Trinidad and Tobago: Selected Issues and Statistical Appendix
Author: International Monetary Fund
Publication Date:
19 Jul 1999
eISBN:
9781451837599
ISBN:
9781451837599
Language:
English
Keywords:
ISCR; CR; trade; export; import; production; CARICOM trade; anti-export bias; CARICOM export; consumer goods; trade reform; Trade barriers; Trade policy
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This Selected Issues paper and Statistical Appendix reviews developments in the energy sector of the Republic of Trinidad and Tobago during 1997–99, and assesses the outlook for energy-related industries. The paper highlights that in 1998, the decline of mature fields was exacerbated by the low price of oil experienced during the year, which made exploitation of some fields uneconomic. The paper examines the fiscal sustainability of energy resources. It also analyzes trade liberalization that has been an integral part of Trinidad and Tobago’s efforts to restructure its economy for sustained growth.

Abstract

This Selected Issues paper and Statistical Appendix reviews developments in the energy sector of the Republic of Trinidad and Tobago during 1997–99, and assesses the outlook for energy-related industries. The paper highlights that in 1998, the decline of mature fields was exacerbated by the low price of oil experienced during the year, which made exploitation of some fields uneconomic. The paper examines the fiscal sustainability of energy resources. It also analyzes trade liberalization that has been an integral part of Trinidad and Tobago’s efforts to restructure its economy for sustained growth.

III. Trade Regime: Openness, Structure and Effects of Trade Liberalization1

A. Introduction

57. Trade liberalization has been an integral part of Trinidad and Tobago’s efforts to restructure it’s economy for sustained growth. In the 1980s, trade policy was used to promote industrialization through protectionism and to contain external imbalances. As part of an overall strategy of macroeconomic stabilization and structural reform began in the late-1980s, substantial progress was made in liberalizing the trade and exchange rate regime, with the objectives of enhancing competitiveness, promoting efficiency and diversifying the economy to reduce its vulnerability to external shocks.2 In recent years additional wide-ranging reforms have taken place, both unilaterally, as well as within the context of regional trading arrangements such as the Caribbean Community and Common Market (CARICOM).3

58. The transformation of trade policy has had a visible impact on trade flows, which have undergone a significant change over the last decade. This paper outlines the measures taken to liberalize the trade regime during 1988-98 and analyzes the impact on the volume and structure of trade flows. Section 2 describes the trade policy regime in the pre-reform period. Section 3 outlines the main features of trade reform, including regional integration. Section 4 examines the effect of trade liberalization on the volume and structure of trade flows. Section 5 concludes with a discussion of the unfinished agenda.

B. Background

59. Until the late 1980s, the trade regime in Trinidad and Tobago was very restrictive and nontransparent, characterized by high tariff protection, widespread use of quantitative restrictions, and heavily regulated foreign exchange markets. As was the case in many countries in the region, the trade regime reflected not only a reliance on an import-substitution based industrialization strategy, but also a recourse to protectionism in the face of external shocks. The use of quantitative restrictions on foreign exchange and foreign trade operations increased in the early 1980s in response to balance of payments crises that resulted from a decline in the terms of trade, in particular declining petroleum prices, and the sharp contraction of oil revenues.

60. Trade restrictions took the form of high import tariffs as well as many nontariff barriers, including quantitative restrictions, price controls and state trading. In 1989, the average (unweighted) nominal import tariff, inclusive of stamp duties, was estimated at 40 percent with intermediate inputs facing rates of 15-20 percent and competing final goods facing rates up to 50 percent.4 Quantitative restrictions were enforced through a negative list system which categorized imports between those which were subject to stringent licensing requirements, and those whose importation was prohibited.5 Import prohibitions and licensing requirements applied to all competing imports, with the most stringent conditions applying to agricultural goods.

61. The tariff schedule was characterized by numerous exemptions for imports of raw materials and capital equipment used in manufacturing production, many of which were granted in an ad hoc manner. The extensive duty exemptions and escalating tariff rates by stages of production resulted in high rates of effective protection, with two-thirds of domestic production having effective rates of protection (ERP) between 50 percent and 110 percent, and one-third exceeding 110 percent.6 Supplementing these restrictions were extensive foreign exchange controls, including surrender requirements for foreign exchange, restrictions on import payments through a system of trade allocation certificates, and mandatory licensing of exports and imports. Restrictions were also imposed on, inter alia, the repatriation of profits and capital, and holdings of foreign currency accounts.

62. This highly protected trade regime distorted relative prices and created a bias towards import substitution and against nontraditional exports. The anti-export bias was exacerbated by an overvalued exchange rate, with the real effective exchange rate appreciating by over 70 percent from 1980 to 1985. Traditional exports, mainly crude oil and petroleum products, dominated merchandise exports, accounting for 80 percent of all exports in 1984 (Figure 4). Petrochemicals constituted over 54 percent of nontraditional exports and 11 percent of total domestic exports. The largest category of imports—intermediate and capital goods—accounted for over 70 percent of total imports in 1984, consistent with the composition of imports in a regime where raw materials received priority over consumer goods in foreign exchange allocation (Tables 3 and 4).

Figure 4.
Figure 4.

Trinidad and Tobago: Composition of Exports, 1984-97

(In percent of total exports)

Citation: IMF Staff Country Reports 1999, 067; 10.5089/9781451837599.002.A003

Sources: CSO; CBTT; and Fund staff estimates.
Table 3.

Trinidad and Tobago: Trade Structure, 1984-97

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Sources: Central Statistical Office; Central Bank of Trinidad and Tobago; International Finance Statistics; and Fund staff estimates.

Excludes re-exports.

Table 4.

Trinidad and Tobago: Structure of Imports, 1984-97

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Sources: Central Statistical Office; Central Bank of Trinidad and Tobago; and Fund staff estimates.

Includes crude materials, minerals, fuels, lubricants, and chemicals.

Includes imports under processing arrangements.

63. The geographical concentration of trade paralleled the commodity concentration of trade, with the United States alone accounting for 58 percent of all exports and 44 percent of all imports in 1984. Although Trinidad and Tobago dominated intra-CARICOM trade, accounting for around 50 percent of all intra-CARICOM exports, exports to CARICOM countries accounted for only 10 percent of its total exports (Table 5). Despite the adoption of a CARICOM common external tariff (CET) in 1976, in the mid-1980s intraregional trade plummeted as member countries imposed additional quantitative restrictions and exchange controls on regional imports. From 1984 to 1988, Trinidad and Tobago’s exports to CARICOM markets registered an average annual decline of 2.5 percent, while imports from the region contracted sharply by an average of 25 percent.

Table 5.

Trinidad and Tobago: Select Indicators of CARICOM Trade

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Sources: International Finance Statistics; and Fund staff estimates.

Includes Suriname and Haiti.

64. Trinidad and Tobago’s trade to GDP ratio increased from 52 percent in 1984 to 59 percent in 1988, comparing favorably with that of other countries in the region (Table 6).7 While the higher trade ratio may suggest that the Trinidadian economy became more open during this period despite the adoption of more protectionist policies, economic activity actually contracted sharply as a result of the downturn in oil production and prices. Export values declined at an average annual rate of 19 percent during this period, as compared to export volumes which declined at an average annual rate of 8 percent, reflecting the deterioration in the terms of trade. The much higher contraction in the volume of imports, by an annual average of over 20 percent, reflected to a large extent the imposition of exchange and trade controls aimed at restraining import demand in the economy.

Table 6.

Trinidad and Tobago: Trade/GDP Ratios in Various Caribbean, Latin American and Asian Countries, 1984-97

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Sources: International Finance Statistics; and Fund staff estimates.

C. Trade Reform

Beginnings of trade reform (1988-92)

65. Following the balance of payments crisis in the late 1980s and as a part of the structural adjustment program, the authorities undertook a comprehensive trade reform that involved the gradual relaxation of import prohibitions and licenses on many intraregional and extraregional imports, the relaxation of exchange control barriers, and a major rationalization of the tariff structure. The changes in the trade regime reflected not only unilateral measures adopted by the government but also the effects of regional commitments arising out of membership in CARICOM.

66. By 1990, the imports of 12 product groups, accounting for 37 percent of total imports, were freed from exchange controls, raising the share of imports free of exchange controls to more than 60 percent. The system of allocating foreign exchange for consumer capital goods was relaxed and exchange restrictions on import payments, covering about 40 percent of total imports, were removed. Export licensing requirements for a number of agricultural products, petroleum and petroleum products, and manufactures were also removed. The scope of the negative list was reduced, with quantitative restrictions replaced by temporary import surcharges which were levied to protect locally manufactured goods in the transition period leading to a trade regime based on tariffs only.8

67. While Trinidad and Tobago, along with Jamaica and Guyana, had adopted the CET in 1976 in principle, the CET was only implemented effectively with the endorsement of the Caribbean Single Market Economy in 1991. A revised CET was introduced in 1991, which featured a reduction in the rate structure from a range of 0-60 percent to 5-45 percent and the removal of most tariff and nontariff barriers for intraregional trade, although exemptions to the basic structure were maintained.9 10

68. Despite the progress made in liberalizing and improving the transparency of the trade system, the effect of the reforms was modest. The introduction of substantial import surcharges, intended to compensate for the fiscal costs of the tariff reductions, widespread exemptions to the CET, and the remaining exchange restrictions, all resulted in a regime which, while considerably more liberal than the one existing in the mid-1980s, was still restrictive.

Acceleration of trade liberalization measures (1992-98)

69. In the mid-1990s substantial progress was made in eliminating and rationalizing remaining restrictions on trade, as the exchange system was fully liberalized and compliance with the phased reduction in the CET was achieved.

70. Tariffs: As a member of CARICOM, in 1993 Trinidad and Tobago adopted the CET four-phased schedule of rate reductions aimed at lowering the maximum rate on industrial goods (excluding those that are subject to exemptions in List C) from 35 percent to 20 percent by 1998 (agricultural goods remained subject to a maximum rate of 40 percent). Tariff reform also entailed a progressive reduction and narrowing of the bands of harmonized tariffs in stages over the 1991-98 period, with the number of tariff bands being reduced from 16 in 1992 to 9 in 1998. Tables 7 and 8 show the decline in the maximum and average tariff rates and the reduction in tariff dispersion since 1992.

Table 7.

Trinidad and Tobago: Tariff Schedule, 1992 and 1998 1/

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Source: World Trade Organization; UNCTAD; and Fund staff estimates.

The average MFN tariff, excluding special duties.

Table 8.

Trinidad and Tobago: Frequency Distribution of Nominal Tariffs, 1992 and 1998

(In percent of total tariff lines)

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Source: World Trade Organization; UNCTAD; and Fund staff estimates.

71. There is some evidence that the reform succeeded in offsetting partly the initial anti-export bias in favor of manufactured and final consumer goods and reducing the effective rate of protection on the latter. Tables 7 and 8 shows that the average tariffs on both manufactured and final consumer goods have been reduced considerably. However, the escalated tariff structure still provides higher effective than nominal protection to final consumption goods, since imports of noncompeting inputs or capital goods are granted duty free access, or face duties of only 2.5 percent.

72. Nontariff barriers: Quantitative restrictions for trade have been largely dismantled and the scope of the negative list narrowed considerably, although import licenses are still required for a few goods.11 The stamp duty on agricultural and manufactured goods was repealed as of 1994, and a phased reduction of import surcharges was achieved. Currently, surcharges ranging from 5 percent to 45 percent apply to a number of agricultural products that are expected to be largely phased out by 2004.12 Export taxes were abolished under CARICOM provisions, and a uniform value-added tax (VAT) of 15 percent was levied on imported goods, although many basic commodities are zero-rated. The rates of excise duties on most alcoholic beverages, tobacco and petroleum products were harmonized for domestically produced goods as well as imports from CARICOM member states, although import duties on alcoholic beverages are determined as specific rates.

73. Exchange rate: Trinidad and Tobago had a fixed exchange rate regime until 1993, when the exchange rate was floated and a market system based on the interbank foreign exchange market established. All remaining foreign exchange controls were abolished and the exchange system fully liberalized.

74. Regional trading arrangements: Trinidad and Tobago, a GATT contracting member since 1962, became a member of the World Trade Organization in 1995. As of 1998, most of its tariff bindings in the WTO were at rates of 50-70 percent for most industrial goods, but substantially higher tariff bindings (mostly at 100 percent) applied to agricultural goods.13 As a member of CARICOM, Trinidad and Tobago has bilateral trade agreements with neighboring countries such as Colombia (1994) and Venezuela (1993). These arrangements grant temporary preferential access to CARICOM exports, after which the preferential trade scheme is to become universal and lead to a phased reduction of duties and nontariff barriers on exports from these countries.

75. As a signatory to the Lomé Convention, exports of certain primary products originating in Trinidad and Tobago are offered duty free access into the European Union. Traditionally, exports of sugar and rum have been the main beneficiaries, but recently preferential access has been granted to petroleum and fertilizers. Trinidad and Tobago also benefits from trade arrangements between Canada and Caribbean countries (CARIBCAN), and the United States and Caribbean countries under the Caribbean Basin Initiative (CBI), which allows duty free entry into the U.S. for a wide range of exports grown and manufactured in eligible countries.14 Membership in other regional integration groups includes the Association of Caribbean States (ACS), which is comprised of 25 Caribbean states, and was formed in 1994 to promote regional development and trade.

D. Effects of Trade Reform

76. Trade liberalization is expected to encourage larger and less distorted volumes of trade, and to result in greater diversification of trade flows as the bias against nontraditional exports is reduced. This section attempts to assess the impact of trade liberalization on the volume and structure of Trinidad and Tobago’s trade, by examining movements in trade flows over the 1984-97 period.

Volume of trade

77. The general success of the trade reforms is reflected in greater openness of the economy, with the trade to GDP ratio almost doubling from 57 percent in 1992 to 95 percent in 1997, consistent with the experience of other countries in the region (Table 6). Figure 5 presents a comparison of the degree of openness in a select group of countries. While not all countries in the Latin American and Caribbean region liberalized their trade regimes at the same time or to the same extent, the last decade has witnessed an increasing trend towards greater openness in the region.

Figure 5.
Figure 5.

Trinidad and Tobago: Comparison of Degree of Openness

(Percent of GDP)

Citation: IMF Staff Country Reports 1999, 067; 10.5089/9781451837599.002.A003

Sources: CSO; CBTT; IF; and Fund staff estimates.

78. The reduction of the anti-export bias from import protection and appreciated exchange rates, improvements in the terms of trade, and increased investment outlays in the energy and manufacturing sectors, have contributed to positive export growth. Exports registered an average annual growth of 6.5 percent in the 1992-97 period (4 percent in volume terms), and the share of exports in GDP has risen from 31 percent in 1992 to over 40 percent in 1997 (Figure 6).

Figure 6.
Figure 6.

Trinidad and Tobago: Summary Measures of Trade Performance, 1984-97

(Percentage of GDP)

Citation: IMF Staff Country Reports 1999, 067; 10.5089/9781451837599.002.A003

Sources: CSO; CBTT: and Fund staff estimates.

79. The impact of the reforms is visible to an even larger extent on the import side, as imports have rebounded from their low levels in the mid-1980s. Since 1992, import values have been growing at an average annual rate of 14 percent per year (15 percent in volume terms) (Figure 7). With that, the import to GDP ratio more than doubled from 25 percent in 1984 to 53 percent in 1997 (Figure 6). The increase in import volumes is consistent with the response of imports to the liberalization of quantitative restrictions, elimination of foreign exchange controls, and the removal of restrictive licensing practices that were undertaken in the reform period. In 1997-98, import growth outpaced export growth as a result of a surge in capital and intermediate goods imports related to foreign direct investment in the energy sector, as well as higher consumer goods imports.

Figure 7.
Figure 7.

Trinidad and Tobago: Trade Volume Growth, 1988-97

Citation: IMF Staff Country Reports 1999, 067; 10.5089/9781451837599.002.A003

Sources: CSO; CBTT; and Fund staff estimates.

Structure of trade

80. Trinidad and Tobago’s trade structure has undergone a considerable change during the 1984-1997 period, both in terms of the composition and the direction of trade. Export diversification has taken the form of reduced dependence on traditional exports, which only accounted for 44 percent of total exports in 1997, as compared with 80 percent in 1984 (Figure 4). This decline is most marked for crude oil, Trinidad and Tobago’s leading export product, with its share in total exports falling from 45 percent in 1984 to 18 percent in 1997.

81. The performance of nontraditional exports reflects the stimulus provided by the reforms of the trade and exchange systems, with their ratio to GDP increasing from 6 percent in 1984 to 24 percent in 1997 (Table 3) and their share of total exports from 20 percent to 56 percent. The volume of nontraditional exports registered an annual average increase of 3 percent over the 1988-97 period. Within nontraditional exports, manufactured goods accounted for less than 5 percent of GDP in 1984, but grew to 19 percent of GDP in 1997, led by petrochemicals, cement, and iron and steel manufactures. However, more labor-intensive agricultural products, namely beverages and food products, and manufactures other than chemicals and iron and steel, registered the greatest improvement, growing at an average rate of over 22 percent during this period from low levels. Notwithstanding the growth in these export categories, Figure 8 shows that petrochemicals continue to dominate nontraditional exports, accounting for 45 percent of the total.

Figure 8.
Figure 8.

Trinidad and Tobago: Composition of Nontraditional Exports, 1984-97

(In percent of total exports)

Citation: IMF Staff Country Reports 1999, 067; 10.5089/9781451837599.002.A003

Sources: CSO; CBTT; and Fund staff estimates.

82. On the whole, export diversification has been modest, as exports remain heavily concentrated on a few products, with petroleum and petrochemical exports accounting for over 70 percent of total exports. The capital-intensive nature of the energy sector has created a growing dependence on imported capital goods, with the share of machinery in total imports increasing from 30 percent in 1984 to 46 percent in 1997, largely fueled by an investment boom in the petrochemical sector (Table 4). While the ratio of consumption goods to GDP has remained relatively constant over the 1992-97 period, consumer goods imports have grown at an average annual rate of 18 percent since 1992. Within consumer goods, there has been a marked decline in the share of agricultural goods. The change in the composition of imports away from primary products and towards manufactures is consistent with trade reform. In the pre-reform period, the use of differentiated tariffs, with higher effective protection for manufactured goods, tended to skew the import structure towards a heavier representation of primary goods and a smaller share of durable consumer goods. With trade liberalization, the bias against manufactured goods has been greatly reduced.

83. The change in the commodity composition of trade has been accompanied by noticeable geographical diversification of trade. The recovery of trade from the mid-1980s is reflected in increased sales to both extraregional as well as intraregional markets. The ratio of extraregional trade to GDP has doubled, from 47 percent in 1984 to 96 percent in 1997, while intraregional trade has almost quadrupled from over 4 percent to 15 percent (Table 3). Although the United States continues to be the largest trading partner, accounting for over 40 percent of exports and over 50 percent of all imports in 1997, the share of intraregional trade as well as trade with neighboring Latin American and Caribbean countries has increased. Following the removal of intraregional barriers to trade and compliance with CARICOM provisions, the share of exports to CARICOM markets has almost tripled, from 10 percent in 1984 to 26 percent in 1997 (Figure 9). Exports to Latin American and non-CARICOM Caribbean countries have benefitted from regional trading arrangements, including preferential access to many of these markets, with their share in total exports doubling from 12 percent in 1984 to 26 percent in 1997.

Figure 9.
Figure 9.

Trinidad and Tobago: Destination of Exports - 1984, 1997

Citation: IMF Staff Country Reports 1999, 067; 10.5089/9781451837599.002.A003

Source: Central Statistical Office; Central Bank of Trinidad and Tobago; and Fund staff estimates.

84. The growing importance of nontraditional exports in trade is evidenced by the increased share of these exports in both extraregional as well as intraregional markets. The share of nontraditional exports to extraregional markets has tripled from 5 percent of GDP in 1984 to over 18 percent in 1997, while the share to intraregional markets has increased dramatically from 0.5 percent to 8 percent of GDP (Table 3). Within the nontraditional group, exports of petrochemicals to non-CARICOM markets have increased significantly; exports of agricultural products and manufactured goods to CARICOM markets have also exhibited a substantial increase. In the latter case, the growth of nontraditional exports reflects, in part, stronger regional economic growth in the 1990s, as other member countries have also pursued trade reforms. However, the existence of regional preferential treatment in CARICOM, together with the existence of extensive duty exemptions for agricultural and manufacturing inputs granted to regional exporters, suggests that the present trade regime can potentially impart a bias against extraregional exports of nontraditional goods by creating an incentive for these exports to be directed to relatively protected regional markets.

85. Trinidad and Tobago continues to dominate intra-CARICOM trade, with its exports accounting for over 40 percent of total CARICOM exports in 1997 and over 60 percent of intra-CARICOM exports (Table 5). The main CARICOM trading partner is Jamaica, accounting for almost 40 percent of all exports to CARICOM countries. Despite the elimination of many barriers to intraregional trade, intraregional imports account for less than 4 percent of all imports. This reflects, in part, the lack of diversification in other CARICOM countries as well as their reliance on primary commodities, such as sugar and bananas, tourism, and other service sectors as the centerpieces of their production.

E. The Unfinished Agenda

86. Trade liberalization in Trinidad and Tobago has resulted in the creation of a substantially more open trade regime, and has had a significant impact on the volume and structure of its trade flows. However, more remains to be done. In particular, Trinidad and Tobago’s tariff structure continues to exempt certain manufactured products from the maximum CET rate of 20 percent on industrial goods. A total of 209 tariff lines in List C (or 3 percent of the total) are subject to exemptions, with over 60 percent of these goods subject to import duties of 30 percent.15 The average rate for goods included in List C is 26.1 percent, well above the average tariff of 9.1 percent on all goods. In addition, the specific duties levied on alcoholic beverages in List C can result in an ad valorem equivalent above the maximum rate of 30 percent. For instance, certain kinds of rum may face an ad valorem equivalent tariff of 50 percent of more.

87. In 1998, following a surge in auto imports, import duties on motor vehicles were raised from a previous range of 20 percent to 30 percent to a range of 25 percent to 45 percent for gasoline powered vehicles and from 30 percent to a range of 35 percent to 40 percent on diesel powered vehicles. This increase in import duties represents a regressive step since the maximum rates not only exceed the CET, but also the rate applied on most industrial goods in List C.

88. Because CARICOM provisions do not call for a phased reduction in the maximum rates on agricultural goods, the applied rates for these goods remain high. The tariff on agricultural goods (20 percent in 1998) is significantly higher than the average tariff, and there is considerable dispersion of rates by product groups. While there are no quantitative restrictions on the importation of agricultural products, several products are subject to additional import surcharges, which can be as high as 100 percent for certain poultry parts and 60 percent for sugar.

89. The exemptions to the CET contribute to the sizeable tariff dispersion of 116 percent, which is well above the average tariff rate of 9.1 percent and compares unfavorably with those of many Latin American countries. Table 9 shows that while Trinidad and Tobago’s average tariff and absolute tariff dispersion is comparatively low among the CARICOM countries, its rate of tariff dispersion is high relative to that in many Latin American countries.

Table 9.

Trinidad and Tobago: Summary of Tariff Structure in CARICOM countries, 1998

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Sources: Inter-American Development Bank; and Fund staff estimates.

The unweighted average MFN tariff.

The standard deviation measures the absolute dispersion of a distribution

The coefficient of variation is a measure of relative dispersion of the distribution, defined as the standard deviation divided by the average.

Excludes tariffs on arms and ammunitions (which cover less than .4 percent of all tariff lines) for which the range can be as high as 70 percent.

The index value ranges from one to ten, with one representing the least restrictive trade regime. The calculation of the index takes into account both the level of average tariffs and the use of nontariff barriers (such as quantitative restrictions, export and import quotas, restrictive licensing, and restrictive allocation of foreign exchange). The calculation, however, ignores the degree of tariff dispersion, the number of tariff bands, and discretionary tariff exemptions. Overall, greater weight is given to nontariff barriers, as they generally result in larger economic distortions and less transparent trade regimes than high tariff rates (IMF).

90. In addition, the escalating nature of Trinidad and Tobago’s tariff structure continues to provide higher protection to final consumption goods and agricultural products relative to inputs and capital goods. A lower and more uniform tariff structure would reduce the rate of tariff dispersion and effective protection.

91. As a result of trade liberalization, and growing importance of the VAT and corporate taxes in the oil and non-oil sectors, import duties have lost their importance as a source of government revenue in the 1990s. In 1992, taxes on international trade were 9.4 percent of total tax revenues, with a collected import tariff rate of 11.1 percent. In 1997-98, revenue accruing from import duties averaged 6.6 percent of total revenues, with a significantly lower collected import tariff rate of 3.5 percent, reflecting both the effect of the trade reform as well as higher imports of capital goods, most of which are accorded duty free status.16 The implementation of further reductions in import tariffs and the removal of goods from List C is likely to result in further losses of tariff revenues from import duties. Any revenue shortfalls could be offset partially by broadening the VAT base and widening the use of excise taxes to cover imports.17

92. On intraregional trade, the unfinished agenda would include eliminating remaining barriers to trade and move towards achieving economic convergence, leading to the creation of a CARICOM single market. To date, little progress had been made in the efforts to create the CARICOM Single Market Economy because of a general failure of members to meet convergence criteria as well as to ratify agreements on the free movements of services and capital in the region. The liberalization of services and the free movement of capital and labor across national borders would entail significant economic benefits, including, for instance, lower freight costs resulting from the liberalization of transportation services, a more efficient allocation of savings, and reduction of the costs of financial intermediation through greater competition and economies of scale.

STATISTICAL APPENDIX

Table 1.

Trinidad and Tobago: GDP by Sectors of Origin at Constant 1985 Prices

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Sources: Central Statistical Office; and Fund staff estimates
Table 2.

Trinidad and Tobago: GDP by Sectors of Origin at Current Market Prices

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Sources: Central Statistical Office; and Fund staff estimates.
Table 3.

Trinidad and Tobago: GDP by Final Expenditure at Constant 1985 Prices

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Sources: Central Statistical Office; and Fund staff estimates.
Table 4.

Trinidad and Tobago: GDP by Final Expenditure at Current Market Prices

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Sources: Central Statistical Office; and Fund staff estimates.
Table 5.

Trinidad and Tobago: Savings and Investment at Current Market Prices

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Sources: Central Statistical Office; and Fund staff estimates
Table 6.

Trinidad and Tobago: Retail Price Index

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Sources: Central Statistical Office, and Fund staff estimates.