REVIEW OF GUYANA’S FOREIGN TRADE

2001 & 2002

PRODUCED BY: MŨTHONI MŨGO Trade Promotion Specialist United Nations Volunteers COMPLIMENTS: Bank of Guyana Customs and Trade Administration

Bureau of Statistics SPECIAL THANKS: Ms. Gayathri Radhakrishnan Economist Overseas Development Institute Ms. Bibi Ahamad Research Assistant Ministry of Foreign Trade & International Cooperation

2

Contents

Page

____________________________________________________________________________________ Foreword from Hon. Clement J. Rohee Minister for Foreign Trade & International Cooperation v Section One Overview of Global Trade 2001 & 2002 1 Section Two Overview of Guyana’s External Trade 4

Section Three Annual Imports and Exports, 2001, 2002 6 _______________________________________________________________________________ Section Four A Closer Look at Exports 9

Section Five A Closer Look at Imports 16 ___________________________________________________________________________ Section Six Direction of Trade 22 ____________________________________________________________________________________ Section Seven Foreign Direct Investment 32 ___________________________________________________________________________ Section Eight External Trading Relations 35 ___________________________________________________________________________ Section Nine

3

Guyana: Outlook for 2003 39 ___________________________________________________________________________

Foreword

Hon. Clement J. Rohee

Minister for Foreign Trade & International Cooperation

This is the second edition of the publication Review of Guyana’s Foreign Trade. On this occasion, the Ministry of Foreign Trade and International Cooperation publishes its first yearly Review 2001-2002. We have tried to make this edition more analytical and comprehensive as regards Guyana’s trade flows with CARICOM and the rest of the world. As usual we have sought to make this edition more user friendly. The feed back we have received thus far is encouraging and positive. We take this opportunity to thank all those who were kind enough to share these sentiments with us. While we believe we are on the right track we are fully aware that there is always room for improvement and we shall endeavor to press on this direction. We look forward to receiving your comments and opinions on the contents of this Review. 4

Section One

Overview of Global Trade 2001 & 2002

According to the World Trade Organization’s (WTO) analysis1 of global trade, growth in trade underwent one of the most severe decelerations in modern times in 2001. Though some recovery was made in 2002, the reports noted that uncertainty within the global economy still exists and could very well cloud trade growth prospects for 2003. WTO studies report that growth in trade decreased from over 13% in 2000 to 1% in 2001. Furthermore, analysts note that the year 2000 witnessed the first decline in the volume of world merchandise trade since 1982 and the first decrease in world merchandise output since 1991. Global GDP growth edged up only by about 1% due to a more resilient services sector. This was a great contrast to the previous year, when trade and output recorded their best performance in more than a decade. The disappointing performance in trade mirrors the overall global downturn in economic activity for these years. Factors that have contributed to such a decline include “the bursting of the investment bubble in ICT sector, the tragic events of September 11th and the sharp corrections experienced in all major stock market indices”2.

In 2001, it was reported that all sectors of trade were affected by the global downturn. Manufactured exports slumped by 2.5 percent, while trade growth in agricultural and mining products was limited to 1.5 percent, markedly less than in the preceding year.

North America was recorded as experiencing the strongest decrease among all regions in merchandise exports and import volumes (by 5 per cent and 3.5 per cent respectively) in 2001. Asia’s export decline was noted as second only to that of North America, and imports decreased by as much as the global average. Imports of Western Europe shrank by 3 per cent, which was faster than the decline in exports of 1 percent.

The WTO analysts also noted that developing countries confronted a 10% drop in the growth in demand for their exports3. The share of developing countries in world exports of merchandise decreased to 29 percent in 2001. The share of developing countries in world merchandise imports stagnated at 26 percent.

1 WTO Press Releases “ Supachai: disappointing trade figures underscore importance of accelerating trade talks”, 7 October 2002 & “ Trade Recovered in 2002, but uncertainty continues”, April 2003, available at www.WTO.org 2 WTO Press Release “ Trade Recovered in 2002, but uncertainty continues”, April 2003, available at www.WTO.org 3 World Bank, “Global Economic Performance 2002”. 5

It was noted however that a small number of developing countries weigh heavily in determining developing countries’ merchandise trade performance. Five out of 150 developing countries account for more than 60 percent of developing countries’ manufactured goods exports. The country concentration of developing country exports — as measured by the top five exporters — has increased in the 1990s , largely due to strong trade growth in China and Mexico4.

Despite an adverse environment in which world trade has contracted, falling commodity prices, and the slowdown of demand in major developed regions, the least developed county group managed to expand both its exports and imports. According to the WTO, a strong export expansion in the volume of both primary and manufactured goods offset the impact of weaker prices for many primary commodities.

In their 2002 analysis however, it was noted however that some economic recovery has been made. In 2002, merchandise trade, driven by strong demand in the US and the big Asian, economies grew by 2.5%. But trade growth, which was significantly above the 1.5% increase in total world output, was uneven and masked the sluggish trade performance in many regions including Latin America and Western Europe.

Again, it was noted that trade performance largely mirrored the pattern of economic growth. Trade expansion was strong in Asia and the transition economies. North America’s imports recovered in line with stronger domestic demand although exports decreased in 2002. Trade remained stagnant in Western Europe and Japan. And it contracted in Latin America as a result of economic turmoil in a number of countries in the region. Imports into the US grew by 3% driven by continuing consumer spending and an increasingly expansionary fiscal stance. But exports declined by nearly 4% partly reflecting reduced demand from some key trading partners whose economies were either hardly growing, such as Western Europe and Japan, or in outright contraction, as in Latin America. The WTO also noted that a lack of price competitiveness might have also played a major role as US exports decreased even to those regions whose imports grew strongly.

LDC exports and imports rose last year although it was noted that this did not change their overall situation as marginal participants in world trade. With regards to the Caribbean, in 2002, with the exception of Guyana, Belize and Trinidad and Tobago, Caribbean countries suffered a weak economic performance. Barbados and the Bahamas, which have recently been consistently strong economies, felt a reduction in output. Dominica had a particularly challenging year, facing a contraction in its economy by 3.1%5. Imports into Latin America and the Caribbean fell 9% between 2001 and 2002. Exports rose by an estimated 0.6% to 0.8%, as some countries managed to boost volumes to offset the steady decline in prices for most good6s.

Latin America saw one of its worst years with the crises in Argentina, Venezuela and difficulties in Brazil in the run-up to the national elections. Latin America’s merchandise imports declined by over 5% in 2002 although merchandise exports rose by about 2% with

4 WTO Press Releases “ Supachai: disappointing trade figures underscore importance of accelerating trade talks”, 7 October 2002 5 Budget Speech; “Sessional paper No 1. of 2003 Eight Parliament of Guyana”, Page 4. 6 ECLAC, “Downturn in Latin American and Caribbean Economies in 2002” 6

the decline in intra-regional trade (especially intra-MERCOSUR trade) being balanced by increased shipment to other regions.

Section Two

Overview of Guyana’s External Trade For the years 2001 and 2002 there was an increase in the level of exports for Guyana, and in both years total exports accounted for over ¾ of Gross Domestic Product (GDP). While the levels of imports into Guyana declined, the value of total imports, approached the value of GDP between 2001 and 2002. Although the balance of trade figure was still negative, the movement in imports and exports level resulted in an improvement in Guyana’s balance of trade. There was a decrease in Guyana’s GDP between 2001 and 2002 (from 1.9 % in real terms to 1.1 %), however a comparison of the trade data over this period reveals an overall positive outlook for Guyana’s external trade. This, therefore, reinforces the importance of international trade to Guyana’s economy. Looking specifically at the commodities exported, it can be seen that during 2001 and 2002, over 2/3 of Guyana’s export earnings arose from the exporting of six products: gold, sugar, shrimp, rice, timber and bauxite. In the six commodities mentioned, three of these commodities (gold, sugar and timber) recorded a positive growth in exports between 2001 and 2002. The other three sectors experienced a fall in export earnings, the worst of which was in the

Selected Socio-Economic and Trade Indicators

2001

2002

Population

774,800

774,800

GDP at factor cost (US$M)

602.5

617.8

Growth Rate of Real GDP

1.9%

1.1%

GDP per capita (US$)

777.5

797.3

Rate of Inflation (% change in Urban CPI)

1.9

6.1 Average exchange rate GY$/US$

187.30

190.5

Total Exports (US M $) 490.3 494.9 Total Exports (% GDP) 81.4% 80.1% Total Imports (US M $) 583.9 563.1 Total Imports (% GDP) 96.9% 91.1% Trade Balance (US M $)

(93.6)

(68.2)

Number One Export Market (Non-CARICOM)

USA

USA

Number One Import Market (Non-CARICOM)

USA

USA

Number One Export Market (CARICOM)

Jamaica

Jamaica

Number One Import Market (CARICOM)

Trinidad

& Tobago

Trinidad

& Tobago

Top Exported Commodity (by value)

Gold

Gold

7

bauxite sector, which faced a dramatic fall in export earnings of 42%. Table 1 Source: Budget 2003 and Bank of Guyana The export of gold was the greatest revenue earner in both 2001 and 2002, contributing to over a quarter of total export earnings and over one-fifth of GDP in both years. Sugar was Guyana’s second largest export, in terms of value, during the two years. Together gold and sugar exports accounted for approximately half of Guyana’s total exports. Data from 2001 and 2002 also revealed an increase in the exports of non-traditional agricultural commodities (by 8% in value and 23% increase in volume). Despite this increase, the total value of exports of non-traditional agricultural commodities still only accounted for less than 1% of total exports in 2002. The data on imports, on the other hand, reveals that the composition of imports did not greatly vary between 2001 and 2002, with the same percentage of consumption goods, intermediate goods and capital goods being imported into Guyana. Guyana’s two largest imports for both years were ‘fuels and lubricants’ and ‘food for final consumption’. Turning to the direction of Guyana’s external trade between 2001 and 2002, the data clearly highlights that the United States was Guyana’s leading export market in both years. The US was followed by Canada and then the UK as the most important export markets for Guyana (the European Union, as a bloc, accounted for approximately one quarter of Guyana’s exports). The data also revealed that CARICOM has become an increasingly important export market for Guyana. Whilst in 2001, only 15% of Guyana’s exports were directed to the CARICOM market, in 2002, almost a quarter of Guyana’s exports went to CARICOM Member States (predominantly Jamaica, Trinidad and Tobago and Barbados). In terms of sources of imports, the US was also Guyana’s main source of imports in both 2001 and 2002. Its second most important source was Trinidad and Tobago (which accounted for over ¾ of total imports from CARICOM in both years). CARICOM, in both years, accounted for almost one fifth of imports into Guyana and the European Union accounted for over 10% in both years (half of such imports originated in the UK). Overall, it can be seen that Guyana’s exports continue to be dominated by the agriculture and mining sectors. Expansions in the agricultural and mining sectors (particularly in gold and sugar) combined with a fairly low inflation rate have enabled Guyana’s economy to enjoy a moderate economic growth rate. Contributions to GDP, in 2002, were 33% for agriculture and 28.2% for the mining sector. This moderate growth has been achieved despite growing international competition and low prices for key exports that have severely affected the rice and bauxite industry.

8

Section Three

Annual Imports & Exports 2001, 2002

The data in this section provides an overview of annual exports and imports for 2001 and 2002, on a monthly basis. From the data, it is evident that total exports increased between 2001 and 2002 and total imports decreased during the same period. This resulted in a smaller trade balance in 2002 though the trade balance continues to be negative. Average monthly exports were approximately US$41 million in both 2001 and 2002 and average monthly imports were US$49 million and US$47 million respectively. Comparing trade to annual GDP (see fig 4 on page 12), it is clear that as in previous years, international trade continues to be of paramount importance to Guyana’s economy. In 2001 and 2002, annual exports amounted to 81% and 80% of GDP respectively. Annual imports in both years approached the value of GDP, being 97% of GDP in 2001 and 91% in 2002.

Monthly Imports, Exports and Trade Balances 2001 & 2002 (US $ Million) 2001 2002

Months Exports Imports Trade

Balance Exports Imports

Trade Balance

Jan 31.6 66.7 (35.1) 31.2 47.6 (16.4)Feb 36.8 37.6 (0.9) 36.9 40.4 (3.5)

March 33.9 45.7 (11.9) 53.7 44.2 9.4April 40.6 44.1 (3.4) 34.3 48.6 (14.3)May 36.2 48.0 (11.8) 37.7 48.5 (10.8)June 36.2 46.5 (10.3) 45.2 48.5 (3.3)July 44.8 53.3 (8.5) 31.7 47.4 (15.7)Aug 39.1 48.2 (9.1) 31.2 44.3 (13.1)Sept 47.9 47.1 0.8 56.4 45.7 10.8Oct 53.2 56.8 (3.7) 51.3 56.0 (4.7)Nov 42.3 48.5 (6.2) 45.4 43.5 1.9Dec 47.8 41.4 6.5 40.0 48.5 (8.5)

TOTAL 490.4 583.9 (93.5) 494.9 563.1 (68.2)Average

(Monthly) 40.9 48.7 (7.8) 41.2 46.9 (5.7)Table 2 Source: Bank of Guyana

9

Comparison of Monthly Exports,2001 & 2002

0

10

20

30

40

50

60

Jan

FebMarc

hApri

lMay

June Ju

lyAug Sep

tOct

Nov Dec

US

$ M

illion

2001 2002Fi

g 1 Source: Bank of Guyana

Comparison of Monthly Imports, 2001 & 2002

0

10

20

30

40

50

60

70

80

Jan

FebMarc

hApri

lMay

June Ju

lyAug Sep

tOct

Nov Dec

US

$ M

illion

2001 2002Fi

g 2 Source: Bank of Guyana

10

Comparison of Total Exports and Imports 2001 & 2002

490.4

583.9

494.9

563.1

440.0460.0480.0500.0520.0540.0560.0580.0600.0

Exports Imports

US

$ M

n

2001 2002

Fig 3 Source: Bank of Guyana

Comparison of Contribution of External Trade to GDP2001 & 2002

81.496.9

80.191.1

0.0

20.0

40.0

60.0

80.0

100.0

120.0

Exports % GDP Imports % GDP

% G

DP

2001 2002

Fig 4 Source: Bank of Guyana

11

Section Four

A Closer Look at Exports In both 2001 and 2002, foreign exchange was mostly generated by the export of six commodities: gold, sugar, shrimp, rice, timber and bauxite products. Together the six export commodities mentioned accounted for 73% and 69% of GDP in 2001 and 2002 respectively. Overall, of these six major exports, exports of gold, sugar and timber recorded a positive growth between 2001 and 2002. (See tables 3 & 5 below).

Guyana’s Top Six Export Commodities Contribution to Total Exports and Annual GDP 2001, 2002

2001 2002

Export Products

Value (GY $ Mn)

Value (US $ Mn)

% Contribution to Total exports

% Contribution to GDP

Value (GY $ Mn)

Value (US $ Mn)

% Contribution to Total Exports

% Contribution to GDP

Gold 23,769.60 127 25.9 21.1 25,985.80 136.3 27.5 22.1

Sugar 20,494.60 109.2 22.3 18.1 22,801.20 119.5 24.1 19.3

Shrimp 9,209.90 59 12 9.8 10,018.10 52.6 10.6 8.5

Rice 9,404.20 50.2 10.2 8.3 8,663.30 45.4 9.2 7.3

Timber 6,180.60 33 6.7 5.5 6,780.80 35.5 7.2 5.7

Bauxite 11,420.60 61 12.4 10.1 6,729.10 35.3 7.1 5.7

Total 80,479.50 439.4 89.6 72.9 80,978.30 424.6 85.8 68.7

Table 3 Source: Bank of Guyana

Gold Gold was the number one export (in terms of value) and accounted for over a quarter of total exports in both 2001 and 2002. Between 2001 and 2002, exports both in terms of volume (by 4.1%) and value (by 7.3%). Revenue from gold exports contributed 21% and 22% to GDP in 2001 and 2002 respectively, which was over one-fifth of total GDP each year.

Sugar Sugar was the second highest foreign exchange earner in 2001 and 2002 accounting for roughly 22% and 24% of exports respectively. Sugar exports also experienced positive growth between 2001 and 2002 in terms of volume (by 11.6%) and in value (by 9.4%). Next to gold, sugar exports were also the second highest contributor to GDP, accounting for 18% and 19% towards GDP in 2001 and 2002 respectively. Shrimp In 2001, shrimp exports were the 4th highest contributor to export earnings (and GDP) accounting for 12% of exports and 9.8% of GDP. In 2002, however, shrimp exports became Guyana’s 3rd major export commodity group constituting 10.6% of total exports and 8.5% of GDP. In actual terms, however, revenue from these exports decreased from 2001 to 2002 by 10.9%. Rice Rice exports were the 5th highest contributor to export earnings (and GDP) in 2001; however in 2002 it ranked as the 4th highest contributor. Though the relative position of rice exports improved in terms of export earnings, actual exports of rice decreased in both volume (by 7.5%) and by value (9.6%). In 2001, rice contributed 10.2% to the value of total exports and 8.3% to GDP; in 2002 rice exports were only 9.2% of total exports and 7.3% of GDP.

The main export market for rice continued to be the European Union, which imported approximately 120,400 metric tons, representing 62.3% of total exports in 2002. The most important markets in the EU were Portugal, 56,000 metric tonnes and Holland, 25,000 metric tons. Rice enters the EU market on preferential terms.

Other significant markets were: CARICOM, 30.7% (76,000 metric tons) and the Overseas Countries and Territories (OCT) 7.0% (13,636 metric tons). Though exports to the Caribbean were much reduced in 2002, the primary CARICOM markets continued to be Jamaica (37,900 metric tonnes) and Trinidad (16,500 metric tonnes). Timber Exports of timber products were the sixth largest export in 2001, by value and the 5th in 2002. Timber exports constituted 6.7% of total exports in 2001 and 7.2 in 2002. In actual quantities, timber exports rose during this period in value (by 7.6%) but decreased in total volume exported (by 1.2%). The overall contribution of timber to GDP increased during 2001-2002 from 5.5% to 5.7%. In 2002, as in previous years, plywood, sawnwood and logs have continued to be the main foreign currency earners for this sector. Total combined revenue earned from the three products was 94% of the overall exports earnings from forest products exported in 2002. Similar performance was recorded between 1999 to 2001. In the face of competition by market giants, exports of plywood (Barama) declined by 31.7% in 2001, and a shortfall in production in 2002 led to a decrease in exports.

13

Other timber exports showed an increase of 16.9%, from 117,303.1 cubic metres in 2001 to 137,152.6 in 2002, in dollar terms a 51.0% increment from US$Mn 16.1 in 2001 to US$Mn 24.3 in 2002. Bauxite Bauxite exports were the third highest contributor to export revenues in 2001 (making up 12.4% of total exports) however in 2002, the relative contribution of this sector to total exports fell to 7.1%. Low prices and high production costs depressed the production of bauxite so that exports decreased significantly between 2001 and 2002, by 17% in volume and 42% in value. In 2001, exports of bauxite contributed 10.1% to GDP but in 2002, they only accounted for 5.7%.

Contribution to GDP of Top Six Export Commodities

0

5

10

15

20

25

Sugar

Rice

Bauxit

eGold

Timbe

r

Shrimps

% T

otal

GDP

% contribution of exports to GDP (2001)% contribution of exports to GDP (2002)

Fig 5 Source: Bank of Guyana

14

Non-Traditional Agricultural Exports Exports of non-traditional agricultural products significantly increased between 2001 and 2002 (See table 4 below), volumes increased by 23% and the value generated by exports of these products by 8%. Featuring prominently on this list of non-traditional agriculture products, in both years were copra, pineapple, plantains, hot pepper and heart of palm. The major commodities accounted for 82% and 94% of total volume of non-traditional agricultural products exported in 2001 and 2002 respectively. During the period under review, exports were concentrated on the traditional markets – CARICOM, North America and Europe. The CARICOM region accounted for approximately 35% and 45% respectively in 2001 and 2002 (with the main markets being Trinidad & Tobago, Barbados and Jamaica). Trade with North America stood at 18% and 12% respectively, while Europe accounted for 47% and 42% for 2001 and 2002 respectively.

Volumes Exported of Major Non-Traditional Agricultural Exports

2001 & 2002

Major Commodities 2001 (tonnes)

% Total (2001)

2002 (tonnes)

% Total (2002)

Heart of Palm 1888.2 56.6 1381.5 33.6Coconuts (crude oil) 0 0.0 742 18.0Copra 312.5 9.4 741.63 18.0Plantain 371.16 11.1 371.67 9.0Others 263.5 7.9 256.11 6.2Mango 96.36 2.9 222.61 5.4Pineapple 113.13 3.4 143.66 3.5Watermelon 0 0.0 90.36 2.2Lime 38.42 1.2 63.47 1.5Pepper (hot) 186.63 5.6 46 1.1Pumpkin 59.52 1.8 41.91 1.0Pepper (wiri wiri) 8.58 0.3 10.08 0.2 Total Non-Traditional Agriculture Exports (Volume in tones) 3,338 100 4,111 100

Total Non-Traditional Agriculture Exports (Value in US$ ‘000)

3,524 - 3,805 -

Table 4 Source: New Guyana Marketing Corporation (NGMC)

15

Exports by Commodity (Volumes and Values), 2001 & 2002 2001 2002 Export Commodities

January - December January - December %

Change

1. Sugar

Volume (metric tonnes) 252,333.0 281,619.0 11.6%

Value (US$Mn) 109.2 119.5 9.4%

2. Rice

Volume (metric tonnes) 209,041.4 193,419.4 (7.5)%

Value (US$Mn) 50.2 45.4 (9.6)%

3. Bauxite

Volume (metric tonnes) 1,825,254.2 1,514,743.0 (17.0)%

Value (US$Mn) 61.0 35.3 (42.2)%

4. Gold

Volume (ounces) 433,496.3 451,251.7 4.1%

Value (US$Mn) 127.0 136.3 7.3%

5. Timber (Total)

Volume (cubic metres) 187,197.0 184,920.1 (1.2)%

Value (US$Mn) 33.0 35.5 7.6%

Plywood (Barama)

Volume (cubic metres) 69,893.7 47,767.5 (31.7)%

Value (US$Mn) 16.9 11.2 (33.9)%

Other Timber Exports

Volume (cubic metres) 117,303.1 137,152.6 16.9

Value (US$Mn) 16.1 24.3 51.0%

6. Fish and Shrimps (US$Mn) 59.0 52.6 (10.9)%

7. Non-Traditional Agricultural products

Volume (Tonnes) 3,338 4,111 23.2%

Value (US$ Mn) 3.5 3.8 8.0% Table 4 Sources: Bank of Guyana & NGMC

16

Distribution of Exports by Product

Guyana's Exports 2001

Sugar22%

Rice10%

Bauxite12%Gold

27%

Timber7%

Shrimps12%

Other10%

Fig 6

Guyana's Exports 2002

Sugar24%

Rice9%

Bauxite7%Gold

28%

Timber7%

Shrimps11%

Other14%

Fig 7

17

Section Five

A Closer Look at Imports

Examining total imports by category; consumption goods, intermediate goods and capital goods (see tables 6,7 and 8, pages 21 and 24), it is evident that in both 2001 and 2002, intermediate goods represented the greatest share of imported products, representing over half of total products imported (58%). Consumption goods were over a quarter of total imports (28%) in both years and capital goods accounted for one fifth of total imports (20%). In terms of actual commodities, Guyana’s largest imports (by value) in both 2001 and 2002 were ‘fuels and lubricants’ (22% and 23% of total imports in 2001 and 2002 respectively), followed by ‘food for final consumption’ (10% of total imports in both years). The latter figure is particularly noteworthy given that Guyana is an agricultural economy yet 10% of its total imports are food products from abroad, amounting to US$61 and US$55 million in 2001 and 2002 respectively. Other major imports included intermediate parts and accessories, building machinery, non-durable consumption goods, chemicals and agricultural machinery. Although there was no change in the percentage distribution of imports, the actual quantities imported in 2002 fell in all three categories. Consumption goods fell by the greatest amount (3.8%), whereas imports of intermediate goods and capital goods both fell by 3.6%.

18

Comparison of Import Value by Economic End Use 2001, 2002

0

50

100

150

200

250

300

350

Consumption goods Intermediate goods Capital goods

US

$ M

n

2001 2002 Fig 9

19

Merchandise Imports by Economic End Use (US$M) 2001

ITEMS Jan-Mar Apr-Jun Jul-Sept Oct-Dec Total CONSUMPTION GOODS

Food For Final Consumption 12.9 13.8 16.4 17.0 60.1 Beverages & Tobacco 3.8 2.8 3.6 3.9 14.1 Other Non-Durables 7.6 7.3 8.2 7.8 30.9 Clothing & Footwear 2.8 3.0 3.6 3.6 13.0 Other Semi-Durables 1.8 1.4 1.9 2.9 8.1 Motor Cars 2.8 2.8 2.6 2.9 11.2 Other Durables 7.1 5.9 6.1 7.5 26.7

Sub - Total 38.9 37.1 42.4 45.7 164.1

INTERMEDIATE GOODS Fuel & Lubricants 38.4 31.3 33.9 28.8 132.4 Food For Intermediate Use 3.4 5.0 6.5 4.2 19.0 Chemicals 8.9 7.9 8.4 6.1 31.3 Textiles & Fabrics 1.5 1.9 3.0 3.5 9.8 Parts & Accessories 10.5 10.0 6.5 14.6 41.5 Other Intermediate Goods 14.5 18.7 17.9 16.6 67.7

Sub - Total 77.1 74.8 76.0 73.8 301.8

CAPITAL GOODS Agricultural Machinery 8.0 6.1 5.0 5.2 24.3 Industrial Machinery 2.3 2.6 2.9 1.4 9.3 Transport Machinery 3.9 3.7 3.1 3.4 14.0 Mining machinery 1.0 0.5 0.3 0.3 2.1 Building Machinery 7.5 7.0 7.8 8.3 30.7 Other Capital Goods 11.2 6.5 10.2 6.6 34.5

Sub - Total 33.9 26.5 29.4 25.1 114.9

MISCELLANEOUS 0.1 0.2 0.8 2.0 3.1 TOTAL IMPORTS 150.0 138.6 148.5 146.7 583.9

Table 6 Source: Bank of Guyana

20

Merchandise Imports by Economic End Use (US$M) 2002

ITEMS Jan-Mar Apr-Jun Jul-Sept Oct-Dec Total CONSUMPTION GOODS

Food For Final Consumption 13.9 12.9 13.5 14.8 55.1 Beverages & Tobacco 2.4 2.6 3.0 3.4 11.3 Other Non-Durables 6.2 8.4 7.7 8.1 30.4 Clothing & Footwear 3.8 3.3 4.7 4.2 16.0 Other Semi-Durables 1.6 2.2 1.9 3.1 8.8 Motor Cars 3.1 3.3 3.2 2.3 11.8 Other Durables 4.8 5.1 4.9 9.5 24.3

Sub - Total 35.8 37.6 38.9 45.5 157.8

INTERMEDIATE GOODS Fuel & Lubricants 28.4 30.3 29.7 37.4 125.8 Food For Intermediate Use 2.8 3.9 4.1 6.5 17.3 Chemicals 6.8 8.0 7.8 6.9 29.5 Textiles & Fabrics 1.7 2.4 3.4 2.0 9.5 Parts & Accessories 7.0 16.4 7.4 6.2 36.9 Other Intermediate Goods 17.9 19.0 18.7 16.4 72.0

Sub - Total 64.6 80.0 71.0 75.3 291.0

CAPITAL GOODS Agricultural Machinery 8.0 5.2 6.7 7.2 27.1 Industrial Machinery 3.2 2.2 1.4 2.4 9.3 Transport Machinery 5.5 5.8 3.4 3.3 18.0 Mining machinery 0.3 0.6 0.5 0.3 1.8 Building Machinery 6.7 7.6 9.2 7.9 31.5 Other Capital Goods 7.9 6.3 5.9 5.6 25.6

Sub - Total 31.6 27.7 27.2 26.8 113.3

MISCELLANEOUS 0.2 0.2 0.2 0.3 1.0 TOTAL IMPORTS 132.2 145.6 137.3 148.0 563.1

Table 7 Source: Bank of Guyana

21

Summary of Change in Imports By Product 2001, 2002

(US$ Million)

ITEMS 2001 2002 %

Change CONSUMPTION GOODS

Food For Final Consumption 60.1 55.1 (8.2)Beverages & Tobacco 14.1 11.3 (19.7)Other Non-Durables 30.9 30.4 (1.7)Clothing & Footwear 13.0 16.0 23.0 Other Semi-Durables 8.1 8.8 8.9 Motor Cars 11.2 11.8 5.7 Other Durables 26.7 24.3 (9.0)

Sub - Total 164.1 157.8 (3.8)INTERMEDIATE GOODS

Fuel & Lubricants 132.4 125.8 (5.0)Food For Intermediate Use 19.0 17.3 (9.1)Chemicals 31.3 29.5 (5.8)Textiles & Fabrics 9.8 9.5 (3.1)Parts & Accessories 41.5 36.9 (11.1)Other Intermediate Goods 67.7 72.0 6.4

Sub - Total 301.8 291.0 (3.6)

CAPITAL GOODS Agricultural Machinery 24.3 27.1 11.6 Industrial Machinery 9.3 9.3 0.3 Transport Machinery 14.0 18.0 28.2 Mining machinery 2.1 1.8 (12.3)Building Machinery 30.7 31.5 2.6 Other Capital Goods 34.5 25.6 (25.7)

Sub - Total 114.9 113.3 (1.3)MISCELLANEOUS 3.1 1.0 (69.4)

TOTAL IMPORTS 583.9 563.1 (3.6)

Table 8 Source: Bank of Guyana

22

Relative Distribution of Imports by Economic End Use2001 & 2002

consumption goods28%

intermediate goods52%

capital goods20%

Fig 10

23

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Summary of Imports (US$M)

20012002

55.1

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8

17.3

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9.5

36.9

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27.1

9.3

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1.8

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1

Fig 11 Source: Bank of Guyana

Section six

Direction of Trade7

Guyana’s Major Trading Partners USA The USA was Guyana’s most significant trading partner, both in terms of the value of imports received from the US and goods exported from Guyana for 2001 and 2002. In 2002, one quarter of Guyana’s total exports (by value) went to the USA. This was a smaller share than in 2001 (where 31% of total exports were sold to the USA). The USA was also Guyana’s largest source of imports. In 2001, 37% of Guyana’s imports came from the United States although this share fell in 2002 to 35% of total imports. Canada Canada was Guyana’s 2nd largest export market in 2001 and 2002. Guyana’s exports to Canada increased, in value terms, between 2001 to 2002 as did the share of Guyana’s imports from Canada between the two years, In 2001, the Canadian market absorbed 22% of Guyana’s total exports and in 2002, 25% of Guyana’s exports went to Canada. Canada was Guyana’s 8th largest source of imports in both 2001 and 2002. The European Union Roughly one quarter of Guyana’s exports in 2001 and 2002 were to the European Union. Within the European Union, the United Kingdom was the most significant export market for Guyana accounting for 67% of the total exports from Guyana to the European Union in 2001 and 40% in 2002. Indeed, the United Kingdom, alone, was also Guyana’s 3rd largest export market in 2001 and 2002. Other significant export markets within the European Union in 2002 were Portugal, Belgium, France and the Netherlands. Regarding imports, 12% and 13% of Guyana’s total imports in 2001 and 2002, respectively came from the European Union. In both 2001 and 2002, the UK was the greatest source of European imports to Guyana accounting for 51% and 56% of total imports from the EU. On its own, the UK was Guyana’s fourth most important source of imports and actual values increased between 2001 and 2002. The Netherlands was also a significant source of imports in 2001 and 2002 accounting for 29% and 24% of total imports, respectively.

7 All data in this section ‘Direction of Trade’ has been taken from Bureau of Statistics Preliminary Data and therefore may be subject to revision. A preliminary analysis has however been undertaken with a view to identifying broad trends in the direction of trade for this edition of the Foreign Trade Review.

CARICOM In 2001, 15% of Guyana’s total exports were directed to other CARICOM Member States. In 2002, the CARICOM market increased in importance for Guyana, accounting for 23% of Guyana’s total exports. Within CARICOM, Guyana’s main markets for exports, in 2002, were the following (listed in descending order with largest markets first): Jamaica, Trinidad & Tobago, Barbados, Antigua and Barbuda and Suriname. These countries together accounted for 88% of Guyana’s exports to CARICOM. Overall (including CARICOM and non-CARICOM markets) Jamaica was Guyana’s 4th most important export market. Trinidad and Tobago was 5th most important and Barbados 6th. The data also revealed that Suriname was Guyana’s 10th largest export market. With regards to imports, 18% and 19% of Guyana’s imports came from CARICOM in 2001 and 2002 respectively. These imports came, mainly, from Trinidad and Tobago (82% and 84% respectively of CARICOM’s total imports to Guyana). Other sources of imports from CARICOM came, both in 2001 and 2002, mainly from Jamaica and Barbados. The three countries together accounted for approximately 92% of Guyana’s imports from CARICOM. Overall, Trinidad and Tobago was also Guyana’s second largest source of imports (after the US) in both 2001 and 2002. Barbados was Guyana’s 9th largest source of imports in both years.

28

1. Guyana’s Top 10 Export Markets by country 2001, 2002

Destination 2001 (G$ ‘000) Destination 2002 (G$ ‘000)

1 USA 28,243,887 1 USA 20,844,4272 Canada 20,127,924 2 Canada 20,327,5383 UK 15,811,690 3 UK 7,905,1174 Jamaica 4,683,461 4 Jamaica 5,408,2195 Trinidad & Tobago 3,189,409 5 Portugal 4,492,0226 Barbados 2,450,072 6 Trinidad & Tobago 4,148,0957 Belgium 1,812,370 7 Barbados 2,463,4278 Portugal 1,451,116 8 Belgium 2,276,6429 Netherlands 1,421,115 9 France 2,141,50810 Suriname 1,211,375 10 Netherlands 2,024,125

Table 9 Source: Bureau of Statistics Table 10 Source: Bureau of Statistics

2. Major Export Destinations by region 2001, 2002

Destination Of Exports

Exports (GY $‘000)

2001

% of Total Exports

2001

Exports (GY$ ‘000)

2002

% of Total Exports

2002

USA 28,243,887 30.9 20,844,427 25.1

European Union 23,767,673 26.0 20,314,161 24.5

Canada 20,127,924 22.0 20,327,538 24.5

CARICOM 13,891,490 15.2 19,462,270 23.5

Sub-Total 86,030,974 94.1 80,948,396 97.6

Other Countries 5,398,435 5.9 2,013,620 2.4

Total Exports 91,429,409

100 82,962,016 100

Table 11 Source: Bureau of Statistics

29

Share of Exports to CARICOM and Non-CARICOM markets2001, 2002

15 23

85 77

020406080

100120

2001 2002

% T

otal

Exp

orts

CARICOM Non-CARICOM

Fig 12

Major Export Markets 2001, 2002

30.9 25.1

26.024.5

22.024.5

15.2 23.5

5.9 2.4

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2001 2002

% T

otal

Exp

orts Other

CARICOM CanadaEUUSA

Fig 13

30

3. Guyana’s Top Ten Import Markets by country 2001 & 2002

2001 2002 Countries

Imports

(G$ ‘000) Countries

Imports

(G$ ‘000)1 USA 41,027,076 1 USA 37,066,8122 Trinidad & Tobago 16,615,761 2 Trinidad and Tobago 16,890,7523 Netherlands Antilles 13,043,661 3 Netherlands Antilles 12,802,7924 UK 6,696,161 4 UK 7,893,1315 Venezuela 4,378,655 5 Venezuela 4,372,2666 Netherlands 3,863,720 6 China 3,665,1297 China 2,972,613 7 Netherlands 3,340,8648 Canada 1,578,532 8 Canada 1,880,9379 Barbados 1,187,535 9 Barbados 1,198,07110 Brazil 888,065 10 Brazil 1,195,955Table 12 Source: Bureau of Statistics Table 13Source: Bureau of Statistics

4. Major Import Markets by region, 2001 & 2002

Region Imports

(GY $‘000) 2001

% of Total Imports in

2001

Imports (GY$ ‘000)

2002

% of Total Imports in

2002 USA

41,027,076 37.4 37,066,812 34.6

CARICOM 20,218,351 18.4 20,053,409 18.7

European Union 13,150,454 12.0 14,056,065 13.1

Netherland Antilles

13,043,661 11.9 12,802,792 11.9

Sub-Total 87,439,542 79.7 83,980,097 78.3

Other Countries 22,281,272 20.3 23,288,160 21.7

Total Exports 109,720,814 100 107,267,238 100 Table 14 Source: Bureau of Statistics

31

Share of Imports from CARICOM and Non-CARICOM Markets,2001 and 2002

18 19

82 81

0

20

40

60

80

100

120

2001 2002

% T

otal

Impo

rts

CARICOM NON - CARICOM Fig 14

Major Sources of Imports 2001, 2002

37 35

18 19

12 1312 12

20 22

0

20

40

60

80

100

120

2001 2002

% o

f Tot

al Im

ports Other

Netherland AntillesEUCARICOMUSA

Fig 15

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Intra-Regional Trade (‘000 G$)

CARICOM Exports 2001 Imports 2001 Trade Balance 2001 Exports 2002 Imports 2002

Trade Balance 2002

ANTIGUA AND BARBUDA 420158 76328 343830 1521202 226650 1294552BARBADOS 2450072 1187535 1262537 2463427 1198071 1265356BELIZE 93517 170600 (77083) 178493 254011 (75518)COMMONWEALTH OF DOMINICA 264510 678711 (414201) 182146 514613 (332467)COMMONWEALTH OF THE BAHAMAS 104973 8751 96222 2788 28518 (25730)GRENADA 350620 20965 329655 522758 48154 474604JAMAICA 4683461 820564 3862897 5408219 628242 4779977MONTSERRAT 1724 244868 (243144) 1019 n/a n/aREPUBLIC OF SURINAME 1211375 244869 966506 1137235 67728 1069507REPUBLIC OF TRINIDAD & TOGAGO 3189409 16615761 (13426352) 4148095 16890752 (12742657)SAINT LUCIA 656315 101851 554464 636503 109664 526839SAINT VINCENT & THE GRENADINES 422298 46125 376173 403705 23502 380203ST. KITTS AND NEVIS 43058 1423 41635 70978 63504 7474TOTAL CARICOM 13891491 20218351 (6326860) 16676568 20053409 (3376841)

Table 15 Source: Bureau of Statistics

Main CARICOM Markets for Export2001

33%

23%18%

9%

5%

12%

JAMAICA TRINIDAD & TOGAGOBARBADOS SURINAMESAINT LUCIA Other CARICOM Countries

Fig 16

Main CARICOM Markets for Export2002

32%

25%15%

9%

7%

12%

JAMAICA TRINIDAD & TOGAGOBARBADOS ANTIGUA AND BARBUDASURINAME Other CARICOM Countries

Fig 17

34

Main Source of Imports in CARICOM 2001

82%

6%

4%

8%

TRINIDAD & TOGAGO

BARBADOS

JAMAICA

Other CARICOMCountries

Fig 18

Main Source of Imports in CARICOM 2002

84%

6%

3%

7%

TRINIDAD & TOGAGO

BARBADOS

JAMAICA

Other CARICOMCountries

Fig 19

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Guyana’s Trade with the European Union

Exports Imports 2001 2002 2001 2002

Austria N/a N/a N/a 2,122Belgium 1,812,370 2,276,642 849,925 840,312Denmark 25,405 23,454 275,906 117,041Finland 886,412 868,929 N/a 11,494France 1,060,605 2,141,508 502,057 265,185Germany 1,108,395 161,369 539,138 735,480Ireland 26 200 62,273 4,095Italy 27,742 36,430 219,196 647,378Luxembourg N/a 335 2,220 N/aNetherlands 1,421,115 2,024,125 3,863,720 3,340,864Portugal 1,451,116 4,492,022 N/a 6,170Spain 159,892 384,030 121,234 150,781Sweden 2,905 N/a 18,624 42,012UK 15,811,690 7,905,117 6,696,161 7,893,131Total 23,767,673 20,314,161 13,150,454 14,056,065Table 16 Source: Bureau of Statistics

36

Section Seven

Foreign Direct Investment Though over the years Foreign Direct Investment (FDI) to Guyana has improved, there has been more domestic investment than FDI. In any given year since 1997 domestic investment has been three to four times larger than FDI.

Investment Flows (G$ Millions)

1997 1998 1999 2000 2001 2002Total Investment

47,099

44,779

47,603 50,065

51,375 n/a

Foreign Direct Investment

7,488

7,271

8,303 12,397

10,612 n/a

Domestic Investment

39,611

37,508

39,300 37,668

40,763 n/a

Table 17 Source: Bank of Guyana

FDI flows into Latin America and the Caribbean

For the third year running, FDI flows into Latin America and the Caribbean have continued to fall, declining 33% from US$84 billion in 2001 to US$56.7 billion in 2002, according to the Economic Commission for Latin America and the Caribbean (ECLAC), in its Foreign Investment in Latin America and the Caribbean, 2002 Report.

Not only has the falling trend continued for the third year running, but also the pace of the decline has risen, following a 12.6% drop in 2000 and an 11% drop in 2001.

Declining FDI worldwide reflects multiple factors, among which ECLAC points to "the sharp decline in the share prices of many transnational corporations (TNCs), mainly those associated with the new economy, the steep drop in privatizations and acquisitions of international assets and the downward spiral in the amount of financing generally available to TNCs."

In Latin America and the Caribbean, this was further affected by "increased instability, slower economic growth and the apparent end of the cycle of privatizations." Crises in Argentina, Uruguay and Venezuela, "were also conducive to increased risk aversion and reduced foreign investment, all of which tended to heighten uncertainty on the part of foreign investors," ECLAC reports.

FDI flows into Central America and the Caribbean countries fell 13% in 2002, but remained similar to inflows from 1995 to 1999, with Costa Rica, where FDI

37

income rose 41%, a case apart. In South America, FDI inflows fell 31% in 2002, reaching just 60% of the annual average posted between 1995 and 1999.

In the Andean Community, where natural resource-seeking strategies predominate, FDI income did not suffer as much from the global downturn. Although it dropped 18% in 2002, this was somewhat less severe than the downturn for the region as a whole, and reflected conditions in Venezuela. FDI in hydrocarbons rose the most, reflecting the threat of war in the Middle East, while investment in minerals fell off considerably.

In Mercosur countries and Chile, FDI inflows fell 35% in 2002. These countries saw biggest rise in the previous decade and the sharpest fall in the new millennium. In 2002, FDI inflows were slightly higher than the annual average posted between 1995 and 1999. In this subregion, market-seeking strategies prevail among transnational corporations and FDI inflows were stymied by the completion of privatization processes, economic crises in Argentina and Uruguay, and lower growth in Brazil and Chile.

The Top 19 Recipients of

Net FDI as a percentage of GDP (1997 – 2000)

20% or more: 3 Countries

1 Lesotho 21.8 2 St. Vincent & the Grenadines 21.2 3 Angola 20.4

10%-20%: 9 Countries 4 St. Kitts and Nevis 17.1 5 Azerbaijan 16.2 6 Trinidad and Tobago 11.8 7 Grenada 11.3 8 Vanuatu 10.5 9 Nicaragua 10.5 10 Panama 10.4 11 Bolivia 10.4 12 St. Lucia 10.3 7%-10%: 7 Countries 13 Seychelles 9.3 14 Chile 8.0 15 Equatorial Guinea 8.0 16 Estonia 7.7 17 Guyana 7.5 18 Czech Republic 7.4 19 Armenia 7.2

Table 18 Source: www.theglobalist.com/DBWeb/StoryId.aspx

38

With the exception of Lesotho8, whose main products are clothing, footwear and other light manufactures, of the top FDI recipients, seven are relatively small economies which depend mainly on mineral exports: Angola (20.4%), Azerbaijan (16.2%), Trinidad and Tobago (11.8%), Bolivia (10.4%), Equatorial Guinea (8.0%), Guyana (7.5%) and Kazakhstan (6.9%). Another six of the top 20 countries are small island states (with a GDP of between US$ 200 – 600 million) which attract tourism-related investment: St. Kitts and Nevis (17.1%), Trinidad and Tobago (11.8%), Grenada (11.3%), St. Lucia (10.3%) and Seychelles (9.3%). Chile, with a GDP of over US$70 billion, is the only sizeable economy among top FDI recipients, with the highest FDI inflows in relation to its size. The others – Estonia and the Czech Republic pursued successful foreign investment polices9.

8 The Globalist, “Global Markets – Sizing Up Foreign Direct Investment,” pg1-4. “Lesotho, a small

country in southern Africa has a very small economy. Its total production is worth less than one billion US dollars (out of a world GDP of well over 30 trillion dollars), yet, the contribution of foreign investors to the economy was 21.8% of GDP during the years 1997 – 2000”

9 Ibid. pg1-4

39

Section Eight

External Trading Relations Given Guyana’s small leverage in world economy and interests - Guyana represents around one-tenth of the population of CARICOM, about one-tenth of one percent of the population of the FTAA, and an even smaller percentage of the WTO membership – it is imperative that it seek to cooperate with partners that have similar objectives. Currently, Guyana is engaged in four major negotiations: I. The Caribbean Single Market and Economy (CSME)

At the regional level, the Caribbean Community (CARICOM) is still strengthening the economic integration of its Member States through the CARICOM Single Market & Economy (CSME). It is intended to facilitate economic development within Member States and across the Region. In essence, the CSME was conceived as an instrument to facilitate economic development of the Member States in an increasingly liberalised and globalised international environment. In the area of trade, the CSME aims to assist in the realisation of full employment of all the factors of production; increased economic leverage and effectiveness vis-à-vis other States, groups of States and entities; expansion of trade and economic relations with other Caribbean, and Central and Latin American Countries; the achievement of increasing levels of competitiveness; and organisation for increased production.

CARICOM is also engaged in negotiations for the formation of a Free Trade Area of the Americas (FTAA). The establishment of the CSME will provide the Region with a basis for production integration and assist in positioning the Region to participate as an equal partner in the agreements already finalised and those that are currently being negotiated. With the establishment of the CSME, which is being undertaken in a phased manner with a series of parallel activities ongoing, a number of benefits are expected to accrue to Guyanese and all other CARICOM nationals.

• Optimal allocation of all the Region's resources. • Increased output of goods and services through production integration. • Access for national producers to entire CARICOM Market in first instance and

to market opportunities further a field. • Enhanced competitiveness of regionally produced goods. • Net positive impact on the profitability of regional companies • Increased opportunities for CARICOM Nationals for investment, service

provision and employment in the new CSME environment.

40

The CSME provides Guyana, as well as the Region with a singular opportunity to organise itself for efficient and competitive production and trade in a globalised world. For Guyanese companies and nationals, the CSME not only offers opportunities in the wider world market, but also in the Regional (CARICOM) market.

II. African, Caribbean and Pacific - The European Union The African, Caribbean and Pacific (ACP) Group of countries on June 23, 2000 signed a new partnership agreement with the 15 member states of the European Union (EU) in Cotonou, Benin. This agreement is referred to as the Cotonou Agreement. It provides the basis for building a new relationship between the parties that encompasses economic, political, and financial and development dimensions. The Agreement is aimed at:-

• The eradication of poverty. • Sustainable development. • The gradual integration of ACP countries into the world economy.

With regard to trade relations, it sets the platform for building, “new trading relations” between the ACP and the EU. It makes reference to the negotiations of Economic Partnership Agreements (EPAs) that will replace the past forty years of partnership with the EU including the past twenty-five years of relations under the various Lomé Conventions that was entered into since 1975. The Lomé arrangements are no longer compatible with WTO rules and are required to conform to the WTO requirements. The WTO at the Doha development Round granted a waiver to the EU for such trading arrangements until January 1, 2008. The ACP Group of countries on September 27, 2002 officially launched negotiations on new WTO compatible EPAs. The new EPAs that will be negotiated over the next five years will replace the past 25 years of non-reciprocal trade relations with the EU under the various Lomé Arrangements. Guyana, among other ACP countries, is continuing to benefit from the preferential access to the EU markets for our exports of rice, rum and sugar. Under the new trade arrangements that will come into effect in 2008 and when the WTO waiver for preferences granted by the EU is set to come to an end, trade with the EU will be on a reciprocal basis and will be based on the new framework that will be put in place which must be WTO compatible. The negotiations for EPAs will be undertaken in two phases. Phase 1 is referred to as the “ALL-ACP” phase in which matters of common interest and concerns of all ACP countries will be addressed. This phase will conclude in September 2003. Phase 2 will address matters of concern and interest to a specific country

41

or regional grouping. The Caribbean is poised to undertake Phase 11 of the negotiations at the regional level. The ACP and EU negotiations are currently in Phase 1 of the negotiations. The task facing the negotiators, who have been partners for several decades looks like a difficult one give the many issues and respective interest to be addressed.

The ACP has identified six clusters for the conduct of the negotiations.

These are:-

1. Market Access. 2. Agriculture and Fisheries. 3. Trade in services. 4. Development Cooperation. 5. Trade related issues. 6. Legal Issues.

For each cluster a lead and alternate spokesperson at the Ambassadorial and Ministerial levels have been identified. Guyana is the alternate Ambassadorial Spokesperson for Agriculture and Fisheries.

For Guyana the EU’s preferential markets are critical to the development and sustainability of the sugar, rice and rum industries. Guyana has benefited from prices higher than the world market prices and preferential access into the EU. The likely erosion of such access will impact on the ability of the industries to become competitive on the international market and undermine the development aspects of the Cotonou.

Guyana has submitted a number of proposals on sugar and rice, which have been adopted at the ACP level and presented as motions for Resolutions to different fora of the ACP/EU. The Resolutions are intended to safeguard trade under the different Commodity Protocols under the Cotonou Agreements. III. The Free Trade Area of the Americas (FTAA)

In December 1994, at the first Summit of the Americas, 34 Heads of State of the Western Hemisphere, encompassing all countries in the Americas except Cuba, agreed to create a Free Trade Area of the Americas (FTAA) by 2005. The FTAA will create the world's largest free trade area — approximating 800 million people and a GDP of almost US$ 11 trillion.

Current negotiations for the establishment of the FTAA are well advanced. At the 3rd Summit of the America in April 2001 the Heads of State of the Hemisphere set January 1, 2005 for the negotiations to conclude and December 31, 2005 for the implementation of the Agreement to commence.

42

Guyana has been participating actively in the FTAA negotiations from its inception in 1995 and continues to do so within the framework of CARICOM’s joint approach to the external negotiations. Guyana is actively represented in the Negotiating Groups on Market Access (NGMA) and Agriculture (NGAG), the consultative Group on Smaller Economies (CGSE) and the oversight Trade Negotiations Committee (TNC).

From the inception of the Summit of the Americas (SOA) process in December 1994, Guyana spearheaded the Caribbean Community’s call for the establishment of a Regional Integration Fund (RIF) that would help the “smaller economies” respond effectively to the adjustment challenges that would result from the implementation of the FTAA and the adjustment to the hemispheric and wider trade liberalization.

IV. The World Trade Organisation (WTO) Guyana became a member of the World Trade Organisation (WTO) on January 1, 1995, following the earlier conclusion of the Uruguay Round Negotiations. Although Guyana became a contracting party to the General Agreement on Tariffs and Trade (GATT), immediately after the country gained became independent in 1996, and a member of the WTO when that organisation replaced the GATT in January 1995, the country has not been able to participate as actively as it would like to in GATT or WTO deliberations since it does not have a permanent mission in Geneva. In February 2002 CARICOM Heads of Government agreed on the appointment of Ministerial lead spokespersons for the region in the key external trade arenas. Guyana, in the person of the Minister of Foreign Trade, was designated the region’s Ministerial spokesperson on WTO matters. Following this decision of CARICOM Heads, the Government of Guyana, with a view to strengthening appropriate institutional arrangements, strategically accredited its Embassy in Brussels as the country’s non-resident Mission to the WTO in Geneva, taking into account the need to effectively co-ordinate the country’s participation in both the Geneva process at the WTO and the ACP-EU Negotiations in Brussels. This arrangement will suffice as an important one until Guyana is able to establish a resident Mission or presence in Geneva.

43

Section Nine

GUYANA: OUTLOOK FOR 2003

With regards to the improvements and expansion that have taken place under the Agricultural Improvement Plan, positive developments are expected in sugar and rice. It is estimated that Guyana’s GDP will grow by 1.2% in 2003. Sugar production is projected to grow by 2.9% to 340,552 tonnes. Rice output is expected to increase by 3% to 296,388 tonnes10. Delayed recovery in the bauxite industry, decline in gold production and non-growth in diamonds production will cause the mining sector to fall by 7.1%11 Merchandise exports are projected to increase by 4.1%, while merchandise imports are expected to rise by 14.2%12 .

10 Budget 2003, “Confronting the Challenges: Staying on course for a prosperous Guyana,” pg44 11 Ibid, pg. 44 12 Ibid, pg45

44