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INFO RUCNCOM/EC CARICOM COLLECTIVE

UNCLAS SECTION 01 OF 03 PORT OF SPAIN 001358 
 
SIPDIS 
 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR ECON ECPS EFIN EINV ELNT ETRD KIRP TD
SUBJECT: TRINIDAD ECONOMIC HIGHLIGHTS - NOVEMBER PT 1 
 
Ref:  (A) Port of Spain 1294, (B) Port of Spain 568 
 
The following were notable economic issues in Trinidad & Tobago 
during the first half of November: 
 
¶1.  Farewell BWIA, welcome Caribbean Airlines 
¶2.  Inflation - who's to blame? 
¶3.  Crushing blow to music pirates 
¶4.  Telecom - Digicel goes to court; Paltel drops out 
¶5.  HBO to plug Flow 
¶6.  T&T/India to sign BIT 
¶7.  U.S. consultants derailed 
¶8.  GOTT convenes smelter symposium, but... 
¶9.  Smelter number three? 
¶10. EMA Sends Alutrint Smelter Back to Drawing Board 11. More 
smelter matters 
 
--------------------------------------------- 
¶1.  Farewell BWIA, Welcome Caribbean Airlines 
--------------------------------------------- 
 
Effective January 1, 2007, the 66-year old airline BWIA will cease 
to exist and will be replaced by new entity, Caribbean Airlines 
(CA).  CA's CEO Peter Davies said that his mandate is to position CA 
as a competitive carrier, and he insists that the transition from 
one company to the other will be seamless.  CA will continue to fly 
BWIA routes to the United Kingdom, United States, Canada and the 
Caribbean.  CA plans to extend its engineering capability beyond its 
jet fleet to include the ability to undertake heavy maintenance and 
repair checks on its turboprop aircraft and for other carriers.  CA 
is also interested in providing regional air transport within the 
Caribbean and to major international cities, but the impending 
alliance between Liat and Caribbean Star Airlines may offer stiff 
competition.  (See reftel A for more details on the BWIA-to-CA 
transition.) 
 
On November 20, Davies announced that CA will trade its Heathrow 
slots to British Airways in exchange for a code-share arrangement 
with BA between Port of Spain and Gatwick beginning March 28.  CA 
will continue its scheduled service between Port of Spain and 
Heathrow until March 27.  Under the agreement: 
- Caribbean Airlines' flight code will be placed on BA's service 
from Port of Spain, Barbados and Antigua. 
- The Port of Spain to Gatwick flights will be offered every 
Wednesday, Thursday and Saturday. 
- On all other days, CA and BA will code-share on connecting service 
between Port of Spain and London via Barbados. 
 
------------------------------- 
¶2.  Inflation - who's to blame? 
------------------------------- 
 
Rising inflation has led to mutual finger-pointing between 
government ministers, opposition politicians, farmers and food 
distributors.  Following the announcement that retail prices had 
risen 9.6% year-on-year as of September, Central Bank Governor Ewart 
Williams warned on October 30 that inflationary expectations would 
be difficult to rein in if inflation goes to double digits.  Prime 
Minister Patrick countered with reassurances on November 2 that 
double digit inflation would "not be the end of the world."  Junior 
Finance Minister Conrad Enill, having previously defended the 
government's 2007 budget as "restrained," acknowledged on November 
11 that GOTT's ambitious development expenditure has contributed to 
inflation.  Enill indicated the GOTT is looking at intervention in 
food production and a reprioritization of expenditure to bring 
inflation down to seven percent by the end of the current fiscal 
year, as announced by Prime Minister Manning during the 2007 budget 
presentation.  Then on November 16 Enill announced plans for a 
TT$2.5 billion GOTT bond issue to support Central Bank efforts to 
absorb excess liquidity.  Enill said that a first tranche, expected 
by year-end, would be issued in a variety of denominations targeting 
both individual and institutional investors. 
 
----------------------------------- 
¶3.  Crushing Blow the Music Pirates 
----------------------------------- 
 
In an effort to send the strongest possible signal to music pirates, 
the Copyright Music Organisation of T&T (COTT) destroyed more than 
3,000 unlawfully manufactured CDs and several pieces of electronic 
equipment worth approx. US$13,000 by crushing them with a 
steamroller and burning the rubble in an incinerator on November 10. 
 Local print and broadcast media featured images of COTT President 
Lutalo Masimba, a calypso artist, driving the steamroller.  Masimba 
told press that his organization is committed to eradicating music 
piracy and is going after the 'big fish,' the mass manufacturers of 
these illegal products, in order the stop music piracy at the 
source. 
 
--------------------------------------------- -------- 
¶4.  Telecom - Digicel goes to court, Paltel drops out 
--------------------------------------------- -------- 
 
PORT OF SP 00001358  002 OF 003 
 
 
 
Negotiations toward and interconnection agreement between Irish 
mobile telecom carrier Digicel and dominant carrier TSTT suffered 
new setbacks as Digicel went to court to overturn an arbitration 
panel report intended to form the basis of an agreement and also 
filed a lawsuit against TSTT for dropping calls originated by 
Digicel customers.  TSTT officials blamed new entrant Digicel for 
the failure to conclude an interconnection agreement, with the 
result that the carriers continue to operate on a "sender gets all" 
basis, to Digicel's advantage.  Digicel, which launched in April, is 
loath to the accept arbitration panel recommendations on reciprocity 
of rates, which reportedly would be less favorable for Digicel in 
T&T than in other markets where Digicel competes with Cable & 
Wireless affiliated carriers. 
 
Meanwhile, local start-up mobile provider Laqtel still has not 
launched service and has for the second time parted ways with a 
would-be partner, this time Paltel, a Palestinian based 
telecommunications company.  Laqtel has already signed co-location 
and interconnection agreements with TSTT but has yet to enter the 
market.  Saskatchewan Telecommunications International of Canada was 
Laqtel's previous partner. 
 
-------------------- 
¶5.  HBO to Plug Flow 
-------------------- 
 
Local attorneys for U.S. cable network HBO issued a warning letter 
to T&T cable company Columbus Communications, also know as Flow, 
calling on the company to immediately cease broadcasting HBO's 
programs.  The November 10 letter warned that Columbus is liable for 
both criminal and civil proceedings under T&T's Copyright Act for 
rebroadcasting HBO's programs to the public as part of a 
subscription package without authorization.  Responding to press 
inquiries, a Columbus official asserted that negotiations with HBO 
are still ongoing and active and faulted DIRECTV Trinidad - part of 
California-based DIRECTV Group and the main complainant against 
Columbus Communications' cable piracy - for not cooperating with 
Columbus' efforts to negotiate with HBO (see reftel B). 
 
------------------------- 
¶6.  T&T/India to sign BIT 
------------------------- 
 
India's Vice President Bhairon Singh Shekhawat visited T&T recently 
to hold discussions with the GOTT towards the signing of a bilateral 
Investment Treaty (BIT).  T&T Minister of Trade and Industry Kenneth 
Valley said that the agreement would most likely be signed when 
T&T's Far East mission visits India next year.  Valley said that the 
BIT could facilitate joint ventures between Indian and T&T companies 
in health, information technology and filmmaking.  India is reported 
to be T&T's fourth largest source of inward foreign direct 
investment in the amount of USD 28 million annually.  Shekhawat 
stated that India will increase the number of Indian Technical and 
Economic Cooperation (ITEC) scholarships for T&T nationals from 20 
to 30 a year. 
 
----------------------------- 
¶7.  U.S. Consultants Derailed 
----------------------------- 
 
On November 7, the GOTT Ministry of Works and Transport announced 
that it terminated a contract with U.S. company Parsons 
Brinckerhoff, Quade and Douglas's to oversee the tendering of a US$1 
billion rapid rail project.  The Ministry cited Parsons 
Brinkerhoff's failure to disclose its involvement through a 
subsidiary company in a joint venture with Canadian firm Bombardier 
in a bid for a railway project in Isreal;  Bombardier is a member of 
one of the consortia bidding for the rapid rail project.  The 
National Infrastructure Development Company (NIDCO) reportedly has 
engaged a new consultant to evaluate bids for the project, which 
were due August 31, but NIDCO has not disclosed the new consultant's 
identity.  Selection of the preferred contractor will be made by 
December 31. 
 
------------------------------------------- 
¶8.  GOTT Convenes Smelter Symposium, but... 
------------------------------------------- 
 
In light of concerns raised, and ongoing objections to the proposed 
construction of aluminum smelters in T&T, Prime Minister Patrick 
Manning announced the convening of a national symposium on this 
issue.  The symposium is scheduled for December 6 and is being 
organized by the South Trinidad Chamber of Industry and Commerce in 
collaboration with the National Energy Corporation.  Chamber CEO 
Thackwray Driver said he expects some U.S. and other foreign experts 
to participate. 
 
In spite of calling for the symposium, PM Manning continued to 
insist that government will stand firm on smelters and that neither 
protests nor objections will dictate the pace of GOTT development 
plans.  He said "We will hear what has to be said.  We will separate 
 
PORT OF SP 00001358  003 OF 003 
 
 
fact from fiction and we will take a decision which we believe to be 
in the best interest of the people of T&T." 
 
------------------------- 
¶9.  Smelter Number Three? 
------------------------- 
 
According to newspaper reports, Mitsubishi Corporation, Japan's 
largest general trading firm, has submitted a third proposal for an 
aluminum smelter plant in T&T.  Prime Minister Patrick Manning had 
previously revealed that the GOTT had received an offer.  The Prime 
Minister set off a storm of criticism and commentary when he told 
reporters that once the documents have been examined and accepted by 
Government, and if the proposal meets the requirements of the 
Environmental Management Authority (EMA), "it would be smelter plant 
number three."  According to press reports, Mitsubishi smelter has 
proposed a 125,000 metric ton smelter, would match the production of 
the proposed Alutrint smelter, significantly smaller than the US$1.5 
billion, 341,000 metric-ton smelter proposed by Alcoa. 
 
--------------------------------------------- -------- 
¶10. EMA faults Alutrint's EIA, sets terms for Alcoa's 
--------------------------------------------- -------- 
 
Alutrint, operator of the smaller of two planned aluminum smelters 
provisionally approved by the GOTT, was required to resubmit a 
technical report to T&T's Environmental Management Authority (EMA) 
for the second time, after the EMA ruled that Alutrint had not 
sufficiently addressed environmental and public consultation 
concerns for its environmental impact assessment.  The EMA requested 
Alutrint to provide more information, particularly on its plans for 
public consultation and the buffer zone for the plant. 
 
The EMA also announced the final terms of reference for the 
environmental impact assessment (EIA) of Alcoa's planned aluminum 
smelter.  According to the TOR, Alcoa must evaluate the risk of 
aquifer contamination, hydrogen fluoride emissions and perform a 
social impact assessment to be granted approval by the EMA for its 
planned aluminum smelter in Chatham.  Alcoa must also conduct "site 
specific human health and ecological risk assessments."  Alcoa said 
it would take approximately six months to address all the EMA's 
concerns. 
 
------------------------- 
¶11.  More Smelter Matters 
------------------------- 
 
Trade and Industry Minister Kenneth Valley told press that he is 
encouraging manufacturers to begin looking at possible joint venture 
partners to take advantage of the opportunities should the smelter 
projects get the green light.  GOTT agency ETecK (Evolving 
Technologies) has been mandated to come up with a business plan for 
the industry, which includes identifying the downstream prospects 
for aluminum i.e. cans, bottle caps, ladders, car parts.  E-TecK 
reportedly has already received inquiries from foreign downstream 
manufacturers regarding the possibilities of setting up plants in 
T&T. 
 
AUSTIN