FATF releases Guidance on Correspondent Banking Services

Alicia Nicholls

The Paris-based Financial Action Task Force (FATF) has released its long-awaited guidance on the application of FATF standards in the context of correspondent banking services following its plenary session held October 19-21st, 2016. The purpose of the guidance is to address de-risking and has been prepared in collaboration with the Financial Stability Board (FSB).

The target audience for the guidance includes not just banks and money or value transfer service (MVTS) providers engaged in providing correspondent banking or respondent bank services, but financial institutions with account holders that are MVTS which in turn provide correspondent banking-type services to their own customers, as well as competent authorities (particularly AML/CFT regulators and supervisors of banks and of MVTS providers).

Key Points from FATF Guidance on Correspondent Banking Services

Some key points from the Guidance are as follows:

  • FATF recommendations do NOT require the correspondent bank to know its customer’s customers (KYCC). In other words, correspondent banks are not required to conduct CDD (Customer Due Diligence) on the individual customers of its respondent institution.
  • While noting that simplified CDD are never appropriate in the cross-border correspondent banking context, FATF explains that not all correspondent banking services carry the same level of money laundering or terrorist financing risk so enhanced due diligence measures must be commensurate with the degree of risk identified.
  • FATF identified some factors to consider in assessing correspondent banking risks, including the respondent institution’s jurisdiction, products/services offered and customer base. FATF recommended the risk factors included in Annex II of the BCBS Guidelines on Sound Management of Risks related to ML/FT.
  • However, FATF stopped short of defining what constitutes a higher risk on the basis that doing so could lead to ‘a tick the box approach’ which could encourage, rather than discourage, de-risking.
  • The requirements of FATF Recommendations 10 (Customer Due Diligence) and 13 (Correspondent Banking) must be met before correspondent banking services may be provided to a respondent institution.
  • Correspondent institutions may obtain information required by FATF recommendations 10 and 13 directly from the respondent institution but this information MUST be verified in order for it to meet those requirements.
  • FATF provided some examples of sources of verification from BCBS General Guide on Account Opening
  • On-going due diligence of existing and new CBRs is required but the frequency should depend on the level of risk associated with each relationship.
  • FATF recommended maintaining an on-going, open dialogue with correspondents and noted that while FATF requirements require termination of customer relations where identified risks cannot be managed in accordance with the risk-based approach (RBA), the other options offered by recommendation 10 should be explored before the relationship is terminated.

This is welcomed news especially for Caribbean countries which, according to a World Bank study released in September 2015, appear to be the most affected by the loss of correspondent banking relationships.  This guidance is an important step in tackling de-risking by providing definitive clarity on a number of key areas, including on the hitherto confusing issue of KYCC.

It also stresses against the wholesale termination of CBRs as a first resort, but rather keeping an open dialogue with respondent banks. If followed, therefore, the guidance should reduce the alacrity with which some banks have restricted or terminated correspondent banking relationships. However, this guidance is not binding and the effectiveness will depend on the level of observance by foreign banks and by their regulators.

The Guidance on Correspondent Banking Services is to be read in conjunction with FATF recommendations and guidance papers, including the guidance on RBA for the Banking Sector. It also complements other guidance on correspondent banking services previously released by the Wolfsberg Group and the Committee on Payments & Market Infrastructure (CPMI).

The full FATF Guidance on Correspondent Banking Services may be read here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

FATF congratulates Guyana on AML/CFT Improvements


Alicia Nicholls

At its recently held plenary session on October 19-21, 2016, the Paris-based Financial Action Taskforce (FATF) congratulated Guyana on the “significant progress” the country has made in addressing the deficiencies in its framework for anti-money laundering/combatting the Financing of Terrorism (AML/CFT).


Since its establishment in 1989, FATF has sought to protect the integrity of the global financial system from threats posed by money-laundering (ML), terrorist financing (TF) and the financing of proliferation of weapons of mass destruction. Its main role is setting and promoting standards on these areas and its 40 plus 9 Recommendations are the international standards for AML/CFT and the financing of the proliferation of weapons of mass destruction. FATF’s work is complemented by the nine FATF-style regional bodies, including the 27-member Caribbean Financial Action Task Force (CFATF), of which Guyana has been a member since 2002.

The AML/CFT Mutual Evaluation is a peer review process to evaluate each member country’s level of compliance with FATF’s Recommendations. These reviews are concerned not just with the jurisdiction’s technical compliance with the recommendations but also now with the effectiveness of the country’s AML/CFT systems.

CFATF was very critical of Guyana’s technical compliance with the FATF recommendations in its third round Mutual Evaluation report dated July 2011. Inter alia, the reviewers had highlighted several deficiencies in the Anti-Money Laundering and Countering of the Financing of Terrorism (AML/CFT) Act 2009, the  lack of statistics, staffing shortages and limited staff training. As a result, the country was placed on expedited follow-up and required to report every Plenary. Due to internal political wrangling over the proposed bill’s content, for many sittings Guyana’s legislature could not pass the proposed amended AML legislation.

This inaction, however, had several negative consequences. Starting in May 2013, CFATF had named Guyana among its list of jurisdictions with strategic AML/CFT deficiencies that had not made sufficient progress in addressing them and had warned that if Guyana did not take specific steps by November 2013, not only would it call upon its members to consider implementing counter measures to protect their financial systems from the ongoing ML/TF risks emanating from Guyana but would consider referring the country to the FATF International Cooperation Review Group (ICRG) which analyses the AML/CFT threats from high-risk jurisdictions.

After Guyana had failed to meet the agreed timelines in the action plan, the regional watch body followed through on its threat in its public statement released May 2014 in which it called on its Members to “consider implementing further counter measures to protect their financial systems from the ongoing money laundering and terrorist financing risks emanating from Guyana”.

That language may sound extreme to the reader considering that Guyana is not an international financial centre and any AML/CFT lapse is unlikely to cause even a ripple in the global financial system. Regulatory costs are burdensome for cash-strapped small states which often lack the financial resources and the human resource capacity to meet all the requirements. What little technical assistance is given is often not adequate. As countries which are not members of FATF Caribbean countries also have little say in the regulatory framework or agenda which are often slanted towards the interests of advanced economies.

However, these important inequities aside, a sound AML/CFT framework is important for countries, especially those with porous borders and which are dependent on foreign investment and foreign trade. Having a reputation for a deficient AML/CFT framework could make it difficult for an FDI-dependent country to attract new investment as some parent companies may prohibit the establishment of subsidiaries in a country with a deficient AML/CFT regime. It also increases the country’s risk profile which would make financial transactions and relationships with businesses and persons in that country subject to enhanced due diligence due to the higher level of perceived risk, increasing the chances of its local banks losing their foreign correspondent banking relationships and  thereby restricting its access to the global trade and financial systems.

Guyana’s progress to date

Since coming to power in 2014, the new government in Guyana has been able to implement several reforms to improve the country’s level of compliance with FATF recommendations. These changes have been well-documented in this article by Anand Goolsooran. However, some of those identified in CFATF’s 10th Follow Up Report released June 2016 include the passing of the AML/CFT (Amendment) No.2 Act 2015 in January 2016 and  of the AML/CFT (Amendment) Act No. 15 of 2016 in May 2016 and the issuance of AML/CFT Directives and Guidelines.

As a result, the CFATF assessors concluded as follows:

Guyana has significantly improved its overall level of compliance and most importantly Guyana has fully addressed the core and key Recommendations. While Guyana satisfies the criteria for application to exit the follow-up process, it is still in the FATF ICRG process which it needs to complete first. As such it is recommended that Guyana stay in enhanced follow-up and be required to report on continuing implementation to the next Plenary in November 2016

In mid-September 2016, the visiting FATF/ICRG delegation praised Guyana’s progress towards bringing its framework in compliance with FATF recommendations.  As of October 2016, Guyana is no longer subject to FATF’s on-going global AML/CFT compliance process.  Guyana will continue to work with CFATF to address the outstanding issues with the goal to exit the CFATF follow-up process.

The outcomes of the FATF October 2016 Plenary session may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

US eases some restrictions on Cuban imports for personal use


Alicia Nicholls

On October 14, 2016 the United States Department of Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) announced further amendments to the Cuba Sanctions Regulations. These changes became effective today (October 17, 2016) and include not just an ease on restrictions of Cuban imports, including alcohol and cigars, for personal use, but also facilitation of joint Cuba-US medical research and a variety of other trade measures.

Since the early 1960s, successive US governments have imposed an illegal economic, commercial and financial embargo on Cuba which is not only contrary to international law but has hindered the country’s economy development. In December 2014 US President Barack Obama outlined a new direction to normalise Cuba-US relations. Efforts at normalisation since 2014 have included, inter alia, the removal of Cuba from the US State Sponsors of Terrorism List in May 2015, the re-opening of embassies in July 2015 and the progressive relaxation of some sanctions.

However, US congressional action is needed to reverse the embargo. The embargo has been widely condemned by the international community. On October 26th, the UN General Assembly will be called on for the 25th consecutive year to vote on a Cuba-introduced resolution calling for an end to the five-decade long embargo.

Current Amendments to Cuba Sanctions Programme 

The current tranche of amendments to the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR) cover the following three broad areas:

  • Expanding opportunities for scientific collaboration and access to medical innovations
  • Facilitate increased humanitarian support, grant opportunities and improve Cuban infrastructure
  • Bolster trade and commercial activities and the growth of Cuba’s private sector

Some of the specific amendments are as follows:

  • Authorisation of joint-medical research with Cuban nationals for non-commercial and commercial research
  • Importation , marketing, sale and distribution in the US of FDA-approved Cuba-origin pharmaceuticals
  • Persons who engage in those above activities will be allowed to open and maintain bank accounts in Cuba for use in conducting authorised business
  • Authorisation of grants, scholarships and awards to Cuba or Cuban nationals for scientific research and religious activities
  • Authorisation of persons subject to US jurisdiction to provide services to Cuba or Cuban nationals relating to developing, repairing, maintaining and enhancing certain Cuban infrastructure to directly benefit the Cuban people
  • Removal of monetary value limitations on what authorised travelers may import from Cuba into the US as accompanied luggage. These include Cuban alcohol and cigars. However, the imports must be for personal use and normal limits on duty and tax exemptions will apply.
  • BIS will generally authorise exports of certain consumer goods that are sold online or through other means directly to eligible individuals in Cuba for their personal use
  • Expanded general license by OFAC authorising persons subject to US jurisdiction to enter into certain contingent contracts for transactions currently prohibited by the embargo, subject to conditions.
  • OFAC authorisation of importation into the US or a third country of items previously exported or re-exported to Cuba under a BIS or OFAC authorisation

Comprehensive information on all of the amendments may be obtained via the US Treasury Department’s website here.

 Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

BRICS Summit 2016: Five Key Trade Takeaways


Alicia Nicholls

The BRICS grouping, comprising of the emerging economies of Brazil, Russia, India, China and South Africa, held its 8th Summit in Goa, India under the theme “Building Responsive, Inclusive and Collective Solutions” October, 15-16, 2016. India currently holds the chairmanship of the five-nation grouping.

Here are the main trade takeaways from the Summit:

  1. Support for the WTO-based Multilateral Trading System

The BRICS leaders have reiterated their support for the rules-based multilateral trading system and the World Trade Organisation’s centrality. Leaders noted the increased spaghetti bowl of bilateral, regional and plurilateral trade agreements and advocated that these agreements should be complementary to the multilateral trading system. According to the Goa Declaration, BRICS leaders also encouraged parties to ” align their work in consolidating the multilateral trading system under the WTO in accordance with the principles of transparency, inclusiveness, and compatibility with the WTO rules.”

2. Continued support of Doha Development Agenda

Contrary to the G20 Statement where the Doha Development Agenda was essentially scrubbed from the trade vocabulary, BRICS leaders reiterated their support for advancing negotiations in the DDA, reflecting the sharply divided opinion on the future of Doha  which was demonstrated in the Nairobi Ministerial Statement. They also emphasised the importance of implementing the decisions taken at the Bali and Nairobi Ministerial Conferences and urged all WTO members to work together to ensure a strong development oriented outcome for MC11 and beyond.

3. Promoting BRICS Economic Cooperation

The BRICS leaders praised progress made so far on the implementation of the Strategy for BRICS Economic Partnership and emphasised the importance of the BRICS Roadmap for Trade, Economic and Investment Cooperation until 2020.

4. Improving intra-BRICS Customs Cooperation

The BRICS leaders commended the establishment of the Customs Cooperation Committee of BRICS and the signing of the Regulations on Customs Cooperation Committee of the BRICS in line with the undertaking in the Strategy for BRICS Economic Partnership to strengthen interaction among Customs Administrations.

5. Double intra-BRICS trade by 2020

In his plenary address, India’s Prime Minister Narendra Modi called on fellow BRICS leaders to double the value of intra-BRICS trade to $500 billion by  2020. According to Prime Minister Modi, intra-BRICS trade was $250 billion in 2015. He further noted that this target would require “businesses and industry in all five countries to scale up their engagement” and “for governments to facilitate this process to the fullest”.

The full text of the Goa Statement may be accessed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Caribbean Trade and Development Weekly Digest – October 2-8, 2016

These are some of the major trade and development headlines and analysis across the Caribbean region and the world for the week of October 2-8, 2016. 

For past issues, please visit here.


China tariffs and NTBS inhibit Caribbean and Latin America imports

Stabroek: Prohibitive tariff and non-tariff barriers for trade between China and Latin America and the Caribbean (LAC) continue to seriously inhibit the prospects for the export of both agricultural and manufactured goods to the world’s single largest market, according to a recently concluded study done by the Inter-American Development Bank (IDB).. Read more

World Bank says Caribbean beginning to show signs of recovery

Trinidad Express:The World Bank says Latin America and Caribbean countries are showing signs of economic recovery and an increased volume of exports, including new products in higher quality niches. Read more


Pound hit by ‘flash crash’ in biggest crash since Brexit

Euractiv: The pound suffered a “flash crash” Friday morning, its biggest drop since Britain voted in June to leave the EU, with confused traders scrambling to understand the reason for the sharp sell-off. Read more

Forget Brussels, Brexit’s Toughest Battleground is the WTO

Politico.EU: WTO’s accession chief says Britain’s departure from the EU creates an unprecedented situation that could take years to resolve.Read more

Appellate Body issues report regarding EU duties on biodiesel from Argentina

WTO: On 6 October 2016, the WTO Appellate Body issued its report in the case “European Union – Anti Dumping Measures on Biodiesel from Argentina” (DS473). Read more

WTO and IFC leaders discuss action to tackle trade finance shortfall

WTO: A large and growing shortfall in trade finance is stymieing growth and development because smaller enterprises are denied access to funds which are critical to their participation in global trade. Read more

New Survey Finds Worsening Global Shortage of Trade Finance

ICC: Small- and medium-sized enterprises (SMEs) and African countries are suffering the most from a deepening global trade finance gap according to the ICC 2016 Global Survey on Trade Finance. Read more

Australian Negotiators arrive to begin post-Brexit trade talks

Telegraph: Australian officials are ready to begin work on a free-trade deal with the UK, and have recently flown in to begin hammering out the details of a landmark pact, the country’s top official in Britain has revealed. Read more

EU, US negotiators officially drop aim of concluding TTIP in 2016

EUrativ: Negotiators on both sides of the Atlantic have clearly given up on the idea of concluding TTIP talks this year, despite progress achieved on the technical aspects of the negotiations.Read more


Recent Articles on Caribbean Trade Law & Development Blog

For past issues, please visit here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Evaluating Barbados’ WEF GCI Competitiveness Scorecard: Is Top of the Regional Class Good Enough?

Alicia Nicholls

Barbados made its grand reappearance on the World Economic Forum (WEF) Global Competitiveness Index (GCI) 2016-2017 after data shortages precluded its 2014-2015 inclusion. According to the WEF’s scorecard, the region’s star pupil topped its Latin American and Caribbean peers in the following subjects: infrastructure, labour market efficiency and technological readiness.

Barbados is a 166 sq  miles (431 sq km) island nation with a population of about 280,000, a GDP of US4.4 billion and a GDP per capita of US$15,773, which puts us in the high income non-OECD range according to the World Bank. On the surface Barbados’ scorecard is commendable, particularly for a small island developing state (SIDS) whose recovery from the 2008/2009 global economic and financial crisis has been slow and protracted. Personally for me as a Barbadian I am proud of the achievements my country has made since our independence from the UK just shy of 50 years ago.

But before we uncork the champagne, several things should give us pause. First, Barbados’ current rank of 72nd out of 138 economies marks a precipitous drop from its ranking in the GCI 2012-2013 where it was ranked 44th place out of 144 economies. Second, contrast this slide with the performance of another small island developing state (SIDS), Mauritius, which was ranked 54th in GCI 2012-2013 and has risen slowly but surely up the ranks to reach 45th place out of 138 economies in GCI 2016-2017. Third, only three other Caribbean economies were included on the index this year. While Barbados and Trinidad & Tobago lost ground, the other two Caribbean economies, Jamaica and the Dominican Republic, improved their rankings. Fourth, Barbados’ performance on eleven of the twelve pillars has been on a downward slope since 2012-2013.

The Good

Barbados’ top scores were in higher education and training, and infrastructure, where it ranked 29th and 30th respectively. For example, it ranks 6th in fixed-telephone lines /100 population and 25th in overall quality of infrastructure.  These have for a long time been among the island’s competitive advantages despite its small size. However, while the gross tertiary education enrolment rate is 36%, this is likely to decline given the removal of tuition-free tertiary education in 2014.

Barbados also ranks 31st in technological readiness which is the only one of the twelve pillars on which the island’s performance remains on an upward trajectory. It ranks a commendable 10th in internet bandwidth kb/s/user. Unlike the other three Caribbean economies included, corruption was not seen as a major problem in Barbados.

The Bad

The GCI is a useful tool for policy makers to benchmark their economy’s current against its historical performance across over 100 competitiveness indicators. Factors which, according to the WEF GCI, affect doing business in Barbados are: poor work ethic in the national labour force, inefficient government bureaucracy, tax rates, restrictive labour regulations and access to financing.

Not surprisingly, market size and the macroeconomic environment are the island’s Achilles heel and are a drag on the island’s competitiveness. The Central Bank of Barbados reports economic growth of 1.3% for the first half of 2016 but the island’s fiscal deficit and public debt remain unsustainably high. The island’s economic fragility is reflected in the low rankings on indicators such as government budget balance as % of GDP (122nd), gross national savings (127th) and government debt (127th). The island is rated 72 out of 100 for country credit rating, reflecting the successive downgrades since 2009 and could decline as the downgrades continue. Under the market size pillar, the country ranked 135th out of 136 on GDP (PPP).

The Way Forward

The GCI is an important scorecard showing the areas in which an economy is doing well, and those in which remedial attention is needed. Barbados remains a preferred jurisdiction in the Caribbean for doing business and the report shows that the island has clear competitive advantages in some areas that policymakers and the private sector should continue to build on and leverage in our investment promotions.

However, I believe that while Barbados remains top of the class in the Caribbean, the island’s continued slippage in the rankings, including in areas which are our competitive advantage, is a concern. I dare say that top of the class in this case is not good enough. Discerning investors consult several indices, including the GCI, when considering potential investment locations. Barbados’ previous A-class performance on these indices was one of its selling points and this would carry less weight if the island continues to decline in its rankings.

A useful feature of the GCI is that it allows for benchmarking against other economies and is a good tool for identifying best practices. Singapore, a small island developing state, currently ranks second place overall on the index and there may be some areas in which Barbados can learn from the reforms they have made. Besides Singapore, we can examine another top 50-rated SIDS, Mauritius, to see what best practices we can consider. We may also be able to learn from the Dominican Republic and Jamaica which, while ranked below us, saw improvements in their rankings.We have strong rankings in our technological and infrastructure capacity. Let us build on these strengths by improving the incorporation of ICTs for improving the ease of doing business and reducing some of the inefficiencies.

Perhaps the best utility of the GCI is that it provides empirical evidence for identifying policy priorities as countries craft and evaluate their national competitiveness policies. As any eager pupil would, Barbados should take these findings to heart. Several competitiveness reforms have been on-going aimed at tackling some of the weaknesses which the GCI 2016 has again brought to light. For example, the $50 million fund for SMEs announced in the August budget should assist SMEs’ access to finance. The island also received a loan from the Inter-American Development Bank for competitiveness improvement called the Barbados Competitiveness Programme. These are good strides. However, if Barbados wants an A-grade and to be truly at the top of the global class, the island needs to quicken and deepen the pace of its competitiveness reforms, strengthening those things it is good at, working on those which it is not, while also putting mechanisms for monitoring and evaluation of their performance.

Nonetheless, the responsibility for ensuring long-term and sustainable competitiveness does not rest with government alone but requires strong collaboration, honest dialogue and feedback among all national stakeholders, including for instance, through the social partnership.

Private sector involvement is key for ensuring Barbados’ obtains a score card each year. A few years ago, I was part of the survey team which administered the WEF Executive Opinion Survey in Barbados, the main instrument used for gathering the data utilised in a whole suite of WEF reports, including the Global Competitiveness Report. While in each instance our team was able to meet our quota, the biggest challenge we found was the unwillingness of some business executives either to participate in the survey, or to complete it satisfactorily and in a timely manner. If insufficient businesses complete the survey, the country will not be included in the index. To encourage greater private sector participation in the survey, I suggest there be closer collaboration between the country partner institute and the various private sector bodies in the country.

 Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Pound Sterling slips to 3 year low: What implications for Caribbean Countries?


Alicia Nicholls

Two main statements enunciated by UK policy makers in the past few days have sent Sterling plunging to a three-year low. The first was Prime Minister Theresa May’s revelation after weeks of speculation that Brexit negotiations will begin in early March 2017. The second is statements by UK Trade Secretary Liam Fox which many have interpreted to show a preference for a “hard brexit”, that is, leaving the EU single market altogether and trading with the EU under WTO  rules.

Investors were not too happy with these developments. According to CNBC, the pound dropped to a low of 1 GBP to 1.2818 USD on Monday, almost as low as the 31-year low set in the days following the Brexit result of June 23rd. In the weeks following its Brexit low, the pound had regained some ground and appeared to stabilise somewhat around 1 GBP to 1.32 USD. The chart below from MoneyAM shows the 6-month performance of the GBP/USD.


Source: MoneyAM.com

So what does this new slump in the pound mean for UK-Caribbean trade? The majority of Commonwealth Caribbean countries have fixed currencies which are pegged to the US dollar. The Barbados dollar, for instance, has been pegged BBD$2 to US$1 since 1975. The Eastern Caribbean dollar is pegged at 1 USD to EC $2.70. This means that any depreciation of sterling against the US dollar also strengthens US-pegged Caribbean currencies against sterling.

The positives

There are both positives and negatives to this development. Let us start with the positives. As I had indicated in an earlier article, this latest drop makes British goods and services cheaper  for Caribbean importers and consumers of UK products. Some of the major beneficiaries of this are students studying in the UK or doing online courses at UK educational institutions who would find their tuition is cheaper. For Caribbean persons who have been longing for that UK trip, now is the time to book your ticket!

Another upside is that a lower pound increases the competitiveness of UK exports which, ceteris paribus, bodes well for the UK economy, and by extension, those Caribbean countries like Barbados for which the UK is the main source market for tourist arrivals and a  major source of foreign direct investment.

The Negatives

The severity of the impact will depend on the level of risk exposure Caribbean economies have to the UK economy and by extension to the fluctuation of sterling. There are several channels through which Caribbean countries can be affected economically.

Caribbean merchandise and services exports will be more expensive for UK buyers and importers. Although the US and in recent years China have replaced the UK as the top trade partners for many Caribbean countries, the UK is Commonwealth Caribbean countries’ top market in Europe.  One way for Caribbean exporters to the UK to mitigate this might be to quote their UK buyers in pounds to eliminate currency risk for the buyer. The Brexit-related uncertainty could also dampen UK foreign direct investment in the region as investors adopt a “wait and see” approach.

In Barbados, British tourists comprise nearly 40% of tourist arrivals and are a major source of visitor expenditure. As this report by Deutsche Welle suggests, it is likely that Britons may choose to spend their vacations closer to home to cut down on costs. Those who do travel to the Caribbean may cut back their length of stay and/or expenditure. Recent media reports in Barbados seem to indicate that British tourists to the island are spending less.

Remittance data is quite limited. However, for countries like Jamaica and Barbados with sizable diasporas in the UK, it is not surprising that the UK is one of their major sources of remittances inflows. According to data published by the World Bank’s Bilateral Remittance Matrix, of the US$108 million in recorded remittances Barbados received in 2015, US$21 million (or a roughly a quarter) were from the UK, making the former Mother Country the island’s second largest source of remittances after the US. In Jamaica, which has a higher dependence on remittances than Barbados, $US 292 million out of the total of $2338 million that island received were from the UK. Unlike foreign direct investment, remittances tend to be counter-cyclical. However, it will now be more expensive for Caribbean-UK residents to repatriate remittances and the spending power of the money they send will be less.

The bottom line

Despite what appeared to be “buyers’ remorse” on the part of the British public in the days and weeks following the Brexit vote, Prime Minister May has indicated that “Brexit means Brexit”. Her unequivocal announcement  of a firm timeline for the UK’s Article 50 notification shows that there will be no reneging on the will of the British people who voted 52 to 48% to leave.

Although several international agencies, including the International Monetary Fund (IMF) in its latest Economic Outlook, have downgraded their growth forecasts for the UK economy, the latest post-Brexit vote economic data released by the Office of National Statistics (ONS) has shown no major negative impact on the UK economy thus far. However, with fears of a hard Brexit spooking investors, my hunch is that we have not seen the last of sterling’s roller coaster ride which may intensify as trigger day draws near. Caribbean economies need to brace themselves for the continued volatility come what may.

 Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.


Ranking Caribbean Countries’ Competitiveness: WEF Global Competitiveness Index 2016-2017

business-561388_960_720Alicia Nicholls

A few days ago, the World Economic Forum (WEF) released its Global Competitiveness Report 2016-2017. Two things immediately struck me as I perused the list of 138 economies which made the GCI 2016. The first was that because of data shortages only 4 Caribbean countries (Barbados, Jamaica, Dominican Republic and Trinidad & Tobago in order of rank) were included in this year’s index. The second was that all four of these economies were in the bottom 50 per cent of the survey sample, with the highest ranked (Barbados) at only 72nd place.

The WEF in its Global Competitiveness Report defines competitiveness as “the set of institutions, policies, and factors that determine the level of productivity of an economy which in turn sets the level of prosperity that the country can achieve”.The GCI’s 114 indicators are grouped into 12 pillars which are further grouped into 3 sub-indices.  Collectively they measure an economy’s performance on a variety of concepts which impact on productivity and prosperity. Some of these include basic requirements such as institutions, infrastructure and macroeconomic environment to more sophisticated indicators dealing with business sophistication and innovation.

In the preface to this year’s report, the World Economic Forum team highlighted that “many of the competitiveness challenges we see today stem from the aftermath of the financial crisis”.  Productivity and GDP growth in advanced economies and increasingly emerging economies remain subdued. This equally applies to Caribbean countries whose small open economies enhanced their vulnerability to the effects of global financial and economic crisis of 2008, and face many competitiveness disadvantages inherent in their smallness. However, not all of the region’s competitiveness challenges are structural and many are within our power to address.

Caribbean Countries’ WEF GCI Performance 2016-2017

So how did the region fare on the GCI this time around?  Barbados, whose economic recovery remains fragile, topped the CARIFORUM rankings with a rank of 72. Due to data shortages, the island had not been included in the 2015-2016 index but has dropped several places since its rank of 55 out of 144 economies on the 2014-2015 index.

Barbados commendably tops the Latin America and Caribbean region in infrastructure, labour market efficiency and technology. However, the island’s most problematic factors for doing business are as follows: poor work ethic in national labour force, inefficient government bureaucracy, tax rates, restrictive labour regulations and access to financing. Unlike the other three Caribbean economies included, corruption was not seen as a major problem in Barbados.

Trinidad & Tobago, which is currently in recession, has also lost ground, ranking 94 out of 138 economies in 2016-2017, compared to 89 out 140 in 2015-2016. The top 5 problem areas for Trinidad & Tobago for doing business were poor work ethic in national labour force, corruption, inefficient government bureaucracy, crime and theft and foreign currency regulations. But there is a silver lining. The WEF GCI identifies three stages of development: Stage 1 (Factor-driven), Stage 2 (Efficiency-driven) and Stage 3 (Innovation-driven). Trinidad was the only Caribbean country listed as a stage 3 economy (innovation-driven). Barbados was ranked as transitioning between stages 2 and 3. Jamaica and the Dominican Republic were classified as stage 2.

Some more good news is that Jamaica saw forward movement on the index, moving to 75 out of 138 in 2016-2017 from 86 out of 140 in 2015-2016, as well as the Dominican Republic which ranked 92 out of 138 countries in 2016-2017 compared to 98 out of 140 countries in 2015-2016. The Dominican Republic’s reforms were mentioned in the report.

Importance of Country Competitiveness Indices

The WEF GCI is the most comprehensive benchmark of national competitiveness of economies worldwide. This year’s index comprised 98% of the global economy. It is, therefore, quite disappointing that not only does no Caribbean country currently rank among the top 50, but that so few Caribbean countries are included in the 2016-2017 index compared to previous indices as a result of data shortages.

These rankings are important for several reasons.The GCI is a useful tool for policy makers not only  for benchmarking the economy’s current performance  across over 100 competitiveness indicators against its historical performance, but also against other economies in the same bracket. As such, it provides good empirical evidence for setting policy priorities and interventions as national competitiveness strategies are crafted and refined.

Secondly, and importantly for small economies which depend significantly on foreign direct investment inflows, the WEF GCI is one of several indices, along with the World Bank’s Doing Business Index, which discerning investors consult when considering potential investment locations. For this reason, it is not uncommon for investment promotion agencies to reference their country’s favourable performance on these indices when marketing to prospective investors.

The Way Forward

It is axiomatic for any economy that  competitiveness should not only be long-term but sustainable. What the current WEF GCI makes clear is that economies in the Caribbean region have a lot of room for improvement, particularly in these problem areas: inefficient government bureaucracy, work ethic in the national labor force and corruption. Improving our competitiveness, however, is not a government responsibility alone. It requires continued strategic and enhanced  public-private sector collaboration and partnership.

Governments, the private sector and other stakeholders including trade unions and other civil society actors, therefore, need to closely examine the causes and solutions for these problematic areas. For example, what are the factors which contribute to the perception of “poor work ethic”? What country-level and firm-level productivity enhancing reforms are working and which need revising or implementing? What can we do improve the vexing issue of “inefficient government bureaucracy”? This year’s Global Competitiveness Report focused heavily on the Fourth Industrial Revolution. What role can ICTs play in improving our weak areas?

We can also take lessons from those economies which consistently rank as the most competitive economies and those which saw tremendous improvement. The top five economies in this year’s GCI were in order of ranking: Switzerland, Singapore, United States, Netherlands and Germany. What best practices can we learn from these countries? How about those countries like India, which made the biggest leap of any country in this year’s index by climbing 16 places? Or Mauritius, a SIDS, ranks 45th , having climbed two places? Even our own Jamaica and the Dominican Republic which saw improved rankings may hold valuable lessons.

Businesses also need to play their part. It is unacceptable that the region is so poorly represented on the GCI year after year. A few years ago, I was part of the survey team which administered the WEF  Executive Opinion Survey in Barbados, the main instrument used for gathering the data utilised in a whole suite of WEF reports, including the Global Competitiveness Report. While in each instance our team was able to meet our quota, one of the challenges we found was the unwillingness of some business executives either to participate in the survey, or to complete it properly and in a timely manner. This is after repeated attempts to impress upon them the importance of the data collected in the survey for judging Barbados’ competitiveness and to ensuring Barbados was ranked on this important index. If insufficient businesses answer the survey, the country will not be included in the index. To encourage greater private sector participation in the survey in each country, I suggest there be closer collaboration between the country partner institutes and the various private sector bodies in the countries.

The full WEF GCI 2016-2017 Report may be accessed here.

 Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Caribbean Weekly Trade & Development Digest – September 25-October 1, 2016


These are some of the major trade and development headlines and analysis across the Caribbean region and the world for the week of September 25-October 1, 2016. 

For past issues, please visit here.


Dominican officials meeting heralds stronger trade ties 

Dominican Today: The foreign ministers of the Dominican Republic, Miguel Vargas and of Haiti, Pierrot Delienne, on Thursday announced a meeting of the Joint Bilateral Commission set for October 19, when topics pending since the last meeting in Port au Prince will be addressed. Read more

Dominican Agro Sector: Time to renegotiate DR-CAFTA Trade Deal

Dominican Today: Dominican Republic’s agro producers (Confenagro) on Thursday said the DR-CAFTA free trade deal must be reviewed and evaluated, as stipulated in executive order 260-16 issued Sept. 17. Read more

Can Upscale Chocolate turn the tide on Haiti’s devastating deforestation

Scroll.in: When a tiny Quebec chocolate maker won a gold prize at this year’s premier International Chocolate Awards for a bar made with Haitian cocoa beans, it rocked the specialty chocolate world. The cocoa beans had been on the market for less than a year, and a Haitian chocolate bar had never before received the award. Read more

European Union to consider approval of accord with Cuba

CaribbeanNewsNow: The European Union on Thursday proposed that its member states to consider approval of a political and cooperation accord with Cuba aimed at normalizing relations with the Caribbean nation.Read more

The Sharing Economy and Caribbean Tourism – Op Ed by CTO Head Mr. Hugh Riley

Caribjournal: The marketplace is evolving. Ten years ago no one imagined homeowners opening their doors and welcoming strangers to bunk at their tropical beach bungalows or private cozy homes for affordable rates. Forget about standing out in the street waving frantically to flag down a taxicab or worrying about having enough change to hop on a bus. Those days are over. Read more


WTO Panel to Discuss India’s Paper on TFA in Services on Oct 5

The Indian Express: The first meeting of a WTO panel to discuss the new concept paper floated by India on a proposed trade facilitation agreement in services will be held on October 6 in Geneva. India is pitching for this agreement with a view to reduce transaction costs by doing away with unnecessary regulatory and administrative burden on trade in services.Read more

WTO cuts 2016 world trade growth forecast to 1.7% 

Reuters: The World Trade Organization cut its forecast for global trade growth this year by more than a third on Tuesday, reflecting a slowdown in China and falling levels of imports into the United States.Read more

CITES to vote on legalising Rhino horn trade

IOL: Parties wait with baited breath to find out if two-thirds of the 182 parties at CITESCOP17 will vote in favour of legalising rhino horn.The 17th meeting of the parties for Cites breaks tomorrow for two days, and early next week for some important votes to take place. Read more

US-Africa Trade Relationship in Focus at AGOA Forum

ICTSD: On 22-26 September, African and US ministers, trade officials, civil society, and business sector representatives gathered in Washington D.C. to discuss the implementation of the African Growth and Opportunity Act (AGOA) at the 15th AGOA Forum. Held once a year, the event gives all stakeholders the opportunity to exchange on potential avenues for enhancing US-Africa economic ties. Read more

EU and US Trade Negotiators seek to get TTIP talks back on track

TheGuardian: Trade negotiators will meet in New York next week to search for common ground on the controversial EU-US trade deal, which has been buffeted by strong opposition on both sides of the Atlantic. Read more

Lack of Transparency in PACER-Plus paints bleak future for Pacific peoples

RadioNewZealand: A Pacific academic says the lack of transparency around negotiations on the proposed regional trade deal PACER-Plus does not bode well for indigenous peoples. Read more
BREXIT: PM to trigger Article 50 by end of March
BBC:  Theresa May will formally begin the Brexit process by the end of March 2017, she has told the BBC.The PM’s announcement on triggering Article 50 of the Lisbon Treaty – which begins the formal negotiation process – means the UK looks set to leave the EU by the summer of 2019. Read more

Recent Articles on Caribbean Trade Law & Development Blog

For past issues, please visit here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

WTO Public Forum 2016 focuses on “Inclusive Trade”

Alicia Nicholls

How can we make trade and trade rules more inclusive for small and medium sized enterprises (SMEs) and women in business? This was the central theme with which government representatives, NGOs, civil society organizations, business leaders, academics, students and ordinary citizens from around the world grappled at the World Trade Organisation’s (WTO) Public Forum held September 27-29, 2016. The flagship outreach event in the WTO’s calendar, the 2016 Public Forum attracted a record 2,000 registrants according to WTO Director General, Roberto Azevedo in his opening remarks on the first day of the event.

This year’s main theme “Inclusive Trade” is timely given the current global trade and economic climate marked by slowing global trade and economic growth, rising anti-trade sentiment in advanced economies and a strong populist backlash against the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP).

On the first day of the event, the WTO Secretariat launched its flagship trade policy publication, the World Trade Report 2016. Themed “Levelling the Trading Field for SMEs“, the Report explores SMEs’ participation in global trade, obstacles to their participation and cooperative approaches to promoting SME participation in global trade. Among the Report’s findings are that “trade participation of SMEs in developing countries is low, with exports accounting for 7.6 per cent of manufacturing sales, compared to 14.1 per cent for larger firms”.

In his opening remarks Director-General Azevedo noted that the backlash against trade and globalisation is not unique during periods of low growth, but cautioned that “history also shows the dramatic consequences that this kind of sentiment can have”. He explained that while trade was an important anti-poverty tool there needs to be acknowledgement that the benefits of trade “don’t reach as many people as they should and we should act … not by attacking trade, but by making it work better.”

Throughout the three-day event, a number of sessions and workshops were held exploring various themes, including e-commerce and bridging the global digital divide, SME access to trade finance, the sustainable development goals (SDGs), regional trade agreements (RTAs), sustainable investment, inter alia.

Audio recordings of the various sessions are available on the WTO’s website here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Is the UN ‘essential’ for Small States? Singapore Minister makes the case


Alicia Nicholls

In an uncertain world, small states have to work much harder just to stay afloat. Small boats on a rough sea will be tossed and turned much more than a tanker with heavy ballast. For our survival and prosperity, small states have to stay open and connected to the world. But our very openness makes us vulnerable to external shocks and threats.”  – Singapore Minister for Foreign Affairs, Dr. Vivian Balakrishnan at 71st UN General Assembly, 2016

As a policy nerd, I enjoyed listening to, and reading the speeches given by the representatives of the 193 members at the 71st United Nations General Assembly. However, one speech stood out particularly to me. It was the poignant statement made by Minister for Foreign Affairs of the Republic of Singapore, His Excellency, Dr. Vivian Balakrishnan entitled “Small states in an Uncertain world” in which he argued why the United Nations was important for the survival and prosperity of small states.

Questions about the 21st-century relevancy of the UN stem not only from the unsuitability of its organisational structure to current geopolitical realities, but also its peacekeeping failures and the fact that so many members, including prominent ones like the United States, are frequently behind on UN membership fees. Dr. Balakrishnan’s intervention on this issue is, therefore, timely.

In less than fifteen minutes, Dr. Balakrishnan convincingly and succinctly  laid out the well-known challenges faced by small states in an increasingly uncertain global economy marked by sluggish growth, growing protectionism, terrorism and health epidemics. The learned Minister reiterated that in this harsh external environment,”small states have to stay open and connected to the world”, and that our “very openness makes us vulnerable to external shocks and threats”.

He outlined three elements which he saw as crucial for the survival and prosperity of small states, namely, a rules-based multilateral system, international partnership and cooperation and sustainable development. On each of these points he reiterated why the UN was right for the job.

In the decades since the UN’s formation in the mid-1940s, its membership has grown from only the “Great Powers” to include numerous former colonies which have become independent states. Small states now make up about two-thirds of the UN’s membership. Noting that small states are “usually at the receiving end of the decisions and actions of large powers”, Dr. Balakrishnan explained that the concept of “one country, one vote” gives small states a voice they would otherwise not have. After all, the vote of the small island developing state of Barbados has the same weight as a vote by the United States, the world’s most powerful country. In concluding, Dr. Balakrishnan proffered that [u]ltimately, small states need the United Nations to provide the framework for building partnerships, promoting development and pursuing peace and security within a rules-based system.”

I quite enjoyed Dr. Balakrishnan’s speech. One cannot deny that there are flaws in the United Nations system which need to be more expeditiously addressed if it is to continue serving the needs of small states in years to come, including reform of the Security Council which still reflects the geopolitics of the 1940s. There is also concern over some of the actions of the UN’s peacekeepers, including the UN’s role in the cholera outbreak in Haiti which it has only admitted to recently.

I agree with former UN Secretary General, Kofi Annan’s assertion in 2002 that “the United Nations exists not as a static memorial to the aspirations of an earlier age but as a work in progress – imperfect as all human endeavours must be capable of adaptation and improvement.”

Despite its imperfections, the UN is an important forum for global cooperation on issues of international development. The 2030 Agenda for Sustainable Development is just one of these initiatives. The “one country, one vote” has given small states the opportunity to have their voices heard on global diplomacy and policy despite their size disadvantage.

Several initiatives have been spearheaded by small states, including the UN Convention on the Law of the Sea and the International Criminal Court. Small states have also left an indelible mark on the UN’s work by raising the global spotlight on climate change and other development issues, including the sustainable development goals (SDGs). It is little wonder, therefore, why Caribbean countries in their national statements before the UN General Assembly pledged their continued support of the UN, while also supporting calls for reforms.

The full National Statement by Singapore’s Minister for Foreign Affairs, Dr. Vivian Balakrishnan may be read here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Caribbean States raise de-risking concerns at the 71st United Nations General Assembly


Alicia Nicholls

De-risking was one of the myriad of developmental issues raised by small states of the Caribbean Community (CARICOM) at the 71st Regular General Assembly of the United Nations in New York over the past few days. The theme of the general debate of the 71st session was “The Sustainable Development Goals: a universal push to transform our world.”

De-risking practices by banks involve the avoidance of risk by discontinuing business with whole classes of customers without taking into account their levels of risk. This is in direct contradiction to the risk-based approach advocated by the Financial Action Task Force (FATF). The major manifestation of bank de-risking has been the restriction or termination by large banks (particularly in the US) of correspondent banking relationships with banks and discontinuing relationships with money transfer operators (MTOs).

While countries across the world have been affected by de-risking in varying degrees, a World Bank study published in 2015 found that the Caribbean region appeared to be the most affected by a decline in correspondent banking relationships. This situation is even more vexing considering CARICOM countries’ adherence to international regulations and best practices, including the recommendations of the Financial Action Task Force.

Arguing that correspondent banking services are a public good, CARICOM countries launched a high-level diplomatic offensive over the past months to raise awareness and mobilise action on this serious issue. The restriction and loss of correspondent banking relationships not only threaten the region’s financial stability but also threaten to de-link Caribbean countries from the global financial and trading system, undermining their sustainable development prospects. There has, however, been limited international progress on this front despite strong advocacy and a myriad of studies on the issue by regional and international development agencies.

Singing from the same hymn sheet, CARICOM representatives consistently raised the issue in their national speeches before the UN General Assembly.  In perhaps one of the most comprehensive and impassioned statements, Minister for Foreign Affairs of the Bahamas, H.E. Frederick Mitchell,  made de-risking the starting point in his speech, emphasizing not only the difficulty being faced in opening accounts, but also the impact on tourism, remittance and financial flows. Calling it a “moral imperative,” he reiterated Caribbean countries’ adherence to anti-money laundering rules, while condemning the over-regulation which has had led to the de-risking phenomenon. He also termed the attacks on the Bahamas and the CARICOM region as “inaccurate and unfair”.

Touching on the sustainable development implications of de-risking, representative of Trinidad & Tobago, Senator the Honourable Dennis Moses, Minister of Foreign and CARICOM  Affairs, poignantly stated as follows:

“The 2030 Sustainable Development Agenda recognizes that national development efforts need to be supported by an enabling international economic environment through international business activity and finance, international development cooperation, and international trade. However, the issue of financial institutions terminating or restricting correspondent banking relations in the CARICOM Region has destabilized the financial sectors of our Member States and has disrupted the Region’s growth and economic progress.”

On behalf of Trinidad & Tobago and CARICOM, Senator Moses further called on “international banks to engage collaboratively with affected Member States to restore normal financial relationships between domestic banks and international markets.”

Prime Minister of St. Kitts & Nevis, the Hon. Timothy Harris noted that “[a]lready, in the Caribbean, as of the first half of this year, some 16 banks, across five countries have lost all or some of their correspondent banking relationships putting the financial lifeline of these countries at great risk”. Highlighting Caribbean countries’ dependence on tourism and remittance flows, he further explained that “such [de-risking] actions threaten to derail progress, undermine trade, direct foreign investment and repatriation of business profits.”

Laying the blame for de-risking on “heavy-handed” FATF regulations, Prime Minister of St. Vincent & Grenadines reiterated the potential of de-risking to disconnect Caribbean countries from global finance and “a shifting of potentially risky transactions to institutions that lack the regulatory wherewithal to handle them”. He further explained that “these [FATF] regulations must be revised urgently before legitimate transactions in the Caribbean–from credit card payments to remittances to foreign direct investment–grind to a halt.”

Besides de-risking, CARICOM representatives raised several other development issues, including climate change, graduation policies of international development agencies, United Nations reform, the US embargo of Cuba, the attack on international financial centres by OECD countries and the on-going border disputes between Guyana and Venezuela and Belize and Guatemala. CARICOM states also congratulated newly elected UNGA President, Peter Thomson of Fiji, and thanked outgoing UN Secretary General Ban Ki-Moon for his service, particularly his support of SIDS.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

OECD describes global trade growth as “exceptionally weak”

Alicia Nicholls

In its Interim Economic Outlook released yesterday September 21, 2016, the Organisation for Economic Cooperation and Development (OECD) has again expressed concern about the slowdown in global trade growth, echoing similar sentiments made by the International Monetary Fund (IMF) and the World Trade Organisation (WTO). Describing global trade growth as “exceptionally weak”, the report notes that the volume of global trade fell in Q1 2016 and remains subdued despite some recovery in Q2.

The OECD noted that weak trade growth was as a result of not only cyclical and structural factors but also “some backtracking” on the opening of global markets to trade in goods and services. Noting that trade is an important driver of productivity growth, the organisation warned that this deceleration could undermine productivity growth and living standards in future years. These issues are further explored in an OECD Economic Policy Paper entitled “Cardiac Arrest or Dizzy Spell: Why is World Trade so weak and what can Policy do about it?” which was also released that same day.

The OECD report has reiterated the need for policy action to boost trade, including avoiding trade protectionist measures, reducing unnecessary trade costs and removing impediments and distortions for cross border investment. Recognising that support for globalisation in advanced economies has weakened, the report also suggests that policies be implemented to ensure that the benefits of trade and investment are widely shared.

This low trade growth is also affecting global GDP growth. The OECD warned that the world economy remains in a “low-growth” trap and projects global GDP growth to remain flat at only  3% in 2016, with only a modest improvement in 2017.

The full press release may be obtained here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Belize accepts TRIPS Amendment

Alicia Nicholls

Belize has become the latest member of the Caribbean Community (CARICOM) to accept the amendment to the World Trade Organisation’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) which seeks to improve poorer members’ access to affordable medicines.

This  amendment to the TRIPS Agreement formalises and makes permanent the waiver provided by paragraph 6 of the Doha Declaration on TRIPS and Public Health, known as the “Paragraph 6 System” in 2003. The amendment was approved by the WTO General Council on December 6, 2005, and permits exporting countries to grant compulsory licenses for the manufacture and export of pharmaceutical products to poorer countries.

The protocol is not yet in force and will only enter into force upon acceptance by two-thirds of the WTO’s membership. The original deadline for acceptance was December 1, 2007 but has been extended to December 31  2017 by the General Council in November 2015.

So far the following CARICOM countries have accepted the amendment: Grenada (2015), St. Kitts & Nevis (2015), St. Lucia (2016), Trinidad & Tobago (2013).

More from the WTO’s press release here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

G20 Leaders’ Hangzhou Summit: Trade and Investment Takeaways

“Our growth, to be strong, must be reinforced by inclusive, robust and sustainable trade and investment growth.”  –G20 Leaders’ Communiqué 2016

Alicia Nicholls

Against the backdrop of an uneven global economic recovery, subpar global trade and investment growth, trade disputes and the recently held Brexit referendum vote in the UK, trade and investment were top of mind for world leaders at the just-concluded Eleventh Group of 20 (G20) Summit held on September 4-5, 2016  in Hangzhou, China.

The G20 is the premier international forum for cooperation on global economic governance and its members account for 86 percent of global GDP and 78 percent of global trade. China currently holds the G20 presidency.

With the goal of providing political leadership to ensure “inclusive, robust and sustainable trade and investment growth”, G20 leaders endorsed the decisions taken by G20 trade ministers at their Trade Ministers Summit held in Shanghai in July this year. Among the key outcomes of that July meeting were the Terms of Reference of the new G20 Trade and Investment Working Group, the G20 Strategy for Global Trade Growth and the G20 Guiding Principles for Global Investment Policymaking.

Key Trade and Investment-Related Aspects of the G20 Leaders’ Communiqué

Below are some of the key trade and investment-related takeaways from the G20 Leaders’ Communiqué:

  • Reiteration of G20 leaders’ recognition that strong growth must be reinforced by “inclusive, robust and sustainable trade and investment growth”;
  • Commitment to strengthening G20 trade and investment cooperation;
  • Commitment to a “rules-based, transparent, non-discriminatory, open and inclusive multilateral trading system” with the World Trade Organisation (WTO) playing a central role;
  • Commitment to continuing the post-Nairobi work. It is instructive that the Doha Round was not mentioned, confirming that the Doha Development Round is effectively dead despite disagreement among WTO members on the round’s future in the communique to the WTO Nairobi Ministerial held December 2015;
  • G20 leaders also reiterated their support for the inclusion of new issues into the WTO negotiating agenda, another area on which WTO members saw strong divergences of opinion in the aftermath of the Nairobi Ministerial. The G20 leaders  noted that “a range of issues may be of common interest and importance to today’s economy, and thus may be legitimate issues for discussions in the WTO, including those addressed in regional trade arrangements (RTAs) and by the B20″;

  • Commitment to ensure their regional agreements and bilaterals complement the multilateral trading system;
  • Commitment to ratify the Trade Facilitation Agreement by the end of 2016;
  • Indicated their support for the importance of the role that WTO-consistent plurilateral trade agreements “with broad participation” can play in complementing global liberalization initiatives and mentioned the Environmental Goods Agreement as an example;
  • Reiteration of their opposition to protectionism on trade and investment “in all forms” and reiterated the commitments to standstill and rollback protectionist measures till the end of 2018 and to support the work of the WTO, UNCTAD and Organisation for Economic Development (OECD) in monitoring protectionism;
  • In recognition of the rising anti-globalisation and anti-trade sentiment in many western countries, G20 leaders “emphasize[d] that the benefits of trade and open markets must be communicated to the wider public more effectively and accompanied by appropriate domestic policies to ensure that benefits are widely distributed”;
  • Endorsed the G20 Strategy for Global Trade Growth, as well as the G20 Guiding Principles for Global Investment Policymaking which “will help foster an open, transparent and conducive global policy environment for investment”. These were decided at the G20 Trade Ministers Meeting held in July;
  • Indicated their support of policies encouraging firms of all sizes (particularly women and youth entrepreneurs, women-led firms and SMEs) to take full advantage of global value chains (GVCs);
  • Although China was not specifically identified, G20 leaders noted that global steel oversupply was a global issue requiring a collective response and increased information-sharing. They called for the formulation of a Global Forum on steel excess capacity to be facilitated by the OECD with the active participation of G20 members and interested OECD members.

For the tax-related aspects of the communiqué by FRANHENDY Attorneys, please visit  here.

The full communiqué may be read here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Climate Change, the US Elections and Small Island Developing States’ Survival


Alicia Nicholls

We are the first generation to be able to end poverty, and the last generation that can take steps to avoid the worst impacts of climate change. Future generations will judge us harshly if we fail to uphold our moral and historical responsibilities.” – Ban Ki-Moon, Secretary General of the United Nations.

In a step that was both historic and symbolic, the Presidents of the United States (US) and China last week ratified the Paris Agreement ahead of the on-going G20 summit in Hangzhou, China. This single showing of solidarity by the world’s two largest industrialised powers was welcomed news for the small island developing states (SIDS) such as those in the Caribbean, Pacific and the Africa, Indian Ocean, Mediterranean and South China Sea (AIMS) states. Through the 44-member Alliance of Small Island States (AOSIS), SIDS  pushed not only for the conclusion of the Paris Agreement but insisted on the inclusion of language in the Agreement in which parties endeavored to “pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels” (Article 2(a) of the Paris Agreement).

SIDS are the least culpable but most physically and economically vulnerable to the adverse effects of climate change. Rising sea levels have dislocated coastal communities and threaten the territorial integrity of the Pacific states of Kiribati and the Marshall Islands. Earlier this year, Cyclone Winston caused US1.4billion in damage, with the highest economic and human toll in Fiji, while Tropical Storm Erika in 2015 cost the Caribbean state of Dominica nearly half of its GDP. However, as the story of a remote Alaskan village which has voted to relocate from their ancestral home because of sea level rise shows, climate change is not a SIDS’ problem alone. It is a cross-cutting global issue which has implications not just for the global environment but for human health, security, sustainable development and economic growth.

So what does all of this have to do with the upcoming election for the 45th President of the US? Well, if one considers the wide disparity in climate change rhetoric and policy proposals between the two major candidates running for the Oval Office, it is pellucid that the election of either Mrs. Clinton or Mr. Trump is the difference between strong US support for reducing GHG emissions and leading the global fight against climate change on the one hand, and on the other, a reversal of the gains that have been hard fought for. In other words, the future of SIDS’ survival could depend on the outcome of the US election.

Current US climate change policy

Current US policy supports global climate change efforts. US President Obama’s three-pronged Climate Action Plan commits to cutting carbon pollution in America, preparing the US for the impacts of climate change, and critically for the Paris Agreement, leading international efforts to address Global Climate Change. This is a policy position which Democratic candidate, Hillary Clinton, has pledged to honour should she be elected to office by the American people this November.

The Paris Agreement was concluded in December 2015 at the end of the United Nations Framework Convention on Climate Change (UNFCCC) Twenty-first session of the Conference of the Parties (COP21). Since the Agreement’s opening for signature in April 2016, over 180 states have signed. However, as of September 3, only 26 states so far (representing 39% of global emissions) have ratified it. The recent ratification by the US and China, which together account for about nearly 40% of GHG emissions, is a significant step towards the threshold needed for the Agreement to come into effect; ratification by at least 55 countries which contribute to 55% of global GHG emissions. According to a White House press release on the US-China Climate Change cooperation outcomes, the two countries “committed to working bilaterally and with other countries to advance the post-Paris negotiation process and to achieve successful outcomes this year in related multilateral fora”.

Climate Change Platforms of Candidates 

While a four-way race in theory, the candidates of the two major parties, the Democratic Party and the Republican Party, still have a large lead ahead of the two other candidates (Jill Stein of the Green Party and Gary Johnson of the Libertarian Party). Perhaps never before has there been such wide disparity in the positions of two US presidential candidates on the issue of climate change. The democratic candidate, former US Secretary of State, Hillary Clinton, has vowed to “take on the threat of climate change and make America the world’s clean energy superpower”. Some of her major policy initiatives to this end are: launching a $60 billion Clean Energy Challenge, investing in clean energy production and infrastructure, cutting methane emissions across the economy and prioritising environmental and climate justice, inter alia.

This stands in stark contrast to the stated position of Republican candidate, billionaire real estate mogul Donald Trump, who, inter alia, tweeted in November 2012 that “the concept of global warming was created by and for the Chinese in order to make US manufacturing non-competitive”. He later said he was joking. Unfortunately, for the world, and especially for SIDS, climate change is no joking matter.

While Trump’s skepticism on the anthropogenic nature of climate change is not dissimilar to that of most Congressional Republicans, a Sierra Club report has rightly stated that “if elected, Trump would be the only world leader to deny the science of climate change.” He has also denounced the Paris Agreement as a bad deal for America, ascertaining it “gives foreign bureaucrats control over how much energy we use right here in America”, a claim soundly and poignantly rejected by the US special envoy for climate change (2009-2016) in a Washington Post op-ed. Mr. Trump first asserted he would renegotiate the Agreement and later stated that he would ‘cancel‘ the US’ participation in it. He has railed against environmental regulations. His proposals to reverse President Obama’s climate change initiatives, abolish the US Environmental Protection Agency, save the coal industry and continue subsidies to the oil and gas industry would jeopardise the US’s current emission reduction targets.

Implications for SIDS of US Climate Policy Change

Should a President Trump, if elected, implement his stated policies, not only will there be a 360 degree reversal of the US’ current commitment to meeting its emission-reduction targets, but an end to US cooperation or support for the global climate change agenda. If this happens, there will be little the world could do,besides raise universal condemnation. This is because one weakness of the Paris Agreement is that there is no binding enforcement mechanism in the agreement to force compliance of countries to the emissions limits they set for themselves. Already, there is skepticism that the current “nationally determined contributions” are not ambitious enough to conform with the Agreement’s goal of “holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels” (Article 2(a) of the Paris Agreement).

Secondly, should the US withdraw from the Agreement or renege on its commitments, some other high emitters may feel less of a moral imperative to follow through with their own commitments or may withdraw as well.

Thirdly, climate change finance is important for SIDS’ adaptation to, and mitigation of, the effects of climate change. Under Article 9 of the Paris Agreement developed country members are obligated to provide “financial resources to assist developing country Parties with respect to both mitigation and adaptation in continuation of their existing obligations under the Convention”.

Caribbean countries  and several other vulnerable states around the world have benefited significantly over the years from the US Department of International Aid (USAID)’s projects which aim to build countries’ resilience to climate change. Climate change was one of the Obama Administration’s priorities for DA funding with $310.3 million in funding requested for Global Climate Change in the FY2017 Budget Request. The future of USAID aid flows to developing countries for climate change adaptation is bleak if current US policy towards climate change action changes under a Trump administration.

What then for SIDS?

The aim of this article is NOT to be an endorsement of either of the two major candidates running for the upcoming US Presidential election, neither is it an attempt to influence the American people’s decision. The US election is a democratic choice for the American people and only they can decide which of the four candidates’ platform better serves their interests. What this article attempts to do is to discuss and show the wide policy differences which exist between the two candidates of the major parties on climate change, and argues that any negative change in current US climate change policy will have far-reaching implications for the global climate change fight.

There are a few nuggets of hope, however.  Because of Article 28 of the Paris Agreement, a President Trump would have to wait at least three years from the date the Agreement has entered into force in the US before he could notify his intention to withdraw the US from the Agreement and it would take another year for such withdrawal to come into effect.Any US withdrawal from the Paris Agreement is unlikely to be a popular move among Americans. Recent US polling data show there is grassroots support for Climate Change. Action. This includes not just environmental lobbies but the ordinary man on the street. There would also be universal condemnation by other major countries.

SIDS may have a few allies in the fight within the US. Outside of federal action, some states, like Oregon, have quite robust climate change initiatives. Moreover, faced with pressure from more discerning and environmentally-aware consumers, more businesses and large corporations are forced to demonstrate their use of energy-friendly processes and products.

Despite this, however, besides lobbying and moral suasion by other countries, there is little SIDS  can realistically do to change US climate change policy should there be a reversal. The vote for US president is a decision only the US electorate can make. However, for SIDS it could be a matter of survival.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Can Sports help Caribbean Countries’ Export Diversification Efforts?


Alicia Nicholls

The Brazil-hosted XXXI Summer Olympiad has come to an end with all of the panache one would expect from “a cidade maravilhosa” (the marvelous city) of Rio de Janeiro. I would be the first to admit that unlike most persons, I was not glued to the Games. However, seeing the success of Caribbean athletes, particularly the Jamaican team which can boast of having the fastest man and woman in the world for the third Olympiad in a row, made me ponder on the possibilities sports could have for Caribbean export diversification. Much of the discourse on sport as an export diversification strategy is often limited to sports tourism. However, I believe that the opportunities for sports trade go beyond simply sports tourism to encompass a wider array of sporting services which will be the focus of this article.

No longer viewed as simply pastimes and sources of entertainment and recreation, the global sports industry is a lucrative and growing one.  A study by AT Kearney found that this industry is worth $480-620 billion dollars. For an appreciation of the sheer economic scale of the recently concluded Rio Olympic Games, this article by the BBC shows there were “more than 10,000 athletes, representing 207 nations, [competing] in 31 sports in Brazil.” It is therefore little surprise why an increasing number of developing countries are exploring the ways in which the commercialisation of their sporting industries can contribute to their economic diversification efforts.

If we turn to the medal count statistics in the Rio Olympics, we see that Jamaica, a Caribbean small island developing state with a population shy of 3 million, won 11 goals (6 gold, 3 silver and 2 bronze), while Jamaican sprinting legend Usain Bolt won a historic three consecutive goals in the 100m, 200m and 4x100m relay further engraving his legacy on history’s page as the fastest man on earth. Caribbean countries’ sporting prowess is not limited to athletics. The West Indies Cricket Team dominated the cricketing world for many years. Here in Barbados we can boast of Sir Garfield Sobers who is regarded internationally as “the greatest cricketer the world has ever seen”, and of being the inventors of road tennis. The raw sporting talent is obviously there so how can we convert our sports talent into economic and export opportunities?

Sports as Export Services

The  commercialisation of sporting services has been internationally recognised in trade classifications. Under the World Trade Organisation (WTO) services classification, “sporting and other recreational services” is one of the sub-sectors of Recreational, Cultural and Sporting Services (other than audiovisual services). The sub-classes of sporting services are quite limited as they only capture a narrow range of the activities currently engaged in by sporting services suppliers, namely,  sports event promotion services; sports event organisation services; sports facility operation services and other sporting services. The UNESCO Framework for Cultural Statistics considers sports as part of the cultural industries.

Caribbean countries’ existing market access and national treatment commitments in “recreational, cultural and sporting services (other than audiovisual services)” in their GATS schedules of specific commitments have been modest. This is not surprising as sporting services have not been a sector most countries have traditionally sought to liberalise. Only Cuba, Dominica, Grenada, St. Kitts & Nevis, St. Lucia, Trinidad & Tobago have made market access and national treatment commitments in sporting and other recreational services (CPC 964) in their GATS schedules.

Sports Tourism

When we speak of sports commercialisation in the region, our discussion tends to be limited primarily to sports tourism which involves travel to another destination for participation or observation of sporting events, sports conferences and meetings. This would be considered a services export under Mode 2 (consumption abroad). Countries around the world joust with each other to host major sporting events from the Olympics to World Cup Football. The Caribbean has had a piece of the action by successfully hosting the ICC Cricket World Cup in 2007, while also hosting several other smaller hemispheric and regional sporting events such as the Commonwealth Youth Games which the Bahamas will host in 2017.The rationale for hosting these events is not just for the immediate inflows of tourist arrivals and expenditure, but also the marketing and promotional opportunities which such intense media attention could bring.

Non-Tourism Sporting Services

Besides sports tourism, there are other possibilities for sporting services exports as the schematic below shows utilising the four modes of supply under the General Agreement on Trade in Services (GATS):

  • Mode 1 (Cross border supply)  – from the territory of one Member into the territory of any other Member e.g: sports consultancy firm providing consulting services to clients in another country online
  • Mode 2 (Consumption Abroad) -in the territory of one Member to the service consumer of any other Member e.g : an athlete of one country attending a training facility in another country
  • Mode 3 (Commercial presence) – by a service supplier of one Member, through commercial presence, in the territory of any other Member e.g: an investor establishing a sports academy  in another country
  • Mode 4 (Movement  of Natural Persons) – by a service supplier of one Member, through the presence of natural persons of a Member in the territory of any other Member e.g: coaches providing training in another country

If we take Jamaica as a case study of sporting services exports, the country already conducts sporting services exports under Mode 4 as Jamaican coaches coach at overseas universities and training facilities. It also exports under Mode 2 as it hosts international sporting events (sports tourism) and its IAAF-funded High Performance Training Centre provides training for both Jamaican and international athletes. Unfortunately, the value of these services to the Jamaican economy is difficult to measure.

In 2013 the then Government under Prime Minister, Portia Simpson-Miller introduced the Jamaica National Sports Policy which provides a framework for the development of sport in Jamaica includes upgrades to sports infrastructure, improvements in schools’ physical sport infrastructure and tax relief for contributions to amateur sport under the Charitable Organizations (Tax Harmonization) Act 2013 and the Charities Act 2013. Jamaica is known as the Sprint Capital of the World for its prowess in athletics, adding to the strength of Brand Jamaica. This is already reaping benefits and sports is one of the sectors in which Jamaica promotes foreign investment. Besides athletics, Jamaica has also enjoyed international success in cricket, football, netball and bobsled.

Some sports-related investment already exists in the Caribbean such as in the Caribbean (Cricket) Premier League. Sports services trade through mode 3 (commercial presence) is possible through  foreign direct investment in the form of sports academies, colleges and other sports facilities which can generate foreign exchange and direct and indirect employment. However, strong regulatory and monitoring frameworks need to be in place to ensure these meet world anti-doping standards and anti-money laundering laws.

Linkages with other sectors

Sporting services can have strong linkages with, and spill-over benefits for other sectors, such as in manufacturing, health & wellness, education, research & development, and audiovisual services. According to this article in the India Times, Usain Bolt requires brands wishing to feature him in advertising campaigns to film in his home country of Jamaica to allow his country to benefit.


Caribbean countries have produced world-class sporting talent which far exceeds their small physical and economic sizes. There are opportunities to leverage that talent into sports services export opportunities which go beyond simply sports tourism. The current contribution of sporting services trade, such as sports festivals, to Caribbean countries’ GDPs is not being captured and remains undertapped.

One of the reasons for the paucity of data on sporting services internationally is that there is the need for the broadening and refining of the CPC classification of sporting services beyond the four currently recognised sub-classes. Better classification and measurement is needed in order to assess the current value, impact and contribution of sports trade to Caribbean countries. This data would assist in the formulation of evidence-based policies and interventions to promote the development of sports as an export diversification strategy.

The level of development of the sports industry and the policy frameworks and support structures for the development of sport varies by country across the region. Sportpersons benefit under the free movement of skilled labour under the CSME but there is no regional policy for the development of sport as an export. Sports are still not seen as a legitimate career option for many young people due to limited financing opportunities and lack of world-class training facilities in many Caribbean countries.

Alas, however, there has also been progress in the right direction. There has been the introduction of sports degrees at the University of the West Indies campuses which could also attract international students. Several Caribbean countries have introduced national sports policies and have invested in upgrading their sports infrastructure. Some have made sports tourism part of their marketing plan e.g: Barbados hosted the 2014 Top Gear Festival at its newly redeveloped Bushy Park Circuit.

If Caribbean countries are serious about commercialising their sports sectors, it is perhaps time that those countries which had not made any commitments in “sporting and other services” in their GATS schedules of specific commitments to consider taking commitments, while those which have already done so to consider  modifying the quality and number of their existing commitments. There is also the need to explore how Caribbean sports services suppliers can benefit from existing trade agreements like the CARIFORUM-EC Economic Partnership Agreement and from cooperation and funding under bilateral cooperation agreements with third states.

An evidence-based approach would allow the region to determine what incentives and public/private sector support are needed to develop sporting services trade, the human resource, infrastructure and financing constraints  being faced and what additional public and private sector support can be given to regional sportspersons and sporting bodies. In the five Caribbean countries where citizenship by investment is offered, these countries can consider the feasibility of making an investment in sport one of the options of a qualifying investment.

The good news is that while I was conducting my research for this article I stumbled across this document for a consultancy to conduct an assessment of the economic contribution of the sporting sector, especially sports tourism to the CARICOM Single Market and Economy (CSME) and the development of a Draft Regional Strategy for Sporting Services. This is a step in the right direction.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Antigua, Are you ready to Gamble?


Javier Spencer, Guest Contributor 


Did you know that in 2000, the Antigua and Barbuda’s Online Gaming Industry accounted for 61% of the Global Online Industry?(Global Betting and Gambling Consultants, 2007) This figure declined in 2001 onwards as the United States introduced statutes that limited Antigua’s supply of online gambling services in the US.

The clock has been ticking and the Government of Antigua and Barbuda (Antigua) has now decided to take the necessary actions to retaliate against the United States (US) in its long-simmering case at the World Trade Organization (WTO) (See US Gambling DS285). The US Gambling case is the first case of its kind brought to the WTO in respect of interpreting and applying member states’ commitments under the General Agreement on Trade in Services (GATS). The GATS is a WTO Agreement that emanated from the Uruguay Round of negotiations in January 1995 and much like the General Agreement on Tariffs and Trade (GATT), the GATS’ remit is to substantially reduce barriers to trade within the services sector based on principles of Most Favoured Nation (MFN) and National Treatment (NT).

Background & WTO Findings

Antigua in 2003 filed a complaint to the WTO to challenge domestic legislation in the US that have significantly restricted the ability for service providers of Gambling and betting services in Antigua, to offer their services to customers in the US. The statutes brought into question were: ‘The Wire Act’, ‘The Travel Act’, and the ‘Illegal Gambling Business Act’; all of which Antigua claimed were de facto discriminatory and therefore in breach of the US’ market access commitments (Article XVI (I) GATS). In response, however, the US claimed that it had never made specific GATS commitments on the cross border supply of gambling services and further iterated that the statutes were passed with the main objective of protecting public morals and maintaining public order (Article XIV (a)).

 Much to the surprise of the US, a WTO panel ruled in favour of Antigua in 2004. This ruling was upheld by the Appellate Body in 2005 on the US’ appeal. The ruling found that regardless of the US’ intent to “protect public morals or to maintain public order” the US indeed made specific GATS commitment in respect of the supply of gambling services. Against the backdrop of the chapeau of Article XIV, the US failed to demonstrate that the pieces of legislation did not constitute “arbitrary and unjustifiable discrimination” in respect of the supply of online gaming.

 The US was given the deadline of until April 2006 to amend its legislation to be consistent with WTO law (DSU Article 21.5). Years later, the US has failed to comply with the ruling which prompted Antigua to file an enforcement case at the WTO. Fast forward to 2016 and the U.S. has still failed to comply with the WTO ruling. Therefore the Government of Antigua has recently announced its intention to implement remedies authorised by the WTO.

  The Remedy – Cross Retaliation

In light of the US’ failure to bring its laws in compliance with WTO law, Antigua requested permission to retaliate against the US by suspending obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The TRIPS Agreement is another result of the Uruguay Round of negotiations which seeks to “promote effective and adequate protection of intellectual property rights”. Ultimately, of course, the agreement regulates intellectual property rights (IPRs) in a manner that eliminates or reduces any barriers to trade.

Further to Antigua’s request, the WTO granted Antigua (as a compensatory measure) the authorization to retaliate in January 2013. This means that Antigua could withdraw US $21 million worth of concessions in IPRs held by US firms, per annum. This cross retaliation strategy has proven to be the best strategy in getting a developed country to comply with WTO rulings. As a precedent, the WTO granted Ecuador the rights to suspend IPR concession against the European Communities (EC) in EC- Bananas III (See DS27). In the final analysis, Ecuador never suspended its TRIPS obligations, but used it as leverage to quickly negotiate with the EC on a mutually agreed solution. This case signals that suspending IPRs as a retaliatory measure gives developing countries a strengthened negotiating position that will serve as an impetus for the developed country to comply or to quickly negotiate a mutually agreeable settlement.

For Antigua, the cross-retaliation remedy could redound to the greater good of its citizens. For example, pharmaceuticals could be legally produced and distributed in Antigua to fight diseases without paying the remunerations otherwise required under TRIPS.

However, a closer look at the suspension of TRIPS obligations yearns a pertinent question. Does Antigua possess the clout and capacity to retaliate using this method? In order for this remedy to secure a great impact on the U.S., firms in Antigua ought to demonstrate that they have technological capacity for (large scale) domestic production of copies of IPR goods from the U.S. This example is further exacerbated if Antigua’s import of IP goods and services from the U.S. is insignificant.

The suspension of IPRs held by US firms is confined to the borders of Antigua and Barbuda which means that goods that would have been created under the TRIPS suspension regime cannot be exported out of Antigua to any other WTO country. At this juncture, a careful examination of the ‘first sale doctrine’ or ‘international exhaustion’ should be applied.

Additionally, Antigua ought to guard against the risk associated with the authorization to retaliate. For instance, suspending TRIPS obligations may cause Antigua to violate its obligations under the Berne Convention and the Paris Convention. Secondly, the authorisation to suspend TRIPS obligations is only temporary in nature (Article 22.8 DSU), although the authorization set out by the DSB has no time limit to implement. However the broader picture portends that Antigua could only suspend TRIPS obligations until the US has removed or amend laws to become WTO consistent. In this regard, Antigua ought to be mindful of new industries that could emanate from this suspension as it would be highly susceptible to a quick change in US laws. Furthermore, Antigua’s preferences under the Caribbean Basin Economic Recovery Act (CBERA) could be negatively affected as one of the criteria is respect for IPRs.


The US Gambling case is a peculiar case where a WTO ruling has been in favour of the developing country’s complaint against the developed country. In such cases, the authorization of TRIPS obligations as a strategy for a developed country to comply could be highly flawed and wreaks greater havoc for the developing country.  Antigua’s retaliation, as case in point, could be ineffective whereas in comparison to the effect that the US statutes had on the Antiguan economy. There are many risks involved in respect of being in breach of other international treaties. Ultimately, however, the measure is meaningless if developing countries do not have the capacity to implement such an authorization.

After a keen assessment of the economic and political risks associated, what other cards are left for Antigua to play? Perhaps Antigua could consider transferring its rights to suspend its TRIPS obligations to another WTO Member State who has the capacity and the clout to successfully implement such a regime. The uncertainty of the outcome is high as there is no precedent of a developing country who has successfully cross-retaliated through a suspension of their TRIPS obligations. This is truly a gamble and Antigua, are you ready?

Javier Spencer, B.Sc., M.Sc., is an International Business & Trade Professional with a B.Sc. in International Business and a M.Sc. in International Trade Policy. His professional interests include Regional Integration, International Business, Global Diplomacy and International Trade & Development. He may be contacted at javier.spencer at gmail.com.

Anti-trade Populism and its Implications for Developing Countries

Alicia Nicholls

Trade, it seems, is a dirty word these days. It does not take much more than a cursory scan of newspaper headlines to observe the growing prevalence of anti-trade, anti-immigration, anti-globalisation rhetoric which has infused the US Presidential Campaign and which was one of the factors which led 52% of Britons to vote for the UK to withdraw from the European Union.  Coupled with a continued slowdown in global trade growth, the World Trade Organisation (WTO) has recently warned about the “worrying rise in the rate of new trade-restrictive measures” initiated by its members in the review period compared to the previous period. These developments beg the question – what does this growing anti-trade, anti-globalisation populism mean for developing countries, particularly small states in the Caribbean which rely so heavily on trade with major countries to sustain their small open economies?

Why the Anti-trade/Anti-globalisation turn?

Neoliberalism, the philosophic orientation of developed countries which extolled the orthodoxy of the free market and free trade, has dominated mainstream development discourse since the 1980s. During the early 1990s developing countries which underwent structural adjustment programmes under the International Monetary Fund (IMF)  and the World Bank (WB) were forced to adopt market reforms, including trade liberalisation, privatisation and deregulation which were seen as the necessary medicine for an ailing economy. These policy prescriptions came to be known as the “Washington Consensus”.

Neoliberal ideology pushed for the removal of restrictions on not just the flow of goods and services, but also on the flow of people and capital across borders, facilitating greater integration and interdependence among states. Not everyone bought into the ideology. Most Latin American countries resisted for as long as they could. But by the time of the fall of Soviet Union and of the competing communist ideology, it seemed that in the words of Margaret Thatcher “There is no Alternative” to the free market.

To be sure, populist hostility to trade and globalisation in some segments of the developed world is not a novelty. The reader may recall the 1999 anti-globalisation protests at a WTO meeting in Seattle, Washington (US) as an example. However, anti-trade and anti-globalisation populism has attracted support in policy circles in the post-2008 era for several reasons. Some of it is linked, of course, to the usual suspects of xenophobia, nativism and other phobia – the fear that the homeland is being taken over and ruined by foreign products and foreign people, as well as concerns over terrorism. But this only tells part of the story.

The other part is disenchantment with the premise of neoclassical economics that removing the hand of the state in the economy will improve the welfare of consumers, promote efficient allocation of resources and create economic growth. Many no longer view this to be true. First, there is greater public concern in OECD countries over levels of income inequality, wage stagnation and unemployment in spite of liberal economic policies. There is the increasing opinion that the free market and free trade are not working for everyone, with gains being confined to the wealthy and multinational companies.

There is the belief, not entirely justified, that free trade is costing domestic jobs and industry. Across the pond in the UK for instance, a major plank of the Leave platform was based on stopping immigration from poorer European countries which has been blamed for taking UK jobs and threatening the traditional British way of life. In regards to free trade agreements, much of the concern is over what is seen as provisions which restrict governments’ regulatory space in areas such as public health and the environment.  The net result is a strong populist backlash which has reinvigorated the rise of right wing, nationalist parties which advocate closing off borders and erecting barriers and renegotiating free trade agreements, while mainstream parties have also sought to pander to this populist fervour.

To varying extents both major candidates in the US presidential campaign have sought to piggy back on this anti-trade populism by making trade a central part of their campaigns in a way that has not been seen in a US presidential election for a long time. Both candidates have aimed their darts directly at free trade agreements such as the North American Free Trade Agreement (NAFTA) and mega-regional trade agreements (MRTAs) like the Trans-Pacific Partnership Agreement. Both candidates have voiced their desire to renegotiate these agreements. Mr Trump has gone further by promising to impose tariffs on Chinese goods and taxes on American companies which relocate to lower cost jurisdictions, to ban the immigration of Muslims and build a purported Mexico-funded wall along the entire border between the US and Mexico. True to his “Make America Great Again” slogan, Mr. Trump has not only hailed the Brexit vote in the UK as the British people taking back their economy but has noted that it is time for America to do the same.

Implications for Developing Countries

So what does this growing anti-trade/anti-globalisation populism have to do with developing countries like those of the Caribbean? After all, Caribbean countries remain on the periphery of global trade and trade policy discourse. Perhaps, thankfully, the Caribbean has not been mentioned in any of the primary debates or on any of the party platforms.  But while Caribbean countries have not been the centre of the trade world since the days of the slave trade, foreign trade remains central to Caribbean countries’ economic livelihood.

Caribbean countries are largely import-dependent, relying significantly on imported goods, services and capital (especially foreign direct investment). They are also reliant on a narrow range of exports and export markets, rendering them susceptible to any protectionist measures which affect the competitiveness or ease of access of their exports in their major markets. A prime example is the rum issue where US subsidising of rum producers in Puerto Rico and the US Virgin Islands has negatively affected the competitiveness of Caribbean rum in the US market. Many Caribbean countries also benefit from unilateral preferences to the US market under the Caribbean Basin Initiative and the more general, Generalised System of Preferences.  In light of the Republican candidate’s zero-sum approach to trade, buffeted by his assertion that America must win the global competition at all costs, what will be the future of these preferential arrangements, far less, any other trade initiatives which benefit developing countries? Furthermore, any adverse changes in the immigration policies of major western countries will have consequences for the Caribbean diaspora living in those countries.

In this recent television interview, the US Republican Presidential Candidate has also suggested that he might “renegotiate or pull out” the US from the WTO in the event that any WTO member brings a challenge against his trade policy plans. The prospect of the world’s third largest economy (after China and the EU) pulling out of the WTO has frightening implications not just for the future of global trade rule-making but also for the amicable settlement of trade disputes. There are concerns about the effectiveness of the WTO dispute settlement mechanism for safeguarding the rights of small states, particularly in light of the US-Antigua & Barbuda Gambling case where that small island developing states is still awaiting US compensation. Despite this flaw, the current WTO dispute settlement system facilitates predictability and security in the global trade system by allowing states to hold each other accountable for breaches of WTO rules in a manner that is peaceful and with limited disruption to global trade. If the US and other any other states follow suit by withdrawing from the WTO, this will make it even more difficult for developing countries and undermine the rules-based trading system.

On a more global level, countries tend to turn inward during periods of crisis, using a wide range of trade policy tools to protect their markets. In 1930 the US government passed 19 U.S.C. ch. 4, otherwise known as the Tariff Act of 1930 or the Smoot Hawley Tariff Act which imposed prohibitive tariffs which some economists blamed for exacerbating the severity of the Great Depression on the US. The global economy is already underperforming and trade growth remains sluggish, which are not welcomed prospects for countries in the Caribbean whose macroeconomic health depend on that of their major trading partners. Christine Lagarde, Managing Director of the IMF, has warned in an interview with the Financial Times that the imposition of new trade barriers could negatively affect the global economy, echoing the WTO’s position that “Members must individually and collectively resist protectionist pressures”.

Is there a silver lining?

There is another side to this coin. I believe trade, once well managed, is a powerful tool for development as it allows for cheaper sourcing of inputs, provides opportunities for the sharing of ideas, technology and best practices and promotes competition which benefits consumers. However, the free market orthodoxy, which postulated that open markets at all costs were good, and that the lesser regulation the better, is flawed. I am, therefore, heartened that these precepts are under scrutiny in the public discourse in a way that they have not been in a long time. The longstanding orthodoxy was that neoliberalism was the only way to promote development.

Many of the arguments now being made in policy circles are arguments which developing countries, in particular small states, have been making about the folly of unmitigated free trade and instead arguing for fair trade. For instance, developing countries have long argued that the comparative advantage argument has been used as justification to keep them as exporters of primary goods, while denying them the trade policy tools which wealthy industrialised countries used to protect their manufacturing industries in the early stages.

While developed countries were pushing bilateral investment treaties containing provisions which were extraordinarily generous to investors while ripping away governments’ regulatory rights to protect against abuses, developing countries were arguing for greater policy space. Developing countries have also long protested developed countries’ demands to open their markets while developed countries continue to heavily subsidise their own agricultural industries.

I read with much interest the article by former US Treasury Secretary, Lawrence Summers, in the Financial Times calling for a responsible nationalism. He poignantly argues that “international agreements would be judged not by how much is harmonised or by how many barriers are torn down but whether citizens are empowered”. Perhaps I am cynical but my main fear is that while this rhetoric may be music to our ears, it is not clear whether this new enlightenment has a development ethos or whether it is done mainly as a cloak for nationalist and protectionist purposes by developed countries to the prejudice of developing countries. Judging by the rhetoric on the US election trail, the latter sadly seems more to be the case.

However, I will try to end on a positive note as I recall again the immortalised words of Margaret Thatcher. It would appear the learned late Prime Minister was wrong and that there is indeed an alternative. In the post-Great Recession era the green shoots of a new theory of how the global economy should operate appears to be taking shape. This new thinking creates space for developing countries to further challenge the neoliberal orthodoxy which developed countries championed for so long in a way that has hitherto been taboo. Developing countries should resist any form of protectionism which seeks to undermine their development gains, while also continue to add their voices to the debate on how trade can be used not as an end in itself but as a conduit for sustainable development which benefits all countries and all peoples and not just a select few.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Turning the Brexit lemon into lemonade for Caribbean countries

Alicia Nicholls

In a non-binding referendum on June 23, 2016 the British public by a 52 to 48% margin voted for the United Kingdom (UK) to withdraw from the European Union (EU). Although the UK has not yet triggered Article 50 of the Treaty of European Union (Treaty of Lisbon), there is understandable concern among Caribbean countries about what implications the UK’s possible exit from the EU (Brexit) will have for their relationships with both the UK and EU. While I believe and have written elsewhere that Brexit will pose challenges to the small island developing states of the Caribbean, we need to think strategically and carefully about how we will turn this Brexit lemon into lemonade for our relations with both trading partners. 

The countries of the Commonwealth Caribbean and the UK have a longstanding relationship. Barbados, for example, was under continuous British rule from 1627 until gaining its independence in 1966 and retains strong diplomatic, historical and cultural bonds which will not necessarily change due to Brexit. Commercial bonds exist as well. The UK accounts for almost 40% of Barbados tourist arrivals and is our largest export market in Europe. According to data retrieved from ITC Trade Map, Barbados exported US $13,879,000 worth of goods to the UK in 2015 but imported US$68,198,000 from that country in the same year, reflecting a merchandise trade deficit in the UK’s favour of US$54,319,000.

One of the early impacts of Brexit is the depreciation of Sterling against the world’s major currencies, including the US dollar to which most Commonwealth Caribbean countries’ currencies are pegged. At the time of writing, the exchange rate is 1 GBP to $1.31 USD. Weaker Sterling would make UK goods and services cheaper for Caribbean importers. The increase in the importation of British goods would likely widen Caribbean countries’ trade deficits with the UK. However, it will also provide cost savings for local businesses which import frequently from that country and for Caribbean consumers of UK services (e.g: education, travel) in all four modes of services supply.

Although Caribbean goods and services exports will be more expensive and less competitive to UK importers, one way our exporters could possibly mitigate this is by quoting their British buyers in British pounds. This would eliminate the currency risk for the British importer. The Caribbean exporter could build a small buffer into their pricing to mitigate some of the currency risk on their own end. We also need to use this opportunity to expand beyond the traditional exports to the UK by developing new and underdeveloped services exports such as in the cultural industries, consultancy services, medical tourism and the like.

Once the UK has concluded its withdrawal from the EU it will cease to be a party to any EU trade treaties, including the CARIFORUM-EC Economic Partnership Agreement. The EPA, which was signed in 2008, provides CARIFORUM countries (CARICOM plus the Dominican Republic) with duty-free, quota-free access to the EU market on the basis of asymmetrical reciprocity – reciprocity which takes into account differences in size between the EU and CARIFORUM. A major value added of the EPA, besides its development component, is the market access concessions it provides for CARIFORUM service providers, particularly under Mode 4 (presence of natural persons), the most restricted mode of services supply.

Until a withdrawal agreement with the EU has been finalised, the UK will continue to be bound by its obligations under the EPA. However, to safeguard their trade interests within the post-Brexit UK market, Commonwealth Caribbean territories , as part of CARICOM or CARIFORUM, should be proactive not only in monitoring the negotiations between the UK and the EU but also in lobbying for the negotiation of a new trade arrangement with the UK post-Brexit. Australia has already indicated its interest in negotiating a post-Brexit trade agreement with the UK. Although it is conceded that the Caribbean will unlikely be among those priority countries/regions with which the UK seeks to secure new trade deals, other interim arrangements could be found.

Caribbean countries’ existing double taxation agreements (DTAs) and bilateral investment treaties (BITs) with the UK also provide further opportunities to enhance investment promotion efforts in the UK, particularly targeting those UK companies which may be seeking to re-domicile post-Brexit. Commonwealth Caribbean territories like Barbados have many factors which would make it attractive to British companies as a domicile of choice for international business, including a common language (English), the common law legal system, political stability, a well-educated labour force and excellent professional services firms. Caribbean countries should continue to not only promote their attractiveness as a domicile of choice but continue to make reforms which will improve the ease of doing business.

There is also the opportunity for the private sector to forge closer links with businesses and private sector organisations in the UK and seek out new business opportunities. In this vein, the Caribbean diaspora living in the UK, while an important source of remittance inflows, is a still largely undertapped resource as an export market and source of foreign direct investment.
Most Commonwealth Caribbean territories do not have traditionally close relationships with most other EU countries. This is the opportunity to expand our level of trade and investment flows with continental Europe under the EPA, as well as continue to widen our DTA and BIT network with these countries. The consensus so far is that nearly 10 years after the signing of the EPA, most CARIFORUM countries have not realised the benefits expected. Simply put, market access does not guarantee market penetration. Sound market research will be needed to identify specific niches within the EU market which Caribbean goods and services providers could tap into. Business support organisations will continue to play an important role in assisting Caribbean exporters in their preparedness to enter the EU market.
By no means is this article meant to negate or downplay the serious implications that Brexit could have for the Commonwealth Caribbean countries nor does it aim to present an exhaustive list of the opportunities available. What it does argue is that although Brexit does pose challenges for the Caribbean region, we should use it as a catalyst and impetus not only strengthen the already strong bonds we have with the UK, but to expand and deepen our trade and diplomatic engagement with the remaining 27 EU countries with which we are yoked via the EPA.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

WTO launches its new World Trade Statistical Review

Alicia Nicholls

The World Trade Organisation (WTO) launched its new annual flagship statistical publication, the World Trade Statistical Review yesterday. According to the WTO’s press release, this new report replaces the WTO’s previous annual statistical publication, International Trade Statistics, which was published each October. The new report will be published online in July each year and a printed report will be available from September.

In his foreword to the report, Director-General of the WTO, Roberto Azevedo notes that “[t]he new structure of the publication allows for more comprehensive information about trade and trade policy developments to be provided, and in a more timely way.”

In addition to statistical compilations, this current report includes a discussion on trends in global trade over the past 10 years, discussions on merchandise trade and commercial services, global and regional trading patterns. An addition is the detailed analysis of developing countries’ participation in global trade, including Least Developed Countries (LDCs).

Among its findings are that the value of both global merchandise and commercial services trade are nearly two-times greater in 2015 than in 2005 but declined in 2015 compared to 2014. Although developing country merchandise trade declined in 2015, their commercial services exports saw a robust increase. The report also mentions the increase in the overall stockpile of restrictive measures, including trade remedies, introduced by WTO members in 2015.

The WTO’s press release may be viewed here.

The full report may be accessed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

De-risking and its Foreign Trade Impact in the Caribbean


Alicia Nicholls

A few weeks ago I had the honour and pleasure of presenting on the Foreign Trade Impact of De-Risking at the Institute of Chartered Accountants’ (ICAC) 34th Annual Conference in beautiful Belize as part of a panel discussion along with Dr. Trevor Brathwaite, Deputy Governor of the Eastern Caribbean Central Bank (ECCB) and Mr. Filippo Alario, Chief Risk Officer of Belize Bank.

Alicia Nicholls ICAC 2016 Belize

Alicia Nicholls  at ICAC 2016 Photo compliments of R Mohammed

I wish to again express my gratitude to ICAC for the invitation and to all stakeholders and everyone who kindly provided me with information and assisted me in my research.

Some of the key points from the presentation were as follows:

  • De-risking is a business decision but with serious implications for Caribbean foreign trade.
  • As small open economies, Caribbean countries are highly dependent on foreign trade as evidenced by their high trade to GDP ratios which range between 70-130% of GDP, according to World Bank data.
  • Several Caribbean countries are among the most dependent in the world on remittance-inflows.
  • Bank de-risking threatens the region’s integration into the global trade and financial systems and has implications for economic growth, stability, employment.
  • Disruptions to remittance and FDI flows by de-risking also have poverty alleviation and sustainable development implications.
  • Cross-border payment for goods via wire transfer and remittance sending appear to be the most affected from a trade perspective.

Several persons  have written me requesting a copy of the full presentation. It is available below:


Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

37th Regular Meeting of the CARICOM Heads of Government Conference Concludes

Alicia Nicholls

Heads of Government of the Caribbean Community (CARICOM) held their 37th Regular Meeting of the Conference of the Heads of Government last week, July 4-6 in Georgetown, Guyana. The Heads of Government paid tribute to, and highlighted the contribution of the former Prime Minister of Trinidad & Tobago, Mr. Patrick Manning who passed away two days before the conference. Mr. Manning, a strong proponent of the regional integration project, was praised, inter alia, for displaying “the finest qualities of regionalism” and for having an “unswerving commitment to building his country and the wider CARICOM”.

The major topics on the agenda included regional security, the CARICOM Single Market & Economy (CSME), facilitation of travel within the Community, correspondent banking, information and communication technology for development (ICT4D) and border disputes.

Below is a synopsis of some of the major decisions to which the HoGs agreed:

  • Agreement to host a Global Stakeholder Conference on the Impact of the Withdrawal of Correspondent Banking on the Region
  • Decision to reconstitute the Prime Ministerial Sub-Committee on Cricket with the Prime Minister of St Vincent and the Grenadines, as the Chairman
  • A mandate that the CARICOM Secretariat convene a meeting of Chief Immigration Officers, CARICOM Ambassadors, and other relevant officials by 30 September 2016, in order to address the challenges being experienced by Community nationals travelling throughout the Region.
  • Endorsement of the Action Plan for Statistics in the Caribbean  which seeks to strengthen national statistical systems, inter alia.

In regards to Brexit, the HOGs “agreed that CARICOM should continue to monitor developments as the exit process unfolded and underlined the importance of a common and structured approach that married the technical, political and diplomatic”.

The Heads of Government also met with specially invited guest, Her Excellency President Michelle Bachelet of Chile. The HoGS expressed satisfaction with the ongoing process of normalisation of US-Cuba relations but took the opportunity to renew their call for the US to lift the economic and trade embargo against Cuba.

The full communique may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

BREXIT fuelling British demand for alternative citizenship?


Alicia Nicholls

Nearly two weeks after the British people by a narrow margin voted in favour of the United Kingdom (UK) leaving the 28-member European Union (EU), it seems that the historic BREXIT vote may be having yet another impact.  Although the UK has not yet notified its intention to leave the EU under Article 50 of the Treaty of Lisbon, various news reports have reported an increase in enquiries and applications by Britons for alternative EU citizenship.

Russian media house RT reports “an explosion” of Belgian citizenship requests from British expatriates living in that European country. Bear in mind that Brussels, as one of the “three capitals of the EU”, is home to a large expatriate community, including bureaucrats and consultants working in EU organs and EU-related organisations. According to Sveriges Radio (Radio Sweden), in the immediate days following BREXIT, over 100 Britons applied for Swedish citizenship compared to 440 applications last year.

There is a good reason why some Britons are seeking to ensure that they keep an EU passport neatly tucked away for a rainy day. Article 20(1) of the Treaty on the Functioning of the European Union (TFEU) confers EU citizenship on every citizen of an EU country.  EU citizenship is additional to and does not replace citizenship of the member state. Currently, British nationals, as EU nationals, have the same rights to “move and reside freely within the territory of the Member States” per Article 20(2)(a) of the TFEU as the nationals of any other EU state.

There are possible economic reasons as well. The Office for National Statistics reports that in June 2016, the UK’s unemployment rate was just 5% and the number of unemployed fell during the first few months of the year. Despite this, unemployment could rise should the uncertainty from BREXIT lead to a slowdown in the UK’s growth and an exodus of businesses from the UK as some predict. An EU passport would give those Britons the right to look for work in the remaining EU countries should this occur.

While a contentious issue and believed to be one of the driving factors which influenced the “leave” vote, freedom of movement within the EU single market has benefited many young Britons who currently work and live in other EU member states, as well as British investors who have established businesses in other EU countries. For the reported 1.3 million UK nationals who currently live and work freely in other EU countries, this may change when the UK eventually leaves the EU should freedom of movement concessions not be part of the negotiated agreement. German Vice-Chancellor Sigmar Gabriel has been quoted directly in this article as suggesting that young Britons who live in Germany, France and Italy should be offered EU citizenship.

Dual Nationality

According to this report in the Irish Newspaper, The Journal, there has been an 80% increase in applications for Irish birth certificates since the referendum, as well as an increase in enquiries and applications for Irish passports at UK post offices. Under Irish law, a person with at least one parent who was an Irish citizen at the time of the person’s birth is entitled to Irish citizenship by descent. Those Britons who qualify for dual citizenship of another EU country, whether due to descent or marriage, are more likely to file applications for citizenship now that their rights to work and live in remaining EU countries are uncertain.

Citizenship by Investment

Current drivers of demand for citizenship under CBI programmes include the desire of high net worth individuals, particularly in emerging economies, for passports with greater mobility or to flee instability in their home countries, as well as nationality-based taxation and the reporting requirements the Foreign Account Tax Compliance Act (FATCA) in the case of Americans. However, it seems that there may be greater demand for EU citizenship by investment programmes like Malta’s and Cyprus’ in the wake of BREXIT. Golden Visas notes that “[their] website has seen a surge in enquiries of over 40%”. This is not unexpected as any person who is willing and able to make a qualifying investment (plus meeting the residency requirement) in one of these programmes is able to acquire an EU passport/nationality without much fuss.

Strength of UK passport

BREXIT may not only be fuelling demand by Britons for alternative EU citizenship but may impact on the strength of the UK passport. The president of one of the top global firms assisting clients in obtaining alternative citizenship has posited in this CNN Money article that BREXIT may reduce the power of the British passport which currently ranks among the top most powerful passports in the world.

As this very useful BBC article explains, there are five main models which could be the basis for the negotiated agreement between the EU and the UK. Only two of which I will briefly discuss as these involve freedom of movement. Like non-EU members Norway, Liechtenstein and Iceland, the UK could become a member of the European Free Trade Area (EFTA) and still be a part of the EU’s internal market via the European Economic Area (EEA) which provides for free movement of goods, services, people and capital. Alternatively, it could follow the model of Switzerland, also a member of the EFTA, but is not a part of the EEA. Its access to the EU single market is framed by several bilateral agreements. However, it is unclear which or whether any of these models will frame future EU-UK relations.

In a time of uncertainty like this where it is unknown what rights UK nationals will have in the EU once the UK and EU have negotiated the UK’s withdrawal, it seems that applying for second EU citizenship, whether through descent, naturalisation or by investment, is a source of comfort or an insurance policy for Britons should the worst happen .Nonetheless, for those many Britons who are currently living and earning a living in other EU countries, and do not qualify for alternative citizenship under any of these avenues, BREXIT brings much uncertainty and angst.

It is hoped that the negotiated outcome will permit British nationals to still enjoy some of the same rights to work and live in EU countries as they currently do. It should be noted though that the remaining 27 EU countries are unlikely not to demand reciprocity on the part of the UK in regards to any such freedom of movement concessions, which is quite ironic given that immigration concerns were part of the reason many Britons voted to leave the EU in the first place!

Turning to the Caribbean, it will be interesting to see what impact, if any, this development may have on the citizenship by investment programmes being offered by some Caribbean countries.  Will BREXIT lead to greater demand for EU based programmes like Malta’s and Cyprus at the expense of Caribbean programmes which (due to visa waivers) only give access to the Schengen area but not the right to live and work in the EU? Very little data is available on these programmes and their client bases but given that it would appear from reports that wealthy Chinese, Russians and Middle Easterners are among the main investors in Caribbean CBI programmes, it is unlikely that they will receive any major fallout from BREXIT. However, only time will tell. Suffice it to say, these are interesting times.

 Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Brexit wins: What possible implications for the Caribbean?


Alicia Nicholls

Last week while I was climbing the Mayan ruins in the beautiful Central American/Caribbean country of Belize, the British people were casting their vote on one of the most important questions regarding the future of their country’s involvement in the global economy. In response to the simple referendum question, “Should the United Kingdom remain a member of the European Union or leave the European Union”, British voters decided that the UK was better off outside of the 28-member bloc. Although I, like many others, expressed doubt that the Leave vote would have been triumphant, the British people by a 52 to 48% margin have decided that leaving the EU is in their best interest.

In a previous article on this matter, I noted the possible ramifications of this then hypothetical outcome for tourism dependent economies like Barbados which are highly reliant on the British market for tourist arrivals and for real estate investment. The current situation is uncharted territory.

In the wake of the Brexit vote, financial markets reacted violently while Sterling lost 10% of its value on currency markets within the days following Brexit, the lowest rate since 1985. Bear in mind that most Caribbean countries’ currencies are pegged to the US dollar and any depreciation of Sterling against the dollar makes the region less price competitive to British travellers. The increased volatility in the value of sterling and any slowdown in the British economy could dampen British demand for travel to the region and or reduce their level of spending during trips. It is a situation which tourism officials across the region have been closely monitoring. Moreover, the political uncertainty as Prime Minister Cameron prepares to demit office in October, the possibility of Scottish demands for another independence referendum, as well as the uncertainty over what impact Brexit will have on the UK economy will result in a wait and see approach by investors, which could impact private British investment in the region.

Against this background of uncertainty and messiness, what we in the Caribbean need to consider is what implication will the UK’s departure from the EU possibly have on our future trade and foreign relations with both the UK and the EU? Of crucial importance will be the possible impact it will have on the CARIFORUM-EU Economic Partnership Agreement, bearing in mind that once the UK officially is no longer a part of the EU CARIFORUM will no longer have preferential access to the UK market.

The truth is that although the EPA has not yet achieved the potential that it has been hoped to achieve, the EU is second only to the US in terms of its importance as a trading partner for the Caribbean. The main source market in the EU for Caribbean countries is the UK market. Once the UK is no longer part of the EU, Caribbean countries will no longer have preferential access to the UK market for their goods and services. Moreover, market access openings for services trade, particularly under Mode 4 (presence of natural persons) which is currently the most restricted mode, will have to renegotiated as part of any new trading arrangement which the UK decides to establish with Caribbean countries. As the UK sets about negotiating its own trade agreements with major partners, the Caribbean is unlikely to be anywhere near the top of the UK’s list of priorities. All that while, Caribbean exporters will face uncertainty in the UK market.

Prime Minister Cameron has already decided that it will be up to his successor, whomever he or she maybe, to invoke Article 50 of the Treaty of Lisbon which formally commences the UK’s secession from the EU. Until such time as a withdrawal agreement is negotiated and agreed to, or after the lapse of two years after the invocation of Article 50, the UK remains part of the EU and bound by its regulations and rules. However, during this time there will be great uncertainty as to what kind of relationship the UK will negotiate with the EU and what will be the impact of Brexit on the UK economy. British companies, services providers and traders need certainty of access to the EU single market. For this reason, it is clear that at the very least the UK will want an agreement which allows the same level of access to the EU single market. Whether the eventual withdrawal agreement involves the adoption of a Norwegian-like model, a free trade agreement, customs union or simply trade under WTO rules will not be known for some time. The EU leaders have already indicated their unwillingness to engage in any informal talks and the EU Parliament passed a resolution urging  the UK to invoke Article 50.

Colonial and historical ties and a shared language have made the UK our main ally in Europe. The UK will no longer be at the EU table once the withdrawal agreement is finalised which means the region will lose a powerful voice and ally in the grouping. This comes at a time when a confluence of important issues with severe development consequences requires the Caribbean to have as many allies in the room as possible. One of these issues is the whole problem of de-risking practices by international banks, a topic on which I spoke in Belize during my stay there last week.

Although it has been primarily US banks which have ended or restricted correspondent banking relations with local banks, some European banks have also done so. Another, and not entirely unrelated issue, is the whole matter of blacklists. One would recall that last year the EU compiled and released a list of all of its countries’ blacklists which included some Caribbean offshore financial centres, despite the fact that all of our countries have been given a clean bill of health by the OECD. Thirdly, the EU is currently in the process of redefining its relationship with the countries of the Africa, Caribbean and Pacific (ACP) group. Fourthly, there are important issues which need to be sorted out in regards to the EPA. One of these is the issue of the octroi de mer (dock dues) which serve as barriers to trade between the Caribbean and French West Indies.

An important issue is the whole matter of the European Development Fund (EDF), the main instrument through which the EU provides development aid to ACP countries and an important source of development funding for Caribbean countries. EU members directly contribute to the EDF based on contribution keys. Germany, France and the UK account for almost half of the contributions under the 11th EDF. This could result in the CARIFORUM countries receiving a smaller share of aid under EDF. On the bright side, the UK is one of the largest bilateral aid donors to the Caribbean and may decide to increase its aid in light of its withdrawal from the EU. However, more “well-off” countries like Barbados, the Bahamas and Trinidad & Tobago have often been excluded from some of this bilateral aid because of their relatively high GDP per capita, another issue which Caribbean countries have been fighting.

Another impact of Brexit is that it is refocusing the microscope on the future of the Caribbean’s own main integration project, the Caribbean Community (CARICOM).  There are already rumblings by some for there to be a similar referendum on CARICOM. Any such referendum now would be a bad idea. Recall the referendum which Jamaica did on September 19, 1961 which led it to leave the West Indies Federation. At a time when Caribbean countries are facing a wide range of global challenges, the region needs solidarity and unity now more than ever.

As I had concluded in my previous article, Brexit does have serious implications for future Caribbean-EU and UK trade and foreign relations. The depth and scope of the impact will depend on the length of time of uncertainty, the impact on the UK economy and the kind of trading relationship which the UK eventually negotiates with the EU. However, there are two things that must be emphasised. Firstly, the UK and the Caribbean share strong historical ties which the region should continue to strengthen even more so now that the UK is going solo. I have heard suggestions that the UK may decide to deepen its relationship with the Commonwealth. Secondly, this is an opportunity for the Caribbean to strengthen its ties with the rest of Europe now that the UK will no longer be at the table.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Agriculture key for fostering Sustainable Development in Caribbean Countries


Alicia Nicholls

Development in the Caribbean Community (CARICOM) can never be sustainable without building a sustainable agriculture sector. But don’t take my word for it. The need for improving the region’s food security and food sovereignty has been a recurrent theme in regional development discourse for decades. As a young girl growing up in Barbados, I remember the cookbook of traditional Barbadian recipes in our kitchen with the smiling face of its author, the late and legendary Barbadian  Mrs.  Carmeta Fraser, on the cover with the words to the effect of “Eat what we grow , and grow what we eat”. Years later, these words which former Senator Fraser echoed  tirelessly cross the length and breadth of Barbados are still in the realm of aspirations and not reality.

It is universally accepted that the best way to reduce Caribbean countries’ unsustainably high food import bills is by expanding agricultural production in an environmentally sustainable manner. However, as recognised by Sustainable Development Goal-2 which seeks to end hunger and achieve food security, plus improving nutrition and promoting sustainable agricultural practices, promoting a sustainable agriculture sector can help Caribbean countries address a number of cross-cutting developmental challenges besides food security.

The State of Caribbean Agriculture

Since the 1990s Caribbean economies have progressively shifted from mono-crop economies to services-based economies, mainly tourism and financial services. The main exceptions are the commodity-exporting countries of Guyana, Belize and Suriname which have more diversified economies and Trinidad & Tobago whose economy is based primarily on the oil/gas sector. A major reason for this shift was the loss of preferences in traditional export markets, particularly the European Union, and but also the recognition of the need to diversify their export-bases.

Agriculture is declining in its contribution to the GDP of most Caribbean countries, while the food import bills saddling our countries’ current accounts continue to rise. An FAO report entitled State of Food Insecurity in the CARICOM Caribbean revealed that CARICOM countries’ food import bill was in excess of USD $4.5 billion in 2011. Food imports are used not just for local consumption but also by the tourism sector. CaribbeanStats shows that Guyana, Trinidad & Tobago and Jamaica have relatively low import bills per occupant, while they are high in countries like Barbados, the Bahamas and Montserrat  Coupled with high food import bills is the growing scourge of non-communicable diseases (NCDs). Caribbean countries’ incidence of, and mortality rates from, NCDs such as diabetes and hypertension, are among the highest in the world. This is due not just to increasingly sedentary and high-stress lifestyles but also poor eating habits, which prioritise processed foods over more organic foods.

Although the agriculture sector is no longer the main foreign exchange earner or employer, family-based small-scale farming remains an important source of employment and earnings in rural communities. Indeed, a 2012 FAO report shows that the majority of farming in the Caribbean is done on smallholdings. Income from farming helps to maintain households, buy needed supplies and educate children.

Challenges facing Caribbean Agriculture

Most Caribbean people would agree that promoting local agriculture is beneficial for Caribbean development, by saving much needed foreign exchange and supporting the livelihoods of local farmers. Moreover Caribbean farmers do not use the level of chemicals employed by farmers in more developed countries.  Even with high tariffs on imported agricultural products, the lack of economies of scale and high costs of production often make local produce less price competitive than imported produce. This is coupled with the fact that Caribbean governments lack the financial means to subsidise their farmers to the extent that large developed countries like the United States and European countries do.

Local farmers therefore could never compete with the subsidised produce from farmers abroad whose inputs are much cheaper. Farmers in Barbados, for example, have complained about the import of some products like onions which are produced in sufficient quantities locally. There is also the perception, in many cases justified, about the dubious quality of imported produce. It is long suspected that produce which have been rejected by developed countries because they do not meet their standards are relegated to third world countries.

In some rural parishes in Barbados, particularly those which have good soils and receive the highest levels of rainfall, prime agricultural land has been granted permission for change of use to residential use and subdivision.

Praedial larceny costs farmers thousands of dollars in lost earnings each year. In Barbados, for example, farmers have taken to the newspapers to complain about crop theft or the heinous slaughtering of livestock for the meat. Another major problem for many Barbadian farmers is crop theft and destruction by the native Green Monkey which has been forced to forage outside of its natural environs because of habitat loss. Farmers also typically experience difficulty in accessing financing through traditional methods to replace lost crops or to invest in technologies and other activities.

One of the impacts of climate change is the  crop loss from natural disasters and extreme weather and crop pests and diseases like Black Sigatoka and Moko which destroy bananas and plantains. For an example of how severe weather could wreck havoc on local agriculture, just remember that in 2004 Hurricane Ivan wiped out Grenada’s entire nutmeg crop. Another facet of climate change is the drought-like conditions which have  plagued Caribbean countries for the past almost two years. The drought has caused reduced crop yields, caused malnourished or lost livestock, and forced some farmers to seek alternative sources of income.

In addition to these issues, there is also the reality that farming is generally not glamorous or financially attractive for many younger Caribbean people. On the flip side though, I know of a few young people who have chosen to get into farming due to their inability to find employment.

If one looks at the demand side, Caribbean people, through exposure to cable television, have become wedded to North American products and foods, to the detriment of reducing demand for some locally produced fruits and vegetables. After all, why limit oneself to local fruits like ackees, golden apples, dunks and fat porks, when one can have imported grapes, strawberries and pears? Part of the recourse for improving demand for local produce is extolling the benefits of these local products through research, innovation and incorporating their usage once more into traditional cuisine, in much the way Carmeta Fraser tried to encourage.

Going forward

A framework for the development of a sustainable agriculture sector through the sustainable improvement of food production must be aligned with wider national and regional policy goals aimed at promoting food security and poverty reduction, improving public health and fostering economic development. If we are speaking of improving agriculture, then permission for change of use should never be given for prime arable lands where crop yields would be higher than poorer quality lands.

Crop loss through praedial larceny can be reduced by strengthening praedial larceny laws through harsher penalties. Jamaica established a Praedial Larceny Unit  May 2015 which was reported in February 2016 to have resulted in a 14 percent reduction in praedial larceny over  10 months. This could be a model other Caribbean countries might want to consider.

There needs to be greater public-sector engagement and support for farmers including training in  business strategies, marketing and packaging, greater use of technology, as well as more sustainable farming practices, such as more efficient land and water use. Would it not be great to be able to have a mobile app where a customer could find out what crops are available for sale at any given time and place an order via his or her phone? I know personally of at least one farm which has used social media to market products. More farmers should make use of the virtual market place.

Improving farmers’ access to finance would also facilitate investment in more environmentally sustainable farming technologies. Getting younger people involved in farming can be achieved by improving the teaching of agricultural science in schools, while some of the arable lands which are currently idle and over-run could be leased to farmers similar to the Land for the Landless Programme in Barbados.

Turning to the theft of crops by green monkeys in Barbados, the loss of habitat from the debushing of natural woodlands and gullies for residential use has forced many green monkeys to raid the crops in farming and residential communities, particularly in the more rural parishes. Although there have been calls by some for a monkey cull, I think a better option may be to consider designating certain gullies and woodlands, particularly on Crown Lands, as special monkey protection areas. These would have the benefit of not just protecting the green monkey’s habitat and being natural greenspace (in keeping with our goal of reducing our carbon footprint), but could be low impact eco-tourism attractions where the native green monkey could be observed in its natural habitat.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is an international trade and development consultant. You can read more of her commentaries here or follow her on Twitter @Licylaw.

St. Kitts & Nevis ratifies WTO Trade Facilitation Agreement


Alicia Nicholls

St. Kitts & Nevis has become the latest Caribbean country to ratify the World Trade Organisation’s (WTO) Trade Facilitation Agreement (TFA). According to the WTO’s release, the country deposited its instruments of ratification on June 17, 2016, becoming the 82nd WTO member to do so.

The World Trade Organisation’s Trade Facilitation Agreement seeks to cut the red tape and reduce the transaction costs and delays in the movement, release and clearance of goods across borders through the harmonisation, simplification and acceleration of customs procedures. The Agreement was concluded at the WTO’s Ministerial in Bali, Indonesia in 2013. It  will come into force once two-thirds of  the WTO’s member countries ratify the agreement.

The TFA is not only the first multilateral trade agreement to be concluded since the WTO’s establishment in 1995 but is the first which links implementation to a member country’s ability to do so. In May last year St. Kitts & Nevis had submitted its Category A notification to the WTO indicating which provisions of the TFA it intends to implement upon entry into force of the agreement.  Countries also have access to the Trade Facilitation Agreement Facility (TFAF) which offers technical assistance. On June 8, 2016 the WTO held an experience-sharing event “to identify best practices and the challenges faced by WTO members in establishing or maintaining a national [trade facilitation] committee”.

The following Caribbean countries have also ratified the TFA:  Trinidad and Tobago, Belize,  Guyana, Grenada, Saint Lucia and Jamaica.

The WTO press release may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

CCJ Issues Ruling in Gay Rights Freedom of Movement Case


Alicia Nicholls

Test cases in law are a legal academic’s dream. They  help to map uncharted legal waters by establishing important legal principles and rights, which, as precedents, would be binding in subsequent cases whose facts are similar. The consolidated  test cases of Tomlinson v Belize, Trinidad & Tobago brought by prominent Jamaican attorney and LGBTI (lesbian, gay, bisexual, trans, and/or intersex) activist, Mr Maurice Tomlinson, before the Caribbean Court of Justice (CCJ) aimed to do just that.

Mr. Tomlinson challenged the consistency of discriminatory provisions contained in the Immigration Acts of the defendant states, Belize and Trinidad & Tobago, which classify homosexuals among the classes of prohibited immigrants. He claimed that the mere existence of those provisions infringed his right of entry as an LGBTI Community national under Article 45 of the Revised Treaty of Chaguaramas and the 2007 Heads of Government Conference Decision.

Article XII of the Agreement Establishing the Caribbean Court of Justice gives the Court exclusive jurisdiction, subject to provisions of the Revised Treaty, in matters concerning the interpretation and application of the Revised Treaty. Freedom of movement of CARICOM nationals has been a sore point in Community relations, with some States claiming that their nationals are routinely discriminated against.  The Court rendered its landmark decision on the right of freedom of movement of CARICOM nationals in the case of Myrie v Barbados. The CCJ’s ruling in that case established definitively that CARICOM member states were bound by the 2007 Decision of the Conference of Heads of Government of CARICOM to allow all CARICOM nationals hassle-free entry into their territories and a stay of six months upon arrival. The only exceptions for refusing entry are where  the Member State deems a person to be “undesirable person” or where  it is believed the Community national seeking entry may become a charge on public funds.

The points of law raised in the instant case are unique as it is the first time that a CARICOM national has challenged the immigration laws of a CARICOM member state on the basis of infringing the right of entry of LGBTI community persons. Mr. Tomlinson also claimed infringement of his right under Article 7 of the Revised Treaty to not be discriminated against on the basis of nationality only and that being a UWI graduate and thus a Skilled CARICOM National, his rights under Article 46 of the Treaty would also be infringed.

The relevant sections from the two Immigration  Acts in question are as follows:

Belize Immigration Act (Cap 156):

5.-(1) Subject to section 2 (3), the following persons are prohibited

(e) any prostitute or homosexual or any person who may be living
on or receiving or may have been living on or receiving the
proceeds of prostitution or homosexual behaviour;

Trinidad & Tobago Immigration Act

8. (1) Except as provided in subsection (2), entry into
Trinidad and Tobago of the persons described in this subsection,
other than citizens and, subject to section 7(2), residents, is
prohibited, namely—

(e) prostitutes, homosexuals or persons living on
the earnings of prostitutes or homosexuals, or
persons reasonably suspected as coming to
Trinidad and Tobago for these or any other
immoral purposes;

As a matter of context for readers outside of the Caribbean, LGBTI rights are still not recognised in Caribbean countries. No one needs to look further than the many archaic and discriminatory laws still found on our statute books, which though not all enforced, still discriminate against members of the LGBTI community and are incongruous to the requirement of legal certainty.

Mr. Tomlinson argued that while he has never been himself denied entry into the defendant member states,  the mere existence of the provisions in question were inconsistent with his right of entry as to enter would amount to him being in breach of the law. As such, Mr. Tomlinson not only requested the Court to make declaratory orders declaring his right of entry to these states, but also that the provisions in question violated his right to freedom of movement and his right not to be discriminated against on the basis of nationality only. He also requested the court to order Belize and Trinidad & Tobago to remove homosexuals from the class of prohibited immigrants.

For their part, the defendant states argued, inter alia, that the existence of the provisions in question in their Immigration Acts  has not hindered Mr. Tomlinson’s entry into their territories. They also did not deny that Mr. Tomlinson was entitled to entry and stay of up to 6 months. The defendant states also agreed that they did not see Mr. Tomlinson, a homosexual, as an “undesirable person” within the meaning given in the 2007 Conference decision.


The Court agreed that homosexuals cannot be categorised as ‘undesirable persons’ and concluded that homosexual CARICOM nationals have a right to freedom of movement on the same terms as any other CARICOM national. However, in regards to the central issue on whether the mere existence of the challenged statutory provisions constituted a breach of those States’ obligations, the Court had consideration for the state practice in Belize and Trinidad & Tobago. Interestingly, the Court accepted Belize’s interpretation of section 5(1)(e) of its Immigration Act that homosexuals are only prohibited from entering the country in cases where they are engaging in prostitution or benefiting from acts of prostitution performed by others.

Turning to Trinidad & Tobago, the Court found that unlike the Belize provision, the provision in the Trinidad & Tobago Immigration Act expressly prohibited the entry of homosexuals and not solely those seeking to engage in prostitution. The Court, however, accepted Trinidad & Tobago’s evidence of state practice that despite the existence of this discriminatory provision, it is not enforced.

Noting the inconsistency of 8(1)(e) of Trinidad & Tobago’s Immigration Act with the Revised Treaty, the Court, however, made reference to Article 9 of the Revised Treaty which provides that “in the event of any inconsistencies between the provisions of this Act and the operation of any other law, the provisions of this Act [the Revised Treaty] shall prevail to the extent of the inconsistency’. The Court also noted that the state practice of Trinidad & Tobago and Belize does not suggest any incompatibility with the Revised Treaty or the 2007 Conference Decision. The Court held, therefore, that Tomlinson had no valid reason to assume that his rights would not be respected by the States.

However, the Court further emphasised at paragraph 59 of the Judgment that it was not condoning the retention by member states of legislation which conflicts with Community Law and stressed that “[s]tates should ensure that national laws, subsidiary legislation and administrative practices are transparent in their support of the free movement of all CARICOM nationals”. The Court also dismissed Mr. Tomlinson’s claims that his rights under Articles 7 and 46 of the Revised Treaty were infringed.

Jurisprudential Impact

Although the defendant lost his claim and was denied the requested remedies, this test case achieved two main things. Firstly, the Court stated definitively that “the practice or policy of admitting homosexual nationals from other CARICOM States (not falling under the two exceptions mentioned in the 2007 Conference Decision) is not a matter of discretion but is legally required based on Article 9 of the RTC as this is an appropriate measure within the meaning of that provision”. Therefore, States cannot as a matter of practice deny entry of homosexuals into their territories. It is hoped, however, that member States will move with alacrity to repeal those discriminatory sections of their Immigration Acts, and also give greater importance to bringing their laws into conformity with Community rules.

Secondly, in so doing, the judgment has added to the Court’s growing jurisprudence, including on the contentious issue of freedom of movement.This significance was not lost on the Court. The justices stated at paragraph 65 of the judgment that the case “raised novel questions and has contributed to the clarification and development of Community law”. While litigation may be costly for member states against which claims are brought, the testing of issues of law by Community nationals helps to clarify points of Community law and ensure that member states are held accountable and uphold the rights which they agreed that Community nationals should enjoy.

Recognising the need not to discourage parties from bringing test cases, particularly in the Court’s current stage of development, the Court in its discretion found the current circumstances were “exceptional circumstances” under Part 31.1(3) of its Original Jurisdiction Rules 2015 and so ordered both parties to bear their own costs.

Copies of the summary, entire judgment and the video of the delivery of the judgment are available on the CCJ’s website here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.


Barbados’ Upcoming CFATF Mutual Evaluation: What’s at stake?


Alicia Nicholls

A robust regime for anti-money laundering and combating the financing of terrorism (AML/CFT) is critical for the integrity and stability of a jurisdiction’s financial sector. This is doubly critical in Barbados where the international business and financial services sector is the second largest foreign exchange earner. Any perceived gaps in Barbados’ AML/CFT framework could sully its international reputation as a place for doing legitimate business, with repercussions for local employment, foreign exchange inflows and tax earnings.

Barbados will shortly undergo its 4th Mutual Evaluation by the Trinidad-based Caribbean Financial Action Task Force (CFATF), the Caribbean regional associate member of the Financial Action Task Force (FATF). An intergovernmental body established in 1989, the FATF is the international standard-setter for AML/CFT and combatting the financing of proliferation. Last revised in February 2012, the FATF’s 40 recommendations plus its 9 special recommendations on Terrorist Financing and the Interpretive Notes are the internationally accepted standards for AML/CFT.

Read more of my article at the Broad Street Street Journal here.

Are AML (Anti-Money Laundering) requirements hindering SME access to trade finance?


Alicia Nicholls

Trade finance is the lubricant which facilitates the smooth conduct of international trade transactions. It allows traders to manage the commercial, country and currency risks inherent in cross-border trade transactions. In other words, trade finance is what helps importers pay for goods and services and ensures exporters are paid in full and on time for goods and services rendered internationally.

A recent World Trade Organisation (WTO) report highlighted that “up to 80 per cent of global trade is supported by some sort of financing or credit insurance”. Although bank-intermediated trade finance instruments, such as documentary letters of credit and documentary collections are major types of trade finance, inter-company credit is also of importance.

Trade Finance Gaps

Despite the centrality of trade finance to global trade, the above-mentioned WTO report entitled “Trade Finance and SMES: Bridging the Gap in Provision” found that access to trade finance was not geographically uniform. This is supported by the  Asia Development Bank’s 2015 Trade Finance Gaps, Growth, and Jobs Survey which highlighted that “the global trade finance gap stands at $1.4 trillion, $693 billion of which is in developing Asia (including India and the Peoples Republic of China)” and that “while availability of trade finance has improved, gaps have become more concentrated”.

Equally striking but not unsurprising is the large gap in access to trade finance between SMEs and MNCs. According to the WTO Report, “globally, 52 per cent of SMEs see requests for their trade finance rejected, against 7 per cent for MNCs”. Even more disconcerting is that “in some large developed countries, up to a third of SMEs face such challenges.”  In the aftermath of the Global Financial and Economic Crisis of 2008, small and medium sized enterprises (SMEs), particularly in Africa and Asia, have found accessing credit for trade increasingly difficult. The Caribbean was not mentioned in the WTO Report but 41.6% of respondents in Latin America identified ease of trade finance as a major obstacle to company’s exports, second only to Africa where 66% shared that view.

SMEs are important drivers of trade, as well as generators of employment and economic activity. An OECD report stated that SMEs account for 60 to 70 per cent of jobs in most OECD countries. In developing countries, particularly small island developing states like the Caribbean, the majority of businesses would be classified as SMEs. Advances in technology have made new opportunities possible for SMEs. They generate growth and employment, which means trade is not just the domain of multinational corporations (MNCs) anymore. Access to trade finance is vital for SMEs not just to engage in international trade but to expand and to capitalise on market access openings created by trade agreements.

In the aftermath of the Global Economic and Financial Crisis, banks have become a lot more conservative in their lending practices. SMEs lower access to “good collateral” and often shorter credit histories make them riskier prospects than established companies.  In cases where trade finance requests are rejected, SMEs either have to find an alternative source of financing the transaction or abandon it altogether. SMEs also often lack information on the trade finance options available to them.

AML/Trade Finance Nexus

According to the WTO Report, 41.4% of respondent banks cited anti-money laundering and know-your-customer (KYC) requirements as a barrier to providing trade finance. Moreover, the International Chamber of Commerce (ICC) identified the main regulations affecting Trade Finance as the Basel Accords on capital adequacy, liquidity and leverage, as well as regulations relating to AML/KYC/KYCC and sanctions.

There are three main methods of laundering illicit monies are through the financial system, physical movement of proceeds across borders and through the international trade system. In regards to the latter, the FATF in its 2006 paper raised the importance of combatting trade-based money laundering (TBML).

In its 2008 Best Practices Paper the FATF defined Trade-based money laundering and terrorist financing (TBML/FT) as:

“the process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimize their illegal origin or finance their activities.”

Common techniques include over or under-invoicing, multi-invoicing, false descriptions of goods and over and under-shipments if goods.

Regulators in developed countries have been punitive in the fines and sanctions meted out to banks found to be in violation of anti-money laundering (AML) and know your customer (KYC) regulations. One of the unintended consequences is that banks have started to de-risk, that is, instead of identifying and managing risks on a case by case basis, they have sought to avoid risk altogether through cutting off correspondent banking relationships with banks in high risk jurisdictions or refusing to provide trade finance to firms with higher risk profiles. While banks could reduce their exposure through higher levels of KYC/CDD, the increased costs they would incur often outweigh the profitability from these business lines.

One of the key findings from International Chamber of Commerce research shows that trade finance transactions have low risks of default, with an average default rate of short-term international trade credit of 0.021%, something which makes trade finance a lot less risky than one might originally think.

The bottom line

AML and KYC regulations are important for ensuring the stability and integrity of the global financial system and help to prevent trade-based money laundering which has negative consequences for both developed and developing countries. However, care must be taken that these regulations do not undermine SMEs access to trade finance, especially in poor countries. Denial of access to trade finance has implications not just for SMEs’ ability to engage in international trade, but to expand and to contribute to job creation and economic activity, with wider economic and sustainable development implications.

In regards to improving access to trade finance, the WTO Report made 6 recommendations, namely reducing the limitations in existing multilateral programmes and increase programme size where possible, set a realistic objective for total trade coverage, increasing capacity building support, maintaining an open dialogue with trade finance regulators, improving the capacity of the international community to read markets and predict problems.

Indeed, there is a role for closer WTO engagement with the Financial Action Task Force (FATF), the global standard-setter for AML/CFT rules, in dealing with the trade finance/AML intersection. Director General of the WTO, Roberto Azevedo, reiterated these sentiments in his speech at a meeting of the WTO’s Working Group on Trade, Debt and Finance where he opined that “greater cooperation between organisations could again lead to better market intelligence, which would enable us to be more responsive to problems as they emerge”.

According to the informal report published by the WTO Secretariat of the Expert Group on Trade Finance’s Meeting in April, 2016, a proposal was also discussed by the Expert Group in regards to tentatively increasing the amount of trade covered by existing trade finance facilitation programmes operated by multilateral development banks from the current $30 billion to $50 billion, as well as discussions on the need for improved capacity-building in trade finance in developing countries.

Besides this, official data on trade finance is lacking, and especially so in the Caribbean. As was noted by the Bank of International Settlements (BIS) in a 2014 report, there is no single or comprehensive source of statistics from which one can estimate the size or composition of trade finance markets. Further research needs to be done on financing challenges experienced by SMEs seeking to participate in international trade and on the impact that de-risking is having on trade finance. Such research will be critical in identifying the scope of the problem and in crafting strategies for monitoring and mitigation.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is an international trade and development consultant. You can read more of her commentaries here or follow her on Twitter @Licylaw.

What the debate on the Panama Papers forgets


Alicia Nicholls

No two words have evoked as much emotion and debate internationally in recent weeks as have the so-called “Panama Papers”. The moniker refers to the cache of over 11 million emails, invoices and other documents leaked by a whistle-blower and originating from the Panamanian international law firm Mossack Fonseca.The files reveal the firm’s use of offshore vehicles registered in several offshore financial centres (OFCs) around the world to help thousands of international celebrity, public official and otherwise wealthy clients worldwide in their tax and asset management. The potential fall-out of the Panama Papers for Barbados was one of the topics of discussion by a panel at the Barbados International Business Association’s very informative Update Seminar last week Thursday.

Read my full article in the Broad Street Journal here.

Are Citizenship by Investment programmes sustainable?


Alicia Nicholls

The International Monetary Fund (IMF) in its end of mission press release following its recently concluded Article IV Consultation mission in St. Kitts & Nevis highlighted that strong construction activity, driven in part by large real estate projects funded under the island’s Citizenship by Investment (CBI) programme, had contributed significantly to the island’s five percent economic growth in 2015. Although the Article IV report itself has not been made available, the end of mission press release noted as follows:

“The outlook for 2016 is positive, but remains dominated by developments in CBI inflows. Growth is expected to moderate to 3.5 percent in 2016 and 3 percent, on average, over the medium term, reflecting a tapering of construction activity associated with a potential slowdown in the pace of new CBI applications, given the increased competition from new CBI programs [emphases are this Author’s].”

Two main things are clear from this paragraph and indeed from the entire press release. Firstly, St. Kitts & Nevis’ CBI programme, which has been in existence since 1984 and was the first of its kind, has contributed significantly to the island’s recent macroeconomic performance at a time when some Caribbean countries are still seeing sluggish GDP growth. Secondly, the IMF has concerns about the sustainability of this  CBI-led growth. This is reflected in the lower GDP growth rate projected for 2016 and for the medium term. It raises the question of how sustainable a role can CBI programmes play in fostering growth and development in the host country.

Citizenship by investment programmes or jus pecuniae (economic citizenship) remain a controversial topic in the Caribbean. Despite this,  given the high level of indebtedness of many Caribbean countries, the need for economic diversification, the fickle nature of foreign direct investment inflows and limited access to concessional borrowing, Caribbean countries are increasingly considering their attractiveness. In January this year, St. Lucia recently joined four other Caribbean countries (Antigua & Barbuda, Dominica, Grenada and St. Kitts & Nevis) as the fifth Caribbean state currently operating a CBI programme. Each of these programmes differs in terms of fees, types of qualifying investment and admission and other qualification criteria.

If managed well, CBI programmes can be an important source of targeted foreign direct investment and other foreign exchange inflows. They can also be alternative means of financing infrastructure projects which might be otherwise unattractive to most private investors. As an example, the Government of Dominica recently announced that its West Bridge project under the Roseau Enhancement Project will be financed through its CBI programme. Without private sector-led involvement, such projects would require use of government’s tax coffers, borrowing or public-private partnerships. Construction activity pursuant to these projects, where provided for, contributes to economic activity and generates employment. High Net Worth Individuals (HNWIs) and their families  also bring with them expertise, contacts and know-how to the businesses which they establish. CBI programmes can to some extent contribute to poverty reduction by creating employment and creating infrastructure in rural communities.

Growing global demand for Second Passports

There is also no disputing that global demand for second passports is increasing. Contrary to popular belief, this demand is not fuelled in the main by nefarious purposes but by HNWIs either fleeing political or economic instability in their home countries or seeking the greater mobility a less restrictive passport could bring. Caribbean passports, for example, rank among some of the least restrictive passports outside those of metropolitan countries.

A growing and increasingly mobile Chinese, Russian, Middle Eastern and African HNW class, and continued instability in the Middle East, are two of the major developments to watch. Turning to this hemisphere, Fortune reports  that 2015 was the third straight year in which a record number of US citizens renounced their US citizenship. Besides the onerous reporting requirements under the Foreign Account Tax Compliance Act (FATCA), the main factor is that under US law,  American citizens or resident aliens living or travelling outside the  US are mandated to file taxes in the US in the same way as those resident in the US. Moreover, if media reports are to be believed, that number may jump depending on the outcome of the presidential election this fall! It is therefore no surprise that citizenship planning is a multibillion dollar global industry.

Sustainability issues

While it is unlikely that global demand for second passports will abate anytime soon, there are concerns about the sustainability of these programmes not just because of the inherent reputational risks to the host countries if applicants are not thoroughly vetted, the implications for loss of visa-free access with third states, but also the security implications in the context of the free movement of persons as envisioned under the CARICOM Single Market and Economy. For example, St. Kitts & Nevis had to revamp its programme after the US and Canada raised concerns. The latter revoked visa-free access  to Kittitian nationals. I have touched on these issues in previous articles so my main focus here is on issues of economic development.

Like all inflows, CBI  revenue inflows are not guaranteed and could leave a country in the lurch if there is a sudden drop in inflows due to competition from other CBI programmes globally. It is a concern that the IMF rightly raised  in its Article IV end of mission press release in regards to St. Kitts & Nevis. Even so, market and size constraints mean there is only so much real estate and tourism construction activity which can take place in a small country at once, and concerns have been raised that increased demand for luxury real estate could drive up the general price of real estate, making it unaffordable to ordinary persons.

The CBI programmes in the Caribbean are direct citizenship programmes, which means that once all fees are paid and due diligence requirements met, a qualifying investor is granted citizenship on the basis of a one-time qualifying investment and is not required to be resident in the country for any period of time prior to applying for citizenship or afterwards. A slight exception is that under Antigua & Barbuda’s CBI programme  an investor may lose citizenship if he fails to spend at least 5 days in Antigua & Barbuda during the period of five calendar years after having obtained citizenship. Five days out of a possible 1,826 days is hardly any time and only applies after citizenship is obtained.

This may be contrasted with residence-to-citizenship programmes, such as the US’ EB-5 programme, which require a period of residency before an investor may apply for citizenship. The lack of a residency requirement means there is no incentive for the investor to reside in the new country of citizenship or contribute through expenditure, tax paying or otherwise once he receives citizenship.

Some countries seek to address this by establishing a relationship with their new citizens. In this article on the Government of Dominica’s website, the Prime Minister of Dominica is reported to have visited and addressed several new citizens of Dominica in Europe, Asia, Dubai and the Arab Emirates and “impressed upon them the importance of their contributions for the development and modernization of [their] country.”

Another option could be to do like Malta did and introduce a one-year residency requirement. A drawback is that this would increase the waiting time for the potential investor, making such a programme less competitive.  While one could argue that this has not hurt Malta which is currently  ranked as the top global residency and citizenship programme on Henley & Partners’ Global Residence and Citizenship Programs 2016 report, I believe that its  visa-free access to 168 countries, including EU citizenship, offsets any negative fall-out from having a residency requirement.


To go to the heart of the question posed in this article,  CBI programmes have their benefits. The revenue  inflows and the economic activity generated make the macroeconomic fundamentals of a country look good. However, they should not be relied on exclusively as an engine of inclusive growth and sustainable development.

Careful planning is needed to ensure that investment under CBI programmes is steered towards targeted growth areas and sectors which can boost economic diversification and growth. To some extent we are already seeing this being done. CBI-funded projects in St. Kitts & Nevis are adding to the appeal of the island’s tourism product. St. Lucia is using its programme in order to develop its luxury tourism and real estate sectors. However, this should be done in a sustainable way in order to boost development and at the same time having a minimal adverse human and environmental impact.

The IMF has also made a very interesting suggestion in its above-mentioned press release that the categories for qualifying investments under the Citizenship by Investment regulations be broadened to include renewable energy, education and health. This merits consideration by policy makers. However, promoting investment in these sectors would require more marketing as their profitability for investors may not be immediately apparent.

The IMF also recommended the need for a prudent framework that “would help build resilience to a sudden stop in CBI inflows, and facilitate the accumulation of fiscal buffers necessary to address natural disaster shocks and absorb unforeseen financing needs if tax performance disappoints after a slowdown in CBI inflows”. The Fund also emphasised that a Growth and Resilience Fund using savings from the CBI programme should be established which could be used as a contingency buffer in the case of natural disasters.

Besides these very timely suggestions, it would be useful if Caribbean countries released more data about the operation of their programmes. For example, periodic impact assessments should be done on the operation of the programmes and made publicly available, highlighting their contributions, challenges and whether they have met their targets. Such an exercise would not only assist policy makers in their policy planning but also show the public that CBI programmes are not a cloak used by unsavoury characters to conceal their illegal activity but are a policy tool to assist in development. I would also add that countries should continuously evaluate and monitor, and where necessary, revise their due diligence frameworks, to ensure the integrity of their programmes.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

CARICOM countries continue fight against bank de-risking


Alicia Nicholls

The countries of the Caribbean Community (CARICOM) are continuing their fight against bank de-risking practices which are resulting in the restriction, threat of, or outright termination of correspondent banking relations with banks and wire transfer providers in the Caribbean region.

Onerous global and national regulatory requirements (such as anti-money laundering and combating the financing of terrorism standards), burdensome compliance costs and the stringent sanctions for breach of these regulations are increasingly leading banks in metropolitan countries, particularly in the United States, to de-risk, that is, avoid risk by discontinuing business with whole classes of customers without taking into account their levels of risk, as opposed to managing and mitigating risk. While other countries are also experiencing this disquieting phenomenon, the Caribbean appears to be the most affected region according to a World Bank survey conducted last year.

There are a number of other factors influencing de-risking decisions. Besides risk and reward considerations, added to the mix is the growing perception of the Caribbean as a “risky” place for financial transactions. The unwarranted attacks against legitimate offshore financial centres in the Caribbean in the wake of the Panama Papers scandal will no doubt unfortunately add fuel to the fire. The net result is an increasing unwillingness of international banks to continue correspondent banking relationships with banks and wire transfer providers in the region.

Belize has been the hardest hit so far by bank de-risking, but other Caribbean countries are also being affected. In the International Monetary Fund (IMF)’s Caribbean Corner publication of September 2015, it was reported that “[a]lready at least 10 banks in the region in five countries have (as of June 2015) lost all or some of their CBRs, including two central banks.” This number has grown.

At the meeting of the Financial Stability Board in Tokyo in March this year, Barbados’ Central Bank Governor, Dr. Delisle Worrell, reporting in his capacity as co-Chair of the Financial Stability Board’s Regional Consultative Group for the Americas, highlighted that eight correspondent banking relationships in Barbados’ international business sector have already been severed. He further warned that the lack of correspondent banking services could lead individuals to utilise unregulated channels, thereby limiting transparency and adding further risk to international transactions.

The loss of correspondent banking relationships disrupts the processing of financial instruments, such as credit card transactions and cheques,  needed for trade, investment, tourism and remittance flows, and would effectively de-link regional economies from the international financial system. It also has humanitarian and poverty eradication consequences as well. Remittances are the “bread and butter” for many poor families who depend on earnings made by breadwinners abroad. In light of the serious threat posed to the region’s economic, financial and social stability by de-risking, CARICOM heads of government took the decision to raise the issue not just bilaterally but in multilateral fora.In March Caribbean countries sought the Organisation of American States’ support.

Last week, Prime Minister of St. Kitts & Nevis, Dr. Timothy Harris took the lead during an important consultation with officials from the US State and Treasury Departments in Washington DC raised the serious impact de-risking was having on regional economies. The issue was also raised at the recently concluded Ninth UK-Caribbean Forum. The Ministers noted at paragraph 9 of the Communique:

The Caribbean therefore called on the UK to continue to work with international
partners to address this global phenomenon, and to encourage banks which
provide correspondent banking services, and regulatory authorities, to take
into account the efforts being made by Caribbean countries and financial
institutions to implement international regulations and to mitigate risks.

The full communique from that meeting may be viewed here.

The Caribbean Association of Banks has also been playing a critical role in lobbying efforts. At the Association’s recently held CEO Forum on May 3rd, parties came together “to explore potential solutions and develop a set of actions in response to this threat”. According to the press release, the Forum “discussed and agreed” on the following possible solutions:  the establishment of a clearing institution in the US, alternative Payment Methods and alternative Correspondent Banking Relationships. The forum also established a six member committee to advance these recommendations. The full press release from the CAB’s CEO Forum may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Race for the White House and US-Caribbean Relations


Alicia Nicholls

US presidential election campaigns are keenly followed in the Caribbean not just for the riveting debates and endless intrigue, but for the important consequences which any change in US domestic and foreign policy will portend for the region. The US is not just the largest trading partner for many Caribbean countries and a valued ally. It is a major tourism source market and is also home to a large and growing Caribbean diaspora.

As of writing, the US presidential race has narrowed down to billionaire business mogul Donald Trump as the presumptive nominee for the Republicans. Former Secretary of State, Hillary Clinton, appears to be mathematically on track to securing the Democratic nomination, despite a continued spirited fight by Vermont senator, Bernie Sanders.

More so  than in any other election season in recent memory, trade policy has been a hot button topic in both the Democratic and Republican presidential primaries. Echoing sentiments long held by some Americans who are fed up with what they see as America getting a raw deal from free trade, the talking points of the presidential candidates have adopted a more protectionist and anti-trade tone than has been seen in recent election cycles. Strong criticisms are being leveled at the recently signed but not yet ratified Trans-Pacific Partnership Agreement with Pacific-Rim countries, as well as the longstanding tri-nation North American Free Trade Area (NAFTA) with Canada and Mexico.

Feeding into the populist, anti-establishment anger, candidates of both major parties have raised concern about the US’ large trade deficits with Mexico and China, the offshoring of US companies to countries with lower labour and production costs, and the consequential loss of American manufacturing jobs. The presumptive Republican nominee, known for his hardline positions on immigration and trade, colourfully equated the US’ deficit with China to rape.

As small island developing states, Caribbean countries have long posited that trade must be fair, foster sustainable development, and not be to the detriment of the local jobs and industries. However, the current tone of the US presidential campaign equates fair trade with trade which supports only US interests. It is maybe fortunate for the region that the Caribbean has not featured in any of the foreign policy discussions or debates during either the Democratic or Republican Primaries, although discussions around tax havens in light of the Panama Papers will have implications for the offshore financial centres in the Region. Anti-immigration rhetoric on the Republic side, while aimed primarily at the anti-immigration lobby’s favourite “villains” like Mexican and Muslim immigrants, could have implications for Caribbean migration to the US as well.

It would be naïve to think that any country would put another’s ahead of the needs of its own people. However, the current “America first” rhetoric raises issues of the future of unilateral preferential arrangements like the Caribbean Basin Initiative which provide beneficiary countries duty-free access to the US market for most originating goods, without the beneficiary country having to confer reciprocal access to US originating goods. Seventeen Caribbean countries and dependencies currently benefit from such status. Perhaps one saving grace is that the programme is seen to be a benefit to the US and the region has a trade deficit with the US. According to the Report to Congress released in December 2015, “[t]he value of U.S. exports to CBERA beneficiary countries grew 2.5 percent in 2014, exceeding the growth rate for total global U.S. exports, which grew 2.1 percent”.

The anti-trade, “America first” message which pervades the current US presidential election campaign brings into question whether there will be any resolution in sight to the long-running US-Caribbean rum dispute. Caribbean rum producing countries have long raised concerns about subsidies given by the US federal government to rum producers in its territories, namely Puerto Rico and the US Virgin Islands. The cover-over programme allows tax revenues raised by the Federal Government from the excise tax on both local and foreign produced rums to be transferred to the “location of production”, that is, the Puerto Rico and US Virgin Islands. The treasuries of both territories depend heavily on these subsidies for revenue to support investments in infrastructure, education and health and it is no surprise that both territories have increased rum production in order to increase their share of these revenues.

However, Caribbean rum producers like Barbados have argued these subsidies amount to unfair competition, by making Caribbean rums less competitive in the US market. The loss of market share not only means the loss of foreign exchange flows to cash-strapped Caribbean countries and a weaker current account position, but it also threatens jobs in the rum sector in Caribbean countries. So far there has not been any real progress on this issue and it is not pessimistic to think that this may very well go the same way as the US-Antigua Gambling case went after the US failed to comply with the World Trade Organisation’s rulings – nowhere.

An issue which is not directly trade-related but which would also have an impact on US-Caribbean trade, investment and remittance flows is that of the loss of correspondent banking relationships due to de-risking practices by US-based banks. Fears of harsh sanctions by US regulators has led several US banks to abandon the risk-based approach by avoiding risk altogether and terminate correspondent banking relationships with banks and money transfer providers in the region. It is an issue which CARICOM, in conjunction with the Caribbean Association of Banks, has been raising at the bilateral, and increasingly the hemispheric and multilateral level. Last week, St. Kitts & Nevis Prime Minister Dr. Timothy Harris led a delegation which raised the issue again with officials from the US State and Treasury Departments at a consultation in Washington DC.

Another key issue is that of climate change. Climate change is a threat to the world, but is an existential threat to the small island developing states of the Caribbean which bear the brunt of the adverse impacts. President Obama’s stance and support for tackling climate change may not be replicated by his successor. As one of the world’s largest emitters of greenhouse gases (GHG), US emission cuts and whether it ratifies the Paris Agreement will have important implications for whether the target of temperature increases of no more than 1.5 degrees or 2 degrees above pre-industrial levels is met.

Historically seen as the US’ backyard, the Caribbean has lost much of its geostrategic importance to US administrations in recent years. Conflicts in the Middle East, Africa, as well as tensions with Russia and China have occupied US foreign engagement. It has opened the door for greater engagement by the Caribbean with China which has expanded its influence in the region. However, there are issues on which the US and Caribbean still share common concerns, including issues of security, energy, combating drug and human trafficking, to name a few. At the U.S.-Caribbean-Central American Energy Summit in Washington DC, chaired by Vice President Joe Biden, the US reaffirmed its commitment to regional energy integration with the Caribbean and Central America.

There does appear to be another nugget of hope. On April 20th, H.R. 4939 – United States-Caribbean Strategic Engagement Act of 2016, a bi-partisan bill sponsored by New York Representative Eliot Engel (Democrat)  won the unanimous consent of the House Foreign Committee. The objective of the bill is “to increase engagement with the governments of the Caribbean region, the Caribbean diaspora community in the United States, and the private sector and civil society in both the United States and the Caribbean, and for other purposes”.

Though still in need of debate and approval by both Houses of Congress, the bill could be a catalyst for constructive re-engagement of US-Caribbean relations. Some of the objectives include increasing US-Caribbean diplomatic relations and economic cooperation, supporting regional economic, political and security integration efforts in the Caribbean, encouraging sustainable economic development , reducing crime and improving energy security, inter alia. Section 3 of the draft Bill provides that a multi-year strategy for US engagement with the Caribbean must be submitted no later than 180 days after the Act’s enactment. Whether this new re-engagement with the Caribbean will fit within the foreign policy agenda of the next president will have to be seen.

The US relationship with the Caribbean is a valued relationship with ties which go beyond trade. Despite these bonds, there is indeed need for deeper constructive dialogue, engagement and cooperation with the US on a number of pressing issues which have sustainable development and macroeconomic implications for the Caribbean. The Caribbean region does have supporters in the DC Beltway. These include members of the Caribbean diaspora who have ascended to positions of influence in Congress and which have been instrumental in lobbying the US government on issues of concern to the region. However, like everything else, the future tone of US-Caribbean trade relations, will depend heavily on who takes the presidential oath of office in January 2017.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Over 170 Countries Sign the Paris Agreement: What next for SIDS?

Alicia Nicholls

Earth Day 2016 was extra symbolic this year. On this day (April 22nd), 174 countries plus the European Union signed the Paris Agreement at a High-Level Signature Ceremony at the United Nations’ Headquarters in New York. Among the signatories were small island developing states (SIDS) from the Caribbean, the Pacific and the Indian Ocean, for whom climate change is a serious matter of survival.

The Paris Agreement, which will replace the Kyoto Protocol when it comes into force, is a landmark climate change agreement which aims to strengthen the global response to climate change. Many years in the making, the Paris Agreement was concluded and adopted at the end of intense negotiations during the United Nations Framework Convention on Climate Change’s (UNFCCC) 21st annual Conference of the Parties (COP21) held in Paris last December.

Climate change is a global problem with implications for us all. According to the United States’ National Oceanic and Atmospheric Administration (NOAA) and NASA, 2015 was the hottest year on record since the start of record keeping in 1880. If these first few months of 2016 are anything to go by, this year may shatter that record handily.

SIDS which are responsible for less than 1% of global GHG emissions, are the most vulnerable to its adverse effects. Besides sea level rise, extreme weather events have caused tremendous economic devastation and loss of human life. The Rapid Impact Assessment showed that Tropical Storm Erika cost Dominica 90% of its gross domestic product (GDP). Earlier this year, the Category 5 Severe Tropical Cyclone Winston ravaged the Pacific SIDS of Fiji, Vanuatu, Tonga and Niue. In Fiji the storm left 44 dead, destroyed over 31,000 homes and caused 1 billion USD in damage.

For SIDS, climate change is an existential threat to our economies, societies and survival, which led our states to push the “1.5 to stay alive” campaign. To keep the temperature increase to just 1.5 percent above pre-industrial levels or even 2 percent, signature of the Paris Agreement is just one step.

Signature is not the same as ratification

The turnout for the signature of the Paris Agreement is reported to be a record number for a new treaty. However, signature does not make a treaty legally binding on a signatory party unless the Treaty specifically provides for this. In the case of most treaties, like the Paris Agreement, it is only after a party has deposited its instrument of ratification (or accession, approval or accession) that it has consented to be bound by the treaty.

The ease of the domestic ratification process depends on the legal system and domestic political processes in each state. In the US, the type of international agreement determines the process. Article II, section 2 of the US Constitution requires approval of two-thirds of the US Senate for a treaty to be approved. Executive type agreements do not require congressional approval. Given the strong objection to the Paris Agreement in the Republican-controlled Congress, the US negotiators were careful to avoid any language or provisions, such as mandatory emission reduction targets, which would require Congressional approval of the agreement. However, the US has not yet ratified the Agreement and the upcoming US Presidential election this November could lead to a dramatic reversal in US policy on climate change depending on whom is elected president. No one wants a repeat of the Kyoto Protocol; the US had signed it but did not ratify and was therefore not bound by the Agreement.

According to Article 21, the Paris Agreement will enter into force 30 days after at least fifty-five parties which account for at least fifty-five percent of total global greenhouse gas emissions (GHG) have deposited instruments of ratification. As at the time of writing this article, 177 parties have signed the agreement, which represents the vast majority but not all the 195 countries which negotiated the agreement in December. Conspicuously absent from the  signatures are several major oil producing states, namely Nigeria, Saudi Arabia and Iraq. Signature will be open for one year until April 2017 so there is still time for more states to sign.

Fifteen countries have so far ratified the Agreement, three of which with declarations. It is no surprise that SIDS led the way in the number of ratifications. Those countries which ratified already are the Marshall Islands, Nauru, Tuvalu, Palau, Somalia, Palestine, Barbados, Fiji, Grenada, St. Kitts & Nevis, Samoa, Maldives, St. Lucia, Mauritius and Belize.

Scaling Up of Climate Action

Even before the entry into force of the Agreement, countries will need to scale up their climate actions to reduce emissions. Prior to the conclusion of the Paris Agreement, most countries submitted their Intended Nationally Determined Contributions (INDCs) which set out their policies, targets and actions for contributing to the reduction of GHG emissions. In Barbados’ INDC, for example, the country intends to achieve an economy-wide reduction in GHG emissions of 44 percent compared to its business as usual (BAU) scenario by 2030. In absolute terms, this means an intended reduction of 23 percent compared to 2008 levels.

However, the just released updated UN synthesis report of all INDCs communicated by Parties by 4 April 2016, a total of 189 Parties (96% of all Parties to the UNFCCC), found that the level of ambition is still not enough to lead to an increase of less than 2 degrees above pre-industrial levels. There is the need to deepen ambitions and convert intention to concrete actions and achievements. This will require planning, political will, cooperation among all stakeholders, the implementation of legislative frameworks and systems for monitoring progress, implementation and reporting.

Of critical importance will be the level of reduction of GHG emissions  by countries, such as the US, China, India and in Europe, which account for over 50 percent of global GHG emissions. However, domestic politics within these countries could be an issue for meeting their goals. As an example, in August 2015, US President Obama and the US Environmental Protection Agency (EPA) announced the Clean Power Plan to lower US emissions by curbing carbon dioxide emissions from power plants through shifting from coal-fired power to renewable power. Some major fossil fuel producing states like West Virginia and Texas have challenged the administration’s plan and by a 5-4 decision the US Supreme Court issued a stay of the Clean Power Plan pending judicial review. Additionally, there is no guarantee that the next US president will be as committed to the climate change mitigation goals set out by the Obama administration to reduce emissions between 26 to 28 percent by 2025, which already is a modest target.

Climate Finance for Adaptation and Mitigation

SIDS require financing not just to build climate-resilient infrastructure but to transition to climate-resilient economies. One of the stated goals in the preamble of the Paris Agreement is to jointly provide USD 100 billion annually by 2020 for mitigation and adaptation, and to provide appropriate technology and capacity-building support.

Many Caribbean States have been graduated from accessing grants and concessionary loans due to their relatively high gross domestic product per capita (GDP per capita), while their high levels of indebtedness also make borrowing on international markets difficult. While several climate change finance streams are available, including funding from Multilateral Development Banks, official development assistance and dedicated funds, some SIDS Governments have raised concern  that the red tape for accessing funds is often cumbersome.

What next for SIDS?

The signature of the Paris Agreement is just but one step. Though SIDS account for less than one percent of GHG emissions, we all have our part to play in lowering emissions and contributing to a climate-friendly future. Domestically, our governments need to focus on implementing our INDC commitments and encourage the use of climate friendly technologies, including in buildings, transportation and the agriculture, tourism and manufacturing sectors. This is not a task for governments alone, but will require continued cooperation with civil society, the business community and ordinary citizens.

It also requires the continued encouragement of a shift from fossil fuels to renewable energy. In Barbados’ INDC, it was noted that energy consumption accounted for 72% of our GHG emissions in 2008, followed by the waste sector (16%). Disconcertingly, major players in the island’s solar energy industry have complained that falling oil prices have led to a decrease in solar installations. Barbados has been a leader in the solar industry, with a high level of solar water heater use which  saved the country a reported US$100 million on its fuel import bill in 2002. We cannot allow the drop in oil prices to allow us to lose sight of the necessity of shifting from fossil fuels for achieving our climate goals and preserving an environmentally-sustainable future for the next generations.

On the multilateral level, continued participation and advocacy in climate change talks are a must for SIDS governments. As I had indicated in my previous article, the Paris Agreement is an important step but its efficacy will depend on its ratification and implementation and subsequent follow-up, especially by those countries which contribute the most to GHG emissions. The future of our states, and the world, depends on it.

The full text of the Paris Agreement may be found here. Barbados’ statement at the High-level signing ceremony may be found here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

ACP 103rd Council of Ministers Meeting Concludes in Dakar, Senegal

Alicia Nicholls

The Council of Ministers of the 79-member African, Caribbean and Pacific (ACP) Group concluded its 103rd meeting in Dakar, Senegal yesterday. Both the ACP and the European Union are currently in a period of reflection on the future of ACP-EU relations post 2020 when the Cotonou Partnership Agreement expires. A twin issue for ACP member states is how to transform the tri-continental grouping into a modern global actor. In this regard, ACP member states welcomed the much-anticipated report of the ACP Eminent Persons Group. The EPG was launched in March 2013.

Charged with the mandate of reviewing the ACP as an international organisation, the EPG is headed by former Nigerian President Chief Olusegun Obasanjo and comprised of former high level government officials, academics and business leaders from across the ACP’s six regions, including former President of Guyana, Bharrat Jagdeo.  The EPG’s report entitled “A New Vision for our Future –  A 21st century African, Caribbean and Pacific Group delivering for its Peoples” will be on the agenda at the 8th Summit of ACP Heads of Government which will take place in Papua New Guinea this May 30th-June 1st.

According to the official ACP Secretariat press release following the meeting, ACP Ministers also discussed and took decisions on a wide range of other trade and development related topics, including Zika, trade for development, fisheries, sugar, inter alia.Importantly, the Council has called on the EU to exercise greater flexibility in the outstanding EPA negotiations with ACP regions which have not yet concluded EPA negotiations with the EU; Central Africa, Eastern and Southern Africa (ESA) and the Pacific. So far CARIFORUM is the only ACP sub-grouping which has ratified a full EPA with the EU, while the West Africa, East African Community, and the Southern Africa Development Community (SADC) EPA group have signed more limited agreements.

At the meeting, CARIFORUM states Guyana and Belize requested ACP assistance with their long-running border disputes with Venezuela and Guatemala, respectively. Both disputes have seen escalation in tensions in recent months. The latest flare up involves the fatal shooting of a Guatemalan teenager by Belizean forces in a border community between the two countries  last week and charges by Belize that Guatemala is amassing troops along the border, prompting a visit by head of the Organisation of American States (OAS), Luis Almagro, to both countries.

The final texts of the decisions and resolutions of this meeting will soon be available on the ACP’s website.

The full press release on meeting is available on the ACP website here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.


COTED concludes 42nd Meeting; Deputy SG calls for greater ease of doing business

Alicia Nicholls

The Council for Trade and Economic Development (COTED) of the Caribbean Community (CARICOM) convened its 42nd meeting in Georgetown, Guyana last week, with the Caribbean Single Market & Economy (CSME) as one of the main areas for discussion for CARICOM trade ministers. COTED is the organ of the Community responsible for the promotion of trade and economic development and consists of Ministers designated by CARICOM Member States.

The agenda for the two-day meeting which took place April 21-22 included the treatment of CARICOM nationals, trade in goods, trade in agriculture, the issue of correspondent banking and regional transportation. Dr. Arancha Gonzalez, Executive Director of the International Trade Centre (ITC)  was also present at the meeting.

Despite the Caribbean Court of Justice’s judgment in Myrie v Barbados, the vexing issue of the treatment of CARICOM nationals seeking entry into other CARICOM member states is a topic which has reared its head in the news media again in recent weeks.  The latest flare up surrounded the deportation of 12 Jamaicans by Trinidad & Tobago authorities over the Easter weekend, which prompted some Jamaicans, not for the first time, to call for boycotts of products from the twin-island republic.

Deputy Secretary General of CARICOM, Ambassador Manorma Soeknandan,touched on this issue in her opening remarks.  Noting that the average citizen judges integration by the ease by which he or she can cross regional borders, she highlighted that “more sensitization has to be done among our border officials in relation to the rules that are already in place and the procedures that should be followed”. She suggested to COTED Ministers that they may wish to consider “establishing a quick-response mechanism to resolve situations as they arise on the ground”.

Terming the CSME “the bedrock of our economic resilience”, Ambassador Soeknanda emphasised that CARICOM people wanted to see results and rightly noted that “consolidation and enhancement of the operations of the Single Market will also allow for a more coherent approach in our External Trade Negotiations”. She referenced the review of the Common External Tariff which is to be commenced.

Ambassador Soeknanda also spoke of the need to improve the ease of doing business in the region, an issue which I have touched on in previous articles. She said, “we are all complaining in our Region [about the ease of doing business], but what is each one of us doing to change the situation.” She noted that in addition to improving our individual country rankings, there are issues which Caribbean countries can address jointly, such as the time taken to start a business, registering property, and the enforcement of contracts.

The Deputy Secretary General’s remarks may be accessed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.


Caribbean Countries Looking East for Trade and Investment


Alicia Nicholls

This week the Barbados Chamber of Commerce & Industry (BCCI) signed a Memorandum of Understanding with the  Foreign Economic Relations Board of Turkey. Further north, Jamaica recently announced that it is appointing investment ambassadors to the Middle East and India and Europe to explore business opportunities for Jamaicans. A few weeks ago Antigua & Barbuda’s government announced plans to establish an embassy in Iraq. Caribbean countries are increasingly courting Asian and Middle Eastern countries, with the aim of unlocking business opportunities for Caribbean exporters and business persons in eastern markets.

Why is the Caribbean looking East?

Caribbean countries’ eastern turn has its genesis in three main factors: firstly, the need to diversify their trade partners in an effort to lessen their vulnerability to economic slowdowns in their traditional export partners (the United States, Canada and the European Union). Secondly, there is the desire to promote South-South economic and political cooperation as a conduit for development. Thirdly, there is the recognition of the growing shift in the global balance of power away from Western capitals towards the East. Asian economies are expected to account for two-thirds of the world’s population and half of global GDP by 2025, according to the United Nations.

China has already solidified its position as a major investment and development partner in the region. Lamentably, Caribbean countries’ overtures towards the East have drawn criticism from some elements in Caribbean societies, with some expressing wariness about the timing given the political instability in the Middle East, the seemingly limited cultural affinity between Caribbean countries and the predominantly Muslim countries of the East, and the diplomatic fall-out some believe would occur if Caribbean countries engage too much with traditional western foes like Iran. However, many of these criticisms are both misguided and myopic.

Firstly, Western countries themselves have recognised this shifting balance of power and have sought to expand their presence in eastern markets, with the Trans-Pacific Partnership Agreement being just one example. Secondly, Caribbean countries have had diplomatic relations with most Asian and Middle Eastern countries for years. What is new is there is now more meaningful efforts at deepening relations through the establishment of embassies and consulates, negotiating visa waiver agreements, open skies agreements and protocols for cooperation.

Thirdly, contrary to popular belief, there are some cultural and historical links between the Caribbean and the East.  As a result of the indentured labour system during the colonial era and successive waves of immigration, East Indians comprise a plurality of the populations in Guyana, Suriname and Trinidad & Tobago and there are also sizable Chinese, Syrian and Lebanese diasporic communities in those countries, as well as a 70,000 person strong Javanese diaspora in Suriname. Jamaica, Barbados and Antigua & Barbuda have much smaller East Indian populations.

Many of these diasporic communities, whether immigrant or native-born, still hold on to cultural relics of their ancestral homeland, including music, religion, cultural norms and in some cases, language. After all, one of highlights of visiting Trinidad & Tobago is eating local Indian-based delicacies like roti and doubles. Additionally, walk into an East Indian owned store in the region and you are sure to find products which were  imported in bulk from the Indian sub-continent.

Another cultural link between the Caribbean and some Eastern countries is the love for cricket. Several West Indies players have played and/or are currently playing in the Indian Premier League (IPL). Some notable names include big names like Chris Gayle, Darren Sammy, Dwayne Bravo, Jason Holder, to name a few. It was also recently reported that seven Afghan players have been registered in the Caribbean Premier League draft. Bollywood star Shah Rukh Khan currently owns the Trinbago Knight Riders (formerly the Trinidad & Tobago Red Steel), Trinidad & Tobago’s franchise in the Caribbean Premier League.

Caribbean students are increasingly benefiting from scholarships offered by the governments of China, Taiwan, Japan, Korea and Malaysia to study in those countries.

Trade and Investment

While the limited data available shows that trade between Caribbean and Asian/Middle Eastern countries is minimal, the bilateral trade and investment relationship between Trinidad & Tobago and India is a good example of the potential which exists.

Data published by the Indian High Commission to Port of Spain (Trinidad & Tobago) shows that in 2014 India exported US $165.48m in goods to the twin island republic, and imported 68.42m. Examples of Indian FDI in Trinidad & Tobago include Bank of Baroda, the New India Assurance Co and Mittal Steel. Cultural industries trade also has huge potential. Trinidad & Tobago was one of the filming locations for the Bollywood film, Dulha Mil Gaya starring Shah Rukh Khan.

Barbados has signed double taxation agreements with the United Arab Emirates (2014) and, the Kingdom of Bahrain (2012), which are currently not yet in force but could be used as vehicles for Middle Eastern investment in Latin America and the Caribbean

Development Finance & Islamic Banking

Earlier this month, Guyana became the 57th member of the Islamic Development Bank (IsDB), joining Suriname to be the only two countries in the western hemisphere to be members of this multilateral development finance institution. Membership of the IsDB  will provide Guyana another means of access to concessional financing, including grants and interest-free loans. Guyana and Suriname also have full membership of the Organisation of Islamic Cooperation (OIC), a prerequisite to joining the IsDB. At the recently held 13th OIC Heads of Government Summit in Istanbul, Turkey, Suriname reiterated its intention to become  the hub of Islamic banking and finance in the Americas.


The rising middle class in Asian and Middle Eastern countries represent a large untapped tourist market for both mainstream and faith-based tourism.  Halal tourism, which provides tourism and services meeting the requirements of Muslim religious rules and practices, is a growing niche in global tourism, not dissimilar to Kosher tourism which caters to persons of the Jewish faith. Several countries, including the predominantly Christian Philippines, have been repositioning themselves to benefit from the global rise in Halal tourism. It may be something which countries like Guyana, Suriname and Trinidad & Tobago, could explore given their greater familiarity with Halal customs.


Exporting goods and services and promoting travel trade in a new market has its complications, from the need to conduct adequate market research so as to understand and meet consumer preferences, to familiarisation of regional exporters with cultural and business norms,regulatory standards and border requirements in the target market, as well as linguistic barriers. It might be easier at first to foster links with countries like India, Malaysia and Singapore where English is widely spoken and where there are some  cultural affinities.

Distance is also a major logistical factor in terms of both ocean freight and air travel. Open skies agreements would help promote greater travel and trade by freeing the air services framework from government interference. However, travel between the Caribbean and Eastern countries is currently time-consuming as it requires changing planes, and transiting through metropolitan hubs like London, Amsterdam or Miami. Nationals of some Asian and Middle Eastern countries require visas to transit through these hubs.  There is some hope, however. Air China commenced service from Beijing to Cuba via Montreal in Canada in December 2015. Although one still has to transit, there is only a three-hour stop over. As technological advancements improve the capacity and speed of long haul airliners, it is not unlikely that there could one day be direct non-stop flights between the Caribbean and Asian and Middle Eastern countries once there is sufficient demand, whether latent or effective.

If one includes China and India, eastern markets include a population of over 3 billion people which is ripe for tapping. As the middle class in Asia and Middle Eastern countries continues to rise, there will be greater demand for travel, and also greater scope for trade and investment between these regions. I believe there are also opportunities for greater engagement, exchange and learning between the Caribbean and eastern countries, particularly in areas like culture, education, technology and sports. Critically, there will be the need to foster linkages between private sector associations and educational institutions in both regions. The countries of the Caribbean Community (CARICOM) would also need to consider the feasibility of negotiating formal agreements for facilitating trade and investment with individual eastern countries or trade blocs like the Association for South East Asian Nations (ASEAN).

There is also the need for language training and cultural awareness between the peoples of the Caribbean and eastern countries. A good start is the Confucius Institutes at the University of the West Indies’ Mona, St. Augustine and Cave Hill Campuses which would assist in this process in so far as Chinese-Caribbean relations are concerned.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Is Brexit a risk for the Caribbean?


Alicia Nicholls

In a few weeks’ time, June 23rd to be exact, the British people will vote in a referendum to determine the future of the United Kingdom of Great Britain and Northern Ireland’s 40-plus year formal relationship with continental Europe. The possibility of a UK vote for an EU exit, poignantly termed “Brexit” in popular parlance, was identified by the International Monetary Fund (IMF) in its recently released World Economic Outlook Update Report as a major risk to the global economy.

The fear of a negative impact of Brexit on the UK and global economy has been echoed off the walls of practically every major economic and political forum within the last few months, with the recently concluded IMF/World Bank Group Spring Meetings  being the latest example.

Though the US, Canada, and in some respects China, have surpassed the UK’s economic importance to the Caribbean region as a destination for Caribbean exports and as a source of foreign direct investment (FDI), the UK remains an important source market for tourist arrivals.  It is also the region’s closest ally in the EU and a partner in helping to ensure the region’s concerns are raised and considered. Therefore, there are possible economic and foreign policy implications for the Caribbean if the UK severs its ties with the EU.


The UK joined the European Economic Community (EEC), the predecessor to the EU, in 1973 but has never joined the eurozone, opting instead to retain the Pound Sterling as its currency and set its own monetary policy. While it is outside the scope of this article to delve into the merits and demerits of either position or to render an opinion on such, those who support the “Vote Leave” cite immigration from poorer EU countries and the perceived impact on UK social services, as well as the loss of British sovereignty as the EU looks to create an “ever closer union”. They see the costs of EU membership (both financial and figurative) outweighing the benefits and point to Switzerland and Norway as examples of European countries successfully striving outside of the EU.

Those in favour of the “Stay vote” highlight the EU as a final destination for nearly half of all British exports and the hypothetical havoc that would be inflicted on the UK economy should the UK cease to be a member of the single market.According to data published by the UK Office of National Statistics, the EU in 2014 accounted for 44.6% of UK exports of goods and services, and 53.2% of UK imports of goods and services.

While Article 50 of the Treaty on the European Union (TEU) provides for withdrawal from the EU by any member state, the current UK situation is untested waters. In 1975 British voters opted to remain in the EEC. Although Greenland left the EEC in 1985 following a referendum, no state has ever left the EU.  Therefore, there is uncertainty about the impact of a potential Brexit on the EU and the global economy considering that the UK is the EU’s 2nd largest member by GDP and 3rd largest by population.

 A “leave” vote will not automatically mean the UK is out of the EU and there is a process to be followed which Article 50 of the TEU outlines once the UK notifies its intention to withdraw pursuant to Article 50(2). This includes negotiation and conclusion of a withdrawal agreement in accordance with Article 218(3) of the Treaty on the Functioning of the European Union (TFEU). Unless the European Council and the UK decide an extension, EU treaties would cease to be applicable to the UK once the withdrawal agreement enters into force or, failing that, two years after the UK has notified its intention to leave.

Caribbean Implications – Trade, Tourism & Investment

The UK still ranks as a major partner for many Caribbean countries’ exports and imports. For commodities-exporting economies like Guyana, Belize, Suriname, the UK is within their top 5 export markets.

The UK is more importantly a main source of tourist arrivals for many Caribbean countries. Some 1.1 million UK tourists visited the Caribbean in 2015, according to the Caribbean Tourism Organisation’s State of the Industry Report in February this year. For those tourism-dependent countries in the Caribbean for which the UK is the major source market, their economic fortunes are tied to the health of the UK economy and strength of Sterling. This was clearly illustrated by the slowdown many tourism-dependent economies in the region suffered while the US and UK economies were in recession during the global economic and financial crisis and during the height of the Air Passenger Duty (APD) saga when British demand for travel to the region fell..

Studies on the impact of Brexit on the UK economy are inconclusive and range the gamut from positive to disastrous. However, the IMF position is clear as seen in its most recent WEO Update Report where it cut its growth projections for the UK from 2.2% to 1.9% in 2016, representing a projected slowdown from the  2.3% growth the UK economy realised in 2015.

In Barbados, British nationals are also an important source of real estate FDI. It was recently reported by local real estate agents in a news broadcast that the softening  in the  value of the Great Britain Pound has dampened demand for Barbadian luxury real estate by British second home buyers and affected the tenuous recovery the island’s second home market was experiencing.

Trade Agreements

There is some disagreement among academics as to the continuity of the UK’s participation in treaties which it signed as part of the EU with third states. These include the Economic Partnership Agreement signed with CARIFORUM states, which is considered a “mixed” treaty under EU law, that is, a treaty under which both the EU and its member states exercised competencies and thus  is concluded by both the EU and its member states. Some posit that the UK can avail itself of the principle of continuity of treaties, which is more likely in a “mixed” treaty than an “exclusive” scenario where the EU has exclusive competence.

However, the principle of continuity actually applies in the context of state continuity and succession and there is no precedent of a scenario like this where a state ceased to be a member of a trading bloc in which capacity it had concluded a treaty. Even if the continuity principle applies, the UK would have to enter into some kind of negotiations with these states if it is to continue to benefit from treaties it signed as part of the EU which still means there will be uncertainty for CARIFORUM exporters and investors. In the worst case scenario, CARICOM or CARIFORUM would have to negotiate a separate agreement with the UK to maintain the level of preferences to the UK market to what they have with the EU under the EPA. As the EU treaties and directives would no longer apply to the UK after the date of entry of the withdrawal agreement, the UK would have the regulatory freedom to set its own standards, such as technical standards and sanitary and phytosanitary standards, which may or may not be as onerous as the EU’s.

Foreign Policy Implications

The UK is most Commonwealth Caribbean countries’ closest ally in Brussels. A British exit would mean the UK no longer has the power to directly influence EU policy and the Caribbean region would lose an important voice to raise and articulate its concerns in regards to the future of EU foreign policy. It is particularly critical now as the EU is contemplating its position on the future framework for cooperation with the countries of the African, Caribbean & Pacific (ACP) Group once the Cotonou Partnership Agreement expires in 2020.

The situation becomes more complicated for UK dependencies in the Caribbean which are not officially a part of the EU but benefit from EU funding and preferences because of their relationship with their mother country, the United Kingdom. A “yes vote” would raise questions about what future relationship they have with the EU.

According to this news report, a  poll by YouGov released on Friday “found support for “In” stood at 40 percent, while 39 percent intended to vote “Out”, 16 percent were undecided and 5 percent did not intend to vote”. Similar to the Scottish independence referendum where polls were close and ultimately the status quo prevailed, my personal view is that despite the growing anti-EU sentiment in the UK, the British people will not vote to leave the EU. Besides the uncertainty a Brexit would portend for the British economy and business, Prime Minister David Cameron was able to secure several sweeping changes from Brussels after two days of negotiations in February and which would go into effect if the “stay vote” wins. 

However, in the event that the “out vote” prevails, it is likely that the UK will negotiate some kind of preferential arrangement, similar to what obtains between the EU and Turkey, given the strong trade and investment ties to the continent. This would ensure UK businesses and exporters are not disadvantaged and still have favourable access to the EU single market once the transition period ends.

The Bottom Line

Brexit would be a risk to Caribbean economies. The nature of the risk would depend on several factors, including the type of withdrawal arrangement the UK negotiates with the EU and the impact on the British economy during the period of transition.

The uncertainty in the UK economy during the post-exit phase could have strong implications for countries like Barbados whose economic fortunes are closely tied to the strength of the UK economy, something which we are already seeing happening to some extent as uncertainty among investors has led to the weakening of Sterling in recent months.  Furthermore, the UK’s exit from the EU would mean uncertainty for Caribbean exporters in the UK market and the loss of the region’s closest ally within the trade bloc at a time when the EU is reconsidering its foreign policy and its post-Cotonou cooperative framework with ACP countries. As such, the Region must brace itself for whatever happens on June 23rd.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

IMF trims global growth forecast to 3.2% in 2016

Alicia Nicholls

In the run up to its annual spring meetings in Washington DC  this week, the International Monetary Fund (IMF) in its World Economic Outlook released today, has cut its baseline projection for global growth  to 3.2% in 2016 and 3.5% in 2017, down from 3.4% and 3.6%, respectively, in its forecast in the January 2016 WEO Update Report. The title of its latest WEO Report “Too slow for too long” pretty much sums up the sluggish and disappointing pace of global growth post the global economic and financial recession and comes on the heels of the recently released World Trade Organisation’s report in which the WTO cut its forecast for global trade growth yet again.

Noting that the global recovery has weakened further in the midst of turbulence in financial markets, the IMF report highlighted several factors which have hampered global growth including legacies from the global recession and the eurozone crisis, declines in potential growth, the impact of low oil and commodities prices (on oil and commodities exporting countries), currency fluctuations and geopolitical tensions which they assumed to remain elevated in 2016 given the situations in Russia, Ukraine and the Middle East. However, the IMF forecasts the modest eurozone recovery to continue in 2016/17.

Emerging market and developing economies are expected to grow by 4.1% in 2016, compared to 1.9% projected output growth from advanced economies for the same period. While emerging and developing economies will continue to comprise the largest share of global growth in 2016, the IMF forecasts that growth  in these economies will be uneven and weaker than in the previous year as a result of a moderate slowdown in China and a weak outlook for non-oil commodities exporters owing to further softening in commodities prices.

Not unrelated to the slowdown in global trade is the softer global investment demand, particularly in commodities-exporting economies due in part to China’s rebalancing and general uncertainty about global growth.


In regards to the Caribbean, the IMF forecasts real GDP growth of 3.5% (slightly above the global forecast) in 2016 and 3.6% in 2017. However, like the global situation, this growth will be uneven. The expected high flyers are as follows: Dominican Republic which is forecast to grow by 5.4% in 2016, Dominica at 4.9% and St. Kitts & Nevis at 4.7%. Barbados is projected to experience real GDP growth of over 2% in 2016, which is an improvement on the 0.5% growth in 2015 but still below both the global and regional average. Economic output in commodities exporting countries, Suriname and Trinidad & Tobago, is  forecast to contract by 2% and 1.1% respectively in 2016.

Turning to the United States, the Caribbean region’s largest trade partner and one of the beacons of hope in an otherwise still subdued global economy, the IMF cut the United States’ growth forecast to 2.4% in 2016, down from it previous forecast of 2.6%. However, the IMF noted that stronger balance sheets, an improving housing market and better fiscal position would help offset any negative effects on US exports from appreciation of the US dollar, weaker manufacturing and tighter domestic financial conditions in some sectors in the US economy.

In regards to the United Kingdom, a major tourist source market for many Caribbean countries, the IMF projects UK economic output to grow by 1.9% in 2016, down from 2.2% in 2015. The IMF listed Britain’s potential exit from the European Union ‘Brexit’ as one of the main risks to its outlook, noting that such a development would pose major challenges not just for the UK but the rest of Europe. Among the challenges highlighted would be disruption of trade and investment flows, while also increasing financial market volatility due to uncertainty during any post exit negotiations. Brexit is a development which the Region should monitor closely as any negative fall-out the UK’s exit from the EU has on the UK economy could affect countries like Barbados which depend heavily on the British market for tourist arrivals and real estate foreign direct investment inflows.

IMF Recommendations

Stressing that the “current diminished outlook and associated downside possibilities warrant an immediate response”, the IMF has made several recommendations, which are also applicable to the Caribbean. Though citing the importance of accommodative monetary policies, the IMF also stressed the immediate need for such policies to be supported by “other policies that directly boost demand and supply”, including infrastructure investment, public action to encourage of research and development activity, structural reforms in product and labour markets, tax reform and financial reforms.

The full report may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

The Movement of Wealth, Transparency, the Right to Privacy…and More

Excellent interview by internationally renowned tax expert, Francoise Hendy, with IFC.


The Q&A  with me on Page 9 which covers the issues which have been brought into sharp focus by the theft of the ‘Panama Papers’ is set out below:

IFC: As more IFCs sign up to FATCA & the OECD’s Automatic Exchange of Information Standard, do you see a fundamental shift in policy happening in the Caribbean?

Francoise Hendy: Independent Caribbean IFCs have always been pre-disposed to information-sharing. Their comparative advantage in international business and financial services is not grounded in secrecy. The fundamental shift that is taking place is therefore in relation to the methodology of exchanges. For these states, the switching over to automaticity under FATCA and as part of the OECD transparency agenda cannot be considered in a vacuum, but rather as a part of a bigger economic re-orientation because of the exponential cost of compliance even in circumstances where the ‘risk profile’ among these states does…

View original post 2,694 more words

WTO predicts weak global trade growth in 2016


Alicia Nicholls

“Trade is still registering positive growth, albeit at a disappointing rate.” This is according to the World Trade Organisation’s Director-General Roberto Azevedo in the WTO’s latest Trade Statistics and Outlook released this afternoon. In its latest report, the WTO has significantly revised its forecast of global trade growth in 2016 to 2.8%, down from its forecast of 3.9% in September 2015. This is disconcerting news for Caribbean countries  as weaker global demand also impacts demand for Caribbean exports.

2015 performance

According to the WTO, the projected expansion of global trade at 2.8% in 2016 would be same rate at which global trade grew in 2015. In what was described as a tumultuous year for global trade on account of weak global demand, 2015 saw trade declines in developing and developed countries in the second quarter of 2015 and a rebound in the final half of the year. South America saw the lowest growth in imports in 2015 as Brazil’s recession dampened demand for imports.

The WTO did not provide any data for the Caribbean’s 2015 performance in its report. However, recently published data from the Barbados Statistical Service showed, for example, that though Barbados’ total merchandise exports from January-December 2015 increased year on year by $17.1 million or 1.8%  over 2014,  this export growth was limited to a robust 16.6% increase in re-exports whilst domestic merchandise exports actually fell by 8.8%.

2016 forecast

Though projected trade growth remains positive, WTO economists have noted that the rate of global trade growth remains below the average global trade growth rate of 5% since 1990. This year’s forecast would also make it five consecutive years that global trade would have grown at almost the same rate as global GDP, as opposed to twice as fast. The report also notes that despite the growth in trade volumes, the dollar value of trade fell 13% in 2015  due to falling commodities prices and exchange rate volatility.

According to the WTO’s Report, Asia will lead global export growth in 2016 at 3.4% growth, followed by North America and Europe, which are both estimated to see a 3.1% increase in their exports. For South and Central America, Africa, the Commonwealth of Independent States and the Middle East, the picture is not as rosy, with imports expected to contract (albeit lower) due to low oil and commodities prices. WTO economists predict that while exports from developed countries are expected to grow around the same rate (2.9% in developed countries and 2.8% in developing), developed economies imports are projected to grow faster (at 3.3%) than developing countries’ imports (at 1.8%) in 2016.

Noting that “risks to the trade forecasts remain tilted to the downside”, the WTO highlighted the slowdown in the Chinese economy, the worsening volatility in financial markets, exposure of countries with high levels of foreign indebtedness to sharp exchange rate movements and declining business and consumer confidence in developed countries which could lead to slower GDP growth in the EU and US in 2016.

At the same time, the WTO has also suggested that more accommodative monetary policy of the European Central Bank could promote growth in the Euro area and encourage demand for goods and services. The WTO also highlighted the threat of “creeping protectionism” due to the growth in trade restrictive measures. The good news is that global trade growth is expected to pick up in 2017 to 3.6%.

These are developments which the Caribbean should continue to monitor closely, particularly the developments in the US and EU, our major trading partners, as well as China which has become a leading development partner for the region. The drop in oil prices has negatively affected oil exports from Trinidad & Tobago and its economy is currently in recession. Commodities exporter Suriname has also faced hard times due to the low commodities prices.

The full press release may be accessed here

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Inaugural Africa Regional Integration Index Launched

Alicia Nicholls

The Vision of the African Union is to
become an integrated, prosperous and
peaceful Africa, driven by its own citizens
and representing a dynamic force in the
global arena.”
African Union Agenda 2063

In a not insignificant milestone in the thrust towards a united African continent, the African Union Commission, along with the African Development Bank (AfDB),and the United Nations Economic Commission for Africa (UNECA),  launched the inaugural Africa Regional Integration Index  last Sunday in Addis Ababa, Ethiopia during Africa Development Week.

Recognising that integration is key for securing prosperity and development for the continent’s peoples and promoting economic growth, the African Union has made it no secret that it plans to deepen the continent’s integration imperative, with plans for a continental free trade area by 2017. The African Union’s Agenda 2063 “sets out the vision for Africa’s integration path over the next 50 years” and is complemented by the Regional Integration Policy and Strategy (2014-2023) developed by the African Development Bank Group.

However, significant data gaps on the current levels of integration and their impact on countries within the continent exist. The inaugural African Regional Integration Index 2016 aims to remedy this lacuna by providing a monitoring and evaluation mechanism, with the concomitant aim of facilitating evidence-based regional policy making.

The current report focuses on the member countries of the 8 regional economic communities (RECs) recognised by the African Union: Community of Sahel–Saharan States (CEN–SAD),  Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), Economic Community of Central African States (ECCAS), Economic Community of West African States (ECOWAS), Intergovernmental Authority on Development (IGAD), Southern African Development Community (SADC) and Arab Maghreb Union (UMA).

The analysis is based on five dimensions (regional infrastructure, trade integration, financial and macroeconomic integration, productive integration and free movement of people) and 16 indicators.


The report shows that the EAC (consisting of Kenya, Rwanda, Burundi, Tanzania, Uganda) has the highest level of integration among the RECs and “has higher than average scores
across each Dimension of Regional integration, except for financial and macroeconomic integration”. Overall, it found that trade integration had the highest scores while financial and macroeconomic integration had the lowest. Another interesting finding was that the biggest economies, such as Nigeria, Egypt and Algeria, were not among the best integrated.

In his foreword to the report, Deputy Chairperson of the African Union Commission, Erastus Mwencha,noted that

Findings show that while progress is being made, with 28 high
performing countries across the eight Regional Economic Communities, average
integration scores stand at below half of the scale. It is time for Africa to build on this
and drive regional integration ever further forward.

African integration still has a long way to go and many of the challenges facing Africa in its integration efforts are not dissimilar to those we share in the Caribbean Community (CARICOM). For instance, similar to CARICOM, Africa countries’ major trading partners are not each other but are external. Intra-African trade currently constitutes around 12% of total African trade, lagging behind other regional groupings. A myriad of logistical and other challenges have served as barriers to intra-African trade and a continental FTA would be a solution to removing many of these barriers.

I believe this index initiative is a laudable step, even more so that the results have been made available to the public. To know where one needs to go, one needs to know where one stands and the empirical data contained in this stocktaking report are an important first step in both measuring and monitoring the pace and impact of integration on the countries included and should serve as a basis on which reforms and policy decisions concerning the region can be made. It is something which we in the Caribbean Community (CARICOM), whose  experimentation with integration predates Africa’s, should consider emulating as we seek to reform our own integration process.

The full report may be accessed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.


Correspondent Banking concerns raised in IMF’s Staff Report on Belize

Alicia Nicholls

Though noting that the termination of major correspondent banking relationships with Belizean banks has so far had a limited impact on that country’s financial system and economic activity, the International Monetary Fund (IMF) in its latest staff report on Belize pursuant to its Article IV consultations agreed that the “recent termination of corresponding banking relationships with Belizean banks and banks in many other countries could have a significant impact on financial stability and economic activity in the affected countries.”

Belize is one of the few Caribbean countries, whose government still sees it fit to allow the IMF  Article IV staff reports to be publicly available. Belize has been at the forefront of efforts by Caribbean governments to raise awareness about the havoc the loss of correspondent banking relationships due to international banks’ de-risking practices could have on the economies of the Region, including on their trade, investment and remittance inflows.

Last year, Bank of America, one of the largest US banks, terminated its correspondent banking relationship with Belize Bank. The IMF staff report noted that this had had a limited impact on the financial system as new arrangements were able to have been put in place with the help of the Central Bank and major credit card companies. However, among the downside risks which could affect their baseline outlook, the IMF noted that “other banks could also lose their CBRs with global banks with severe impact on international financial transactions”.

IMF directors “urged the authorities regulating international banks that are terminating correspondent banking relationships to better clarify their expectations of how these international banks should deal with local banks they perceive as “high risk””.

The IMF staff lauded Belize’s AML/CFT reform efforts, noting that “the deficiencies identified by the Caribbean Financial Action Task Force (CFATF) in 2011 have been mostly addressed”. They did, however, stress that “important reforms are still needed to ensure compliance and effective implementation of Belize’s AML/CFT regime in line with the 2012 FATF standard”.

In regards to Belize’s overall macroeconomic position, the IMF highlighted the recent improvement in economic activity. However, they noted that “Belize’s economic outlook is characterized by sluggish growth, weak fiscal stance, and external and financial sector vulnerabilities”. Though predicting that growth over the short-to-medium term would hover around 2.5 percent, they noted that excess spending could cause the fiscal outlook to worsen. They also expect public debt to increase to “unsustainable levels” in excess of 100 percent of GDP in 2016.

The full IMF Staff Report on Belize may be accessed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.


Global Trade and Socio-economic tides pushing Caribbean countries to the back of the shoal: Integrate or be left behind

Alicia Nicholls

A few days ago I had the pleasure of being on the Regional Integration panel at the 17th Annual SALISES Conference held this year in Barbados where I presented a paper co-authored with founder and president of the African, Caribbean and Pacific Young Professionals Network (ACP YPN), Miss Yentyl Williams. The consensus all the panelists had reached in our papers was that as small fish in a very large pond, Caribbean countries are facing a growing swell of global trade and other socio-economic tides which are deepening our marginalisation in the global economy.

We argued that the region desperately needed to deepen and widen its integration process or face being further relegated to the back of the global shoal. Of course, what we were saying was not novel and indeed, has been one of the oldest and most compelling justifications for the regional integration project.

The Good

Caribbean countries have generally attained high levels of socio-economic and political development and high per capita incomes, which have put us “ahead of the pack” of other small island developing states (SIDS). An unfortunate side effect has been the graduation of several “high income” Caribbean countries like Barbados, the Bahamas and Trinidad & Tobago from accessing most concessional loans and grants, with a shift in aid focus towards Least Developed Countries (LDCs). We also have long traditions of stable democratic rule underpinned by respect for the rule of law which has been a source of comfort for investors seeking to do business in the region.

The Bad

Despite these very noteworthy accomplishments, Caribbean countries confront many challenges endemic to SIDS, including vulnerability to natural disasters and to international economic and financial shocks, open economies with a high dependence on imports and on a narrow base of exports and trade partners, a paucity of natural resources, unsustainably high levels of debt, low growth rates, wide fiscal and current account deficits, declining competitiveness, growing informal economies and unpredictable foreign direct investment (FDI) inflows.

The potential shift in trade rule making from the multilateral level (Doha is practically dead post-Nairobi), to the regional and plurilateral levels means Caribbean countries will be subject to rule-taking on important trade issues such as services, competition policy, investment and government procurement, without having a seat at the negotiating table. Mega regional trade agreements like the recently concluded Trans-Pacific Partnership Agreement (TPP), the Trans-Atlantic Trade and Investment Partnership (TTIP) which is currently under negotiation and plurilaterals under negotiation like the Trade in Services Agreement (TISA), also have the potential to further erode the narrow margins of preference Caribbean countries’ exports enjoy in the US and EU markets respectively. Regional exports to these countries are not only below potential but remain heavily concentrated in commodities, namely, minerals and fuels and agricultural products,  and some textiles.

Although low oil prices have benefited oil-importing countries of the region by lowering their fuel import bills, the region’s largest oil exporting economy, Trinidad & Tobago, has gone into recession.

One bright spot is that Caribbean tourism appears to be on the rebound in the aftermath of the impact of the global recession. The latest Caribbean Tourism Organisation (CTO) State of the Industry Report indicates that in 2015, international arrivals to the Caribbean region grew 7%, outpacing global tourism growth of 4% in the same period. Tourist arrivals from within the Caribbean increased by 11.4%. Nonetheless, shocks like 9/11 and the global recession and possibly the current Zika outbreak, highlight the very sensitive nature of the industry, which has implications for countries like Barbados, the Bahamas and the Eastern Caribbean where tourism is a major foreign exchange earner and employer.

The loss of correspondent banking relationships due to the de-risking practices of banks in metropolitan countries has the potential to undermine the region’s trade, investment and remittance flows, a lifeline for many communities within Caribbean countries. The view of the region as being a “risky” place to do business cannot be divorced from Caribbean countries’ constant need to fight their inclusion on arbitrary blacklists, with the EU being one of many latest examples. On the social front, there is rising unemployment and underemployment, which are particularly acute among young persons, as well as rising crime and security concerns.

All of these challenges, many both national and regional in texture and scope, are injurious to regional development, including our progress towards achieving the 17 United Nations sustainable development goals (SDGs). These challenges necessitate harmonised national and regional responses. However, progress on the regional project remains lacklustre.

Functional cooperation has been the pillar in which CARICOM has been most successful. There has also been some success on the foreign policy coordination front as exemplified by the Region’s cohesive position at the Paris Negotiations which led to the Paris Agreement. However, economic integration has been where the challenge lies. The implementation deficit, though spoken of ad infinitum, remains problematic given the long delays in domestic implementation of regional decisions and missed deadlines. The “E” of the Caribbean Single Market and Economy (CSME) is still in the realm of dreams as opposed to reality.

CARICOM countries export the majority of their trade extra-regionally (mainly to the US, EU and Canada). Intra-regional trade remains low and under-exploited and dominated by CARICOM MDCs, particularly petroleum exports from Trinidad & Tobago.

Without doubt, the lack of political will deserves a significant share of the blame for the current malaise. The fact that most CARICOM states have still not signed on to the appellate jurisdiction of the Caribbean Court of Justice is just but one example. At the same time, the slow process of integration in CARICOM can be juxtaposed to the deep level of integration among member states of the Organisation of Eastern Caribbean States, which have their own Eastern Caribbean Supreme Court, currency union, central bank and recently have granted Martinique, a French Caribbean Outermost Region, associate membership.

Besides the lack of political will, other factors remain hindrances to regional integration as well, including human and financial capacity constraints at the national and regional levels, limited monitoring and evaluation of member states’ implementation of reforms and the inability of CARICOM to force compliance with regional imperatives due to its intergovernmental structure. Not to be overlooked are the fears, suspicions and nationalist sentiments we Caribbean people still harbour towards each other, as well as the very “inward looking” as opposed to “regional looking” approach by  many regional leaders.

The options

As the saying goes, Caribbean states are tiny fish in a very large pond but a shoal of fish is better than one if the region is to avoid being swept away by global tides and relegated to the back of the global shoal. Boosting intra-regional trade among Caribbean countries and trade with third states are priorities. For this, improving trade facilitation and ease of doing business in the region are a must.

Caribbean countries have an average rank of ease of doing business of 104 out of 189 economies, according to the latest World Bank Doing Business Survey 2016. Though in ease of trading across borders, Caribbean countries had a average regional rank of 95 (higher than Latin America (108) and East Asia Pacific Islands (112), a lot more work needs to be done. Just compare our average to the comparable SIDS, Mauritius which topped Africa with a rank of 32 in 2016. The highest ranking Commonwealth Caribbean country was Jamaica (68).

Doing business between Caribbean countries can be a frustrating exercise due to differing customs regulations and other regulatory standards, existing non-tariff barriers to trade (e.g: sanitary & phyto-sanitary standards and technical barriers to trade), foreign exchange controls, the high cost of regional transport and lack of access to timely information on documentary and other requirements. While the region has very liberal investment regimes, investors seeking to do business in multiple Caribbean countries have to navigate a complex web of different border and behind the border regulations. This increases the cost of doing business.

A single economic and investment space as envisioned by the CSME, aided by fiscal, investment policy and regulatory harmonisation, would make intra-regional trade easier and also make the region a more attractive destination to extra-regional investors. To this effect, it is imperative that Caribbean countries follow through with the current reforms and the vision of the CARICOM Strategic Plan 2015-2019. Additionally, so far just a handful of Caribbean countries have ratified the World Trade Organisation’s Trade Facilitation Agreement, which while a global agreement, the reforms undertaken would also benefit intra-regional trade.

What the  global financial and economic crisis has reinforced is the need for Caribbean countries to diversify their export profiles and trade partners. The latter is happening to some extent as both China and Venezuela have become major investors and development partners in the region, adding to the traditional partners of the US, EU and Canada. However, China’s economy has slowed as it transitions from export-led to more consumption-led growth. Venezuela faces significant socio-economic turmoils which call into question the sustainability of the Petrocaribe arrangement, under which most Caribbean countries receive oil from Venezuela on highly concessional terms. Some OECS countries are exploring deepening diplomatic and possibly economic relations with Middle Eastern countries. Antigua & Barbuda recently announced it was establishing an embassy in Iraq and lifted its ban on Iraqi nationals seeking to apply for its Citizenship by Investment programme.

Like all trading economies Caribbean states have both offensive and defensive interests. There is the need to convert market access under existing trade agreements such as the CARIFORUM-EU Economic Partnership Agreement and preferential arrangements like the Caribbean Basin Initiative (CBI) and CARIBCAN into market presence. CARICOM should also explore the expansion of existing partial scope agreements the region has with the Dominican Republic (its CARIFORUM partner), Costa Rica, Cuba and  Colombia, as well as the possibility of concluding trade arrangements with other South and Central American countries.

Additionally, there is the need to move into higher value products than just traditional commodities like cocoa, sugar and rice and also accelerate the development of possible growth sectors like the cultural industries, transshipment, ICTs and renewable energy (for domestic consumption and possible export). To this effect, the region needs to make optimum use of aid for trade initiatives.

CARICOM countries must continue to speak with “one voice”, particularly on global trade, economic and social issues which have implications for the development of our economies and our peoples. This includes continued advocacy for the interests of small vulnerable economies (SVEs) in WTO negotiating groups and continuing to support the multilateral system to ensure its primacy, and not FTAs and plurilaterals, as the forum for trade rule making so that the Region has a say in the rules to which it is subjected.

OECS countries have long seen the utility of maintaining joint representation in diplomatic capitals, such as the OECS Joint Mission in Brussels. It is time CARICOM consider the same.

Any regional strategy requires continuity and continuity mandates engaging the future of the region – our young people. The region has to harness and unleash the energies of its young people, many of whom feel alienated from the regional integration process and from their societies in general. While the CARICOM Youth Ambassadors is a great step, I have always argued that CARICOM needs a Young Professionals Programme similar to the young professionals programmes of other organisations, where the region’s young people, many of whom have increasing difficulty finding jobs commensurate with their skills, can be systematically recruited into various regional institutions and inject new ideas and enthusiasm. As SIDS, our human resource has always been our greatest resource. It is time we exploit it to the fullest.

In sum, the growing challenges facing the region means it cannot be business as usual. The time for talking is over. It is time for action. Countries with economies and populations larger than ours have seen the importance of deepening their integration. As small fish in a large pond, Caribbean countries need to do the same or face being left at the back of the global shoal.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

WTO Panel rules in Argentina’s favour in EU Biodiesel Anti-dumping Case

Alicia Nicholls

A World Trade Organisation (WTO) dispute settlement body panel has ruled primarily in Argentina’s favour regarding anti-dumping measures imposed by the EU on Argentine biodiesel exports to the EU. Inter alia, the panel found that the EU had contravened the Anti-dumping Agreement and the GATT 1994 by failing to calculate the cost of production of the product on the basis of the records kept by Argentine producers, and by imposing anti-dumping duties in excess of the margins of dumping that should have been established per the Anti-dumping Agreement and the GATT 1994.


The dispute (DS473) European Union – Anti-dumping Measures on Biodiesel from Argentina surrounds two EU measures regarding biodiesel imports from Argentina and Indonesia, namely:

  • Article 2(5), second subparagraph, of Council Regulation (EC) No. 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (the Basic Regulation)
  • Anti-dumping measures imposed by the European Union on imports of biodiesel originating in Argentina and Indonesia.

The EU’s anti-dumping measures were implemented following an investigation by the European Commission after the European Biodiesel Board (EBB), which represents the interests of EU biodiesel producers, lodged a complaint on July 17, 2012, for anti-dumping against biodiesel imports from Argentina and Indonesia. The  EBB has argued that Argentine and Indonesian biodiesel producers were selling biodiesel at artificially low prices in the EU market thereby putting the EU biodiesel industry at a disadvantage, compromising jobs in the industry and the industry’s ability to contribute to sustainable green transport in the EU.

In January 2013, the Commission made Argentine and Indonesian biodiesel imports in the EU subject to registration. Following its investigation, the Commission imposed provisional anti-dumping duties on May 29, 2013 and definitive anti-dumping duties on 27 November 2013. In the Definitive Regulation No 1194/2013, it was calculated that the injury margins ranged from 41.9% to 49.5% . The EU applied anti-dumping duties of 22.0% to 25.7% which took the form of specific duties expressed as a fixed amount in euro/tonne.

Argentina, one of the world’s largest exporters of biodiesel, argued that the EU’s measures were protectionist and aimed at protecting inefficient European biodiesel producers. It has been reported in Argentine media that the measures are estimated to have cost Argentina almost the equivalent of 1,600 million dollars worth in biodiesel exports annually.

The Dispute

In December 2013, Argentina requested consultations with the EU and requested that a panel be established in March 2014. A panel was established in April 2014.

Argentina based its claims on various articles of the Anti-Dumping Agreement, the General Agreement on Tariffs and Trade (GATT) 1994 and the WTO Agreement, arguing that “as applied” the EU’s measures were inconsistent with various articles of these agreements. Argentina also asked the Panel to find that Article 2(5), second subparagraph of the Basic Regulation was  “as such” inconsistent with Articles 2.2, and 18.4 of the Anti-Dumping Agreement, Article VI:1(b)(ii) of the GATT 1994, and Article XVI:4 of the WTO Agreement.

“As such inconsistent”, basically means that the measure is inconsistent in and of itself and is not solely inconsistent because of its application in a specific instance. “As such” challenges are therefore “serious challenges” as noted by the Appellate Body in US – Oil Country Tubular Goods Sunset Reviews particularly given the presumption that WTO Members act in good faith in the implementation of their WTO commitments.

Additionally, the ruling’s contribution to the WTO’s body of jurisprudence should not be overlooked. As noted by the panel, Argentina’s claims “raise[d] complex questions pertaining to the interpretation of Articles 2.2 and of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 that have not been addressed previously by panels or the Appellate Body”.


In its panel report released yesterday (March 29), the panel found in favour of most of Argentina’s complaints. However, the Panel found that Argentina did not establish that Article 2(5), second subparagraph of the Basic Regulation was “as such” inconsistent with Articles and 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.The Panel also rejected  Argentina’s claim that the amount for profits established by the EU authorities (15% on turnover) was not based on a reasonable method  within the meaning of Article 2.2.2(iii) and also rejected Argentina’s claim that the EU had failed to meet the “fair comparison” requirement under Article 2.4 of the Anti-Dumping Agreement.

However, the Panel did find in Argentina’s favour on several key issues. Argentina claimed that the EU had failed to calculate the cost of production of biodiesel on the basis of the records kept by the producers/exporter under investigation and had therefore acted inconsistently with Article of the Anti-dumping Agreement.

Article of the Anti-dumping Agreement provides that:

For the purpose of paragraph 2, costs shall normally be calculated on the basis of records kept by the exporter or producer under investigation, provided that such records are in accordance with the generally accepted accounting principles of the exporting country and reasonably reflect the costs associated with the production and sale of the product under consideration.

One of the issues the Panel had to consider was whether an investigating authority’s belief that a producer/exporter’s records reflect costs that are artificially low due to an alleged distortion constitutes a legally sufficient ground under Article for that authority to find that a producer/exporter’s records do not “reasonably reflect the costs associated with the production and sale of the product under consideration”.

The EU authorities had argued that Argentina’s Differential Export Tax had artificially depressed the domestic price of soybeans and soybean oil (the inputs for Argentina’s biodiesel) and had distorted Argentine producers’ production costs.  They argued that this cost distortion should be taken into account in constructing Argentine producers’ normal value and chose  to rely on the average reference price of soybeans published by the Argentine Ministry of Agriculture for export as opposed to the actual price for soybeans reported in the Argentine producers/exporters’ records.

The panel found that the EU’s argument for ignoring the producers’ costs  did not constitute a legally sufficient basis  for arguing that the producers’ records do not reasonably reflect the producers’ costs as required per Article of the Anti-dumping Agreement.Because of its ruling on Article, the Panel did not see it necessary to rule on whether as a consequence, the EU had acted inconsistently with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994 in this regard.

The Panel also found that the EU did not use a cost that was the cost prevailing in the country of origin (i.e. Argentina) in the construction of the normal value and had therefore acted inconsistently with Article 2.2 of the Anti-Dumping Agreement and Article VI:1(b)(ii) of the GATT 1994.

The Panel ruling also supported Argentina’s claim that the EU had imposed anti-dumping duties in excess of the margin of dumping per Article 2 of the Anti dumping argument and had therefore also acted inconsistently with Article 9.3 of the Anti-Dumping Agreement and Article VI:2 of the GATT 1994.

The Panel upheld Argentina’s claim finding that as it relates to production capacity and capacity utilisation, the EU had acted inconsistently with Articles 3.1 and 3.4 of the Anti-Dumping Agreement. However, the Panel ruled that Argentina’s claims with respect to the EU authorities’ evaluation of return on investments fell outside of the Panel’s terms of reference.

The Panel concluded that “to the extent that the measures at issue have been
found to be inconsistent with the Anti-Dumping Agreement and the GATT 1994, they have nullified or impaired benefits accruing to Argentina under these agreements”. Pursuant to Article 19.1 of the DSU, the Panel recommended that the EU bring its measures into conformity with its obligations under the Anti-Dumping Agreement and the GATT 1994.

Both parties have 60 days in which to file an appeal against the panel’s decision.

Indonesia, which was also affected by these EU measures, was one of the third parties to this dispute. Indonesia also currently has a dispute pending against the EU on this matter (DS480 :  EU – Anti-dumping measures on biodiesels from Indonesia).

A summary of the panel report and  the full panel report may be accessed on the WTO’s website here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Summary Report of Public Consultation on Future of ACP-EU Relations Released

Alicia Nicholls

The African, Caribbean and Pacific (ACP) Group and the European Union (EU) are currently in a period of reflection on the future and form of ACP-EU cooperation post the expiration of the Cotonou Partnership Agreement (CPA) in 2020. The EU launched a public consultation “Towards a New Partnership between the EU and the ACP Countries after 2020” which took place between 6 October to 31 December 2015. Last Monday, the European Commission released its summary report of this public consultation.

A wide variety of stakeholders submitted responses, including the ACP Young Professionals Network whose response may be viewed here. Public authorities/ international organisations was the largest category of shareholder which sent responses, followed by civil society organisations.

As part of the ACP group, CARIFORUM countries have enjoyed a privileged relationship with the EU for the past four decades. The EU is a major trade, investment and development partner for CARIFORUM countries and it is in the region’s best interest to ensure that any new framework for EU-ACP engagement takes into account the region’s interests and concerns.

It is therefore quite unfortunate that there was such poor representation of CARIFORUM stakeholders among those which submitted responses as part of the joint consultation. Of the 103 responses received, only one came from a stakeholder within a CARIFORUM state – Jamaica.  The overwhelming majority of non-EU responses were from entities based in African countries.

Key points from the Summary Report

It was noted in the summary report that the major problem highlighted by respondents was “the difficulty to attribute progress or lack thereof specifically to the CPA framework or to EU policy as a whole”.
Some of the other key points noted in the summary report are that:
  • Respondents were generally of the opinion that the Cotonou Partnership has had a positive contribution to human and social development, including poverty reduction. However, opinions seem divided on its contribution towards sustainable and inclusive economic development.
  • Respondents, however, had a more critical opinion of the CPA’s effectiveness with respect to several other areas, including private sector development and foreign direct investment.
  • Implementation of the Sustainable Development Goals (SDGs) was the main priority put forward in regards to the future of joint ACP-EU relations, with private sector development, improved business environment and business promotion being identified as priorities in the framework of sustainable and inclusive economic growth.
  • With respect to the future form of ACP-EU collaboration, a large majority of respondents favoured a stronger role for civil society actors and the private sector.
The full summary report may be accessed here.
Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.
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