Formulating trade policy in a small hydrocarbon-dependent economy: The case of Trinidad and Tobago

We examine the status of Trinidad and Tobago's trade policy regime based mainly on the WTO's Trade Policy Review 2005 and to a lesser extent the Review of 1998. The paper highlights the areas identified by the WTO that the country needs to address to ensure compliance with the rules, disciplines and commitments made under the Multilateral Trade Agreements and the existence of a trade regime characterised by little or no distortions. It undertakes this discussion against the background of Trinidad and Tobago's role as a founding member of CARICOM and the increasing influence of this body in determining its trade policies in particular and economic policies in general. The study highlights the progress made by Trinidad and Tobago in establishing an outward-oriented trade regime since embracing reforms in the mid-1980s. However, the need for much deeper reforms is stressed if the country is to realise its ambitious objective of becoming the manufacturing base and the commercial, trans-shipment and financial hub of the western hemisphere. Further, it points to the inextricable link between the country's economic fortunes and international petroleum prices, and increasing over-reliance on the hydrocarbons sector. Consequently, it stresses the need for getting its diversification strategy 'right' if it is to minimise the fallout effects associated with the bust that inevitably follows a petroleum boom.