The foregoing typifies the world trading system in which we are operating and the driving force behind globalization has been the expansion in goods and services. And well into the 21^st Century, trade will continue to drive global integration especially among countries in the developing world.

It is the case that trade liberalization, new technologies, foreign investments and expanding media and Internet connections are opening many opportunities for millions of people around the world. However, owing to the privatization and concentration of technology and power, these advancements and their potential for development threaten to exclude and marginalize significant numbers of people and have served to widen the gap between the rich and poor. One statistic will demonstrate this. According to the 1999 Human Development Report, the income gap between the richest fifth of the world's people and the poorest fifth, increased from 30 to 1 in 1960 to 74 to 1 in 1997.

While globalization and interdependence pose many threats to established methods for conducting business and to human security, it also offers new opportunities for countries in the Caribbean to remove barriers to cooperation and to enhance production, investment and income for the betterment of the people of the region.

REGIONAL DEVELOPMENTS

In line with this, a key priority must be for CARICOM countries now to complete the long delayed single market and economy. This would create a larger economic space within CARICOM thereby holding out prospects for increased investment, export development and economic growth in all of its member countries. However, the extent to which firms are able to expand exports would depend not only on policies of governments, but on the readiness and ability of the private sector to compete effectively.

Another important priority for CARICOM countries, must be the consolidation of its negotiating arrangements for the freeing of trade with neighboring states in the Caribbean Basin, such as Columbia, Dominican Republic and Venezuela. As well, the small size of CARICOM economies provides a compelling reason for regional integration at the wider level of the Association of Caribbean States (ACS), optimizing the advantages to be gained by enhancing mutual cooperation in economic and trade-related areas, within this Grouping.

There is also the need to lock in arrangements with traditional trading partners as CARICOM countries prepare for the inevitable removal of preferential access to these markets. The dramatic breakthrough last month in the context of a post Lomé agreement between the African, Caribbean and Pacific states and the European Union still has to be formalized. But, the more realistic timetable which rolls over the present agreement for an additional period of time and leading to eventual free trade with Europe, provides a further window of opportunity for these small economies to strengthen their capacities for the onset of reciprocal arrangements.

Similarly, while other process-related barriers need to be crossed, the recent passage in the United States Senate of the Caribbean Basin Initiative (CBI) Enhancement Bill, which includes increased access to the US market for textiles and apparel from Central America and the Caribbean could only be viewed as positive. Such developments bode well particularly for Jamaica and could provide an opportunity for restoring the competitiveness of its garment industry.

Meanwhile negotiations on the Free Trade Area of the Americas (FTAA) to which CARICOM countries have committed continue and although the process is not scheduled for completion before 2005, it is unlikely that special consideration will be given to smaller economies within this proposed trade bloc.

In a similar vein, the Uruguay Round Agreements have, at times, had very severe impact on some of the most vulnerable members of the world community. Developing countries see an imbalance in the way existing agreements affect them and are pressing for their review at the upcoming Seattle Ministerial Meeting, later this month. Furthermore, they are calling for a Development Round rather than a Millennium Round and wish to see development considerations play a central role in the negotiations. This is very much in line with the broader and more comprehensive concept of development, which I will address later in this presentation.

Meanwhile, proponents of the Millennium Round have repeatedly stated that a comprehensive round of negotiations and a Development Round are not mutually exclusive. Thus, a major challenge in Seattle is whether developing countries can withstand the pressure for further liberalization through extending WTO disciplines to regulate "new issues", such as investment and trade; trade and competition policy; transparency in government procurement practices; and electronic commerce.

The foregoing argues for, among other things, acceleration in the pace of regional integration and rapid diversifying of the economic base of Caribbean economies, if the opportunities presented by globalization and liberalization are to be seized. The narrow export base of Caribbean economies, and the limited success in Jamaica in diversifying export activity in keeping with the objectives of the National Industrial Policy, is the issue to which I now turn.

BROAD TRENDS IN JAMAICA'S EXPORT PERFORMANCE

A review of Jamaica's export base over the past five years suggests that limited diversification has taken place. The mining sector dominates merchandise export revenues, accounting for around 50 % of all sectors. Except for mining, the share of other major merchandise sectors - that is, agriculture and agribusiness and manufacturing - declined in 1998 when compared to 1993.

In terms of the composition of Jamaica's exports, commodities are the top revenue earner, with primary products such as bauxite and sugar, which are characterized by little value added, weak and volatile market prices and unstable market demand, comprising the bulk of exports. For example, in 1993, primary products accounted for about 78.6% or US$808 million of total merchandise exports. This share increased to 79.1% in 1998 at the expense of manufactures, which grew at a slightly slower pace over the corresponding period.

The heavy emphasis on primary products - indeed the changes in favour of primary commodities--would suggest that efforts to diversify the base of the economy have been progressing quite slowly. Moreover, it should also be noted, that while technology or human capital intensive export products grew the fastest during the period 1993 to 1998, the share of such products in overall merchandise exports is very small, that is, less than US$3 million in 1993.

Data reveals that the contribution of non-traditional exports to revenues over the last five years has increased with manufacturing products - apparel - making up the bulk, although the contributions from manufacturing have contracted over the 1993 to 1998 period. Similarly, non-traditional agriculture and agribusiness increased as a source of export revenue over this period, reflecting positively on efforts to support this subsector in the export base. To the extent however, that such shifts have occurred at the expense of the manufacturing sector, this does not bode well given that manufactures contain the main source of value added and technological intensity and therefore, greater earning capacity.

Concerning trends in the export services sector, tourism contributes more than 90% of earnings and mirrors the lopsidedness seen in the merchandise export sector. While data exists for certain services, such as tourism, transportation and financial services, disaggregated data classified by categories along WTO lines, including business, educational, and culture and entertainment services, is hard to come by. Hence, a definitive statement on the contribution of these services to GDP or on service investment flows and stock, cannot be made.

Indeed, it is a sad commentary that, notwithstanding the increasing importance of the services sector in international trade and in trade negotiations, to employment generation, its potential contribution to trade diversification and thus to a reduction of external vulnerability, insufficient attention has been paid to data collection, disaggregation and analyses in the non-tourism services sector. This state of affairs must seriously complicate the national policy and planning process and would argue for the initiation of efforts on the part of the relevant institutions to correct this situation.

Efforts by the Jamaica Exporters Association to develop databases and conduct market research not only on goods, but as well on the services sector, are steps in the right direction. Such information would provide the basis for determining new service sector activities. In turn, innovative and creative entrepreneurs would have an opportunity to look beyond the traditional sectors and embrace these new dynamic sectors in the global economy, including telecommunications, information, electronic commerce, microelectronics and robotics. As I understand it, information technology services such as data processing and software development are very much in the formative stages.

A shift to these sectors will require a labor force that is more skilled and knowledge oriented and capable of adopting these new technologies. Relatedly, in light of the challenges posed to average literacy and numeracy skills, a massive basic education programme of the Jamaican labor force is needed, for the long-term economic development of the country. Values such as respect, discipline and a commitment to excellence, must be part of any basic education programme.

The key input for enhancing competitiveness is perhaps knowledge of customer preferences, and export firms must have access to this information so as to respond efficiently to more demanding and sophisticated consumers. Furthermore, information and knowledge of firms' competitive positions relative to their rivals is critical for increasing productivity growth. In this connection therefore, the role of the Export Resource Centre of the Jamaica Exporters Association in the provision of these services, remains vital for improved decision making at the firm level.