Foreign Economic Relations
Small, open economies depend heavily on preferential trade agreements. Belize's economy benefited from a range of such agreements: the United States sugar quota; the Lomé Convention of the European Economic Community (EEC--in particular, the Sugar Protocol and the Banana Protocol); the CBI; United States Tariff Schedule 807 program; the Multi-fibre Arrangement; and the EAI.
Preferential trade agreements demonstrate the complexity of international trade relations and their effect on economic progress, especially in developing countries. Preferential trade agreements also provide a reminder that trade liberalization is a double-edged sword for all trade participants, developed and developing alike. For example, there were distinct advantages in the existing quota systems for the Belizean sugar industry in the early 1990s. Quotas guaranteed that Belizean sugar would have access to markets in the EEC and the United States at prices far above world market levels. At the same time, it was also clear that a quota system was a unilateral act, that it limited market access, and that quotas could be changed or eliminated by foreign powers at their will.
Belize was a member of Caricom and benefited from preferential market access to the markets of other member countries. However, Caricom's success at integration was mixed. Between 1984 and 1986, Belize's trade with Caricom members decreased sharply as a result of currency devaluations and a renewal of trade barriers by some member countries. In 1988 Caricom approved a common internal tariff, which was to reinvigorate intraregional trade. However, there were some exceptions to the common internal tariff. Caricom's much-delayed common external tariff was adopted by Belize at the end of 1991. This common tariff changed Belize's duty rates but produced no effect on the budget. High duties on foodstuffs were dropped, and duties on machinery were reduced.
Belizean trade patterns were heavily affected by the country's participation in various bilateral and multilateral trade arrangements. The United States and Britain remained the principal destinations of Belizean exports throughout the 1980s. In the second half of the 1980s, the two accounted for more than 80 percent of total exports in every year. Their respective shares fluctuated from year to year, but their combined total remained practically unchanged. Exports to Caricom countries, which had peaked in 1983 at 14.5 percent of total Belizean exports, plunged to 1.9 percent in 1986, but recovered in 1990 to roughly half their 1983 level.
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