tobago - which means southward cargoes have to split up into smaller vessels to go into Guyana. Despite this, both nations already benefit from duty-free, quota-free access to each others’ markets due to CARICOM, so fixing the vessel draft difference would only further increase trade.

 

And due to Trinidad and Tobago’s key geographic location and strong existing transport infrastructure, the country is an ideal transshipment hub for smaller Caribbean economies dependent upon commodity exports especially to those locales outside of the region. However, outdated regulations can trump even the best of on-the-ground conditions as a Guyanese firm exporting honey found out in February 2015 when they were fined $3,000 for “facilitating movement of honey” within a mile of the national shoreline in contravention of the Beekeeping and Bee Products Act, a law which has not been updated in over 60 years.

 

This is unfortunate because Guyana itself is a transshipment hub for South America, but especially Brazil, and has a global comparative advantage in more than 200 domestically-grown fruits and vegetables alone. Developing a stronger transport link with Guyana means furthering Trinidad and Tobago’s largely undeveloped trade ties with the world’s eighth largest economy in Brazil while connecting both of them to the rest of the world. With Guyana planning to sell water resources to northern Brazil for drinking and hydropower purposes, the country is well-poised to take advantage of its naturally renewable resources across multiple sectors.

 

To that effect, Brazil has been in talks with Guyana since 2009 to build 2700 MW of hydropower, even offering to pay for construction and buy power once operational at market rates to provide the region of their country north of the Amazon River with a clean, reliable source of energy. With Guyana’s annual energy needs only being 300 MW as of 2015 and large hydropower potential, the full development of this resource would have an enormous impact on attracting power-hungry industries.

 

To streamline regional trade, and prevent other transshipment issues from cropping up in the future, the Trinidad and Tobago Chamber of Industry and Commerce embarked on a trade mission to Guyana in June of this year following successful trips to Cuba and Panama. Key advantages of the South American country highlighted by the chamber are mining in gold, bauxite and diamonds; raw commodities such as agriculture, livestock and timber; and renewable energy in the form of plentiful hydropower potential. Trinbagonian companies could benefit immensely from further development in all these sectors when it comes to support services such as telecommunications, construction, logistics, and health, safety, environment (HSE) training.

 

This training in HSE is especially important coming on the heels of yet another Payara reservoir oil discovery in July of this year by American supermajor ExxonMobil in offshore Guyana, as the country stands to benefit from Trinidad and Tobago’s rich experience in offshore oil and gas production. With a strong local content regime and relatively inexpensive wages for the region, Trinbagonian service firms are well-suited to transfer technical skills and HSE training to Guyanese workers slated to work for international oil and gas companies in development of these 2.25-2.75 billion barrels of oil equivalent.