Faria: Businesses trading with Ukraine now looking closer to home

BUSINESSES that trade commodities with Ukraine are looking for alternatives closer to home amid the Russian invasion, said former CEO of the TT Chamber of Industry and Commerce Gabriel Faria.

Speaking as CEO of Caribbean Advocacy, an advocacy unit that represents businesses locally and regionally, Faria said businesses are now seeking to conduct a practice called “nearshoring,” which is simply looking for commodities in the region.

“They are trying to see where they source their products regionally or closer to them. People are looking for sources closer to home,” Faria said.

He noted, however, that owing tothe combined effects of the pandemic and war breaking out in Eastern Europe, inflation is expected to be the highest it has been in years. In light of this he called on government to make concessions for products that still carry import duties.

In response to Russia’s invasion of Ukraine, the world’s largest economies have sought to wound Russia financially through heavy sanctions and cutting off of businesses.

At the UK's House of Commons on Monday, Foreign Secretary Liz Truss announced the UK’s intention to develop legislation to levy even more sanctions on Russia with the intention of crippling its war machine and its economy on the whole.

The sanctions will include preventing Russian banks from clearing payments in sterling, a full asset freeze on Russian banks and Russian businesses – about three million businesses in total – and a ban on exports to Russia in multiple sectors including microelectronics and marine and navigation equipment.

Economist Marlene Attz, in a conversation with Newsday, said TT’s dependence on imports, especially for food, meant it will feel the effects of any shocks to value chains in the food industries, which will result in further inflation.

“There is an old saying that goes when someone else sneezes, you catch cold. The same happens to TT,” she said “That is because as a small open economy we are heavily dependent on the rest of the world.”

She said if the conflict between Russia and Ukraine escalates or spreads outside Eastern Europe there would likely be implications for food security.