The Grenville Phillips Column – The End Game – Part 4, Chasing An Illusion
The EPA was negotiated in the worst possible manner, resulting in the worst of all trade agreements for the Caribbean. When I asked why they had signed such a bad agreement, I was told that we had to sacrifice the sunset industries for the sunrise. Suddenly everything made sense – there was a method to the madness.
During the EPA negotiations (2002-2008), I kept hearing that the EPA would facilitate the trade of the Caribbean’s rich cultural industries. The Caribbean has popular events, talented artists, and competent supporting businesses that the EPA was supposed to launch to international recognition. Eleven years later, we can confirm that it did not.
I was the President of the Combermere School Old Scholars Association from 2006 to 2008. During that time, Rihanna became a member, and her popularity was rapidly rising internationally. While the EPA was being negotiated, Rihanna was noted as an example of what the EPA could facilitate. With Rihanna’s undisputed international success, that EPA justification went unquestioned at the time. Let us question it now.
Rihanna became successful without the need for the EPA. No artist will likely become successful because of the EPA. Achieving international recognition in artistic work is something that cannot be predicted. That is the risk of the cultural industries – no one can accurately predict what other people will like enough to spend money on.
There are many talented artists in every country. However, the most skilful artists are not necessarily the most popular. What makes a person with lesser artistic skills have significantly more mass-appeal than someone with significantly more skills? It is an undefined and unknown quality that some have called the ‘X-factor’. To promise an artist international appeal is to promise an illusion.
Sporting achievements, by contrast, are different. If you can dribble a basketball out of traffic and shoot three-pointers consistently, while under pressure, then basketball teams will pay for your talent. If you can dribble a football out of traffic and consistently score goals from outside of the penalty area, then football teams will pay for your talent. If you can consistently run 100 m in less than 10 seconds, then people will pay to see you run.
Physical and mental skills can be developed through practise, and there is a defined standard that the practitioner knows that they must meet to get to the next level of development. The standard for artists is less certain, even if the product is enhanced with better support services. Once a business depends on an undefined emotional appeal, rather than fulfilling a defined physical need, then that is a risky type of business. But we were convinced that we just needed the EPA.
Giving Away the Crown
In exchange for facilitating an illusion, we gave up the crown jewel of modern trade agreements – the lucrative and nationally important construction industry. A single large construction project typically earns BD$100M. The Sam Lords Castle hotel reportedly cost $340M. The construction of a referral hospital may exceed $500M. The Sandals project is reportedly a $900M investment.
With such large sums on the table, construction projects worldwide attract political corruption. The common corrupt component has been measured at between 10% to 30% of the cost of a construction project. Since governments do not meaningfully address corruption, international funding agencies have taken the lead. They normally publish lists of contractors and consultants who engaged in corrupt activities. Those listed can be barred from tendering on their funded projects for up to 15 years.
Despite its vulnerabilities to corruption, the construction industry is important to national development and stability. The Construction industry allows persons to enter at any skill-level, and advance to the top on merit alone. A teenager with no academic certificates can start as an unskilled labourer, and become a skilled artisan, supervisor, and then contractor. A teenager with drawing skills can start as a draughtperson, and become an architect or engineer.
The EPA will open the Caribbean market to competition from the combined European construction industry, but effectively closes the European market to us. Unlike when our fore-parents were purchased for trinkets, we gave away the crown jewel that sustains national development for nothing, an illusion, a promise of Rihanna-like potential for our artists, which after 11 years has not been realised.
We Are To Blame
We have no-one to blame but ourselves. We took the lunatic decision to negotiate the EPA in secret. Our trade experts lacked the experience to recognise trade barriers written into the EPA, that effectively disqualified Caribbean construction practioners from trading in Europe.
The trade barriers with the FTAA were hidden, and we had to find them. The EPA trade barriers are plainly written, with a no apparent effort to disguise the obvious intent. The European negotiators appeared to employ the ‘hiding-in-plain-sight’ strategy, which tends to work when playing against relatively inexperienced players.
The construction industry is about 15% to 20% of our total annual economic activity. It also facilitates social stability – turning wayward youth into responsible adults through the apprenticeship system. With so much at stake, we should be trying to make the industry internationally competitive, but we seem to be trying to do the exact opposite.
The selective regulation of local and foreign construction companies is discriminatory, and grossly unfair to local contractors. For example, the Chinese construction companies appear to be almost unregulated when compared to the effort made to regulate local construction companies. When the Government awards no-bid construction and consultancy contracts, it can only corrupt the industry and damage our most competent companies.
Artificially raising construction costs discourages demand for new-construction. Smaller contractors rely on building houses so that they can develop into medium sized companies. However, VAT on construction materials makes construction unnecessarily expensive. The VAT on construction materials alone, can take a homeowner about 5 years of a 30-year mortgage to repay. We should not have to go in so much debt to pay a tax.
There is so much that the current administration can do to adequately prepare Barbados for what is to come, without the need for austerity. They simply need to start listening to other advice, and then determine whether it is better than what they have received. However, they serve BERT alone, and BERT has publicly admitted that they never looked at any of the non-austerity economic plans for Barbados – and will never look at them. If we continue on our present path, then we are sunk.
Next week, the conclusion of this 5-Part End-Game series.
Grenville Phillips II is a Chartered Structural Engineer and President of Solutions Barbados. He can be reached at NextParty246@gmail.com