VZCZCXRO4985
RR RUEHGR
DE RUEHSP #0358/01 2191831
ZNR UUUUU ZZH
R 061831Z AUG 08
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC 9333
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHDG/AMEMBASSY SANTO DOMINGO 2627
RUCNCOM/EC CARICOM COLLECTIVE
RUCNDT/USMISSION USUN NEW YORK 0105

UNCLAS SECTION 01 OF 02 PORT OF SPAIN 000358 
 
SIPDIS 
 
SANTO DOMINGO FOR REGIONAL COMMERCIAL OFFICE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EAGR EFIN EINV EAIR KIPR SENV TD
 
SUBJECT: TRINIDAD & TOBAGO ECONOMIC HIGHLIGHTS FOR MID- JUNE TRHOUGH 
MID-JULY 2008 
 
The following were notable economic issues in Trinidad & Tobago during 
the second half of June and first half  of July. 
 
¶1.  China and GOTT sign loan and cooperative agreements 
¶2.  T&T to sign trade agreement with EU 
¶3.  Dubai, NYC support T&T's International Financial Center 
¶4.  T&T deposits US$200m into its sovereign wealth fund 
¶5.  No flour subsidy for T&T 
¶6.  Fuel hedge key to Caribbean Air success 
¶7.  Successful bond issue 
¶8.  Drop in Global Competitiveness ranking 
¶9.  GOTT helps finance St. Vincent Airport 
¶10. Copyright body distributes TT$7 million in royalties 
¶11. Caribbean Sea Initiative 
 
¶1. China and GOTT sign loan and cooperative agreements 
--------------------------------------------- --------- 
On behalf of the Chinese government, visiting Chinese 
Communist Party official He Guoqiang signed an agreement 
 with the GOTT to provide a US$400 million loan facility 
to finance the Alutrint aluminum smelter project.  He and 
 his GOTT hosts also agreed to establish a joint committee 
 for trade, economic, and technical cooperation.  In addition, 
 the PRC agreed to supply Trinidad with a TT$60 million 
(US$10 million) interest-free loan to buy a linear accelerator 
 x-ray scanning and radiation detection system to enhance 
cargo security. 
 
¶2. T&T to sign trade agreement with EU 
-------------------------------------- 
Minister of Foreign Affairs Gopee-Scoon announced that T&T 
is ready to sign the Economic Partnership Agreement (EPA) 
with the European Union (EU).  The EPA is designed to further 
trade reciprocity between Cariforum (Caricom plus the Dominican 
 Republic) and the EU.  While T&T's goods and services will 
receive duty free access to EU markets immediately, under the 
agreement, tariffs on EU products will be gradually eliminated 
with 82.75% of products entering T&T duty free within 15 years 
and 86.9% in 25 years.  The agreement has been controversial 
in T&T, albeit less so than in some other Caribbean states. 
 
¶3. Dubai, NYC support T&T's International Financial Center 
--------------------------------------------- -------------- 
During a trip to Dubai by Finance Minister Nunez-Tesheira and 
Central Bank Governor Williams, the Government of UAE and 
Dubai's International Financial Center agreed to collaborate 
with the GOTT to establish an International Financial Center 
(IFC or TTIFC).  In addition to their meetings in Dubai, the 
T&T officials also met with major financial firms in New York. 
According to local reports, Lehman Brothers expressed interest 
in becoming an IFC anchor tenant.  PM Manning touted the success 
of the GOTT missions to Dubai and New York, saying that T&T's 
stability and geographic location as the "gateway" to Latin 
America will enable it to attract top investors. 
 
¶4. T&T deposits US$200m into its sovereign wealth fund 
--------------------------------------------- --------- 
GOTT deposited TT$1.2 billion (US$200 million) of its petroleum 
 revenue from Q1 2008 into the Heritage and Stabilization Fund 
(HSF), T&T's sovereign wealth fund.  In May, the Central Bank 
reported a fund balance of US$1,996 million.  A rule governing 
the HSF requires the GOTT to deposit a minimum of 60 per cent 
of excess energy revenues, defined as the difference between 
actual and budgeted energy revenues, into the fund. 
 
¶5. No flour subsidy for T&T 
--------------------------- 
The GOTT rejected requests by bakers and grocers to subsidize 
flour following the second price increase this year and an 
increase of over 60% in 2007.  The state-owned National Flour 
Mills increased the price of flour by 40% in March and 24% 
on July 1, while competitor Nutrimix Flour Mill was closed 
for expansion.  Nutrimix Flour Mill, which supplied 40% of 
the nation's flour before its closure, anticipates its 
return to market will reduce pressure on flour prices. 
 
¶6. Fuel hedge key to CAL success 
-------------------------------- 
State-owned Caribbean Airlines (CAL) reported that it is 
ahead of revenue targets for the year.  CAL president 
Philip Saunders attributes this success, in part, to a 
fuel hedge that enables the company to purchase jet fuel 
at a favorable price until 2011.  Despite numerous 
requests, the company has declined to disclose more 
information regarding the hedge.  Several newspapers have 
 
PORT OF SP 00000358  002 OF 002 
 
 
suggested the GOTT is providing the state-owned enterprise 
with subsidized fuel.  CAL has adamantly denied this. 
 
¶7. Successful bond issue 
------------------------ 
The GOTT issued TT$1.2 billion (US$200 million) in 
government bonds to absorb the excess liquidity generated 
by the sale of Royal Bank of Trinidad and Tobago (RBTT) 
to Royal Bank of Canada (RBC).  The bonds were auctioned 
and received bids amounting to TT$1.976 billion 
(US$329 million).  Having reached the legislated borrowing 
limit of TT$13 billion (US$2.16 billion) as a result of 
the bond issue, Finance Minister Nunez-Tesheira asked 
Parliament to raise the ceiling to TT$20 billion 
(US$3.33 billion). 
 
¶8. Drop in Global Competitiveness ranking 
----------------------------------------- 
T&T dropped 17 places on the World Economic Forum's 
Global Competitiveness Index, falling from 67 out of 
137 countries in 2006 to 84 in 2007.  The Global 
Competitiveness Report identified crime, government 
bureaucracy, a poor work ethic, and corruption as 
the four key issues that precipitated the drop. 
 
¶9. GOTT helps finance St. Vincent Airport 
----------------------------------------- 
The GOTT approved the release of TT$78 million 
(US$13 million) from the T&T-funded CARICOM Petroleum 
Stabilization Fund to support the construction of a 
new airport runway in St. Vincent.  The fund was set 
up in 2004 to assist other CARICOM countries in coping 
with high energy prices.  T&T contributes TT$420 million 
(US$70 million) to this fund annually. 
 
¶10. COTT distributes TT$7 million in royalties 
--------------------------------------------- - 
The Copyright Organization of Trinidad and Tobago (COTT) 
announced that it will distribute nearly TT$7 million 
(US$1.17 million) in royalties this year, a 21% increase 
from last year.  While this increase may suggest an 
improvement in copyright protection, the Recording Industry 
Association of T&T (Riatt) claimed that recorded music is 
still largely unprotected on the internet.  It stressed 
that T&T's Intellectual Property Office (IPO), a division 
of the Ministry of Consumer and Legal Affairs, needs to 
sign the WIPO Performances and Phonograms Treaty to further 
strengthen T&T's regulatory framework and ensure proper 
protection for artists.  Having passed the Copyright 
Amendment Act in May, which brings T&T into compliance 
with WIPO, the IPO expects to sign the treaty by late 
September. 
 
¶11. Caribbean Sea Initiative 
-------------------------------- 
During an Association of Caribbean States (ACS) meeting, 
a T&T official announced the Caribbean Sea Commission is 
working to implement the "Caribbean Sea Initiative." 
This effort seeks UN recognition of the Caribbean Sea as 
an area of sustainable development.  The hope is that 
such a designation would curb exploitation and pollution 
of the sea while allowing Caribbean states to pursue strong 
development agendas. 
 
KUSNITZ