How can Caribbean CIPs survive increased global and regional competition and scrutiny?

Alicia Nicholls

Citizenship by investment programmes (CIPs) operated by five Caribbean small island developing States have been receiving increased international competition and scrutiny, with some arguing that a veritable “race to the bottom” has begun. Indeed, these programmes face increased competition not just inter se, but globally as more countries worldwide are turning to citizenship or residency programmes for attracting much needed investment.

The CIP-operating countries in the Caribbean are currently St. Kitts & Nevis (the world’s longest running), Dominica, Grenada, Antigua & Barbuda and most recently, St. Lucia. As all five of these countries are part of the CARICOM Single Market and Economy (CSME), investors who obtain citizenship under one of these countries’ CIPs are also entitled to the freedom of movement privileges under the CSME, which has caused legitimate national security concern in some non-CIP operating CARICOM countries.

  1. Eliminate price as a factor

Although Caribbean CIPs are already the most affordable in the world, there are irrefutable signs of increased price competition among Caribbean CIPs.  In January of this year, St. Lucia amended its regulations to, inter alia, reduce the minimum qualifying investment to US$ 100,000 to the National Economic Fund. In the wake of the passage of Hurricane Irma, St. Kitts & Nevis added a lower cost option (US$150,000 plus applicable fees) in the form of the temporary hurricane relief investment option (until March 2018), whereby the invested funds would be earmarked for assisting hurricane-affected areas. This latter change was sharply criticised. Even more recently, Antigua & Barbuda cut the investment threshold for the National Development Fund by 50%.

Any semblance of price competition among Caribbean CIPs is problematic for several reasons.  Although the majority of persons seeking alternative citizenship do so for the ease of business and travel a good quality passport brings, lowering the minimum investment threshold makes Caribbean CIPs more accessible to those persons who may seek alternative citizenship for nefarious purposes. Even if the due diligence processes remain unchanged, a perceived price war could cause third States to either reimpose visa restrictions or apply more scrutiny to passport holders of those States  (or of other Caribbean States!), which diminishes the value and attractiveness of those CIP-countries’ passports. It lessens the perceived value of the citizenship offered by those countries which may actually be a turn-off to some High Net Worth Individuals who may be more attracted to exclusivity.

What this speaks to is the need for CIP-operating Caribbean countries to eliminate price as a factor of competition by harmonising their minimum investment threshold, a point I made in a paper I delivered on this topic earlier this year.

2. Increase due diligence cooperation

Cooperation among CIP-operating Caribbean countries should also extend to cooperation on issues of due diligence to ensure that an applicant who fails one country’s due diligence requirements is not accepted under another’s. Based on my research, it appears that there is some due diligence cooperation already occurring, but more can be done. Additional options could be to harmonise due diligence requirements and to formulate a harmonised list of excluded countries instead of national lists as currently obtains in some CIP-operating Caribbean countries.  This would also address some of the national security concerns of non-CIP operating Caribbean countries, and third States.

3. Improve transparency

Lack of transparency remains a major problem plaguing the perception of Caribbean CIPs. Antigua & Barbuda’s legislation makes it mandatory for a 6-month report to be published and this information is found online. However, generally speaking, there is little information made available about Caribbean CIPs’ operation, except for the economic data found in the IMF’s Article IV consultation reports. With few exceptions, officials are often very reluctant to share data on these programmes’ operation, whether out of fear of competition or negative publicity.

Failure to share information only adds to the shroud of secrecy plaguing the programmes and it also makes it difficult to analyse the socio-economic impacts of these programmes.

It would be useful if CIP-operating Member States would use the framework for information sharing as mentioned in the Strategic Plan for the Caribbean Community Plan 2015-2019 to share data on the operation of their programmes for transparency purposes, including their approval and disapproval rates.

4. Compete on quality

Competition among Caribbean CIPs should be on quality of service and product without compromising standards. Caribbean countries already have inherent natural advantages which are pull factors for HWNIs, such as their natural beauty, pleasant climates, stable democratic societies and quality of life. But these alone are not enough. What the latest World Bank Doing Business Report 2018 shows is that there are several indicators on which Caribbean countries, including CIP-operating countries, can improve their attractiveness as investment destinations by improving the ease of doing business. Jamaica, which does not offer a CIP, is a good example of a Caribbean country which has been making sound reforms in the quest for  ‘best in class’ status as an investment destination.

5. Good governance

Good governance is key to the long-term sustainability of Caribbean CIPs. This includes ensuring that due diligence standards are robust, as well as that transparency and efficiency remain paramount to the programmes’ administration. It also entails keeping the programmes free of political interference.

6. Residency Criterion?

Currently, all five Caribbean CIPs are direct citizenship programmes which means that there is no requirement on the investor to reside in the jurisdiction for a fixed period of time before citizenship is granted. The lack of a residence requirement is one of the unique selling points of Caribbean programmes, but it is also one of the reasons why some third States are increasingly critical of these programmes.

The addition of  a short residency requirement, similar to Malta’s 12-month requirement, could be a possible option for Caribbean CIPs as it would remove some of the transactional nature to the process.

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.

COP23: Five Negotiation Priorities for Small Island Developing States (SIDS)

Alicia Nicholls

In about a week’s time, delegates from over 190 countries will convene in Bonn, Germany for the 23rd Conference of the Parties (COP23) to the United Nations Framework Convention on Climate Change (UNFCCC). During this round of climate negotiations, which will last from November 6-17th, the parties will continue work on implementation guidelines for the Paris Climate Change Agreement signed at COP21 in December 2015.

Despite United States’ President Donald Trump’s statement in June that the United States would be withdrawing from the Paris Agreement, there is some cause for optimism that this year’s COP negotiations will bear fruit. For the first time, a small island developing state (SIDS), the Republic of Fiji, has assumed the presidency of COP and brings to this task first-hand experience from the front lines of the climate change battle.

Secondly, recent natural disasters worldwide have brought increased international attention to the devastating effects of climate change and the need for urgent action on reducing global greenhouse gas emissions. This point was well-made by President of Fiji, Mr. Frank Bainimarama, who stated at a Pre-COP Ministerial Meeting held on October 17 in Fiji that:

“We can no longer ignore this crisis. Whether it is fires in California, Portugal and Spain. Flooding in Nigeria, India and Bangladesh. The dramatic Arctic melt. Ice breaking off the continent of Antarctica. The recent hurricanes that devastated the Caribbean and the southern United States. Or the hurricane that has just struck Ireland and Scotland – the tenth hurricane of the Atlantic season this year. It’s hard to find any part of the world that is unaffected by these events.”

Thirdly, except for the US, political will among the world’s most powerful nations has coalesced on the side of climate action. The 19 other G20 countries reaffirmed their “strong commitment” to the Paris Agreement, calling it “irreversible” in their Summit Declaration following the Hamburg meeting in July.

Below are five key likely priorities for SIDS as they go into the negotiations:

  1. Scaling up Climate Finance to SIDS

At COP15 in 2009, developed countries committed to jointly mobilise USD 100 billion annually by 2020 to meet the mitigation and adaptation needs of developing countries. According to an OECD study, climate-related concessional finance has increased in both absolute terms and as a percentage of total concessional development finance, however annual commitments for 2014 were still 20% of the USD100 billion goal.

SIDS often find it difficult to attract private financial inflows for development purposes due to their small size and economies, and current financing levels do not meet their current needs. Moreover, current graduation criteria have made some middle and upper income SIDS, like those in the Caribbean, ineligible for certain types of concessional financing.

Pledged contributions, whether to the Green Climate Fund or otherwise, also do not necessarily always lead to timely disbursement, and there is the need for guidelines and protocols for incorporating the Adaptation Fund established at COP7 into the Paris Agreement’s framework.

Finding innovative and effective ways to attract and increase financial flows, including from both public and private and bilateral and multilateral sources, will be key. For example, Fiji became the first developing country to issue a sovereign green bond, with technical support from the World Bank, to support the country’s mitigation and adaptation efforts.

  1. Loss and damage

Loss and damage was one of the most contentious topics in the negotiations leading up to the Paris Agreement and was strongly lobbied for by SIDS and LDCs as they are the least culpable but most vulnerable to the harshest impacts of climate change. The concept recognises that there is some irreversible damage which cannot be avoided through mitigation and adaptation strategies.

The Paris Agreement has recognised the concept of ‘loss and damage’ as a distinct concept of climate action and has made the Warsaw International Mechanism for Loss and Damage permanent. It, however, does not deal with liability or compensation, something which developed countries were adamant they did not wish to be included. The softer language used in Article 8, which, inter alia, itemises areas for cooperation and facilitation, is reflective of these developed country concerns.

The costliness of this year’s Atlantic hurricane season is an important background against which SIDS should call for greater discussion on concretely addressing loss and damage, including the successful launch of the Clearing House for Risk Transfer which is slated to take place at COP23.

  1. Adaptation and Mitigation

Developed countries’ continued and increased support will be necessary to assist SIDS in implementing national climate action plans, policies and projects in order to build climate resilience. This support for adaptation and mitigation includes not just financial support, but technology transfer and capacity building and technical assistance.

Certain groups within societies are particularly vulnerable to climate change, including women and children, the disabled and indigenous and rural communities. As such, the COP23 negotiations will involve operationalizing the Gender Action Plan and the Local Communities and Indigenous Peoples Platforms.

  1. More ambitious NDCs

Some 163 parties have already submitted their Nationally Determined Contributions which outline their emission reduction targets toward meeting the goal set out in Article 2 of the Paris Agreement of keeping average global temperature increase to no more than 2 degrees Celsius above pre-industrial levels and as close as possible to 1.5 degrees Celsius. These NDCs may be found at the interim NDC registry.

However, the May 2016 synthesis report on the aggregate effect of INDCs showed that a higher level of ambition will be needed in order to reach the goal in Article 2.

SIDS will want all parties to communicate to more ambitious NDCs after 2018 in order to meet the temperature goals in the Agreement and in keeping with the Article 4(3) commitment of communicating successively progressive NDCs.

  1. Preparations for Facilitative Dialogue 2018

The Facilitative Dialogue which will take place in 2018 will be the first initial opportunity under the Paris Agreement to take stock of parties’ collective progress in a transparent manner towards meeting the Agreement’s long-term goal and inform the preparation of NDCs. It will be a precursor to the Global Stock Take, the first of which will take place in 2023 and will occur every five years thereafter.

The Facilitative Dialogue 2018 will be launched at COP23 and parties will need to organise and decide on the procedures, events and expected outcomes in time for its convening. The President of Fiji, who must be commended on his country’s excellent work on preparations for COP23 to date, has indicated that these talks will approached on the principle of ‘talanoa’, a Pacific concept which values inclusive, participatory and transparent dialogue.

A copy of the negotiating agenda for COP23 (current as at this date) 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.

 

Caribbean Trade and Development Digest – October 22-28, 2017

Welcome to the Caribbean Trade and Development Digest for the week of October 22-28, 2017! We are pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. We hope you enjoy this edition.

REGIONAL

Rowley talks trade with Mexico at CARICOM Summit

Trinidad Express: According to a statement from the Office of the Prime Minister, Rowley has asked Mexican President Enrique Pena Nieto to immediately consider the development and implementation of a partial scope trade agreement which will allow Trinidad and Tobago manufactured goods access to the Mexican market. Read more

Get cracking: EU wants region to get to work on CSME; EPA

Barbados Today: Barbados and its Caribbean Community (CARICOM) neighbours have been told to get cracking on the Caribbean Community (CARICOM) Single Market and Economy (CSME) and the Economic Partnership Agreement (EPA) with Europe. Read more

South Africa set to boost trade with Cuba

allAfrica: The upcoming Havana International Fair will further advance relations between South Africa and Cuba, says Trade and Industry Deputy Minister Bulelani Mangwanishe. Read more

Haiti-DR. Towards a border resident card to facilitate trade?

Haiti Libre: Director of the National Institute of Migration (INM) of the Dominican Republic encourages the Directorate General of Migration (DGM) to create a border resident card, which would facilitate the movement of people who depend on binational trade in areas border with Haiti. Read more

India eyes trade deals with Central American, Caribbean Countries

Times of India: India is looking to expand its trade footprint in America with initial discussions initiated in the government for a possible free trade agreement (FTA) with Caribbean and Central American countries and a logistics hub in Panama to help shipment of goods. Read more

China, Cuba sign agreements to expand economic, trade ties

China Daily: China and Cuba on Wednesday signed five cooperation and legal agreements, which reaffirm the willingness of both nations to strengthen and expand their economic and trade relations. Read more

Mexican President and CARICOM meet in Belize

Amandala: Oct. 26, 2017–Belize hosted a historic meeting between heads of government of CARICOM and the president of Mexico, Enrique Peña Nieto at the Best Western Belize Biltmore Plaza on Wednesday, October 25, 2017. Read more

Mexico gives USD$14 million to CCRIF

The Reporter: The Government of Mexico will contribute $14 Million to the CARICOM Catastrophe Risk Insurance Fund (CCRIF), Mexico’s President, Enrique Peña Nieto confirmed at the IV CARICOM-Mexico Summit. Read more

CARICOM should seek to deepen ties with BRICS

Stabroek: An opinion piece by a staff writer at Stabroek. Read more

Barbados and Italy Double Taxation Agreement enters into force

Nation News: The Double Taxation Agreement (DTA) between the Government of Barbados and the Italian Republic has entered into force in accordance with Article 30 of the Agreement. Read more

INTERNATIONAL

UK, EU send proposal to rest of WTO

Reuters: Britain and the European Commission formally told other members of the World Trade Organization on Wednesday how they plan to split up the European Union’s WTO-agreed tariff quotas and farm subsidies after Brexit. Read more

Turkey, Pakistan finalise free trade agreement talks

Xinhua: Turkey and Pakistan have finalized negotiations on free trade agreement (FTA), and wished to sign the deal as soon as possible, Turkish Customs and Trade Minister Bulent Tufenkci said on Friday. Read more

NAFTA Uncertainty already hurting growth, Bank of Canada says

Bloomberg: Uncertainty about U.S. trade policy will reduce investment growth by 0.7 percentage points and export growth by 0.2 percentage points in both 2017 and 2018, according to projections in the Bank of Canada’s quarterly Monetary Policy Report, released Tuesday in Ottawa. Read more

Infrastructure deficit remains major challenge to intra-Africa trade: ECA

Xinhua: The Economic Commission for Africa (ECA) has reiterated that infrastructure deficit in Africa remains a major challenge to trade facilitation, intra-regional trade as well as economic development and transformation on the continent. Read more

Trudeau dismisses concerns free trade with China will hurt Canada-US relationship

CBC: Prime Minister Justin Trudeau said strengthening trade ties with China does not put the Canada-U.S. relationship at risk, shrugging off concerns raised Thursday by a member of his NAFTA advisory council. Read more

PM Lee urges the US to uphold free trade and sustain economic ties with Asia

Today Online: The United States’ relations with Asia has not “been turned upside down” despite the different approach taken by the Trump administration on some issues, said Prime Minister Lee Hsien Loong in urging Washington to uphold free trade and sustain economic engagement with the region. Read more

RCEP deal unlikely this year, says South Korea official

Nikkei Asian Review: An agreement to create a free trade zone among 16 countries in the Asia-Pacific region, including China, Japan, India and South Korea, is not expected before the end of the year, said a South Korean representative in charge of the negotiations on Friday. Read more

WTO issues compliance panel reports on revised US “dolphin-safe” tuna labelling measure

WTO: On 26 October the WTO issued the panel reports in the cases brought by the United States and Mexico in “United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products – Recourse to Article 21.5 of the DSU by the United States” and “United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products – Second Recourse to Article 21.5 of the DSU by Mexico” (DS381). Read more

Canada in bid to limit Brazil aircraft subsidy probe at WTO

Reuters: Canada has urged the World Trade Organisation to block attempts by Brazil to trigger a detailed investigation of its aerospace industry to buttress its case that subsidies to Bombardier caused “serious prejudice” to Brazil’s Embraer. Read more

Move to introduce ‘gender inclusivity’ in the WTO

The Hindu Business Line: Waking up to the need to enable more women to participate in international trade, the World Trade Organisation (WTO) and a group of member countries are making efforts to get a joint declaration on gender and trade to be adopted at the Buenos Aires Ministerial meet in December. Read more

Colombia looks to expand free trade deals with Pacific region countries

The City Paper (Bogota): Colombia wants its share of the Asia Pacific trade pie as it joins the three other member nations of the Pacific Alliance (Chile, Peru and Mexico) in free trade talks with Australia, New Zealand and Singapore. Read more

Germany, UK will gain the most from an India-EU free trade deal

The Hindu Business Line: Germany and the UK will witness the highest absolute gains if the proposed Free Trade Agreement (FTA) between India and the European Union (EU) is concluded, states a study conducted by the Bertelsmann Stiftung of Germany. Read more

Former WTO boss warns Brexit trade agreement could take seven years

The Express: A FORMER World Trade Organisation (WTO) Director-General warned that Britain’s worst option post-Brexit would be to trade under WTO rules, amid claims that Britain is preparing for Brexit talks to fail. Read more

‘Decision on fishing subsidies certain in WTO’s Dec meet’

The Hindu: An agreement on elimination of ‘harmful’ fisheries subsidies is likely to be the only major outcome at the forthcoming meeting of the World Trade Organisation’s (WTO) highest decision-making body called the ‘Ministerial Conference’. Read more

European Parliament votes for trade deal with New Zealand

Radio New Zealand: The European Parliament has voted to press ahead with plans to do a trade deal with New Zealand. Read more

Liked this issue? To read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

Mexico and CARICOM agree new areas for technical cooperation

Photo credit: Pixabay

Alicia Nicholls

Caribbean Community (CARICOM) countries and the Government of Mexico have approved the seventh Mexico-CARICOM Technical Cooperation Programme (2017-2019). This was one of the main outcomes of the Fourth CARICOM-Mexico Summit held this week on October 25, in Belize City, Belize. Hailed as “a new paradigm” in cooperation between CARICOM and the Government of Mexico, the new programme will include both existing and new priority areas for development cooperation which align with those identified in the CARICOM Strategic Plan 2015-2019 and the global development agenda.

Mexico and CARICOM have enjoyed four decades of diplomatic cooperation and friendship.  At the Third Mexico-CARICOM Summit in 2014 President of Mexico, His Excellency Enrique Pena Nieto had pledged his Government’s desire to build on and deepen those ties.

The discussions at  Wednesday’s summit touched on several areas of cooperation, including trade and investment, public health, education, cultural cooperation, technical assistance, and cooperation on the global development agenda. A member country of the Organisation for Economic Co-operation and Development (OECD), Mexico has the world’s eleventh largest economy according to International Monetary Fund (IMF) forecast data for 2017. This makes Mexico a potentially powerful voice and ally on international issues of interest to the Caribbean, including climate action,  de-risking and the need for multilateral financial institutions to revisit graduation criteria for official development assistance.

Disaster risk management was a major focus of the talks, as CARICOM countries and Mexico have both suffered significantly at the hands of natural disasters this year. Powerful hurricanes Irma and Maria caused major loss of life and damage in several Caribbean Islands, most tragically in Barbuda and Dominica. In September as well, Mexico was struck by Hurricane Katia around the same time that it was reeling from two devastatingly strong earthquakes within a two week span which claimed over 200 lives.

In addition to pledging their continued support for the Paris Climate Change Agreement, the CARICOM and Mexico heads of government/State agreed to a Mexico-CARICOM Strategy for Comprehensive Disaster Risk Management which, according to the summit’s official declaration, will comprise the following three main lines of work:

  1. strengthening initiatives already in place
  2. developing a complementary cooperation agenda, such as early warning, awareness raising, emergency response, among others
  3. joint action in multilateral fora and international mobilization to further strengthen and support Caribbean institutional capabilities for disaster risk management

The Mexican Government also made a US14 million grant to the Caribbean Catastrophe Risk Insurance Facility (CCRIF SPC), a regional catastrophe fund formed in 2007 and which has had to pay out about US$50.7 million since the start of the 2017 Atlantic hurricane season alone!

They have also agreed to support the establishment of a hydrometeorological monitoring centre for the Caribbean region and to collaborate to ensure  the success of the CARICOM-hosted International Donor Conference planned for November 21, 2017 at the UN Headquarters, New York. This conference will seek to mobilise assistance for those hurricane-struck Caribbean islands.

The Government of Mexico has also offered 150 scholarships for training Caribbean teachers of Spanish as a second language. This would assist in reducing the language barrier which would be one of the impediments for CARICOM exporters seeking to enter the Mexican market. According to data quoted in the CARICOM press release before the meeting, “between 2012 and 2016, imports from Mexico to CARICOM exceeded exports from CARICOM to Mexico, with Jamaica, Trinidad and Tobago, Belize, Barbados and Guyana being the main importing countries, accounting for 95 % of imports from Mexico between 2014 and 2016”.

The Joint Declaration of the CARICOM-Mexico Summit 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.

ACP Trade Ministers demand ‘concrete outcomes’ at upcoming WTO MC11

Alicia Nicholls

Trade ministers and other representatives from the 79-member Africa, Caribbean and Pacific (ACP) countries added their voices to demands for ‘concrete outcomes’ at the upcoming World Trade Organisation’s Eleventh Ministerial Conference (WTO MC11). Preparations for the upcoming WTO MC11 was one of several topics discussed by ACP trade representatives at their 20th ACP Ministerial Trade Committee meeting held in Brussels on 18-19 October last week.

According to the press release from the meeting, the ACP representatives  reiterated the need for a development-friendly and robust MC11 work programme which recognized differences between developed, developing and least developed countries and whose outcomes were aligned with the Sustainable Development Goals (SDGs).

Reaffirming their commitment to the multilateral trading system, they also called for “inclusiveness, consensus and transparency in all WTO decision-making processes, as well as careful framing of any reform evaluation of the WTO to ensure that the interests of all countries are protected”. Guyana was chosen to be the spokesperson for the ACP Group at the Ministerial which will take place in Buenos Aires December 10-13, 2017.

In a speech delivered at the ACP meeting, the WTO’s Director General, Roberto Azevedo, acknowledged the important role ACP countries have played in shaping the WTO’s work.

Mr. Azevedo gave a brief status report on the WTO’s preparatory work for the upcoming Ministerial Conference, lauding the ACP countries for being at the “forefront” of these discussions. He noted that although there were some positive signs, the many gaps to bridge meant that there was still much work ahead with respect to the negotiations.  He further reiterated that in order to achieve concrete results in Buenos Aires, “more focused engagement and negotiation will be required to quickly identify areas of convergence”.

In the meeting which was chaired by the Hon. Carl Greenidge, Vice President and Minister of Foreign Affairs of the Cooperative Republic of Guyana, ACP trade representatives also focused on several  other topics of importance to ACP countries’ trade, including enhancing trade among ACP countries and trade issues with the European Union (EU).

The ACP press release also notes that ACP representatives have committed to “increased integration, unity and solidarity” among ACP countries, including taking more “joint ACP approaches to trade and development”.

The press release from the ACP can be read here.

The WTO Director-General’s full speech can 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 Trade and Development Digest – October 15-21, 2017

Welcome to the Caribbean Trade and Development Digest for the week of October 15-21, 2017! We are pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. We hope you enjoy this edition.

REGIONAL

Cuba, T&T trade ties growing, says Cuba ambassador

Trinidad Guardian: Despite the American economic embargo against Cuba, T&T businesses continue to show interest in commercial ties with the island said Cuban Ambassador Guillermo Vázquez Moreno. Read more

(Jamaica) Senate passes law to speed up exports

Jamaica Gleaner: The Senate yesterday passed legislation amending the Processed Food Act and the Processed Food (General) Regulations, 1959, removing the requirement for export certificates to facilitate the implementation of the Automated System for Customs Data (ASYCUDA). Read more

COTED green-lights Agriculture Regional Emergency Response Team

ST Kitts & Nevis Observer: The Council for Trade and Economic Development (COTED) has approved the Regional Agriculture Emergency Response Sub-Committee to provide prompt action to help the agriculture sector in Caribbean Community (CARICOM) member states to rebound after natural disasters. Read more

CARDI ready to take action to rebuild agriculture in Barbuda, Dominica

Caribbean News Now: The Caribbean Agricultural Research and Development Institute (CARDI) has already begun taking action to restore the battered agriculture sectors in Barbuda and Dominica. Read more

UWI launches Centre for Reparations Research

Jamaica Observer: The University of the West Indies (UWI), Mona, this week officially launched Centre for Reparation Research at the campus. Read more

Meat safety training for Caribbean countries

Jamaica Observer: A two-day regional training workshop covering hygiene provisions for raw meat, meat preparations and manufactured meat from the time of live animal production up to the point of retail sale, gets underway here on Tuesday. Read more

INTERNATIONAL

ACP trade ministers reaffirm commitment to multilateral trade system

Caribbean News Now: Ministers and senior officials responsible for trade from 79 African, Caribbean and Pacific (ACP) countries reaffirmed their strong and resounding commitment to the multilateral trading system, at the conclusion of the 20th ACP Ministerial Trade Committee meeting held in Brussels on 18-19 October. Read more

Ukraine files WTO Complaint over Russia, import, transit restrictions

WTO: Ukraine has requested WTO consultations with Russia regarding Russian measures affecting trade in certain products such as juice, alcoholic beverages, confectionery and wallpaper from Ukraine. The request was circulated to WTO members on 19 October. Read more

Dubai set to host Africa trade summit

The Standard: Dubai will this November host African heads of State and business leaders at a forum to discuss the continent’s economic outlook and investment opportunities for countries in the United Arab Emirates (UAE). Read more

Canada ‘extremely worried’ about NAFTA: Ambrose

CTV: Behind the scenes Canadian officials are “extremely worried” about where the North American Free Trade Agreement negotiations are headed, and it’s time to be worried, says Rona Ambrose, a member of Canada’s NAFTA Advisory Council. Read more

UK Trade Secretary Dismisses ‘Nightmare’ of No-deal Brexit

Bloomberg: U.K. International Trade Secretary Liam Fox said leaving the European Union without a deal for future business isn’t a “nightmare scenario” for Britain. Read more

US will not interfere in EU trade with Iran, says Tillerson

Reuters: The United States does not aim to impede European trade and business transactions with Iran despite President Donald Trump’s decision last week to decertify the 2015 nuclear agreement, Secretary of State Rex Tillerson told the Wall Street Journal. Read more

‘We need trade deals’: Swedish PM opposes Macron’s call to slow down

The Local: Swedish Prime Minister Stefan Löfven has said he opposes moves by French President Emmanuel Macron to slam the brakes on free trade deals. Read more

New Zealand’s Ardern wants to balance trade pact with housing pledge

Bloomberg: Incoming leader Jacinda Ardern says New Zealand will still seek membership in the proposed Trans Pacific Partnership even as she strives to honor her election campaign pledge to clamp down on foreign property speculators. Read more

Details of a massive trade deal among 11 heavyweight economies may be announced next month

CNBC: Ten months after President Donald Trump abandoned what was pegged as the world’s biggest trade deal, its surviving participants may be close to a new agreement. Read more

US pushes ‘fair trade’ as economic talks with Japan advance

Bloomberg: The Trump administration is advocating for a more balanced trade relationship with Japan as high-level economic talks with the Asian nation advance this week in Washington, according to Vice President Mike Pence. Read more

WTO: On 17 October the WTO issued the panel report in the case brought by Brazil in “Indonesia – Measures Concerning the Importation of Chicken Meat And Chicken Products” (WT/DS484). Read more

Azevedo underlines growing importance of services trade

WTO: Speaking at the Global Services Summit in Washington D.C. on 17 October 2017, Director-General Roberto Azevêdo highlighted that trade in services accounts for almost 50 per cent of world trade today. Read more

Afghanistan and Brazil welcomed as observers to WTO Government Procurement Agreement

WTO: The WTO Committee on Government Procurement agreed on 18 October to grant observer status to Afghanistan and Brazil. Members welcomed Afghanistan’s commitment to seek eventual accession to the Government Procurement Agreement (GPA). Some also expressed hopes that Brazil might, in the future, consider acceding to the Agreement. Read more

Liked this issue? To read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

 

Caribbean Trade and Development Digest – October 8-14, 2017

Welcome to the Caribbean Trade and Development Digest for the week of October 8-14, 2017! We are pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. We hope you enjoy this edition.

REGIONAL

COTED approves of poultry plants to sell products within CARICOM

Jamaica Observer: Nine poultry processing plants in the region have been approved to trade among member states as the Caribbean Community (CARICOM) continues to move steadily towards increasing intra-regional and food security, the Guyana-based CARICOM Secretariat has announced. Read more

Column:Brexit’s Impact on British Overseas Territories

Bernews: An opinion column written by Paul Hare. Read more

CARICOM to push for concessionary funding during meetings with US next week

Jamaica Observer: Caribbean Community (CARICOM) countries will use “important meetings” in the United States next week to push the international community to re-think its policies regarding regional countries that are no longer eligible for concessionary loans and other forms of preferential treatment, St Lucia’s Prime Minister Allan Chastanet said on Friday. Read more

INTERNATIONAL

We’ve got the A-Team of talks, says Liam Fox

Express UK: International Trade Secretary Liam Fox has hit back at claims his negotiators don’t have enough experience to strike deals with the US and other countries post-Brexit, describing them as the “A-Team”. Read more

South Africa committed to enhancing Intra-African trade

allAfrica: President Jacob Zuma says South Africa remains committed to boosting intra-African trade, which will be equitably beneficial for all participating countries. Read more

Mexico, Canada pledge trade unity as NAFTA negotiations continue

The Hill: Mexico and Canada are vowing to continue work on the North American Free Trade Agreement (NAFTA) after an unproductive fourth round of negotiations in Washington. Read more

Japan exasperated by Trump’s trade policies

Politico: Japanese officials are expressing growing frustration with the Trump administration’s economic policies, vowing to continue striking trade deals with other countries that undercut U.S. agricultural exports rather than seek a new trade agreement with the United States. Read more

Turkey, Indonesia agree to trade talks

Anadolu Agency: Indonesian and Turkish governments on Thursday agreed to start negotiations on the Comprehensive Economic Partnership Agreement (CEPA) in November in an attempt to further strengthen economic cooperation between the two countries. Read more

Pacific Trade Advances without the US

Wall Street Journal: The Trans-Pacific Partnership trade pact is regaining momentum despite the Trump Administration’s January decision to withdraw. Representatives of the remaining 11 TPP members met last month in Japan to push for ratification as early as November in the hope that Washington will rejoin. Read more

UK and EU formally inform of post-Brexit tariff quota plan

The Guardian: Britain and the EU have formally informed members of the World Trade Organisation how they plan to split up the EU’s tariff quotas and farm subsidies after Brexit in a plan already rejected by the White House. Read more

WTO DG Azevedo tells ministers more commitment is needed to deliver success at MC11

WTO: At an informal ministerial gathering in Marrakesh on 9-10 October, hosted by Morocco and Argentina, Director-General Roberto Azevêdo told ministers that there were some promising issues on the table, but in all areas there remains a long way to go in order to deliver a successful outcome at the 11th Ministerial Conference in Buenos Aires in December. Read more

Qatar escalates UAE trade dispute

Reuters: Qatar has asked the World Trade Organization to set up a dispute panel to adjudicate on its row with the United Arab Emirates, Qatar said in a document published by the WTO on Thursday, escalating a trade complaint it lodged with the WTO in July. Read more

India and EU to look at ways to restart trade pact talks

The Economic Times: India and the European Union plan to take stock of the proposed free trade agreement negotiations next month and explore ways to put in place a framework to resume the stalled talks. Read more

Economist sees merit in Pacific trade deal (PACER Plus)

Radio New Zealand: An economist says the PACER Plus trade agreement still has benefits for smaller Pacific states, despite two of the region’s bigger economies not signing up to the deal. Read more

Pangolin trade forces Ghana to look at new wildlife laws

Sunday Times: Ghana is facing calls to update its laws on wildlife crime after fears the country has become a transit route for the illegal trade in pangolin scales. Read more

Asia-Pacific Services Trade needs more harmonised regulation

Asia Times: Preliminary research has found that it is in the best interest of Asia-Pacific services trade partners in emerging sectors to access the largest possible legal framework, and from within that framework raise the standards of membership in terms of domestic regulation harmonization. Read more

Liked this issue? To read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

Caribbean leaders place spotlight on climate change at UNGA

“To deny climate change is to deny a truth we have just lived” – The Honourable Roosevelt Skerrit, Prime Minister of the Commonwealth of Dominica

Alicia Nicholls

These powerful words uttered by Prime Minister of Dominica, The Honourable Roosevelt Skerrit were perhaps the most memorable from the United Nations’ General Assembly (UNGA) seventy-second session. It was against the tragic backdrop of the devastation inflicted by Hurricanes Irma and Maria on several Caribbean islands that successive Caribbean leaders made their addresses during the UNGA general debate, highlighting the urgency of the need to address climate change in a meaningful way.

There were many moving addresses, but the most impactful  was the address by Mr Skerrit, whose country was severely battered by the Category 5 power of Hurricane Maria just days before. Reiterating that he was “coming from the front line of the war on climate change”, Mr. Skerrit reminded participants of the horror which Tropical Storm Erika had inflicted on the island back in 2015 and the tragedy currently unfolding due to Hurricane Maria where the confirmed death toll is 27 and several other persons remain missing.

In the space of a couple of hours, Dominica’s iconic mountains, once resplendent in coats of green and through which flowed clear rivers, had turned brown with mud and rubble. Some 95% of homes have reportedly lost their roofs in some places. Every one of the Nature Isle’s 70,000 inhabitants has been affected in some way.

Proclaiming that “Eden is broken”, he declared that Dominica was faced with “an international humanitarian emergency”. A fortnight before Maria hit Dominica, Barbuda, the smaller of the two main islands of the country of Antigua & Barbuda, was hit by Category 5 Hurricane Irma, leading to a complete evacuation of the entire island after the crisis. Hurricane Irma also did not spare Cuba or the island of St. Martin, split between the Kingdom of the Netherlands and the Republic of France.

But besides the human and infrastructural losses, the economic toll will be equally enduring for those countries affected. A recent report estimates that Hurricane Irma caused $45 billion in damage in the Caribbean, with at least $30 billion in Puerto Rico.   With Maria, this toll will be expected to rise. A rapid damage and assessment had found that Tropical Storm Erika in 2015 had inflicted loss and damage on Dominica of US$483 million, equivalent to 90% of the island’s GDP. Hurricane Maria was much worse.

While climate change is not the cause of hurricanes, warmer waters in the Atlantic is believed by scientists to be the cause of stronger, more powerful hurricanes during this hurricane season. Hurricane Irma and Maria both rapidly developed into Category 5 hurricanes and the back to back pummeling of several Caribbean islands by two Category 5 hurricanes in such a short space of time is certainly not an everyday occurence, but one which may become a more frequent reality as global temperatures increase.

It is these realities which led Caribbean countries and other Small Island Developing States (SIDS) to be at the forefront of climate change negotiations which eventually led to the historic Paris Agreement being signed in December, 2015. It is why the decision by US President Donald Trump to declare that the US, the world’s largest polluter, would be pulling out of the Paris Agreement was extremely unfortunate.

As Hurricane Harvey and Irma potently showed in the US states of Texas and Florida, wealthy nations like the US are not immune to the more deadly effects of climate change. However, Caribbean countries, like all SIDS, are poorly equipped, both geographically and economically, to confront these disasters. Their fragile economies are dependent on industries which are among the first economic victims of storm devastation, tourism being the clearest example.

Moreover, their generally high  GDP per capita and “middle income” designation makes most concessionary loans and certain types of development aid beyond their reach due to outdated notions that GDP per capita is a good measure of wealth for countries. This point was raised in the address by Minister of Foreign Affairs and Foreign Trade of Barbados, Senator the Honourable Maxine McClean. Barbados was spared the devastation of both Hurricanes Irma and Maria and has been among the forefront of relief efforts in Dominica.

As was eloquently put in a recent World Bank blog, hurricanes can seriously turn back the developmental clock. This is certainly the case with Dominica which was still in many ways recovering from Tropical Storm Erika and will face a much longer recovery following Hurricane Maria. It is also the case with the US territories of Puerto Rico and the US Virgin Islands which are also facing tremendous human suffering after being pounded by both Irma and Maria. Puerto Rico’s economy was already fragile due to the huge debt crisis being faced and is now faced with many places without drinking water or electricity.

Platitudes and best endeavour promises do little to allay the reality that there is little time left to reverse the damage which has been done and reverse course towards more severe temperature increases. The Paris Agreement was an important step but there needs to be stronger commitment, ambition and meaningful action by all nations, especially those which are the most responsible for atmospheric pollution, to take steps to meet and go beyond the greenhouse gas emission reduction targets they set for themselves.

There also needs to be greater support for SIDS which bear a disproportionate brunt of the consequences. The issue of climate finance was raised by Prime Minister Gaston Browne of Antigua & Barbuda, who mentioned debt swaps as a possible option, and the need for greater finance for building resilience, as well as reminded participants of the economic vulnerability of countries which were faced with high debt, large trade deficits and small, undeveloped financial markets.

As Prime Minister of Dominica, Mr. Skerrit rightly stated, “we need action and we need it now”.

Mr. Skerrit’s full speech may be viewed here.

The CTLD Blog extends our heartfelt sympathy to all our Caribbean brothers and sisters affected by the devastation caused by Hurricane Irma and Maria.

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 Digest – September 24-October 1, 2017

Source: Pixabay

We’re back! Welcome to the Caribbean Trade and Development Digest for the week of September 24-October 1, 2017! We are pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. We hope you enjoy this edition.

REGIONAL NEWS

Online plaforms launched to promote regional trade, business

St Kitts & Nevis Observer: The Caribbean community’s development of a single market and economy has been given a boost with the launch of four new online platforms aimed at promoting trade and improving the ease of doing business. Read more

Services an untapped growth sector

Jamaica Information Service: Head of the Trade Agreements Implementation Unit in the Ministry of Foreign Affairs and Foreign Trade, Symone Betton-Nayo, says the services sector remains an untapped area that offers tremendous opportunity for Jamaica’s economic growth and development. Read more

INTERNATIONAL NEWS

WTO Chief Warns of Risks to Trade Peace

Financial Times: The head of the World Trade Organization has warned that the Trump administration’s blocking of the appointment of new judges to hear international disputes risks undermining a system that has kept trade wars at bay for more than two decades. Read more

Interview: Pacific Alliance tackles non-tariff trade barriers

Xinhua: Latin America’s Pacific Alliance is looking to do away with non-tariff obstacles to trade between its members Chile, Colombia, Mexico and Peru, according to a top Peruvian businessman. Read more

Cross-border rail links: the spark to ignite intra-African trade?

International Railway Journal: Trade between African nations is considered one of the continent’s great untapped economic opportunities, but poor cross-border connectivity continues to hinder growth. Keith Barrow reports from Cape Town on the potential role for rail in unleashing intra-African trade. Read more

Philippines revives plan to join Trans-Pacific Partnership

Philstar Global: The Philippines is reviving its plan to join the Trans-Pacific Partnership (TPP) even as the mega-trade deal pushes through without the US, the Department of Trade and Industry said. Read more

Britain caught in cross fire of trade spat between Boeing and Bombadier

The Globe and Mail: Britain, caught in the crossfire of a damaging trade dispute between airplane makers Boeing Co. and Bombardier Inc., said on Sunday it would fight to protect thousands of jobs put at risk in Northern Ireland. Read more

Ciobo chases Mexico free-trade deal

The Australian: Trade Minister Steven Ciobo will lead a business delegation to ­Mexico to open new opportunities for Australian companies as free-trade talks progress for a new Latin American free-trading bloc.  Read more

The US made the global trade rules it claims are unfair

The South China Morning Post: If trade conflict erupts between China and the United States in the coming year, it will certainly not be for want of both sides trying to keep the peace. Read more

Ireland hopes to boost exports under Japan-EU Agreement

Japan Times: Ireland hopes to boost exports to Japan under an economic partnership pact the European Union and Japan reached a broad agreement on in July, Irish Deputy Prime Minister Frances Fitzgerald said in a recent interview. Read more

Zambia Commerce Minister saddened by low intra-African trade

Lusaka Times: MINISTER of Commerce, Industry and Trade Margaret Mwanakatwe has called for concerted efforts in boosting intra-Africa trade. Read more

Liked this issue? Read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

Linking Puerto Rico’s Debt Crisis to the US and the WTO

Namit Bafna & Shamy Ravishankar (Guest Contributors)

Puerto Rico, an island the US acquired in 1898 after the Spanish-American War, has lived in legal ambiguity with respect to its relationship with America and its statehood. It was recently declared bankrupt and has demanded that the US bail it out. This article explores if such a demand is well–founded, both in logic and in law.

A general reading of Puerto Rico’s history makes such a demand appear to be a prudent call. However, would this be desirable from the WTO law making perspective? Are bailouts allowed under WTO rules? We explore Puerto Rico’s dilemma through international relations and WTO law.

Understanding Puerto Rico’s Debt

Puerto Rico’s debt is a complex one with multiple types of debts; making it harder to negotiate agreements with various investors. Michael Williams, the Attorney who was handling Puerto Rico’s case states that its $123 billion debt is a consequence of years of economic stagnation and bad policy according to writers like Thomas Heath of the Washington Post. There is a serious need for debt restructuring, with investments needed for upgrading the island’s infrastructure (water works, waste management, and electric supply) as well as in boosting the economy.

Investors bought bonds from one of the eighteen authorised Governmental Agencies under the belief that the mainland Government would do everything necessary to prevent such an awful bailout situation from happening. However, the authorised agencies missed payments to the investors. Its cumulative bond debt is $74 billion. Even with an Oversight Board and PROMESA (Puerto Rico Oversight & Economic Sustainability Act of 2015-2016), it remains unclear how a wholescale economic turnaround can be initiated, with not only settling claims with investors (who will undoubtedly require fees for the Government’s defaulting on payments), but also improving the economy. Puerto Rico also requires funding for its pension commitments ($40 billion debt) and for MEDICAID, so that its social security obligations can also be carried out.

The Island has had a terrible recession since 2006, which has only been worsened by questionable policies of its previous Governments by borrowing more and thereby putting the island into greater debt. In addition to this, the current Government’s negotiation attempts with the aforementioned investors have not helped the situation by producing any concessions in the repayment of money owed to these creditors.

At this juncture, it is unfortunate to note that Puerto Rico has been knocking on Washington’s doors for over two years now, requesting more involvement from the mainland. It has been involved in Congressional Committee hearings and submissions before the United States Supreme Court. This invites the question: If any, what is the extent of Washington’s obligations to Puerto Rico, and in particular to this debt crisis? To ascertain this, we must go back in time and establish the exact nature of their relationship.

The US & Puerto Rico’s Relationship

The United States of America (US) has several categories of land holdings that it acquired over time, none of which are considered “Federal States”. These categories include territories (Guam, American Samoa, and US Virgin Islands), Possessions (which includes Baker, Howland, Midway, Wake, Palmyra, Kingman Reef, Jarvis and Johnston, that are all islands), and finally land holdings that are a Commonwealth (Northern Mariana Islands and Puerto Rico). It is to be noted that the Commonwealth category of land holdings are “insular political communities” that have affiliations with the mainland Government of the US. They are above territories in prestige and status but below the level of states. The Possessions and Territories have low levels of political and legal power on account of their fluctuating populations and not desiring self-determination. An another interesting nuance is the fact that the Commonwealth category of nations works with the US Congress and has an established political system that works for both the Congress and the Commonwealth land holding. However where the territories are concerned, the US Congress as more power to impose measures and in effect rule over the populations on the given territory. Citizens of the territories also cannot vote for the members of the Congress.

Over time the offshore territory policy of the US has varied and has even come before the US Supreme Court. In one case (Puerto Rico v. Sanchez) which went into the question of whether or not double jeopardy was applicable to Puerto Rico, the Judges of the Supreme Court had some interesting ideas of what Puerto Rico really was. If it was considered a Federal State then double jeopardy would not apply because federal proceedings could not disallow a state government to try a person for the same crime. If it wasn’t a Federal State then double jeopardy would disallow the person from being tried twice for the same crime (once by the US and once by Puerto Rico). This is because double jeopardy in the US does not apply where the person is being tried by “separate sovereigns” which in this case would be the State Court and the Federal Court. The counsellor for Puerto Rico suggested that it be given “Semi-sovereign status” so as to avoid the political implications of calling it a sovereign and thereby the 51st Federal State of the US, while also ensuring that Puerto Rico would also be able to prosecute Sanchez. Justice Kennedy then sought clarification on whether this would be an “interim sovereignty”? In the end, however, the Supreme Court held that the sources of power for itself and for the Court in Puerto Rico were the US Constitution because Puerto Rico was not a State and therefore the double jeopardy principle did not apply. This meant that the Court in Puerto Rico could not also prosecute Sanchez.

This reasoning is the strongest for the US Congress to allow the bailing out of Puerto Rico. It has had many occasions to either grant freedom to Puerto Rico or to make it the 51st federal state, as the US Constitution empowers the Congress to deal with matters of allowing a new state to be a part of the federation [Article IV. Section 3. Clause 1]. Given the fact that the US has both promised the United Nations to respect Puerto Rico’s sovereignty in 1953 (after allowing Puerto Rico’s Constitution to come into force in 1952), but also never fully allowed it to be a free independent nation, it would suggest that the US wants continued association with Puerto Rico. The fact that on several occasions, the US Government has rejected even the commonwealth status of Puerto Rico, deeming it as merely a territory, also points towards the same conclusion. The US wants these “land holdings” because it clearly benefits from the culture, natural resources and of course the population, who have served in the US military forces. That being said, the US Government does not want to give it full power that a State has. Regarding the bankruptcy bailout, the current US Administration has said it would not extend a helping hand, to what is undoubtedly (based on facts and legal precedent), a US problem.

The US policy on its offshore holdings seems to be one of granting those populations a “second class citizenship” status. It must be noted that when the US conceived the idea of a commonwealth, it was used to mean that the path to self-determination was automatic. This, however, has not taken place for Puerto Rico. Could this be a new twist to an already floundering and ever changing US policy on its offshore land holdings? Could this be the impetus necessary for the Puerto Ricans to demand freedom over their own affairs and formation of a new country that is divorced from the US?

The WTO perspective!

May be yes! But an underlying problem with bailouts would be that it may not be allowed under the WTO norms. Though bailouts are not anything new and the 2008 financial crisis triggered a few bailouts, every forthcoming bankruptcy should push for a clearer stance of the WTO on whether such bailouts would be considered as a subsidy and thus prohibited under SCM? Is it trade distortive under GATS? Is it time to introduce special WTO rules to deal with economic crises; making state actions non-vulnerable from WTO consequences?

The WTO has a well drafted subsidy discipline under the SCM Agreement. Any financial contribution which provides some benefits to an enterprise or an industry would result in a subsidy. Bailouts being sponsored from public money may attract provisions of GATS as they may provide benefit to the bank and its dependent (read “whole economy” of a major bank). As financing of banks would ultimately assist manufacturers, exporters and other players; they may affect other trading partners by creating artificial competitive processes.

However, as banks provide services, a bigger case forms under the GATS; for affecting competition in banking & financial services and making market competitive artificially. This may violate GATS’ obligation of National Treatment, Most Favoured Nation and Anti–Competitive provisions.

Despite its widespread use as a tool for economic reconstruction, no member state of the WTO has challenged bailouts at the WTO. But even if one appears in future, would it be desirable? As financial crises are unavoidable and it is practically impossible to pin down fault to any one entity, group of entities or even a state – bailouts are inevitable. They are required not just to save the bank but the whole economy. Thus, desirability of an “economic crisis exception” in the SCM and/or GATS should be put on table for member states and WTO expert committees before we witness another Puerto Rico-like situation in some other part of the world.

Conclusion

It is unfortunate that today, much after colonialism and colonialist tendencies have lost international relevance, that Puerto Rico’s relationship with the US is still not well-defined in law. However, for the purpose of alleviating this crisis, this article firmly backs considering Puerto Rico to be an integral part of the US; although it may not be necessary to use the terminology of “federal state”. Puerto Rico must be treated for all intents and purposes as a federal state, that entitles them to federal support and involvement, as was granted when Detroit required an $18 million debt restructuring in 2013. This is because, the US still claims Puerto Rico as a land holding, and the US Congress is still empowered under the US Constitution to manage the same. It may have given Puerto Rico some degree of sovereignty but the fact is that the US still has not granted it independence. By the very fact of this lack of independence from US policies and control, Puerto Rico has a right to seek and get aid from the Federal government.

Even if Bankruptcy is declared and the Federal Government pumps money into the Commonwealth, the question of its legality from WTO perspective still remains unresolved. Nevertheless, the bigger question is would bailouts even be challenged at the WTO? As bailouts are used by every member state to safeguard its economy from financial crisis, it is unlikely that it they will be challenged at the WTO, much like the fossil fuel subsidies.

Namit Bafna is a Corporate Lawyer working in Bangalore. His area of interest includes derivatives & trade law. 

Shamy Ravishankar is a 2015 Felix Scholar, now working as a Human Rights Lawyer. Her areas of interest include environmental law, public international law and of course Human Rights Law. Follow her on twitter: @shamy27 or on her blog: https://theworldweknowsite.wordpress.com/

References:

  1. Mark Joseph Stern, Second-Class Sovereignty, Slate (14 Jan., 2016), available at: http://www.slate.com/articles/news_and_politics/supreme_court_dispatches/2016/01/the_supreme_court_considers_puerto_rico_s_sovereignty_in_sanchez_valle.html
  2. Puerto Rico v. Sanchez, https://www.oyez.org/cases/2015/15-108
  3. Puerto Rico Report, The Relationship Between Puerto Rico and the U.S. (27 Feb 2016), available at: http://www.puertoricoreport.com/relationship-puerto-rico-u-s/#.WSAl_uuGPcd
  4. Thomas Heath & Tory Newmyer, Puerto Rico, with $73 billion in debt, forced toward bankruptcy, The Washington Post (3 May 2017), available at: https://www.washingtonpost.com/business/economy/puerto-rico-with-73-billion-in-debt-forced-toward-bankruptcy/2017/05/03/92e39d76-3020-11e7-9534
  5. Jaemin Lee, Beneath the Tip of the Iceberg – Global Financial Crisis, Bank Bailouts and the SCM Agreement, 10 Asian Journal of WTO & International Health Law and Policy (2015)

Belize undergoes third WTO Trade Policy Review

Photo credit: Alicia Nicholls 2016

Alicia Nicholls

Belize underwent its third World Trade Organisation (WTO) mandated Trade Policy Review over the period April 24th and 26th, 2017. Trade Policy Reviews are a mandatory exercise under the WTO’s Trade Policy Review Mechanism. Each WTO member country’s national trade and other trade-related policies are peer-reviewed by the Trade Policy Review Body (the WTO General Council acting under special rules and procedures).

The frequency of the reviews depends on the country’s share of world trade. The purpose of the trade policy reviews is to help to ensure transparency of member countries’ trade policies. Belize has previously undergone reviews in 2010 and 2004.

Some key findings from Belize’s 2017 review

These findings were taken from the WTO Secretariat Report and the Chairman’s concluding remarks.

The Report noted that several issues had affected Belize’s economy during the review period, including the decline in oil prices, disease outbreaks affecting its agriculture sector and the impact from the loss of correspondent banking relationships due to the de-risking practices of major global banks.

Areas of praise

Members praised Belize for the following:

 

  • Its diversification into tourism which is now the major driver of the country’s economy, and the adoption of the country’s first National Trade Policy Framework.
  • Belize’s participation in the WTO. Some members also suggested that the country establish a permanent mission in Geneva.
  • Belize was commended  for being among the first Members to ratify the Trade Facilitation Agreement and for having notified its Category A commitments.  Belize also recently established a National Committee on Trade Facilitation
  • Members commended Belize’s efforts to modernize its trade regime and customs procedures.
  • Reduction by half of the number of products subject to import licensing, but some members noted that this was followed by tariffication, resulting in some applied MFN tariffs exceeding their bound rates.
  • Noting Belize’s membership of the Caribbean Community (CARICOM), Members encouraged Belize to continue engagement in regional integration and trade liberalization schemes.
  • Belize was commended for its acceptance of the Protocol amending the TRIPS Agreement; while some Members encouraged Belize to join the WIPO treaties.
  • The establishment of Belize’s first Internet Exchange Point to reduce the costs of local internet traffic.
  • Members acknowledged the recent reforms to Belize’s financial services regulatory framework.
  • Some Members welcomed Belize’s efforts to improve its air transport infrastructure and air links, and encouraged Belize to replicate such efforts to enhance land and maritime transport.

Areas of concern

  • Members, however, were concerned that Belize had not submitted notifications in a number of areas, and urged for compliance with the WTO requirements.
  • Several Members highlighted Belize’s three incentive programmes granting export subsidies which should have been eliminated by 31 December 2015. However, they acknowledged Belize’s ongoing efforts to amend the relevant legislation.

As noted by the Chairman, Belize was commended for providing prompt and helpful answers to all written questions submitted in advance by members, as well as to all that came after the deadline.

Belize is the fourth WTO member country to undergo review so far for the year, following Sierra Leone, Japan and Mexico. The other CARICOM member state to be reviewed this year is Jamaica which will undergo its review on September 13 & 15.

The documents from Belize’s review, including the full WTO Secretariat Report and the Chairman’s Concluding Statement, 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.

Caribbean Trade & Development Digest – April 23-29, 2017

Source: Pixabay

Welcome to the Caribbean Trade and Development Digest for the week of April 23-29, 2017! We are pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World.

We do apologise for the lack of a Digest for the past two weeks due to my travelling. It has been an interesting two weeks in world trade, with the US imposing tariffs on Canadian softwood lumber imports and the EU releasing its Guidelines for the Brexit Negotiations with the UK pursuant to Article 50. On the home front, Belize has concluded its third World Trade Organisation (WTO) Trade Policy Review. And that’s just the tip of the iceberg! We hope you enjoy this edition.

REGIONAL NEWS

Belize has concluded its third WTO trade policy review

WTO: The third review of the trade policies and practices of Belize takes place on 24 and 26 April 2017. The basis for the review is a report by the WTO Secretariat and a report by the Government of Belize. Read more

US and region deepen security ties

Nation News: The United States has pledged its commitment to deepening its cooperation with the Caribbean region to combat all threats. Read more

Barbados Hotel occupancies drop during the first quarter

BarbadosToday: Against the backdrop of a fall in hotel occupancies and weak returns on hotel room rates during the first quarter of this year, Chairman of the Barbados Hotel and Tourism Association (BHTA) Roseanne Myers Wednesday disclosed that travel agents from source markets were reporting that some repeat visitors were opting not to travel in winter because they were waiting for “when the rates are a little better”. Read more

Hopes for Caribbean Trade Boost

Business Authority: Local exporters, and their Caribbean counterparts, stand to benefit now that a major international trade agreement has come into force.  Read more

Barbados records significant rum trade with Europe

Jamaica Observer: Barbados has exported BDS$89.9 million (US$44.95 million) in rum products to the European Union over a four year period, Commerce Minister Donville Inniss has said. Read more

Barbadian Rum producers fear results of French election

BarbadosToday: Barbadian rum producers are keeping a close eye on the French presidential run-off election scheduled for May 7, fearing the results could hurt the local industry. Read more

Gopee-Scoon talks trade with local high commissioner and ambassador

Loop Trinidad: Trade and Industry Minister Paula Gopee-Scoon met with the High Commissioner-designate to the United Kingdom Orville London and Ambassador-designate to Costa Rica Tracey Davidson –Celestine on Wednesday. Read more

Sector leader sees improved trade relations with Trinidad & Tobago

Jamaica Gleaner: President of the Jamaica Manufacturers’ Association (JMA) Metry Seaga says his organisation has received fewer complaints from local manufacturers about unfair trade practices by their Trinidadian counterparts. Read more

We will do everything to keep GuySuCo alive – says Granger

Stabroek: President David Granger said today that his government will do everything possible to keep the sugar industry alive. Read more

Guyana considers Suriname’s gold export model

Demerara Waves: Guyana’s recent foreign currency shortage appears to have caused government to consider adopting Suriname’s model to ensure that more earnings from gold sales goes directly to the national treasury. Read more

Granger names three sugar estates to be retained

Demerara Waves: President David Granger has named at least three sugar estates that will be retained as part of a restructured Guyana Sugar Corporation. Read more

INTERNATIONAL NEWS

European Council Releases (Article 50) Guidelines

EU: The European Council has released its guidelines for the upcoming Article 50 Brexit negotiations with the UK. Read more

Africa and China trade is booming

BusinessReport: China remained Africa’s biggest trading partner as bilateral economic relations boomed, said Jiang Zengwei, head of the China Council for the Promotion of International Trade. Read more

US imposing 20 percent tariff on Canadian softwood lumber

CNBC: U.S. Commerce Secretary Wilbur Ross said on Monday his agency will impose new anti-subsidy tariffs averaging 20 percent on Canadian softwood lumber imports, a move that escalates a long-running trade dispute between the two countries. Read more

US lumber tariffs hit B.C. manufacturers hard

CBC Canada: New softwood lumber tariffs being imposed by the U.S. are already cutting deep into B.C. businesses. Read more

DG Azevedo: Global trade challenges are best tackled through the multilateral system

WTO: The WTO should seek to bolster global economic cooperation in order to leave a strong and well-functioning trading system for future generations, said Director-General Roberto Azevêdo. Read more

Downgrades depress South African exports and trade

BusinessReport: Recent credit downgrades by Standard and Poor’s (S&P) and Fitch have put more pressure on South African exports and international trade. Read more

WTO issues panel report on Chinese cellulose pulp duties

WTO: On 25 April 2017 the WTO issued the panel report in the case brought by Canada in “China – Anti-Dumping Measures on Imports of Cellulose Pulp from Canada” (DS483). Read more

Arbitrator issues decision in Mexico-US tuna dispute

WTO: On 25 April, a WTO arbitrator issued a decision on the level of retaliation that Mexico can request in its dispute with the United States over US “dolphin safe” labelling requirements for tuna products (DS381). Read more

ACP: One billion people to speak to Europe with one voice

The Southern Times: Seventy-nine countries from Africa, the Caribbean and the Pacific, which are home to around one billion people, will speak with one voice as they prepare to negotiate a major partnership agreement with the European Union (500 million inhabitants) in May. Read more

EU tells May: Give our citizens their rights or no trade talks

The Guardian: The EU has called on Theresa May to provide immediate “serious and real” guarantees to its citizens living in Britain. Read more

Some important clarifications on the EPA

The Guardian: All of the ECOWAS countries, apart from Nigeria and the Gambia, have to date signed the EU-West Africa Economic Partnership Agreement (EPA). The EPA may enter into force only if all ECOWAS member states sign and if at least two thirds ratify the agreement. Read more

Examining Trump’s record on trade

NPR: When the president speaks the world listens. Adam Behsudi of Politico talks with NPR’s Scott Simon about how Donald Trump’s outspoken commentary is affecting international trade with the U.S. Read more

Trump on trade: Scrutinise NAFTA, other deals for abuses

Politico: President Donald Trump’s latest executive order on trade calls for review of all U.S. free trade agreements — including NAFTA and the World Trade Organization pact — and possible renegotiation of any deal to eliminate “violations and abuses,” Commerce Secretary Wilbur Ross said Friday. Read more

Difficult trade-offs necessary for RCEP to be worthwhile: PM Lee Hsien Loong

Strait Times: Asean is keen to conclude a region-wide trade agreement with its key partners, but the pact must have substance to be worthwhile, said Prime Minister Lee Hsien Loong on Saturday (April 29). Read more

Southeast Asia prioritises trade pact including China

Channel News Asia: Southeast Asian countries will prioritise creating an Asia-focused trade pact this year that includes China, India and Japan, while trade issues with the United States will be put on the back burner, the Philippine trade minister said. Read more

Mwagiru: Durban forum expected to focus on intra-Africa trade

Daily Nation: Wary of the perils of depending on reluctant donors for its survival, Africa is on a quiet quest for self-reliance and intra-regional cooperation. These are among the themes that will feature at the three-day World Economic Forum that opens in Durban, South Africa, on Wednesday. Read more

CTLD NEWS

IMG-20170428-WA0014

Alicia Nicholls presenting her paper at the SALISES Conference, Trinidad.

Alicia Nicholls presented a paper at the 18th Annual SALISES Conference 2017, a major academic conference organised annually by the University of the West Indies (UWI). The Conference was hosted this year by the Trinidad (St. Augustine Campus) at the Hyatt-Regency Hotel in Port of Spain, Trinidad & Tobago.

Alicia’s paper is a work in progress and is entitled “Economic Citizenship and Freedom of Movement of the Caribbean Community National: An Irreconcilable Tension?”.

The theme of this year’s conference was “Small Nations, Dislocations, Transformations: Sustainable Development in SIDS” and was held over the period April 26-28, 2017.

For more CTLD News see News & Announcements

NEW ON CTLD BLOG

French Election 2017: What’s at stake for the world and the Caribbean?

The Trump Presidency – Implications and Opportunities for Caribbean IFCs

PM May calls snap election: Pros and Cons

Liked this issue? Read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

Why the proposed US fee on remittance outflows to LAC makes no sense

Photo credit: Pixabay

Alicia Nicholls

The cost of sending remittances from the US to some Latin American and Caribbean countries and dependencies will increase should HR 1813 introduced in the United States (US) House of Representatives on March 30, 2017, be passed. The proposed Bill entitled the “Border Wall Funding Act of 2017”, would amend the Electronic Fund Transfer Act by imposing a two percent fee on the US dollar value of remittances (before any remittance transfer fees) on the countries listed. The bill is sponsored by Representative Mike Rogers, a Republican from Alabama’s third district.

One of President Donald Trump’s most controversial campaign promises was to build a wall along the US’ southern border, which he claimed would be paid for by the Government of Mexico, to deter illegal immigration. The Government of Mexico has consistently and strongly denied that its taxpayers would be paying for the wall. As a result Republican lawmakers have been seeking ways to fund the wall without relying on the US taxpayer. Instead, should this bill become law, it will raise money for the wall on the backs of hardworking Caribbean and Latin American immigrants living in the US, some of which are actually US citizens.

Here are some few reasons why I, respectfully, believe the proposed fee makes no sense:

  1. The wall will still be paid for by some US taxpayers

The two percent fee is to be imposed on the sender of any remittances sent to recipients in the countries identified. Ironically, it would still be funded by some US taxpayers as some remittance senders are either US-born or have acquired US citizenship or have greencard status. Data from the 2015 American Community Survey show that there are an estimated 4 million Caribbean-born immigrants living in the US. Some 58.4% of those became naturalised US citizens, while 41.6% are not yet US citizens according to US Census Bureau 2016 data.

2. The list of ‘foreign countries’ excludes some of the largest sources of illegal immigrants to the US

The affected  countries would be: Mexico, Guatemala, Belize, Cuba, the Cayman Islands, Haiti, the Dominican Republic, the Bahamas, Turks and Caicos, Jamaica, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Aruba, Curacao, the British Virgin Islands, Anguilla, Antigua and Barbuda, Saint Kitts and Nevis, Montserrat, Guadeloupe, Dominica, Martinique, Saint Lucia, Saint Vincent and the Grenadines, Barbados, Grenada, Guyana, Suriname, French Guiana, Ecuador, Peru, Brazil, Bolivia, Chile, Paraguay, Uruguay, and Argentina.

This arbitrarily drawn up list raises two main questions. (1) Why were Caribbean countries included in this list? The Caribbean sub-region as a whole only accounts for 2% of the illegal immigrant population in the US, according to Migration Policy Institute analyses. (2) Why were only countries from the Americas targeted when several Asian countries, like China for example, rank among the top sources of illegal immigrants to the US?

3. It is unlikely to raise enough money to pay for the border wall

It is unlikely that the two percent fee will raise enough money to pay for a wall which is estimated by a leaked memo from the US Department of Homeland Security to cost some 21.6 billion dollars, particularly if the monies will be raised mainly on the back of remittances sent to small Central American and Caribbean countries. Moreover, despite the threat of penalties, people will inevitably find ways to evade the fee by increasing their use of informal channels for sending remittances.

4. It could destabilise the US’ backyard which is contrary to US strategic homeland security interests.

With many of the region’s economies already threatened by de-risking, elevated debt levels and high unemployment, this proposed Bill is another worrying development. Although I do not believe the fee will stop the US-based Caribbean diaspora from remitting money to their loved ones, it may make it more difficult for them to do so as frequently as they normally do, which could have social and economic implications for the most remittance-dependent economies.

The Caribbean diaspora community in the US is an important source of remittance flows to the Region. According to a World Bank Migration and Development Brief released this month, stronger US job growth and a stronger US dollar were major reasons why the LAC Region was the only region to register an increase (6.9 percent) in remittance flows, with a total of $73 billion inflows in 2016. This is in contrast to the global landscape where remittances to developing countries in 2016 declined for the second consecutive year in a row.

Haiti and Honduras are the two most remittance dependent countries in the LAC Region and rank among the most remittance-dependent economies in the world, among countries for which data are available. Data provided in the previously mentioned World Bank Report show that in 2016 remittance inflows were equivalent to 27.8% of GDP for Haiti, 18.4% of GDP for Honduras, 17.6% of GDP for Jamaica, 17.2% of GDP for El Salvador,  and 8.6% of GDP for Guyana. For Belize it was 5% and Dominica, 4.6% of GDP.

A 2010 Report released by the Bank of Jamaica entitled “Remittances to Jamaica: Findings from a National Survey of Remittance Recipients” revealed that “more than half of the remittances sent back to Jamaica come from the US” and found that “remittances are an essential source of financing to many Jamaican recipients, which is used to supplement household income for necessities such as food, utilities and education”.

Successive US administrations have generally recognised that an economically and socially stable Caribbean region was in the US’ strategic homeland security interests. This is why the US government through its various economic and military aid programmes has poured millions of dollars into assisting Caribbean countries on issues such as crime, border security, among other things.

Besides the hardship that could be caused at the micro-level, a reduction in remittance inflows due to higher costs could have poverty alleviation and crime reduction implications and could have a destabilising effect on those economies and societies which are the most dependent on them. The same Bank of Jamaica report noted that “remittances to Jamaica have become an important source of foreign exchange and balance of payments support”.

Due to the paucity of official remittance data for many Caribbean countries, the importance of remittances to LAC economies is still underestimated and its micro and macro-economic importance to Caribbean economies is likely higher than currently measured.

How should we respond?

The bill has been referred to the House Subcommittee on Crime, Terrorism, Homeland Security and Investigations on April 21, 2017 and will need to be debated and passed by both chambers of Congress before being sent to the President for signature into law.

Latin American and Caribbean governments, along with their diplomatic representatives and the diaspora, should lobby against the passage of this bill by engaging in discussions with Congressional and other officials on the serious economic and social impact any potentially significant decline in remittance inflows could have on remittance-dependent countries in the Region, and the spin-off negative effect this could have on the US homeland.

To view the text of the proposed Bill, please see 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.

French Election 2017: What’s at stake for the world and the Caribbean?

Photo source: Pixabay

Alicia Nicholls

The results of the first round of voting in the two-round French presidential elections are in! Pro-EU businessman Emmanuel Macron and far-right candidate Marine Le Pen are the two candidates who will face off in the second/final round of voting within a fortnight.

French presidential elections do not normally attract this much fanfare internationally, but the results of the first round of the 2017 race are interesting for two main reasons. The first is that there is a 50% chance that there could be a Le Pen presidency which would add to a growing string of political upsets globally. The second is that neither candidate is from the mainstream political parties in France, a firm rejection by the French people of the entrenched political establishment, not unlike what occurred in the US with the election of Donald Trump.

France has a two-ballot presidential election system which means that in the event of no one candidate winning over 50% of the votes in the first ballot, the two front-runners  have to face off against each other in a second ballot. As of the time of this article’s writing, Emmanuel Macron is estimated to have won this first run-off with  23.9% of the vote, while Ms. Le Pen came second with 21.4%, beating the other candidates.

France at the moment is facing lacklustre GDP growth, high unemployment, high debt and an increase in high-profile and deadly terrorist attacks, which means the anti-establishment, anti-business as usual mood comes as no surprise. Incumbent President, Francois Hollande, currently faces low approval ratings and has decided not to seek a second term.

The Two Candidates

While Macron and Le Pen are ‘outsiders’ from the political mainstream, the two candidates represent two diammetrically opposed worldviews. Emmanuel Macron is a former investment banker who has never held elected office, but had worked for Mr. Francois Hollande during the 2012 Presidential Election campaign. He also subsequently served as Minister of Economy, Industry and Digital Affairs under then Prime Minister Manuel Valls in 2014 until August 2016. Mr. Macron founded his own party En Marche!  in April 2016 which currently has 253,907 members, according to the Party’s official website. The centrist Mr. Macron is pro- Europe, socially liberal and believes that France’s prosperity can be ensured through pursuing pro-trade and outward-looking policies and through continued membership in the EU.

Marine Le Pen is a lawyer, a Member of the European Parliament since 2009 and the leader of the populist Front National, a far-right party which had been on the dark fringes of French politics until recently.  She is the daughter of Front National co-founder, Jean Marie Le Pen, a far-right ethno-nationalist.  She sought to distance herself from some of her father’s most extreme views as she sought to broaden the Party’s appeal, and succeeded in having him ousted from the party. Ms. Le Pen, however, has strongly anti-immigrant, anti-EU views and has expressed enthusiastic support of both Brexit in the UK and the election of Donald Trump in the US.

The polarity in the views of the two candidates means that the election of either will have completely opposite global implications.

What’s at stake with the French presidential election?

Although polls are showing a Macron victory, Le Pen still has a chance of winning the final run-off on May 7. A Le Pen victory on May 7th would be the continuation of a nationalist, inward-looking turn in advanced western economies, with both economic and geopolitical implications. Domestically, she has indicated her intention to pursue protectionist economic policies and champion anti-immigration reforms. She is anti-globalisation and anti-free trade. She has vowed that she would pull France from the EU and the eurozone, and the North Atlantic Treaty Organisation (NATO). She has voiced her intention to strengthen relations with Russia and had forcefully condemned the EU decision to extend its sanctions on Russia until mid-2017.

In their forecasts for the global economy and world trade respectively, both the International Monetary Fund (IMF) and the World Trade Organisation (WTO) have forecast higher growth rates but noted the vulnerability of the forecast growth to trade, monetary and other policies pursued by governments. IMF Managing Director, Christine Legarde (who is a former French Minister of Finance) has been reported as stating that a Le Pen presidency could lead to political and economic upheaval.

First, France is the 6th largest economy in the world. A founding member of the EU, it is also the eurozone’s second largest economy. A more isolationist France would impact on the global economy and have implications for western approaches to current global threats and a reshaping of global alliances. Moreover, a French withdrawal from the EU (termed ‘Frexit’), coming on the heels of the UK’s withdrawal from same, could plunge the EU into an existential crisis more so than Brexit would.

Any implications of the French election for the Caribbean?

Will there be any implications of a possible Le Pen presidency for the Caribbean? The specifics of Ms. Le Pen’s policies are still not fleshed out. However, a French withdrawal from the EU would reduce the amount of EU development assistance which the region currently receives under the European Development Fund (EDF).

But what about trade? Thanks to the Economic Partnership Agreement (EPA) signed between the EU and CARIFORUM in 2008, the countries which make up CARIFORUM (CARICOM plus the Dominican Republic) currently enjoy preferential market access for their goods and services to the EU market, including to the French market (and to French Caribbean Outermost Regions, by extension).

However, should France leave the EU, it would no longer be a party to the EPA. On its own, the lack of preferential access to the French market would be unlikely to have any significant economic impact on the anglophone Caribbean trade-wise as the volume of trade between English-speaking Caribbean countries and metropolitan France is limited.

There are, however, small but growing trade links between some CARICOM countries) and the FCORs, which are Martinique, Guadeloupe and French Guiana. Martinique, for example, is one of the most important source markets for tourists to St. Lucia. While there are issues which have inhibited greater CARIFORUM trade with FCORs including the language barrier and the ‘octroi de mer’ (dock dues) charged on all imports into FCORs (despite the EPA), the FCORs are also seen as stepping stones for exporting to continental Europe using the EPA. A French withdrawal from the EU if Ms. Le Pen wins means the latter will not be possible.

It is the democratic right of the French populace to choose which of the two candidates is in their country’s best interests. However, given France’s economic and geopolitical importance globally, and the political upsets of late, the results of the final round on May 7 will reverberate far beyond its borders.

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 Trump Presidency – Implications and Opportunities for Caribbean IFCs

Alicia Nicholls

On March 31, 2017 I was a panellist representing FRANHENDY ATTORNEYS at the Barbados International Business Association (BIBA) Barbados International Business Forum 2017 entitled “Is the Barbados International Business Sector Under Attack?” held at the Lloyd Erskine Sandiford Centre in Barbados.

I was on the second panel which discussed the topic “The Trump Presidency – Implications and Opportunities for IFCs“. My esteemed fellow panellists were Jeremy Stephen, Economist and UWI Lecturer, Lisa Cummins, Executive Director of UWIConsulting and Cadian Dummond, Attorney at Law. The discussion was expertly moderated by Melanie Jones, Partner at Lex Caribbean Attorneys-At-Law.

I spoke to the possible implications of the Trump Presidency in regards to de-risking, FATCA and visa restrictions.

For those who missed the panel discussion and have expressed interest in my remarks, please find a copy of same in powerpoint form here. Enjoy!

For more on past presentations I have done, please see news and announcements.

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.

 

 

PM May calls snap election: Pros and Cons

Alicia Nicholls

United Kingdom (UK) Prime Minister, Theresa May, has today ‘reluctantly’ announced that Britons could be going to the polls in a general election on June 8, 2017, three years shy of the due date of May 2020.

The UK has a parliamentary system of government. Since 2011, parliamentary elections are fixed for every five years pursuant to the Fixed-Term Parliaments Act. However, early general parliamentary elections may be called before the five year period, inter alia, where two-thirds of the House of Commons (including vacant seats) vote in favour of same. In the UK parliamentary system (also known as the ‘Westminster System’) and in most British-inherited parliamentary systems like those in the Caribbean, the Prime Minister is not directly elected. In practice, though, it is the person who leads the party which wins the majority of seats in the House of Commons who becomes the Prime Minister.

The announcement of an early poll is surprising for two main reasons (1) it comes after months of denials by Mrs. May that she would be calling an early election, and (2) it also comes less than a month after the May Government made the UK’s notification under Article 50 of the Treaty on European Union (Lisbon Treaty) of its intention to withdraw from the EU.

Pros

So what are the upsides? Firstly, it is likely that in light of the disarray of the Jeremy Corbyn-led Labour Party, the Prime Minister is anticipating a stronger Conservative working majority in Parliament, reducing the likelihood of the final Brexit deal being voted against.

The Tories currently have a 17-seat working government majority in the House of Commons following the 2015 poll, which is a slim majority when one considers that there is a total of 650 seats in the House of Commons. After all, what Prime Minister would not want a more comfortable majority at home when facing difficult negotiations with the EU for the next (at least) two years? Prime Minister May said as much in her statement when she noted that “Division in Westminster will risk our ability to make a success of Brexit and it will cause damaging uncertainty and instability to the country”, and warned that “If we do not hold a general election now, [Opposition Party] political game-playing will continue.”

Polls already show a Tory sweep, but let us also remember polls had predicted a “No” win in the Brexit referendum.

Secondly, it should be recalled that Mrs. May became Prime Minister in July 2016 not through leading the party in a general election, but after then Prime Minister David Cameron resigned following his Brexit defeat.  If Mrs May leads the Conservative Party to victory in the June 8, 2017 poll, she would have:

(i) won a ‘direct mandate’ from the British people to pursue her own domestic agenda, which frees her from pursuing some of the policies promised by the then Cameron-led government.

(ii) This mandate, she would hope, would help quell the dissenting factions in her own party who disagree with her handling of Brexit thus far.

(ii) She would not be legally required to call another general election until June 2022, by which time the messiness of Brexit would be largely past (hopefully). Recall that Brexit negotiations could be extended up to 4 years, at which time the May Government would not wish to negotiating a final deal with the EU-27 while having to worry about an election at home which could be lost due to an unpopular final deal.

A third pro is likely economic. Although predictions of a British recession following the Brexit vote have not come to past, there is no telling what would happen to the British economy once the Brexit negotiations are underway. It makes more sense for Mrs. May to seek an election now than wait until things take a turn for the negative.

Cons

Firstly, on the flipside, calling a snap election after having made the Brexit notification and ahead of the negotiations with the Europeans risks adding even more uncertainty to an already uncertain political climate.

Secondly, although polls favour a Tory win, what happens if the polls are wrong and the Tories lose to an anti-Brexit Labour?  Or what if Labour and the Liberal Democrats expand their number of seats, further reducing the already slim Tory majority?

Thirdly, she risks dealing with ‘voter fatigue’.

Calling the election at this time is a risky move but one, which like all high risks, could have big rewards if the May-led Tories win and expand their mandate. In anticipation of a Tory win, markets took the news of the snap election quite enthusiastically. Sterling appreciated  against the US dollar to 1.26. However, it is also potentially a big gamble and the decision to hold the poll after triggering Article 50 is curious. It will be up to British voters to decide whether to reward or reject the gamble.

What is next?

When the House of Commons meets, they will need to deliberate and vote (as required under the Fixed-Term Parliaments Act) on whether they are in favour of an early election. A two-thirds majority will be needed. For his part, Labour leader Mr. Corbyn has supported the decision to go to the polls in his statement released on his official Facebook page following the Prime Minister’s announcement.

For Prime Minister May’s full statement, please see 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.

IMF raises global GDP growth forecast but protectionist policies a threat

Alicia Nicholls

The sharp downtown in global trade in recent years is both a symptom of and a contributor to low growth“. – Making Trade an Engine of Growth for All (IMF, WTO, World Bank Report of April 2017)

Protectionism leading to trade warfare is a ‘salient threat’ to global economic growth, warned the International Monetary Fund (IMF) economists, not for the first time, in their recently released World Economic Outlook for April 2017.

The good news is that the Fund’s April outlook was much more upbeat than its January 2017 outlook. According to the Fund, the global economy is projected to expand by 3.5 percent in 2017, a modest increase from its 3.4 percent projection in its January 2017 outlook but greater than the 3.1 percent growth in 2016. The Fund has maintained its outlook for 2018 at 3.6 percent.

The not so good news, as already noted, is that the tenuous economic recovery remains vulnerable to several downside risks, including protectionism. Bear in mind as well that the global economy expanded on average 4.2 percent between 1999-2008, so the projected rate of growth is still below the pre-crisis rates of growth.

The Fund’s most recent WEO report comes on the heels of the release by the World Trade Organisation (WTO) of its trade growth forecast which projected some recovery in global trade growth to 2.4 percent in 2017. Most readers would remember that 2016 saw the slowest rate of global trade growth since the global economic and financial crisis which coincided with the slowest rate of global economic growth in 2016 since 2009.

As noted by the WTO in its press release, “the volume of world merchandise trade has tended to grow about 1.5 times faster than world output, although in the 1990s it grew more than twice as fast.” However, dampened trade volumes have been linked to a subdued global economy and global trade grew less than global economic growth in 2016. Although, the WTO’s projected rate of growth for 2017 signals a cautious recovery, the rate of merchandise trade growth is still much lower than pre-crisis merchandise trade growth and the forecast risk is higher due to both economic and policy uncertainty.

The IMF’s most recent WEO also follows a joint report released by that institution, the WTO and the World Bank entitled “Making Trade an Engine of Growth for All: The Case for Trade and for Policies to Facilitate Adjustment” in which it was stated, inter alia, that the role of trade in the global economy is ‘at a critical juncture’, and arguing that further trade integration was important for stimulating global growth.

At the same time, the IMF warned that protectionism could lead to trade warfare, citing several factors in mainly advanced economies which have seen greater political support for nationalist and protectionist policies. There is good reason for this concern, stemming from protectionist turns and mercantilist rhetoric emanating from political quarters in advanced economies, namely the US and Europe. Moreover, the communique from the March 2017 G-20 Finance Ministers’ Meeting in Germany  saw, for the first time, the exclusion of the pledge to “resist protectionism”. On the multilateral front, although the WTO’s Trade Facilitation Agreement has come into effect, there has been little progress otherwise on multilateral trade negotiations.

Trade is an important driver of global growth, and helped to propel global growth in the latter half of the 20th century. Trade has also played an important role in boosting competition, productivity and improving living standards and productivity. However, there has been dislocation as a result of free trade. In the case of developing countries, there has been the negative impact of competition from cheaper subsidised (particularly agricultural) imports from advanced countries on domestic industries which have higher production costs due to lack of economies of scale and lower technology use. An Oxfam report noted the  negative impact on Mexico’s corn industry following the introduction of the North American Free Trade Agreement (NAFTA).

While the cheaper imports benefit consumers through lower prices, they, however, can negatively impact domestic industries and jobs, and with implications for countries’ balance of trade, and in the case of the agricultural sector, food security. This is an issue which has been noted by developing countries and development economists for years but only seemed to gain mainstream discussion once the effects became more palpable in advanced economies, such as the US and Europe.

However, this is not to suggest that trade is undesirable or that the negatives outweigh the positives. Trade, as the IMF has rightly noted, is an important driver of the global economy. It does, suggest, however, that there needs to be greater consideration of the “social impact” of trade policies and of the need to make trade policies much more inclusive by ensuring that the most vulnerable to the negative fall-outs of trade, such as women and the poor, are protected through supporting policies and mechanisms. As such, domestic policies to assist with, and mitigate, these trade-related adjustments are important, a point made in the joint report by the IMF, WTO and World Bank.

Besides protectionism, the IMF also noted faster than expected interest rate hikes in the US, aggressive financial deregulation, financial tightening in emerging market economies, geopolitical tensions, inter alia, as among the inter-connected downside risks to global growth. Furthermore, the IMF emphasised the importance that countries’ policy choices will have on the global economic outlook and on reducing risks to this outlook.

To read the full IMF WEO April 2017 report, 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 Trade Forecast 2017: Cautiously Optimistic about trade growth recovery

Alicia Nicholls

After decelerating considerably in 2016, world merchandise trade growth is expected to recover to 2.4% in 2017. This is according to the cautiously optimistic trade forecast released today by the World Trade Organisation (WTO).

According to the WTO, although global merchandise trade volumes have historically on average grown 1.5 times faster than global GDP, this ratio has slowed to 1:1 since the crisis of 2008. Last year’s merchandise trade growth of 1.3% was the slowest pace of trade growth since the world economic crisis of 2008 and was linked primarily to a weak global economy.

In his press conference remarks, Director-General of the WTO, Roberto Azevedo, explained that early indicators, such as the record increases in global container shipping throughput, the high levels of global export orders, and the expected recovery in world economic output, point to a recovery in global trade in 2017.

However, the WTO Chief also cautioned that this forecast assumes that governments pursue the right policy mix and that forecasts of an expected recovery in global GDP are accurate. The report noted that trade growth could be negatively affected by governments’ trade, monetary and fiscal policies.

Indeed, the Director-General’s remarks to this point perfectly sum this up as follows:

Overall, I think that while there are some reasons for cautious optimism, trade growth remains fragile and there are considerable risks to the downside. Much of the uncertainty around the outlook is of course political — and not only geopolitical. Part of this is driven by people’s concerns about the impact that trade can have.

Given the high levels of uncertainty which have increased the forecast risk factor, WTO economists have also given a growth range of between 1.8 and 3.6% for 2017.

Observing that trade does cause some dislocation, the WTO Director General cautioned governments against protectionism and highlighted that innovation, automation and new technologies, and not trade, were responsible for eighty percent of the loss of manufacturing jobs.

The WTO’s forecasts for 2018 are much more optimistic, with a growth forecast of between 2.1 and 4.0%

For further information, please see the WTO Director-General’s press conference remarks here and 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.

Caribbean Trade & Development Digest – April 2-8, 2017

Source: Pixabay

Welcome to the Caribbean Trade and Development Digest for the week of April 2-8, 2017!  I am pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. 

 

REGIONAL NEWS

EPA Plan to be reset

Nation News: Barbados is resetting its implementation strategy of the Economic Partnership Agreement (EPA) with the European Union as Britain prepares to exit the EU. Read more

Trinidad pushes for shift to cleaner fuel

Caribbean360: The Trinidad and Tobago government has invested about $74 million in the first phase of a $295-million project to encourage more drivers to use Compressed Natural Gas (CNG), described by experts here as a preliminary step in the country’s transition to using more sustainable forms of energy. Read more

T&T Recession slows rum sales

Sunday Express: The ongoing recession is affecting local rum sales, the country’s largest legal rum manufacturer said in its results released yesterday on the Trinidad and Tobago Stock Exchange (TTSE). Read more

Trinidad & Tobago trade mission to Guyana

T&T Newsday: Come June 12 and 13 of this year, the Trinidad and Tobago Chamber of Industry and Commerce, in collaboration with the Georgetown Chamber of Commerce and Industry (GCCI) will embark upon a Trade Mission to Guyana, one of the most significant emerging economies in the region. Read more

CARICOM considers how to keep market access in tact after Brexit

Caribbean360: CARICOM has reportedly narrowed down the options it intends to pursue to prevent a break in market access in the United Kingdom due to the UK’s planned exit from the European Union (EU). Read more

Bahamas Trade Information Service Portal Launched
Eleutheran: The initiative is the first of its kind in The Bahamas and one of only a few Trade Information Portals in the Caribbean Region. Read more

Dominican Republic signs trade agreement with Cuba

Jamaica Observer: The Dominican Republic has signed a Partial Scope agreement with Cuba in an effort to boost economic, trade and cooperation between both countries. Read more

OECS needs a unified approach to development, says economist

Antigua Observer: The biggest impediment to growth of the economies of the Organisation of Eastern Caribbean States (OECS) is their small size and scale of production, and the lack of a unified regional approach to development. That’s the view of Dr Vanus James, economist, statistician and regional academic. Read more

Trump reinforces bond between Jamaica and the US

Jamaica Gleaner: United States President Donald Trump says he looks forward to working with the Jamaican Government on bilateral and regional issues. Read more

Jamaica saves $30 billion on oil imports

Jamaica Gleaner: Jamaica reduced its oil import bill by US$242 million ($30 billion) last year, which helped to slash the trade deficit by nearly nine per cent, according to new data from Statin. Read more

PM Launches 7th Biennial Diaspora Conference

JIS: The ‘Jamaica 55 Diaspora Conference’, which is organised by the Ministry of Foreign Affairs and Foreign Trade, will be held at the Jamaica Conference Centre, downtown Kingston, under the theme ‘Partnering for Growth’. Read more

INTERNATIONAL NEWS

WTO creates panel to decide on China, EU flap

The Star: The World Trade Organisation (WTO) set up on Monday a panel to examine the so-called “surrogate country” approach used by the European Union to calculate anti-dumping measures applied to Chinese exports, following a request from Beijing.
Read more
Rwanda: AfDB unveils US $450 million fund to promote export trade
AllAfrica: The African Development Bank (AfDB) has approved $450 million about (Rwf372 billion) trade finance facility for the African Export-Import Bank (Afreximbank). Read more

NAFTA Trade Growth Continues in January

American Shipper: Total cross-border trade between the US, Mexico and Canada jumped 6.7 percent in January 2017, the third straight month of year-over-year increases, according to the Department of Transportation’s Bureau of Transportation Statistics. Read more

Malaysian PM Najib Razak pushes for conclusion of free trade deal

Livemint: Malaysian Prime Minister Najib Razak on Monday called for the speedy conclusion of a free trade pact between the Association of Southeast Asian Nations (Asean) and six other countries including India, saying the regional partnership becomes all the more relevant after the US pulled out of the Trans-Pacific Partnership (TPP). Read more

European Parliament backs red lines resolution for Brexit negotiations

TheGuardian: The European parliament has overwhelmingly voted in favour of a tough negotiating stance towards the British government in the Brexit negotiations. Read more

Pacific looks to improve links with Asian economies

RNZ: Pacific economic ministers meeting in Suva have been looking at how the region can better engage with the growing Asian economies. Read more

South African Court allows domestic rhino horn trade

Environment News Service: South Africa’s Constitutional Court has overturned the current ban on domestic trade in rhino horn. As a result, the sale of rhino horn will be allowed to resume within the country’s borders, but not internationally. Read more

Trump’s NAFTA plans are more than a tweak, Mulroney says

TheGlobeandMail: Brian Mulroney says U.S. plans to renegotiate the North American free-trade agreement are shaping up to be more than a tweak.The former Progressive Conservative prime minister made the comments after briefing the Liberal cabinet committee on Canada-U.S. relations on Parliament Hill. Read more

Canadian Free Trade Agreement Finalised

CNW: Ministers representing the federal, provincial and territorial governments have concluded negotiations on a new Canadian Free Trade Agreement (CFTA) that will help to expand Canadian businesses and increase economic growth across the country.  Read more

US Labor chief wants mores drastic changes to NAFTA from Trump

Reuters: Top U.S. labor leader Richard Trumka on Tuesday blasted the Trump administration’s initial plan to revamp the North American Free Trade Agreement (NAFTA), calling it “very timid.” Read more

Australia moves closer to free trade talks with EU

ABC (Australia): The Federal Government hopes to begin negotiations for a free trade agreement (FTA) with the European Union in the second half of this year, after finalising a key step needed to begin talks. Read more

Brussels mulls excluding UK from trade talks updates

Politico: The EU is considering shutting the U.K. out of sensitive briefings on its trade policy, following warnings that Britain will become a competitor for striking trade deals post-Brexit.  Read more

At US-China Summit, Trump pressed Xi on trade

President Donald Trump pressed Chinese President Xi Jinping to do more to curb North Korea’s nuclear program and help reduce the gaping U.S. trade deficit with Beijing in talks on Friday, even as he toned down the strident anti-China rhetoric of his election campaign. Read more

WTO members discuss trade facilitation provisions in RTAs

WTO: WTO members discussed the relationship between trade facilitation provisions in regional trade agreements (RTAs) and the WTO’s Trade Facilitation Agreement (TFA) at the 3-4 April meeting of the Committee on Regional Trade Agreements. Read more

UK eyes trade agreement with Asean after it leaves European Union

Business Insider: Trade and Industry Secretary Ramon M. Lopez said that the United Kingdom (UK) has expressed interest to pursue a regional trade agreement with the Association of Southeast Asian Nations (Asean), weeks after the European Union (EU) expressed intent to do the same. Read more

Panels established to review EU dumping methodologies, Indian steel safeguard

WTO: At its special meeting on 3 April, the Dispute Settlement Body (DSB) agreed to the establishment of two new dispute panels: one to review a complaint filed by China against the European Union’s measures related to price comparison methodologies in anti-dumping investigations; and the second to review a complaint from Japan regarding India’s safeguard measure on imports of iron and steel products. Read more

Trade Policy Review: Mexico

WTO: The sixth review of the trade policies and practices of Mexico took place on 5 and 7 April 2017. The basis for the review was a report by the WTO Secretariat and a report by the Government of Mexico. Read more

BONUS – Bloomberg Interview with Mexico Economy Minister

In an interview with Bloomberg’s Erik Schatzker, Mexico Economy Minister Ildefonso Guajardo discusses President Donald Trump’s stance on NAFTA, among other things. Have a watch here.

CTLD NEWS

One of my Brexit articles was republished in the leading business magazine in Barbados, the Barbados Business Authority. Have a read here: Seize the Brexit Moment.

For more CTLD News see News & Announcements

NEW ON CTLD BLOG

Will US Financial Deregulation help mitigate the de-risking phenomenon?

Trump’s Trade Executive Orders target deficit and uncollected AD/CV Duties

Liked this issue? Read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

Will US Financial Deregulation help mitigate the de-risking phenomenon?

Alicia Nicholls

The exigencies of complying with a complex and often confusing maze of overlapping regulations, coupled with steep fines for compliance breaches, have been identified as principle drivers for United States-based global banks’ restriction and termination of correspondent banking relationships with respondent banks in other jurisdictions. As part of his promise to “Make America Great Again”, US President Donald Trump has pledged to cut the regulatory noose argued to be strangling US enterprise and growth. Will this deregulatory push have the unintended spin-off of mitigating the de-risking phenomenon facing several countries around the world, including Caribbean States?

President Trump has been adamant that ‘burdensome’ regulations passed during the Obama administration to avert a repeat of the Global Economic and Financial Crisis of 2008, have been fetters on US business activity and prosperity. While most available data point to the contrary, the Trump Administration and Corporate America posit that Obama-era regulations like the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) have reduced bank profitability and risk appetite, culminating in dampened bank lending to consumers and businesses.

President Trump has so far signed two executive actions on financial deregulation. The latter, an executive order dated February 3, 2017, sets out seven core principles for regulating the US Financial System. It mandates Treasury Secretary, Steve Mnuchin, to consult with the heads of the member agencies of the Financial Stability Oversight Committee (FSOC) and to submit to the President within 120 days a review of “laws, treaties, regulations, guidance” inter alia, which among other things inhibit regulation in sync with the Core Principles. There has been reportedly a shift towards more ‘pro-business’ regulators. Perhaps most telling, in contrast to his anti-Wall Street rhetoric during the campaign, President Trump has picked several former bankers (notably Goldman Sachs) for key cabinet and administration positions, including for Treasury Secretary.

Stringent compliance burdens and costs, as well as uncertainty about the interpretation of the regulations, are major drivers for banks’ avoiding, rather than managing risks. Will an unintended consequence of financial deregulation in the US be a mitigation of the de-risking phenomenon? While at first blush this conclusion may appear tempting, I respectfully submit that this may be an overly optimistic view, at least at this early stage, for the reasons which I outline below.

Firstly, the Trump Administration has set its cross-hairs firmly on the Dodd Frank Act which President Trump termed a “disaster”. This Act, which is hundreds of pages long, was passed in the aftermath of the Great Recession. It includes, for instance, rules against predatory lending, sets measures to deal with banks which become “too big to fail”, prohibits proprietary trading by banks for their own profit (Volcker Rule), inter alia. While Dodd Frank is not perfect and has been blamed for contributing to de-risking, repealing it would not only create an environment for a resumption of the pre-crisis risky behaviours by banks and other financial institutions. It would set the stage for a repeat of 2008, in much the same way that deregulation during the 1990s to early 2000s, including changes to the (now repealed) Glass-Steagall Act, laid the groundwork for the Great Recession, almost a repeat of the Great Depression of the 1930s.

Secondly, Dodd-Frank is just one aspect of the de-risking problem. There appears to be no indication that the Trump Administration intends to tackle the constellation of other regulations, including international anti-money laundering, countering the financing of terrorism (AML/CFT), tax and banking regulations (Basel III), with which banks, including in the US, must comply.

In the World Bank’s seminal 2015 global survey on the Withdrawal from Correspondent Banking, some 95% of large banks had cited “concerns about money-laundering/terrorism financing risks” as a driver for withdrawing from correspondent banking relationships. However, it is unlikely that the Trump Administration will try to rollback AML/CFT rules. President Trump’s ‘America First’ ethos has a strong national security undertone. Weakening the US’ AML/CFT rules would likely make him appear ‘soft’ on money laundering and countering the financing of terrorism. International pressure is also a factor as the US’ last Financial Action Task Force (FATF) Mutual Evaluation Report (2016) highlighted some AML/CFT weaknesses, including gaps in timely access to beneficial ownership information.

Thirdly, replacing existing regulators with so-called pro-business regulators does not necessarily mean that there will be a more lenient approach to fines imposed on banks for compliance breaches. Unlike popular belief, most of the large banks which have been made to pay record fines had indeed knowingly committed serious AML/CFT breaches.

Fourthly, even if financial deregulation in the US eases the regulatory pressure on US global banks, it does not affect two core problems which appear to be driving the de-risking of regional banks, namely the perceived unprofitability of providing correspondent banking services to indigenous Caribbean banks, and the Caribbean region’s unjustified characterisation as a ‘high risk’ region for conducting financial services. In the previously mentioned World Bank 2015 Survey, some 80% of large banks cited “lack of profitability of certain foreign CBR services/products” as a driver of exiting correspondent banking relationships.

Further to the latter point, Caribbean countries, particularly international financial centres (IFCs) are consistently and unjustifiably placed on US government lists deeming them as money laundering threats, despite the fact that no Caribbean IFC is currently on any CFATF list of ‘high-risk and non-cooperative jurisdictions’. The most notorious example of this unfair practice is the US’ annual International Narcotics Control Strategy Report, the latest edition of which listed 21 Caribbean jurisdictions without providing (as usual) any evidence to support the conclusions drawn.

Caribbean countries are consistently branded as tax havens in spite of the fact that all Caribbean countries have signed intergovernmental agreements (IGAs) with the US Government pursuant to the extra-territorially applied US Foreign Account Tax Compliance Act (FATCA) passed in 2010. Most Caribbean governments have already passed implementing legislation to bring their IGAs into force. In addition, while the US has opted not to be a part of the OECD’s Common Reporting Standard, several Caribbean countries have elected to be early adopters!

Added to this is that compliance officers in overseas banks usually view the Caribbean as a “collective” and not as individual countries; any perceived risks in one country are transposed to the Region as a whole.

Granted, it is still early days of the Trump Administration and the findings of the Treasury Secretary’s report on which regulations may possibly be earmarked for axing would not be known for some time. What does help, however, is where there is clarification of the rules through clearer guidance. For instance, for a long time it was unclear how far banks’ due diligence requirements were to go. In addition to knowing their customer (KYC), there appeared to be a growing consensus that banks were also supposed to know their customer’s customers (KYCC).  Definitive guidance through the FATF Guidance in October 2016 showed that KYCC was not required. Turning to the US, that same month the US Office of the Comptroller of the Currency (OCC) released guidance to assist banks in the periodic risk reevaluation of foreign correspondent banking relationships.

However, the Region would be well-advised not to expect any serious mitigation of the de-risking phenomenon stemming from US financial deregulation. Despite being a ‘pro-business’ administration, it should be remembered that the overriding goal of the Trump Administration’s regulatory rollback is to “Make America Great Again”, point blank. Any spill-over positive benefits to the Caribbean from Trumpian financial deregulation would be welcomed but unintended, and it is more likely that the regulatory rollback may perhaps be more harmful than helpful to the region.

There is no panacea for the de-risking phenomenon as it is caused by a multiplicity of factors. Regional governments and private sector stakeholders should continue their lobbying and advocacy efforts, including engagement with key US administration officials, regulators and the banking sector. Given the Trump Administration’s ‘America First’ disposition, lobbying efforts which emphasises the implications that possible derisking-related economic and social destabilisation in the Caribbean may have on the US’ homeland security would be more impactful than pure moral suasion.

These advocacy efforts should also highlight to US officials and to US correspondent banks Caribbean countries’ own efforts at continuously improving their AML/CFT frameworks and the compliance efforts of Caribbean banks. Regional banking stakeholders should also continue to explore the possibility of investing in technologies such as Know Your Customer (KYC) utilities and legal entity identifiers (LEIs) to assist in customer due diligence (CDD) information sharing between themselves and their US correspondents.

These were part of the remarks I gave as a panellist at the Barbados International Business Association (BIBA) International Business Forum 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.

Trump’s Trade Executive Orders target deficit and uncollected AD/CV Duties

Alicia Nicholls

United States (US) President Donald Trump has sent a warning signal to those countries which he accuses of engaging in ‘unfair trading practices’ argued to be costing American manufacturing jobs. Proclaiming that the “theft of American prosperity will end,” the President concluded the work week by signing two trade-focussed executive orders aimed respectively at identifying the causes of the US’ reported $500 billion dollar total trade deficit and the $2.3 billion dollars (as at May 2015) in uncollected anti-dumping and countervailing duties owed to the US government. Ultimately, the twinned measures are to “set the stage for the revival of US manufacturing” as noted in the President’s remarks at the signing ceremony.

Presidential Executive Order Regarding the Omnibus Report on Significant Trade Deficits

Taking aim at the US’ trade deficit  blamed for a decline in American prosperity and jobs, President’s Trump executive order mandates the Secretary of Commerce, Wilbur Ross, and the United States Trade Representative (USTR), Robert Lighthizer (yet to be confirmed) to prepare and submit to him an Omnibus Report on Significant Trade Deficits. This is to be done in consultation with relevant departments and agencies. The Secretary of Commerce and the USTR may hold public meetings and receive comments from relevant government and non-governmental stakeholders.

Primarily, this report is to examine the US’ trading relationships country by country. It will identify those foreign trading partners with which the US had a significant trade deficit in goods in 2016, and seek to ascertain the reasons for the deficits, including whether it is because of trade abuses (or what President Trump has termed “cheating”) by these countries, assess the effects of the trade relationship on US employment and wage growth and identify imports and trade practices that may be impairing US national security.

Most Caribbean countries can perhaps breathe a sigh of relief as the US has a trade surplus with the Region, as at the last report on the operation of the CBERA. The exception is the oil-rich Trinidad & Tobago which enjoys a merchandise trade surplus with the United States. According to US Census Bureau data, in 2016, the US imported $2,961 million in goods from the twin-island republic and exported $2,334 million, resulting in a deficit of $617 million. Natural gas, crude oil and petrochemicals comprise the majority of US imports from Trinidad & Tobago as this table shows.

While it may appear that Trinidad & Tobago might potentially be in the Administration’s cross-hairs as it has a trade surplus with the US, it should be noted that (a) the US’ deficit with Trinidad & Tobago in 2016 was not ‘significant’ and has been declining since 2011 (b) the Report is supposed to consider other factors as well, including whether the country engages in ‘unfair trading practices’ which Trinidad & Tobago does not. (c) As the Trump Administration will seek to increase US onshore petroleum production, its imports from Trinidad & Tobago (and its deficit with that country) will continue to decrease.

Presidential Executive Order on Establishing Enhanced Collection and Enforcement of Anti-dumping and Countervailing Duties and Violations of Trade and Customs Laws

In a warning salvo to China, President Trump’s second executive order targets US importers which evade anti-dumping/countervailing duties by improving collection of these duties at the border. Dumping in the trade context refers to where an exporter sells a product in an export market at a price lower than in the home market. Under the WTO’s Anti-dumping Agreement, a country may, after investigation, impose extra duties (anti-dumping duties) on a “dumped” product from another country to ensure the price is close to the “normal value” or to offset injury to its domestic industry.

Specifically, the executive order mandates the Secretary of Homeland Security, through the Commissioner of Customs & Border Patrol (CBP), to “develop and implement a strategy and plan for combating violations of US trade and customs laws for goods and for enabling interdiction and disposal”.

The order also seeks to ensure the timely and efficient enforcement of laws protecting intellectual property rights holders from the importation of counterfeit goods. It therefore requires the Treasury Secretary and the Secretary of Homeland Secretary to take all appropriate steps to ensure that the CBP can share any information with rights holders which is necessary to determine whether there has been an IPR infringement or violation, and regarding merchandise voluntarily abandoned, once such information is shared consistent with the law.

Memo on NAFTA

In other news, last week a leaked draft memo to Congress signed by the Acting USTR revealed what appeared to be the Administration’s orientation towards the renegotiation of the North American Free Trade Agreement (NAFTA), an agreement which Trump had called the “worst trade deal ever signed by the US”. However, during a daily press briefing the White House Press Secretary, Sean Spicer, has said the memo is “not a statement of administration policy”.

Trade had been a major plank of President Trump’s platform, which aimed to stop ‘bad trade deals’ and eradicate the US’ trade deficit. One of his earliest executive orders was mandating the Acting USTR to withdraw the US from the Trans-Pacific Partnership (TPP).

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 & Development Digest – March 26- April 1, 2017

Source: Pixabay

Welcome to the Caribbean Trade and Development Digest for the week of March 26-April 1!  I am pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. 

The biggest trade news this week was that the United Kingdom has officially submitted its notification of intention to withdraw from the European Union, and has published its Great Repeal White Paper. United States President Trump signed on Friday two executive orders on trade, one calling for improving the collection of anti-dumping/countervailing measure duties and the other mandating a study on the reasons for the US trade deficit. Turning to the Caribbean, the Golding Commission in Jamaica has turned over its CARICOM Review Report to the Jamaican Prime Minister.

For past issues of our weekly Caribbean Trade & Development Digest, please visit here.

To receive these mailings directly to your inbox, please follow our blog.

REGIONAL NEWS

Golding Commission Submits CARICOM Review Report To PM

Jamaica Gleaner: The Bruce Golding-led CARICOM Review Commission has submitted its final report, eight months after it started its work. Read more 

Guyana cleared for paddy exports to Mexico

Stabroek: According to the Ministry of Agriculture, Guyana will now be able to bid on three quotas, totalling 30,000 metric tonnes of paddy for export to Mexico, following the Government of Mexico’s decision to allow the tax free importation of 150,000 metric tonnes of paddy and rice products from outside of the North American Free Trade Agreement (NAFTA) member states. Read more 

Belize economy declines by 1.2% in 4th quarter

Breaking Belize News: For the first time in five years, Belize has seen a decline in the Gross Domestic Product (GDP) fourth quarter of the year. Read more

CARICOM launches new energy efficiency code

Antigua Observer: Jamaica has launched a new initiative aimed at develop a Regional Energy Efficiency Building Code (REEBC).  The project is being undertaken by the Bureau of Standards Jamaica (BSJ) in collaboration with the Caribbean Community (CARICOM) Organisation for Standards and Quality (CROSQ). Read more 

Leveraging opportunities from the EU

Barbados Advocate: Andrea King, Director, Barbados Cultural Industries Development Authority has revealed the recent project that the Barbados Cultural Industries Development Authority is managing on behalf of the Ministry of Culture, Sport and Youth has gained critical market research intelligence to conduct business in the European market. Read more 

Tourism will still be king

Nation News: Tourism will continue to be golden egg in Barbados’ economic basket even as the island pursues diversification via other sectors including renewable energy. Read more 

Local experts to inspect Brazil’s meat processing plants

Jamaica Gleaner: A Jamaican technical team, which leaves this week for Brazil, will undertake a fact-finding mission to determine the validity of reports of tainted meat being processed into corned beef. Read more 

Regional sugar production for 2017 off to steady start

Jamaica Observer: The Sugar Association of the Caribbean (SAC) has reported an increase in sugar production in the region for the month of February when compared to the same period last year. Read more 

10th EDF Technical Barriers Of Trade Programme Is A Resounding Success

ZIZ Online: Media representatives and members of national bureaus of standards in CARIFORUM member countries participated in a close-out regional press conference on Thursday, March 23, which was geared at highlighting the numerous successes of the 10th European Development Fund (EDF) Technical Barriers of Trade (TBT) Programme. Read more

Guyana’s Coast Guard boosts capacity amidst oil production

Demerara Waves: The Guyana Defence Force (GDF) Coast Guard is beefing up its capacity to provide security for offshore oil exploration and production as well as clamp down on illegal activities some of which “distort our economy,”  President David Granger said. Read more 

Ministers finalise Caricom strategy for education, human resource development

Stabroek News: Caribbean Ministers of Education and other educational officials yesterday met to finalise a regional strategy for education and human resource development. Read more 

INTERNATIONAL NEWS

No turning back on ‘Brexit’ as Article 50 triggered

BBC: Britain’s departure from the EU is “an historic moment from which there can be no turning back”, Theresa May has said. Read more 

‘We are ready’: Canada-Europe trade deal set to kick in, mostly, by July 1

CBC News: Canada is preparing to provisionally apply the Comprehensive Economic and Trade Agreement (CETA) by July 1. Read more 

COMESA 53m Euros trade facilitation programme almost complete

CTA: The formulation of projects under the COMESA trade facilitation programme to be financed under the 11 European Development Fund has entered the home stretch. Read more 

EU, Mercosur Negotiators Report Progress, Schedule Future Meetings

ICSTD: Negotiators meeting to advance a planned EU-Mercosur Association Agreement, including a free trade deal, finished their 27th round of talks last Friday in Buenos Aires, Argentina. Read more 

OAS, US Denounce Venezuelan High Court’s Takeover of Legislature

VOA: The Venezuelan Supreme Court’s decision late Wednesday to take control of the opposition-controlled legislature has set off a wave of outrage, with some hemispheric neighbors, including the United States, Mexico, Peru and Argentina, denouncing the measure as a threat to democracy. Read more 

Canada’s ambassador: All Romanian citizens can travel to Canada without visas starting December 1

Business Review: Romanians who own a valid visa for USA or received a visa for Canada in the last 10 years will travel to Canada without visa from May 1 and from December 1 all citizens will travel to Canada without visa, said on Thursday Kevin Hamilton, the ambassador of Canada to Romania, according to Agerpres. Read more

Brexit: UK publishes ‘Great Repeal Bill’ plan to replace EU laws

CNN: The scale of the task facing UK legislators as they try to extricate Britain from the European Union was revealed on Thursday when the British government set out how the process would work. Read more 

Nicola Sturgeon threatens to try and obstruct Great Repeal Bill

Telegraph: Nicola Sturgeon has signalled she will try and derail the Great Repeal Bill by withholding her government’s consent for its plans to give Scotland powers repatriated from Brussels. Read more 

Trump executive orders will target trade ‘cheaters’

USAToday: President Trump promised to crack down on “foreign importers that cheat” Friday, signing two executive orders that he said would lead to a historic reversal of the nation’s trade deficit. Read more 

On ‘Brexit,’ It’s Divorce First, Trade Talks Later, E.U. Tells U.K.

New York Times: Britain must agree to pay its bills and to protect millions of Europeans living in Britain before reaching a new trading relationship with the European Union, Donald Tusk, the president of the European Council, said on Friday. Read more 

Trump administration seeks mainly modest changes to NAFTA

CNBC: The Trump administration is seeking mainly limited changes to the North American Free Trade Agreement with Mexico and Canada, the Wall Street Journal reported on Thursday. Read more 

Germany urges EU to file WTO complaint against U.S. in steel row

Reuters: Germany urged the European Union on Friday to consider filing a complaint with the World Trade Organization (WTO) against the United States over its plan to impose duties on imports of steel plate from five EU member states. Read more

China says U.S. trade orders should respect international rules

Reuters: China called on the United States to respect international trade rules and improve cooperation and dialogue in reaction to two new orders by U.S. President Donald Trump calling for an investigation into trade abuses. Read more 

WTO issues panel report regarding EU tariff rate quotas on poultry imports

WTO: On 28 March 2017 the WTO issued the panel report in the case brought by China in “European Union – Measures Affecting Tariff Concessions on Certain Poultry Meat Products”. Read more

WTO members review new farm policies in Agriculture Committee

WTO: WTO members held discussions about each other’s farm trade policies at a meeting of the Committee on Agriculture on 27 March. The Committee considered 29 questions concerning subsidies and market access in agriculture, with 16 of these items being raised for the first time. They also reviewed notifications of members’ farm policies. Read more 

US universities speak out against Trump travel ban

VOA: A group of 31 U.S. colleges and universities is supporting a legal challenge to President Donald Trump’s restrictions on travel to the United States by refugees and visitors from certain Muslim-majority countries, asserting the executive order would harm their efforts to provide quality education and promote the free exchange of ideas. Read more 

Trump Administration appealing halt of revised travel ban

CNN: The Justice Department has filed a notice to appeal a Hawaii-based federal judge’s ruling that indefinitely halted core portions of the President Donald Trump’s revised travel ban. Read more 

 

CTLD NEWS

I was honoured to be a panellist  representing FRANHENDY ATTORNEYS at the Barbados International Business Association (BIBA) International Business Forum on March 31st in Barbados. The Panel was “The Trump Presidency – Implications and Opportunities for IFCs“. The discussion, which considered the potential implications and opportunities of the Trump Presidency for Caribbean International Financial Centres (IFCs) was ably moderated by Melanie Jones of LEX Caribbean Attorneys-at-Law. I was delighted to share the stage with a distinguished panel which comprised of noted economist Jeremy Stephen, attorney-at-law Cadian Drummond and Executive Director of the University of the West Indies Consulting (UWI Consulting), Lisa Cummins.  I wish to thank BIBA, the moderator, my fellow panellists, as well as those from the two other panels for a very engaging and informative Business Forum as always.

NEW ON THE CTLD BLOG

Brexit begins; UK makes historic Article 50 notification of withdrawal from EU

New Trump Executive Order Reverses Obama-Era Climate Change Policies

Post-Brexit UK-Caribbean Trading Relations: What are the options?

Liked this issue? Read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

Brexit begins; UK makes historic Article 50 notification of withdrawal from EU

Alicia Nicholls

Nine months after 52% of Britons voted yes in the June 23, 2016 referendum on whether the United Kingdom should exit the European Union (EU), British Prime Minister Theresa May has followed through on her “Brexit means Brexit” promise. On Wednesday, March 29, 2017 the May Government submitted a letter to the EU Council’s President Donald Tusk formally notifying of the UK’s intention to withdraw from the EU pursuant to Article 50 (2) of the Treaty on European Union (Lisbon Treaty).

Earlier this month (March 13), the UK Parliament had passed the legislation authorising the Government to make the notification and allowing Mrs. May to meet the end of March deadline she had promised last year.

What happens next?

The UK will be the first EU Member State to withdraw from the EU so the move is not just historic but also brings some uncertainty.  However, on several points Article 50 of the Lisbon Treaty is clear.  The Article 50 (2) notification starts the two year clock towards the UK’s formal exit. The Brexit negotiations will concern not only the terms of the UK’s withdrawal from the currently 28-member trade and economic bloc but also the framework for the future relationship between the UK and remaining EU-27. Article 50(2)  also makes clear that the negotiations are to follow the procedure set out in Article 218 (3) which deals with negotiations of agreements with third States. Regardless of whether or not a deal is reached, the UK automatically ceases to be part of the EU and its treaties once the two year timeframe from the date of the Article 50 (2) notification (March 29 2019) elapses, unless the EU Council (unanimously) and the UK agree to an extension.

The road to Brexit thus far has not been a smooth one, but may be mild compared to what potentially awaits ahead. Mrs May faces likely tough negotiations. Though wishing to preserve as amicable and cooperative a relationship with the UK, the EU Council would not want to make leaving the EU too easy a prospect for those EU member states which might be contemplating their own ‘Brexit’. Moreover, the UK has little experience in trade negotiations because the EU Commission was responsible for negotiations with third States.

For her part, Mrs. May was both firm but cordial in her withdrawal letter, reiterating themes from her major Brexit speech. She noted that while the UK would be leaving the EU, it would not be leaving Europe and she expressed the desire to remain friends and committed allies with the EU-27.

One of the issues to be ironed out would be what level of access will the UK have to the EU for not only its goods and services. Mrs. May has already made clear that the UK will not seek to be a member of the single market or the customs union.

Additionally, another contentious issue is that of residency rights of the 900,000 Britons (according to the Office of National Statistics) living in the EU-27.

The May Government has already stated its willingness to walk away with no deal rather than a bad one.

In addition to possibly tough negotiations with the EU, Mrs. May will also need to manage the home front amidst calls by Scotland’s First Minister Nicola Sturgeon for a second independence referendum. Scotland had voted to remain.

The Brexit negotiations may not start until June which cuts into the two year window for negotiation.

The full Article 50 notification letter 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.

New Trump Executive Order Reverses Obama-Era Climate Change Policies

Alicia Nicholls

Less than one hundred days into his presidency, President Donald Trump has started a major rollback of Obama-era climate policies. Surrounded by an ensemble of coal miners, the US President today signed his Executive Order on Promoting Energy Independence and Economic Growth.  Touted as necessary to liberalise energy production, promote economic growth and job creation, the Trump Executive Order takes aim at several executive actions implemented by his predecessor, President Barack Obama, as part of the US’ then response to the global climate change challenge.

For fellow pro-environmentalists today’s executive order is a blow to the global climate change fight and a sad confirmation of the policy change which Trump had promised. Why? Firstly, the US is the world’s largest emitter of greenhouse gases (16% according to 2015 figures), which means US action or inaction on climate change has a non-negligible impact on global efforts to reverse course before it is too late. Secondly, environmental regulatory rollback by the US could provoke a domino effect on other large emitters who may decide to rollback their own so-called ‘job killing’ environmental regulations in order to be competitive. Thirdly, US climate change inaction is not just a blow for small island developing States which are the most vulnerable to the adverse effects of climate change, but it further endangers those parts of the US which are feeling the ravages of climate change, such as sea level rise and more powerful storms.

The name  of the executive order is a misnomer as it does nothing to promote energy independence. Instead, it mandates, inter alia, departments and agencies to immediately review, suspend, revise or rescind existing regulations that “potentially burden the development or use of domestically produced energy resources”. It rescinds Certain Energy and Climate-Related Presidential and Regulatory Actions, including a 2013 executive order urging the federal government to prepare for the impact of climate change and a 2013 presidential memorandum on Carbon Sector Carbon Pollution Standards. It also lifts moratoria on Federal land coal leasing activities. His Head of the Environmental Protection Agency (EPA), Scott Pruitt, a known climate sceptic, reportedly hailed the regulatory rollback as “pro-jobs and pro-environment”.

This 360 degree reversal of US Climate Change policy comes days after President Trump’s proposed Budget which slashed budgetary funding for the EPA by 31%, but saw an increase in military spending.

Though denounced by environmentalists, the executive order has been praised by the US Coal Industry. Mr. Trump constantly blamed President Obama’s Clean Power Plan for the loss of coal mining jobs. However, though it is true that coal mining jobs have been on the decline in the US, most have been lost to automation as well as the shift to cleaner energy sources as opposed to clean energy regulations. Therefore, even some coal industry leaders, who have denounced climate action, have noted that coal jobs may not be coming back, regulatory rollback or not.

Moreover, the equation of climate change regulation with job losses is a false comparison as it ignores the growth not just in renewable energy industries and the green economy, but also specifically of green jobs and green goods and services.

President Trump is currently the only major world leader to deny the anthropogenic origin of climate change, and while he has often vacillated in his views on other subjects, on climate change he has been a consistent denier. Almost as a warning salvo that it would not be business as usual,  the Whitehouse.gov site had been scrubbed of any information relating to climate change immediately after President Trump’s inauguration.

Mr. Trump was also a fierce critic of the Paris Climate Agreement which had been concluded and signed by over 190 countries at the UNFCCC’s 21st Conference of the Parties (COP 21). Parties to the Agreement, which the US had ratified under President Obama via executive action, pledged, inter alia, to “holding the increase in the global average temperature to well below 2 °C above pre-industrial levels.”

In the absence of being able to withdraw from the Paris Agreement (which the US cannot do until 4 years after ratifying), President Trump has, as expected, chosen to ignore and reverse emission reduction commitments made by his predecessor. It is also expected that under President Trump the US will renege on the pledge made by developed countries to mobilise $100 billion in climate finance per year by 2020 to assist developing countries with their climate change mitigation and adaptation efforts.

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.

Post-Brexit UK-Caribbean Trading Relations: What are the options?

Alicia Nicholls

With the United Kingdom’s Prime Minister Theresa May due to formally begin the Brexit process by making the Article 50 notification this Wednesday (March 29), it is worth considering what are the possible options for future Caribbean trading relations with post-Brexit “Global Britain”. Moreover, should one of the options be participation in a Commonwealth-wide free trade agreement (FTA)?

UK-CARICOM Trading Relations

The UK and the Commonwealth Caribbean have a shared and close relationship which goes beyond historical, cultural and diplomatic ties. While Commonwealth Caribbean countries’ trade with the United States dwarfs trade with the UK, the latter remains the region’s largest trading partner within Europe. Caribbean Community (CARICOM) Member States, as part of the CARIFORUM (CARICOM plus the Dominican Republic), enjoy preferential access to the UK market under the CARIFORUM-EU Economic Partnership Agreement (EPA) signed in October 2008.

As the EU agreements to which the UK is currently part will cease to apply to the UK once it has completely withdrawn from the EU, here is what CARICOM/CARIFORUM will losing preferential access to (a) the world’s fifth largest economy (or sixth largest according to some reports), (b) a market of over 64 million people which includes a Caribbean diaspora population whose potential demand for Caribbean goods and services and as a source of diaspora investment still remains largely under-exploited, and (c) a trading partner with a shared language, shared culture and shared values and a common law legal system which brings a level of assurance and certainty for cross-border commerce.

Merchandise trade aside, the UK is an important source of tourist arrivals for many Caribbean countries, while in Barbados, for example, British high net worth individuals (HNWIs) are the largest buyers of luxury real estate on the island, making the UK the largest source of real estate foreign direct investment (FDI) into the island.

Whilst the UK cannot formally commence negotiations with third States until it has left the EU, the May Government has reportedly already begun preliminary informal trade talks with some States. Indeed, several countries around the world, including Commonwealth states like Australia, Canada and India have lined up in hopes of being among the first negotiate post-Brexit trade agreements with the UK. Here in the Caribbean, the Dominican Republic has also signalled its interest in a post-Brexit UK-DR FTA as the UK is apparently the Dominican Republic’s fastest growing market for Dominican exports according to the statement made by the DR’s Ambassador to the UK.

To this point, it is heartening to note that Prime Minister May has bucked the protectionist trend and intends to expand the UK’s trading relations around the world under her “Global Britain” banner. Indeed, Mrs. May argued that one of the compelling reasons for Brexit was so Britain would be free to expand its trade with the rest of the world on its own terms. The door is clearly open to the region for dialogue.

Possible Options for post-Brexit UK-CARICOM/CARIFORUM Relations

As I see it, the possible options for post-Brexit UK-CARICOM/CARIFORUM trading relations are as follows:

  1. Interim Arrangement which preserves EPA-level concessions before an FTA can be negotiated
  2. Negotiation of a UK-CARICOM or UK-CARIFORUM FTA
  3. Commonwealth FTA
  4. Most Favoured Nation (trading under WTO rules)

The Commonwealth Advantage?

This discussion is even more interesting in light of what is clearly a Commonwealth pivot by the UK government as it seeks to map its future trade policy and relations. Most CARICOM countries are member states of the 52-member Commonwealth of Nations, an intergovernmental organisation which consists primarily of former British colonies and current dependencies spanning Africa, Asia, the Americas, Europe and the Pacific.

The Commonwealth is not a trade bloc. However, despite the absence of a Commonwealth FTA, intra-Commonwealth trade and investment flows are substantial and growing. According to a 2015 report released by the Commonwealth, not only is “trade between Commonwealth members on average 20 per cent higher and trade costs are 19 per cent lower compared with in trading between other partners”, but intra-Commonwealth trade is expected to reach 1 trillion by 2020. The Secretariat’s International Trade Policy section also publishes very timely  and insightful research on trade matters. A good example is this brief which was part of the Meeting documents.

However, despite this, Commonwealth Trade Ministers have not met frequently. This is why the Inaugural Commonwealth Trade Ministers Meeting two weeks ago was such a momentous event.  From all reports the meeting was not only well-attended but the ministers discussed prospects for deepening intra-Commonwealth trade and investment ties using the “Commonwealth Advantage”. Inter alia, Ministers directed the Secretariat to “develop pragmatic and practical options to increase Commonwealth trade and investment”, to regularise and institutionalise Trade Minister meetings, and to cooperate on the implementation of the WTO’s Trade Facilitation Agreement.

The prospect of a Commonwealth-wide FTA has been floated informally, although it does not yet appear to be a firm policy proposal. The arguments for a Commonwealth FTA include a ready market of over 2.4 billion people yoked by a shared language and history, common principles and values, respect for the rule of law, the common law legal system, all of which form part of the “Commonwealth Advantage”. Additionally, it is argued by proponents of a pan-Commonwealth FTA that the potential for even greater intra-Commonwealth trade and investment should be harnessed as a buttress against rising protectionism and slowing global trade which are potentially harmful for Commonwealth developing States.

To be sure, the Commonwealth brings important value for the Caribbean. It has, for example, developed a strong small states agenda, which is not surprising given that thirty-one of its member States are small States. As an illustration, the Commonwealth launched the Commonwealth Small States Trade Finance Facility in 2015. Moreover, the fact that the current Secretary-General, Dame Patricia Scotland QC, is a daughter of the soil is also an advantage for the region.

There is also, of course, merit to fomenting closer commercial and political ties with fellow Commonwealth countries as some of the more developed Commonwealth countries are part of influential fora like the Group of 20 (G20), Organisation for Economic Cooperation and Development (OECD) and the Financial Action Taskforce (FATF) where Commonwealth Caribbean countries are not represented.  This is doubly important in light of the on-going slowdown in global trade flows, an apparent retreat from multilateralism and rising protectionism. Moreover, Commonwealth Caribbean countries have been seeking to diversify their trading partners, including source markets for tourism, foreign investment and international business and deepening ties with the rest of the Commonwealth could be useful.

Nonetheless, while I have not done any econometric analysis on what would be the possible economic and welfare benefits of any Commonwealth FTA for CARICOM/CARIFORUM, given the length of time it may take to negotiate a Commonwealth FTA, the varying levels of development, the differences in economic profile, and the diverse offensive and defensive interests of the various Commonwealth Member States which will need to be managed, the negotiation of a Commonwealth-wide FTA will not be an easy task. Therefore, I submit that the Caribbean region’s interests will, at least in the short to medium term, be better served by either negotiating an interim arrangement  with the UK which preserves EPA-level concessions until an FTA can be negotiated or negotiating an FTA with the UK straight off the bat.

So what should a possible UK-CARICOM/CARIFORUM take into account?

CARICOM countries have limited experience in negotiating FTAs with developed countries. So far the EPA is the region’s only completed FTA with a developed partner, as the Canada-CARICOM negotiations are currently in abeyance. Perhaps, fortuitously, the UK has even less experience with negotiating trade agreements, as trade negotiations have hitherto been handled exclusively by the European Commission, pursuant to the EU’s common commercial policy. So both parties, despite the power asymmetry, will be on a learning curve.

Commitments made under any prospective UK-CARICOM/CARIFORUM free trade agreement should take into account the sustainable development and economic growth needs and interests of both parties in a mutually beneficial way, while also taking into account differential levels of development among CARICOM/CARIFORUM countries.

CARICOM/CARIFORUM countries will also want at least the same level of concessions for their service suppliers, particularly in Mode 4 (Presence of Natural Persons) which has been the mode of supply which is the least liberalised. Additionally, as capital-importing States, CARICOM/CARIFORUM countries will likely wish to negotiate an investment chapter which protects, promotes and liberalises investment between CARICOM/CARIFORUM and the UK for the mutual development of both parties.

Of course, stakeholder consultations with not just the private sector but also civil society and citizens at large should continue to inform the region’s negotiating positions, including whether there is actually the need for an UK-CARICOM FTA and what are the region’s offensive and defensive interests.

FTA negotiations can take several years. The EPA negotiations, for instance, had been launched in April 2004 and the Agreement was not signed until October 2008. Therefore, unless a WTO-compatible interim arrangement could be negotiated whereby the UK agrees to continue EPA-type concessions to the region until a UK-CARICOM/CARIFORUM FTA is negotiated, it is possible that UK-CARICOM/CARIFORUM trade relations may revert to MFN conditions. Even so, while the UK is also a WTO member in its own right, its schedules are part of the EU’s which means the country will have to work out its own tariff schedules under the WTO post-Brexit. Additionally, WTO MFN conditions will not afford CARIFORUM countries the level of market access, especially for their service suppliers in the UK market, that they currently enjoy under the EPA.

Although the argument is often rightly made that the Caribbean region will be at the low rung of the negotiation priority ladder, I believe that the region cannot sit idly by as the clock begins ticking come Wednesday. While other major countries have begun to erect barriers, the May Government’s “Global Britain” outlook is a welcomed open door for the region. We should at least signal to the May government our interest in beginning talks on cementing a mutually beneficial UK-CARICOM/CARIFORUM trading arrangement post-Brexit, and take steps to do the ground work for such an eventuality.

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 & Development Digest – March 19-25, 2017

Welcome to the Caribbean Trade and Development Digest for the week of March 19-25,2017!  I am pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World.

It is “Brexit Week”! This Wednesday United Kingdom (UK) Prime Minister Theresa May is expected to trigger Article 50, beginning the formal process of the UK’s withdrawal from the European Union (EU). I trust you will enjoy this week’s edition of our Caribbean Trade and Development Digest!

For past issues of our weekly Caribbean Trade & Development Digest, please visit here.

To receive these mailings directly to your inbox, please follow our blog.

REGIONAL NEWS

Grenada joins list of CARICOM countries to ban corned beef from Brazil 

Jamaica Observer: Grenada has join the list of countries within the Caribbean Community (CARICOM), to place a ban on the importation and consumption of corned beef from Brazil. Read more 

Dominican Republic: Plantain contribution vital to GDP

Fresh Plaza: The Dominican Republic’s plantain sector contributes more than RD $14.000 million per year to the country’s gross domestic product (GDP) and it is one of the products that promotes the economy’s development the most, stated the chief executive of the Dominican Agribusiness Board, Osmar Benitez. Read more 

CARICOM to introduce secure, harmonised skills certificate

Antigua Observer: The Caribbean Community (Caricom) said it will be implementing a harmonised skills certificate with a range of security features under the Caricom Single Market & Economy (CSME) regime. Read more 

EU wants to advance common agenda with CARICOM in global fora

Nation News: The Caribbean Community (CARICOM) on Wednesday accredited a new Ambassador of the European Union (EU), with the new envoy advocating for the relationship to more effectively advance a common agenda in global and multilateral fora. Read more 

Jamaica, Brazil face off over “bully beef”

Jamaica Observer: Jamaica and Brazil appear to be heading towards a trade row over the island’s ban on corned beef imported from that South American country as both sides yesterday took hard positions on the measure. Read more 

Finland expresses interest in CARICOM’s bioenergy potential

Jamaica Gleaner: Finland has expressed an interest in exploring the bioenergy potential in mainland territories of the 15-member Caribbean Community (CARICOM) countries. Read more 

EUR 24m in support to the Caribbean’s private sector

St Lucia Times: The European Union (EU) have signed the 11th European Development Fund (EDF) agreement worth EUR 24 Million to support regional private sector development. Read more 

INTERNATIONAL NEWS

Trump to review all 14 US FTAs

Fortune: The Trump administration is preparing new executive orders to re-examine all 14 U.S. free trade agreements and review government procurement policies to aid American companies, two administration officials said. Read more 

EU, Mercosur Countries Work to Speed up trade talks 

ICTSD Bridges: Talks on a potential trade deal between the EU and Mercosur have reportedly been gaining renewed traction, with diplomats from both trading partners affirming their commitment to bringing the long-running negotiations closer to a successful conclusion. Read more 

Pacific countries to sign deal next month

Radio New Zealand: Pacific Island countries are expected to sign the proposed regional trade deal called PACER Plus next month. Read more 

Anti-Brexit protesters march in London 

The Australian: Tens of thousands of protesters marched in London against plans for Britain to withdraw from the European Union. Read more 

China, Australia work together to develop Asia-Pacific Trade

Global Times: At a time of uncertainty, where protectionist economic policy poses some threats to the broader global market, Chinese Premier Li Keqiang‘s visit to Australia has highlighted the importance of the two nation’s responsibility to work together and develop trade in the Asia-Pacific. Read more 

Africa Trade Meeting Has no Africans after Visa denials

VOA: Each year, the University of Southern California brings delegations from Africa to meet with business leaders, government officials and others in the U.S. But this year, the African summit has no Africans. All were denied visas. Read more 

Outcomes from FATF annual Private Sector Consultative Forum

FATF: The Financial Action Task Force (FATF) held its annual Private Sector Consultative Forum on 20-22 March 2017 in Vienna, Austria, hosted by the United Nations Office on Drugs and Crime (UNODC).Read more 

Japanese, European leaders push for swift conclusion to trade talks

ICTSD Bridges: Japanese Prime Minister Shinzo Abe met with German Chancellor Angela Merkel on Sunday 20 March in Hanover, renewing calls to finalise negotiations on a EU-Japan free trade accord and defending open and fair trade. Read more 

Wildlife Trade: China Reports drop in demand for ivory

ICTSD Bridges: The past month has seen a series of domestic efforts aimed at addressing different aspects of wildlife trade, from the implementation of measures to further regulate or curb ivory sales in various countries and a debate in South Africa over domestic trade in rhino horn. Read more 

MacAuley Looks to tap Asia-Pacific trade for Canada

The Guardian: MacAulay held talks with his counterparts in both countries to promote Canadian products like lobster, livestock genetics, blueberries, grains and oilseeds. Read more 

Algeria ready to strengthen trade with South Africa

Brand South Africa: Algerian ambassador to South Africa Abd-El-Naceur Belaid called for stronger economic partnerships between Algeria and South Africa at an Algeria-South Africa trade and investment summit held in Johannesburg. Read more 

Canada aims to avoid Brexit cliff-edge with trade talks 

Toronto Star: The government is pushing for its trade deal with Europe to be ratified by Britain before it leaves the European Union to secure the crucial agreement. It also has its eye on deeper relations with the U.K. once Brexit is complete. Read more

RCEP “another important path” for trade liberalisation

Channel News Asia: Even as the United States has pulled out from the Trans-Pacific Partnership (TPP), both Singapore and Vietnam are “watching how things will develop” on the trade pact, said Prime Minister Lee Hsien Loong, at the end of his visit to Vietnam on Friday (Mar 24). Read more 

Panels established to review US renewable energy measures and Russian transit restrictions

WTO News: The Dispute Settlement Body (DSB) agreed on 21 March to the establishment of two new dispute panels: one to review a complaint filed by India regarding certain measures at the state level in the United States to promote renewable energy; and the second to review Ukraine’s complaint regarding restrictions on goods in transit through the Russian Federation. Read more 

UK Food Lobby Calls for Tariff-Free Post Brexit Trade with EU

Bloomberg: Industry bodies representing the U.K. food supply chain have called on the government to seek a tariff-free trade agreement with the European Union during coming Brexit negotiations. Read more 

Malaysia remains open on TPP

The Borneo Post: Malaysia is still keeping its options open on the Trans-Pacific Partnership (TPP) as 10 of its signatories met in Chile last week, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed. Read more 

US Chamber urges quick vote on USTR pick: Lighthizer

The Hill: The nation’s largest business lobby on Wednesday threw its support behind President Trump’s pick to lead U.S. trade policy. Read more 

Mexico prepared to “step away” from NAFTA if negotiations don’t benefit the country

Mercopress: Mexican Foreign Minister Luis Videgaray said that if North American Free Trade Agreement negotiations don’t benefit all parties involved, the country is willing to “step away” from it. In an interview with Bloomberg, he said pulling out of NAFTA would be a last resort. Read more 

Trumps pipeline permit to TransCanada

USA Today: The company responsible for the Keystone XL oil pipeline said Friday that President Trump’s administration signed off on the project, clearing a hurdle for a polarizing endeavor that has rankled environmentalists and inspired hope for jobs among supporters. Read more 

Trump trade negotiator wants stronger ties with Taiwan 

China Post: U.S. President Donald Trump’s nominee for trade representative has urged stronger bilateral ties with Taiwan, according to a report released Tuesday. Read more 

CTLD NEWS 

Read my latest commentary Sport, Entrepreneurship and Development

Caribbean Trade Law & Development (CTLD) and the Africa Caribbean & Pacific Young Professionals Network (ACP YPN)  have submitted joint written evidence to the United Kingdom (UK) House of Commons’ International Trade Committee’s on-going UK-US Trade Relations Inquiry . The inquiry  is examining the potential for a trade agreement between a post-BREXIT UK and the United States  of America (US).Our joint submission has been published on the UK House of Commons’ ITC’s website and may be viewed here.

Liked this issue? Read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

ACP YPN and CTLD submit joint Written Evidence in UK-US Trade Relations Inquiry

Caribbean Trade Law & Development (CTLD) and the Africa Caribbean & Pacific Young Professionals Network (ACP YPN)  have submitted joint written evidence to the United Kingdom (UK) House of Commons’ International Trade Committee’s on-going UK-US Trade Relations Inquiry . The inquiry  is examining the potential for a trade agreement between a post-BREXIT UK and the United States  of America (US).
Noting the importance of having a youth voice in this process, our joint submission referenced the important issue of ensuring market access for UK young professionals in the US market and ensuring that youth are given the opportunity to contribute to monitoring any negotiated agreement. The submission also emphasised the importance of including a development chapter into the Agreement.
ACP YPN and CTLD are grateful for the opportunity to have been able to represent the views of youth on this important matter.
Our joint submission has been published on the UK House of Commons’ ITC’s website and may be viewed here.
About the Contributors

The African Caribbean and Pacific Young Professionals Network (ACP YPN) provides a platform for young people to play an active role in policy-making processes at the national, regional and international levels.

Caribbean Trade Law & Development Consulting (CTLD Consulting) is a Caribbean-based consulting firm and think tank specialising in international trade, development and international business research, policy advocacy and consulting.

Click here for more CTLD News and Announcements.

Caribbean Trade & Development Digest – March 12-18, 2017

Welcome to the Caribbean Trade and Development Digest for the week of March 12-18,2017!  I am pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World.

We apologise for the absence of a Trade & Development Digest for the week of March 5-11, 2017 and trust you will enjoy this week’s edition. Some major news from the past week and a half were the Commonwealth Trade Ministers Meeting, the G20 Finance Ministers Meeting and the challenges to US President Trump’s new travel ban.

On a sad note, we also would like to take this opportunity to express our condolences on the passing of literary giant, St. Lucian born poet and playwright and 1992 Nobel Peace Prize in Literature winner, the late Mr. Derek Walcott who passed away last week.

For past issues of our weekly Caribbean Trade & Development Digest, please visit here.

To receive these mailings directly to your inbox, please follow our blog.

REGIONAL NEWS

Customs World inks cooperation Agreement with Dominican Customs

Dubai News: Customs World, a subsidiary of Ports, Customs and Free Zone Corporation in Dubai, has signed an agreement of cooperation with the General Directorate of Customs of the Dominican Republic. Read more

French rum brand buy stake in National Rums

Jamaica Gleaner: Goddard Enterprises Limited of Barbados has exited its investment in National Rums Jamaica Limited (NRJ) under a wider deal worth nearly US$13 million that hands ownership to a French company called United Caribbean Rum Limited. Read more

Delays continue over signing of Guyana-EU trade agreement to combat illegal logging

Mongabay: Guyana’s plan to sign a trade agreement with the European Union by the end of 2016 to combat illegal logging has been delayed again. Read more

DR: Haitian Customs Retain Dominican Goods at Border

HaitiLibre: Dominican merchants reported that several trucks loaded with plantains, bananas, carrots, lemons and other Creole products were retained at the Jimani-Malpasse border by the Haitian authorities. Read more

CARICOM seeks FATCA delay, but law may prove irrelevant 

Cayman Compass: The Caribbean Community is looking at spending nearly quarter of a million dollars on a Washington-based consultant to lobby the Trump administration about the Foreign Accounts Tax Compliance Act. Read more

Industry Ministry says Jamaica to expand exports to UK

Jamaica Observer: Chief Technical Director in the Ministry of Industry, Commerce, Agriculture and Fisheries Stephen Wedderburn has reiterated Jamaica’s commitment to expand export of produce and products to the United Kingdom. Read more

Jamaica hopeful of banana export recovery

Fruitnet: Plans to invest almost €5m of EU funding in Jamaica’s banana sector are advancing well, according to reports in the country, raising the prospect  of the Caribbean nation restoring its former key position in the international market. Read more

King Pepper re-enters Canadian market

Jamaica Gleaner: King Pepper Products Limited, manufacturers of the Eaton’s line of seasoning, has re-entered the Canadian market through exports and is hoping to push sales of the product there as well as increase its regional footprint. Read more

Alcazar calls for push to exports

Trinidad & Tobago Newsday: Admitting that it is a difficult time to take over the mantle of President of the Trinidad and Tobago Manufacturers Association (TTMA), Christopher Alcazar, who was elected on March 9, 2017 at the body’s 61st Annual General Meeting, said he is solution driven and will lead the organisation with a heavy amount of engagement and collaboration with the membership and stakeholders whether Government or different agencies.  Read more

Bureau of Standards monitoring foreign cement

Trinidad Guardian: With the entry of foreign cement on the market, Trade and Industry Minister Paula Gopee-Scoon said the T&T Bureau of Standards is continuing to monitor all products to ensure they meet quality standards. Read more

CDB funds project to prevent loss of correspondent banking relationships

Caribbean News Now: The board of directors of the Caribbean Development Bank (CDB) has approved funding of US$250,000 to strengthen financial transparency, and assist in preventing the loss of correspondent banking relationships (CBRs) in the region. Read more

TCL ponders treating T&T waste

Trinidad Guardian: Two months after Mexican cement giant Cemex succeeded in its bid to take over Trinidad Cement Ltd (TCL), managing director Jose Luis Seijo has assured that the company will be dealing aggressively with environmental pollution. Read more

Trinidad’s MHTL cutting methanol production by 25%

ICIS: Trinidad’s leading methanol producer plans to idle 25% of its total capacity because of heavy natural-gas curtailments, sources said on Monday. Read more

INTERNATIONAL NEWS

Mexico turns to World Trade Organisation over avocado dispute with Costa Rica

The Costa Rica Star: The World Trade Organization (WTO) stated today that Mexico had requested consultations with Costa Rica as, allegedly, this country unlawfully imposed a restriction on Mexican avocado imports. Read more

Trump Travel Ban: Hawaii judge declines to narrow injunction

Politico: A federal judge in Hawaii who issued a temporary restraining order against key parts of President Donald Trump’s revised travel ban last week has turned down a Justice Department request to narrow the injunction. Read more

Decade old trade pledge dropped at G20 Meeting

Reuters: Try as they might, G20 nations in the German spa town of Baden-Baden could not persuade U.S. Treasury Secretary Steven Mnuchin at the weekend to agree to a joint pledge to resist protectionism so the phrase in question – a fixture of G20 communiques for a decade – was dropped. Read more

Mustapa: RCEP is next best option to junked TPPA

The Star Online: The Regional Comprehensive Economic Partnership (RCEP) is the next best option to boost trade after the Trans-Pacific Partnership Agreement (TPPA) fell through. International Trade and Industry Minister Datuk Seri Mustapa Mohamed said Malaysia is not keen to salvage the TPPA with the other 10 nations after the United States pulled out of the trade pact. Read more

EU, ASEAN Ministers agree to consider trade talks reboot

ICTSD Bridges: The EU and the Association of Southeast Asian Nations (ASEAN) are preparing to examine the prospect of re-launching talks for a region-to-region trade accord, nearly eight years after the original plans for such a project were put on hold. Read more

South Korea lobbies China at WTO over Missile Shield trade spat

Bloomberg: South Korea has taken a tentative first step against China at the World Trade Organization, complaining about its economic retaliation over the planned deployment of a U.S. missile shield. Read more

Commonwealth Trade Ministers conclude Meeting in London

Nation News: Commonwealth trade and business ministers concluded their two-day meeting in London with a commitment to make full use of the ‘Commonwealth Advantage’ to boost trade within the 52-member grouping. Read more

Brexit costly in trade terms whatever deal reach, says former WTO DG Pascal Lamy

Reuters: Britain’s departure from the European Union will be costly for both sides in trade terms, however good the exit deal reached, former head of the World Trade Organization Pascal Lamy said on Thursday. Read more

Brazil’s rotten meat scandal breaks amidst fresh EU talks

Euractiv: The European Union has insisted Brazilian representatives attend an emergency meeting today (20 March) to explain themselves regarding a scandal involving rotten meat and the country’s two largest exporters. Read more

Drive replace UK-EU trade ties with Commonwealth

Guardian (UK): Britain would harmonise regulations with its former colonies rather than the European Union under new proposals for trade integration that critics have dubbed Empire 2.0. Read more

CTLD NEWS

Alicia Nicholls was a panellist at TTOC Sport Conference 2017

I was honoured to be a panellist on “Panel III: Protecting the Legal Idea and Other Legal Issues for the Enterpreneur” at the Trinidad & Tobago Olympic Committee’s Future of Sport Conference 2017 which took place at Hotel Normandie in St. Ann’s, Trinidad on March 9th.  My fellow panellists were Shyamal Chandradathsingh of Invest TT, and entertainment and sport attorney, Carla Parris. The conference was ably moderated by Ms. Racquel Moses of ACCA Caribbean.

17203065_10158384295270444_8488981909036060187_n

Panel #3: L-R, Moderator (Racquel Moses), Panellists: Shyamal Chandradathsingh, Carla Parris, Alicia Nicholls (me)

The key note speaker was Dr. Terrence Farrell, former Deputy Governor of the Central Bank of Trinidad & Tobago and current chairman of the Economic Development Advisory Board.

The second annual conference hosted by TTOC, this year’s conference was designed to take audience members on a journey from conception of the business idea to execution. The panels focused on conception of the business idea, perspectives and best practices from entrepreneurs, protecting the idea, the importance of business plans and funding the venture.

Fellow panellists Carla Parris, Je-Anne Borneo (Panel #4) and I also enjoyed acting as judges for a business idea competition at the end of the Conference.

I wish to sincerely thank Mr. Brian Lewis, President of the TTOC for his kind invitation to be a panellist and commend both Mr. Lewis and his capable TTOC Team, the moderator Ms. Racquel Moses, and all fellow panellists and the audience members for an excellent conference. For further photos and videos from the Conference, please see the TTOC’s Facebook page.

Liked this issue? Read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

Sport, Entrepreneurship and Development

Photo credit: Pixabay

Alicia Nicholls

Sport can be a powerful tool for development and economic diversification. This was the central thesis undergirding the Trinidad & Tobago Olympic Committee’s Future of Sport Conference 2017 which took place at Hotel Normandie in St. Ann’s, Trinidad last week. First let me once again commend TTOC President Mr. Brian Lewis and his team on a well-organised and informative event and for kindly inviting me to be a panellist. I also would like to give kudos to all fellow panellists, the moderator and to the audience for making the sessions as engaging as they were.

17203065_10158384295270444_8488981909036060187_n

TTOC Conference Panel #3: (L-R) Moderator Racquel Moses, Shyamal Chandradathsingh,  Carla Paris, Alicia Nicholls

Sport is a multibillion dollar industry, and countries around the world are seeking ways to capitalise on this powerful tool for economic growth and development. For example, the small state of Qatar has identified sport as part of its national strategic plan. Among other upcoming international events, it will play host to the 2022 FIFA World Cup.

Here in the Caribbean we too have earmarked sport as a potential non-traditional growth sector. In his rousing key note address at the TTOC Conference, Chairman of Trinidad & Tobago’s Economic Development Advisory Board and former Deputy Governor of the Central Bank of Trinidad & Tobago, Dr. Terrence Farrell indicated as much, naming sport as a potential diversification sector for their currently hydrocarbons based economy.

Sport can also be an enabler for achieving the Sustainable Development Goals, which are targets set by the United Nations and to which all UN members agreed to pursue. Specifically, sport can assist not just in poverty alleviation (SDG 1), but also promoting good health and well-being (SDG 3), quality education (SDG 4), gender equality (SDG 5), and promoting peaceful and inclusive societies (SDG 16).  Indeed, this was recognised by the UN through the adoption of a resolution recognising sport as a means to promote education, health, development and peace.

However, for sport to play such a transformational role for growth and development, it is not enough to have raw sporting talent. It is no secret that Caribbean countries’ sporting prowess dwarfs their economic and physical size.  What is needed is a complete support structure. It requires not just the building of a sport entrepreneurial ethos, but a support system, including greater recognition of the role of intellectual property rights, financing and marketing, to name a few. It is this holistic approach which informed the four conference panels which aimed to take the would-be entrepreneur on a journey from conception of the idea to execution.

Again I would like to thank Mr. Lewis and his team for an excellent conference and I look forward to continuing the conversation on how we can harness sport for Caribbean development and growth. For videos and photos from the Conference, do have a look at the TTOC’s Facebook page.

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 & Cuba Foreign Ministers meet

Alicia Nicholls

Foreign Affairs ministers of the Caribbean Community (CARICOM) and the Republic of Cuba met at the iconic Tryp Habana Libre Hotel in Havana, Cuba, on March 11, 2017, for the Fifth Ministerial Meeting of CARICOM-Cuba. As noted in the official communique, the meeting also marks the commemoration of the Forty-fifth Anniversary of the Establishment of Diplomatic Relations between the Independent States of CARICOM and Cuba and the Fifteenth Anniversary of Cuba-CARICOM Day.

Discussion items at the Meeting touched on climate change, cooperation in areas of mutual concern such as food security, education and health, solidarity with the Republic of Haiti, reparations for slavery, CARICOM countries’ inclusion on the EU’s list of non-cooperative tax list, the promotion of sustainable tourism, migrants’ rights, inter alia.

Caribbean countries have been among the most vocal supporters of Cuba in the face of the illegal US embargo. The official communique concluded with a call for “the President of the United States to use his broad executive powers to substantially change the application of the blockade and the Congress of that country to proceed with its elimination”.

Ministers also acknowledged the legacies of the late former Cuban President, Dr. Fidel Castro, and former Trinidad & Tobago Prime Minister, Patrick Manning, who died last year, and the former Haitian President, Rene Preval who passed away last week.

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.

 

De-Risking: The ‘Perfect Hurricane’ Threatening Caribbean IFCs

Alicia Nicholls

My latest publication is an article entitled “De-Risking: The ‘Perfect Hurricane’ Threatening Caribbean IFCs” in the forthcoming IFC Review 2017. It discusses the implications of the de-risking phenomenon for Caribbean international financial centres (IFCs) and some of the steps they have been taking to fight it. An excerpt from the article is as follows:

“Caribbean offshore international financial centres (IFCs) are adept at navigating turbulent global waters. The de-risking practices by global banks, manifested most damagingly by the restriction or termination of correspondent banking relationships (CBRs), can be likened to a hurricane threatening to churn already rough seas into a maelstrom, with implications for Caribbean IFCs’ long-term viability. In this article, I will discuss the impact of de-risking on Caribbean IFCs and what is being done so far to address the impact.”

The full version of the article is available online on IFC Review’s website and may be viewed here.

To read more of my work, please also see the Papers & Articles section of this blog.

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 & Development Digest – February 26 – March 4, 2017

Source: Pixabay

Welcome to the Caribbean Trade and Development Digest for the week of February 26-March 4, 2017!  I am pleased to share some of the major trade and development headlines and analysis from across the Caribbean region and the World.

For past issues of our weekly Caribbean Trade & Development Digest, please visit here.

To receive these mailings directly to your inbox, please follow our blog.

REGIONAL

Guyana and Cuba increase friendly relations

Prensa Latina: Representatives for Guyana and Cuba ratified in this capital both countries” willingness to continue strengthening the traditional friendly and cooperation relations, diplomatic sources reported today. Read more

Amendments to ECCU Banking Act likely

WINN FM: Regulators and financial institutions have agreed that there are some aspects of the Banking Act passed in all Eastern Caribbean Currency Union (ECCU) member countries in 2015, that need to be amended. Read more

Cuba’s Mariel port seeks China push

China daily: These days, giant Chinese-built cranes briskly unload shipping containers from cargo ships at Cuba’s deep-water port of Mariel, a fledgling special economic zone the country hopes will drive development over the coming years. Read more

Chastanet calls for OECS Action

WINN FM: St Lucia’s Prime Minister Allen Chastanet is pointing to the many challenges facing his country and the rest of the OECS. Read more

Rabbani for deep political, trade ties with Cuba

The News: Pakistan and Cuba have agreed to maintain upward trajectory in bilateral relations witnessed in the recent past. Read more

Couple seeks $38m for Dominican Republic’s project block

Law360: An American couple is asking an international arbitration panel for more than $37 million from the Dominican Republic for allegedly obstructing the expansion of a gated mountain community in favor of politically connected competitors, saying environmental concerns raised by the government have no merit.  Read more

CARICOM preparing for UNCLOS

Jamaica Gleaner: Caribbean Community (CARICOM) countries have been fine-tuning their positions ahead of the next Preparatory meeting of the United Nations (UN) meeting to establish an international legally binding agreement on sustainable use of marine resources. Read more

CAPRI To monitor more CARICOM States

Jamaica Gleaner: Co-Executive Director of the Caribbean Policy Research Institute (CaPRI), Dr Damien King, has engaged a number of CARICOM countries on the monitoring of their progress towards the Global Sustainable Development Goals. Read more

Americans buying cigars by the thousands in Cuba

VOA:Puffing on a cigar at Cuba’s annual Habanos cigar festival, American aficionado Paul Segal said he would buy as many boxes of cigars as he could carry home in case U.S. President Donald Trump tightens regulations on visitors to the communist-run island again. Read more

CARICOM, Korea commit to areas of closer cooperation

Jamaica Observer: The Caribbean Community (CARICOM) and the Republic of Korea have agreed to several areas for closer cooperation. Read more

INTERNATIONAL

Future of AGOA Uncertain in Trump era

Atlantic Star: What will trade with Africa look like under a Trump presidency? African leaders are concerned that the African Growth and Opportunity Act, or AGOA, will be on the chopping block under Trump and that the continent itself will not be a priority. Read more

East Africa: Magufuli Stance on EU-EAC Trade deal could split bloc

AllAfrica: Tanzania has yet again refused to endorse a regional trade pact with the European Union, saying the deal stood in its way to industrialization. Read more

Canada launches consultations on free trade with China

CTV: The federal government is launching consultations on a potential free trade agreement with China.Prime Minister Justin Trudeau and Chinese Premier Li Keqiang announced the beginning of exploratory discussions in September. Read more

Envoy pushes for EU-Philippines free trade agreement

Inquirer: European Union (EU) Ambassador Franz Jessen on Thursday called for speedy negotiations for a Free Trade Agreement (FTA) between the EU and the Philippines to create the “best possible enabling environment” for business. Read more

Russia to facilitate drafting the EAEU-Egypt deal

Sputnik: Russia will seek to greatly facilitate the drafting of a free trade agreement between the Russia-led Eurasian Economic Union and Egypt, Russian upper house speaker Valentina Matvienko said Saturday. Read more

Investment treaty before trade pact, says Canada to India

Hindu Business Line: Canada is throwing its weight behind an early “progressive” bilateral investment treaty (BIT) with India before it concludes a bilateral free trade agreement (FTA) to ensure a stable and predictable environment for its investors. Read more

Korea, MERCOSUR to launch trade talks in first half

The Korea Herald: South Korea and the South American trade block MERCOSUR will launch their official negotiations on a trade pact before the first half of this year, the trade ministry here said Friday, amid the country’s efforts to tap deeper into the region. Read more

Canada’s Trudeau defends NAFTA

CNBC: Canadian Prime Minister Justin Trudeau said Friday that both the United States and Canada depend on the North American Free Trade Agreement, a deal repeatedly slammed by President. Read more

Maersk expecting earnings rebound

Global Trade Mag: Maersk Line expects its net earnings to rebound by over $1 billion from a loss of $384 million in 2016 to a net profit in 2017. Read more

Ottawa takes another step toward free trade agreement with China

Global News: The federal government has taken another step toward a free-trade agreement with China, officially launching three months of consultations that will help it determine “how to best proceed” with the possible deal. Read more

China’s THAAD retaliation may be in violation of WTO, FTA rules, says minister

The Investor: A recent series of retaliatory economic actions taken by China against South Korea may be in violation of international trade law as well as their bilateral trade pact, Foreign Minister Yun Byung-se said March 5, alluding to Seoul’s possible move to bring the cases to an international court. Read more

Theresa May must guarantee rights of EU citizens to remain in UK, says MPs

Evening Standard: Theresa May is facing renewed pressure from MPs to guarantee the rights of more than three million EU citizens to remain in the UK. Read more

Trump administration sheds light on what revamp of NAFTA may entail

Huffington Post: Donald Trump’s new point man on trade negotiations has shed some light on key goals in revamping the North American Free Trade Agreement, hinting Friday that priority No. 1 involves more automobile parts sourced close to home. Read more

Brexit Bill: Theresa May faces another defeat in House of Lords

Independent: Peers say Theresa May is heading for another thumping Brexit defeat in the House of Lords, to prevent her crashing Britain out of the EU with ‘no deal”. Read more

DG Azevedo welcomes EU trade ministers’ strong support for global trading system

WTO: Addressing a meeting of European Union trade ministers in Malta on 2 March 2017, Director-General Roberto Azevêdo argued that EU leadership will be more important than ever in supporting the rules-based multilateral trading system. He welcomed the strong support for the WTO that the EU and its members have shown in recent months. Read more

NEW ON CTLD BLOG

President Trump’s Trade Policy Agenda for 2017 Released

Trump Trade Policy ‘Achievements’: The First Month

Liked this issue? For past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

President Trump’s Trade Policy Agenda for 2017 Released

Alicia Nicholls

The Office of the United States’ Trade Representative (USTR) today released a preliminary report outlining President Trump’s Trade Policy Agenda for 2017.  It should be noted that this is a preliminary report prepared in order to comply with the statutory deadline for the report’s annual release March 1, but bearing in mind that President Trump’s nominee for USTR, experienced trade lawyer and former deputy USTR under former President Ronald Reagan, Robert Lighthizer, has not yet been confirmed by the Senate. As such, it has been noted in the report that  a more detailed version will be published once the USTR has been confirmed and has had the opportunity to provide input in that report’s development.

As stated in the report, President Trump sees bipartisan support by the American people for a complete overhaul of US trade policy. In order to effect this, the report states that the overarching purpose of the Trumpian trade policy “will be to expand trade in a way that is freer and fairer for all Americans”.

To this effect, the report outlines four priorities identified by the Administration:

(1) defend U.S. national sovereignty over trade policy;

(2) strictly enforce U.S. trade laws;

(3) use all possible sources of leverage to encourage other countries to open their markets to U.S. exports of goods and services, and provide adequate and effective protection and enforcement of U.S. intellectual property rights; and

(4) negotiate new and better trade deals with countries in key markets around the world.”

Several preliminary things stand out from the report:

(1) The report highlighted that the US is not bound by WTO decisions and evinces a policy stance going forward not to accept any adverse rulings from the WTO. The paragraph below taken directly from the report is instructive:

“And, when the WTO adopts interpretations of WTO agreements that undermine the ability of the United States and other WTO Members to respond effectively to these real world unfair trade practices with remedies expressly allowed under WTO rules, those interpretations undermine confidence in the trading system. None of these outcomes is in the interest of the United States or a healthy global economy.”

This is coupled with what appears to be the Trump administration’s plans to make greater use of unilateral remedies.

US disregard for adverse WTO rulings is a troubling prospect for many reasons, but particularly for small island states’ enforcement of their trade interests. It should be noted that the Caribbean island state of Antigua & Barbuda is still awaiting compensation from the US, after many years, since winning the US-Gambling dispute. It remains to be seen whether this will ever be resolved.

(2) Based on the arguments made in this report, I think it likely that Trump’s team will advocate for changes to be made to the WTO’s dispute settlement mechanism for their own interest.

(3) The Administration has stated its intention to not only more aggressively go after countries the US deems to be “engaging in unfair trade practices”, but will also with equal zeal go after countries which do not sufficiently open their markets to US exports. As mentioned previously, the pursuit of countries’ trading practices which are perceived to be inimical to US interests is not new and has been US policy for years. The singling out of China in this regard came as no surprise.

(4) The Trump administration’s criterion for whether a trade agreement is bad or good appears to be based solely on whether the US has a trade (merchandise) deficit with the country in question. This is not just a facile way of assessing the merits of a trade agreement, but also ignores services trade and investment which in many cases the US has a surplus with its trading partners.

(5) While there are references to “free and fairer trade” throughout the report, I believe the term “zero sum” trade may be the more appropriate term to describe these proposals.

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.

 

Trump Trade Policy ‘Achievements’: The First Month

Alicia Nicholls

February 20th marked United States (US) President Donald Trump’s first full month in the Oval Office. And what a month it has been! We have seen a lot of focus by his administration on immigration. But what about trade? Trade occupied a major part of the platform of then US presidential candidate Trump. In his Contract with the American Voter , he had enumerated several trade-related pledges as part of his 100-day action plan to “Make America Great Again”. His first one hundred days are not yet up, but it is worth looking at what have been the achievements towards his “America first” trade policy during his first month in office.

President Trump’s Trade Promises

As a reminder, these were the major trade-related promises gleaned from his Contract with the American Voter. He pledged to:

  • Announce his intention to renegotiate the North American Free Trade Agreement (NAFTA) or withdraw from the deal under Article 2205;
  • Announce the US’ withdrawal from the Trans-Pacific Partnership;
  • Direct the Secretary of the Treasury to label China a currency manipulator;
  • Direct the Secretary of Commerce and U.S. Trade Representative to identify all foreign trading abuses that unfairly impact American workers and direct them to use every tool under American and international law to end those abuses immediately;
  • Work with Congress to introduce the “End Offshoring Act” to establish tariffs to discourage US companies from laying off their workers in order to relocate in other countries and ship their products back to the U.S. tax-free.

Three main reasons possibly explain Mr. Trump’s slow progress on his trade agenda thus far. Firstly, two key members of his trade team  who are needed to help effect his policies are still awaiting Senate confirmation, namely his United States Trade Representative (USTR) pick, noted trade lawyer and former deputy USTR under President Ronald Reagan, Robert Lighthizer, and his commerce secretary nominee, Wilbur Ross, an investor and former banker.

Secondly and related to the first point,Mr. Trump’s policy inexperience means he will likely be more reliant on the guidance and advice of his yet-to-be confirmed trade team than would other presidents. Thirdly, it is possible that Mr. Trump is realising that there is a wide chasm between presidential campaign rhetoric and how Washington and the role of president actually work, particularly when contrasted with being a CEO of one’s own company.

What has he achieved so far and what hasn’t he?

With that in mind, it is not surprising that of his stated promises, his only substantive trade policy achievement thus far has been directing the USTR via a presidential memorandum to withdraw the US from the Trans-Pacific Partnership (TPP). Withdrawal from the TPP was a low-hanging fruit. The US had signed but not yet ratified the Agreement and there was almost bi-partisan criticism of the deal. The acting USTR has since followed up on this memorandum, submitting a withdrawal letter to the TPP depository and TPP partners, and indicating their interest in bilateral trade deals with former TPP partners with which the US does not currently have a trade agreement.

Further to the latter point, President Trump and his soon-to-be confirmed trade team have been consistent so far on their preference for bilateralism over multilateralism. Trade was one of the hot button topics at his initial meetings with United Kingdom (UK) Prime Minister Theresa May,   Japan’s Shinzo Abe and Canadian Prime Minister, Justin Trudeau.

In keeping with his campaign promise that post-Brexit UK would not be at the back of queue for a trade deal, Mr. Trump received Prime Minister May as his first foreign head of government. The two have reportedly agreed to establish working groups in regards to a possible post-Brexit US-UK trade deal. Indeed, the UK House of Common’s International Trade Committee has already launched an inquiry on this.  However, formal negotiations on any such deal can only legally begin once the UK concludes its withdrawal agreement with the European Union (EU) pursuant to Article 50 of the Lisbon Treaty.

More immediately possible, however, may be trade talks between Japan and the US. Despite Mr. Trump’s earlier criticism of former TPP partner Japan’s “unfair trade practices”, the meeting with Mr. Abe went cordially, with agreement in principle for beginning US-Japan trade and investment talks. It should be noted that Japan has a large trade surplus with the US, boosted particularly by automobile exports, which might be a bone of contention in any trade talks between the two countries.

Outside of withdrawing from the TPP and these preliminary aspirational trade talks, there has been limited progress so far on his specific campaign promise in comparison to the ambitious agenda he proposed. So far he has not labelled China a “currency manipulator”. Indeed, the International Monetary Fund (IMF) had indicated that China’s currency was no longer below value. Nonetheless, Trump’s Secretary of the Treasury, Steve Mnuchin, hesitated in a recent CNBC interview to “pass judgment” on China’s currency practices, stating his preference to go through the US Treasury’s established process on judging whether China (and other countries) was manipulating its currency to boost exports.

Additionally, President has not yet triggered the 90-day notice period by informing Congress of his intention to renegotiate NAFTA, which he had promised to do “immediately”. While Mr. Trump has criticised the shift of US jobs to Mexico and the US’ large merchandise trade with that NAFTA partner, it is also not clear on what particular provisions of the agreement he wishes to “tweak”.

What is clear is that Mr. Trump’s main grievance with NAFTA appears to be with Mexico more so than with Canada. Indeed, Mr. Trump took a less protectionist stance towards Canada during his meeting with Prime Minister Trudeau, speaking collectively of keeping jobs and wealth within North America (US and Canada) and not just the US. While reporting on his meeting with Canada’s Prime Trudeau indicates that he would be looking for greater access by American firms to Canadian procurement markets, it is unclear when the NAFTA renegotiation talks will begin.

With respect to the promise to direct the USTR to identify countries engaging in “unfair trade practices”, his USTR nominee is still awaiting confirming. However, it has been longstanding US policy to challenge nations whose actions are against US economic and trading interests, as evidenced by the large number of disputes brought by the US before the WTO’s dispute settlement body.  Therefore, President Trump will not be doing anything more than what previous US administrations have done in this regard, although we will likely see an even more aggressive stance towards China’s trade practices.

Mr. Trump has spoken frequently against US companies which offshore production processes (and therefore jobs), as evidenced by his deal with air conditioner maker Carrier. He has promised to, but has not yet proposed, legislation to impose a punitive tax on US companies seeking to offshore may receive stiff opposition from the business community and from Congress.

He has, however, vacillated in his views on the controversial Border  Adjustment  Tax (BAT) proposal being pushed by Congressional Republicans as part of their tax reform plan. Different from Trump’s border tariff proposal, the GOP BAT Proposal seeks to convert the US corporate income tax from an origin-based to a destination-based tax. It would prevent companies from deducting the costs of their imported goods as an expense, while giving a tax break to companies which export. However, while some business leaders have praised the idea, some economists have argued that it will not boost US exports.

What next?

Besides the questions surrounding the renegotiation of NAFTA and which other nations the Administration will earmark for future bilateral deals, it is unclear what will be the Trump administration’s stance on other existing trade agreements, and on the on-going negotiations, including the Trans-Atlantic Trade and Investment Partnership (TTIP) with the EU and on the plurilateral negotiations such as the Trade in Services Agreement (TISA). There is also need for clarity on the Administration’s position on key multilateral trade issues, bearing in mind the WTO’s upcoming 11th Ministerial Conference in Buenos Aires at the end of this year.  Nonetheless, it is early days yet and it is hoped there will be greater policy clarity before the one hundred days have elapsed.

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 & Development Digest – February 19-25, 2017

Source: Pixabay

Welcome to the Caribbean Trade and Development Digest for the week of February 19-25,2017!  I am pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. 

The biggest trade news this week has the entry into force of the World Trade Organisation’s Trade Facilitation Agreement which seeks to slash border red tape and costs and thereby facilitate the smooth flow of cross-border merchandise trade. This week also marks the first month since US President Donald Trump assumed office.

For past issues of our weekly Caribbean Trade & Development Digest, please visit here.

To receive these mailings directly to your inbox, please follow our blog.

REGIONAL NEWS

Belize Exports Rebound in 2017

Breaking Belize News: After several consecutive months of underperforming, Belize’s exports increased by 51.2 percent at the beginning of 2017. Read more 

CCJ blocks lawsuit against Dominica in Tommy Lee Sparta detention case

Jamaica Observer: The Caribbean Court of Justice (CCJ) has blocked an application by show promoter Cabral Douglas against the island of Dominica for refusing entry to Jamaican dancehall artiste Tommy Lee Sparta who was contracted to perform in the eastern Caribbean country. Read more

Local music industry important to sustainable development of T&T

T&T Newsday: The Ministry of Trade and Industry (MTI) in collaboration with its state agency and subsidiary company, The Trinidad and Tobago Creative Industries Company Limited and the Trinidad and Tobago Music Company Limited hosted a workshop on February 17, at the National Academy of Performing Arts, Port-of-Spain on the “Business of Calypso”. Read more 

President Trump invites Trinidad PM to Washington

Caribbean360: Trinidad and Tobago’s Prime Minister Dr Keith Rowley got a surprise calls from American President Donald Trump during which the leader of the twin-island republic was invited to Washington. Read more

Free trade zones in the DR, an engine for competitiveness and jobs: World Bank Report

Dominican Today: A new report presented today by the World Bank suggests a series of policies designed to strengthen free-trade zones in the Dominican Republic as a path toward sustainable and inclusive economic growth, and its effective use in order to attract foreign direct investment and generate better-qualified and better-paid jobs. Read more

Mississippi ports eye Cuba, sign agreements in Havana

Reuters: The Mississippi ports of Pascagoula and Gulfport signed agreements in Cuba on Monday with an eye to future business and with a Republican U.S. senator from the state looking on, despite concerns President Donald Trump might backtrack on improved relations. Read more 

CSME a Journey, not a Destination, says CARICOM

Jamaica Gleaner: A comprehensive review of the current status of the CARICOM Single Market and Economy (CSME) was among matters before Caribbean Community heads of government at the just concluded 28th inter-sessional meeting in Guyana. Read more

OECS firms to showcase at Specialty Caribbean Expo

St Lucia Times: The OECS Commission, Saint Lucia’s Trade Export Promotion Agency (TEPA), and the Ministry of Commerce have collaborated to stage a high profile trade show, under the theme “A Unique Buying Experience.” Read more 

INTERNATIONAL NEWS

ACP wants continued strong relations with UK after Brexit

Jamaica Gleaner: Secretary General of the African Caribbean and Pacific (ACP) Dr Patrick I Gomes says while the grouping is supportive of a strong Europe, it has no desire of neglecting its relationship with the United Kingdom following its decision to leave the EU. Read more 

Commonwealth trade negotiators being seconded to Britain to help train civil servants ahead of Brexit

Telegraph: Ministers are recruiting the “best” trade negotiators from across the Commonwealth to help train civil servants in securing trade deals ahead of Brexit. Read more 

WTO Trade Facilitation Agreement enters into force

WTO News: A major milestone for the global trading system was reached on 22 February 2017 when the first multilateral deal concluded in the 21 year history of the World Trade Organization entered into force. In receiving four more ratifications for the Trade Facilitation Agreement (TFA), the WTO has obtained the two-thirds acceptance of the agreement from its 164 members needed to bring the TFA into force. Read more

EFTA/Mercosur talks confirmed to begin next June in Buenos Aires

Mercopress: The first round of formal trade negotiations between Mercosur and EFTA, European Free Trade Association, is scheduled to take place in Buenos Aires next June according to information from Brussels where there was a preliminary encounter between the two sides. Read more

Bangladesh aims to raise trade volume to $5 bln/year with Canada by 2022

Reuters: Bangladesh aims to raise its annual bilateral trade with Canada to $5.0 billion by 2022 from the current $2.0 billion, a senior government official said on Saturday. Read more

Indonesia and Australia agree to strengthened trade and defence ties

News.com.au: Indonesia and Australia have mended a rift to restore full defence ties following formal talks between Malcolm Turnbull and visiting Indonesian President Joko Widodo. Read more

Commission publishes negotiating proposals for EU-Indonesia trade deal

EU Commission: The European Commission has published nine initial European proposals for the trade agreement under negotiation with Indonesia, as well as the report from the second round of talks that took place in Indonesia between 24 and 27 January. Further EU proposals will be made available as the negotiations progress. Read more.

Commissioner Malmström and Japan’s Foreign Affairs Minister confirm commitment for an early conclusion of EU-Japan FTA negotiations

EU Commission: Meeting in Bonn, Commissioner Malmström and Minister Kishida exchanged views on domestic reforms that Japan is undertaking, and on their possible impact on the negotiating process calendar, as well as on the international situation and the perspectives for world trade. Read more

Latvia becomes 1st EU country to sign CETA

CBC: The journey toward full ratification of Canada’s trade deal with the European Union will be long and complicated, but an early step was taken Thursday as Latvia’s parliament voted in favour. Read more 

DG Azevêdo: Huge amount of work ahead to deliver outcomes at MC11

WTO News: At a meeting of all WTO members held on 23 February to discuss the organization’s work, Director-General Roberto Azevêdo reported on a range of consultations that have taken place so far in 2017, concluding that while engagement is strong in many areas “we still have a long way to go, and a huge amount of work ahead if we are to arrive at concrete outcomes” for the 11th WTO Ministerial Conference. Read more 

Appellate Body issues report regarding Russian import restrictions on pigs, pork from EU

WTO News: On 23 February 2017, the WTO Appellate Body issued its report in the case “Russian Federation – Measures on the Importation of Live Pigs, Pork and Other Pig Products from the European Union” (DS475). Read more

Brexit could help EU strike free trade deal with India, MEPs believe

TheGuardian: The EU believes it may stand a better chance of striking a free trade deal with India after the UK leaves the union, despite the importance Britain attaches to trade with its old colony. Read more 

Trump is off to a slow start on Trade Promises

Business monitor: President Donald J. Trump keeps firing verbal broadsides at Mexico and China, but so far his new administration has not acted to keep specific campaign promises about trade policy. Read more 

Enda calls for united Ireland clause in Brexit Deal

Financial Times: Enda Kenny, Ireland’s prime minister, is pressing Brussels to include measures in the eventual Brexit deal to allow “ease of access” into the EU for Northern Ireland in the event of Irish reunification under the Good Friday peace agreement. Read more 

BONUS

Securing ACP Economic Interests After BREXIT

Indepth News: See extensive excerpts as part of this report by Indepth News from a presentation by the ACP Secretary-General during launch of the book “After Brexit – Securing ACP Economic Interests” by The Ramphal Institute on February 17, 2017 at King’s College London. Read more here

NEW ON CTLD BLOG

WTO Trade Facilitation Agreement: Why is it important for Caribbean Small States?

WTO Trade Facilitation Agreement enters into force

De-Risking discussed at CARICOM 28th Inter-sessional Meeting

CARICOM 28th Inter-Sessional Meeting; Economic Development and International Relations centre-stage

Liked this issue? Read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

WTO Trade Facilitation Agreement: Why is it important for Caribbean Small States?

Alicia Nicholls

History was made on February 22nd when the World Trade Organisation (WTO) Trade Facilitation Agreement (TFA) finally came into force. Coming into effect some four years after its conclusion at the WTO’s 9th Ministerial held in Bali, Indonesia in 2013, the TFA is a momentous achievement for the world, but also a plus for Caribbean small States which, like other developing countries, stand to benefit the most from the Agreement’s full implementation. Indeed, WTO economists estimate that full implementation of the TFA “could reduce [global] trade costs by an average of 14.3% and boost global trade by up to $1 trillion per year.”

Economic growth was one of the three broad themes discussed at the 28th Intersessional Meeting of the Heads of Government of the Caribbean Community (CARICOM) held in Georgetown, Guyana last week. Trade, both intra- and extra-regional, is an important contributor to economic growth, employment and poverty reduction. CARICOM Secretary-General Irwin Larocque recalled that the Community “has identified the CARICOM Single Market and Economy (CSME) as the best vehicle to promote our overall economic growth and development”.

However, despite trade accounting for between 54-135% of Caribbean countries’ GDP according to World Bank data, the region’s share in global trade has been on a decline. Export performance and investment attraction remain lacklustre. Market and product diversification remain limited. Moreover, according to the last Caribbean Trade and Investment Report published in 2010, although intra-CARICOM merchandise trade was gaining momentum, it still only comprised “a minute portion of total CARICOM trade”.

Trade Facilitation can improve Caribbean trade

There is no one factor which explains the region’s declining trade performance or the still limited intra-CARICOM trade. For instance, a 2015 Compete Caribbean study noted that except for three countries, customs and trade regulations were found not to be a significant obstacle for doing business. With regard to intra-regional trade, high transportation costs remain one of the biggest barriers. However, with regard to extra-regional trade, a 2013 World Bank Report highlighted the low customs performance of Caribbean countries’ despite their high trade openness.  Another World Bank report noted that port handling charges in the Caribbean “can be two to three times higher than in similar ports in other regions”.

Unnecessarily burdensome border procedures and costly border fees make it difficult for exporters to access other markets, even where trade agreements or preferential arrangements exist. This is made even more difficult in cases where customs and other administrative procedures are opaque and rely largely on paper-based processes as opposed to electronic payments and e-documents. While large firms can invest the time, human and financial resources in navigating complex border rules and procedures in other markets, small-and medium sized enterprises (SMEs)’s often lack this luxury. Add in a foreign language, and it gets even more complicated. Improving trade facilitation can help boost Caribbean countries’ competitiveness, while facilitating policies and support structures can assist Caribbean firms’ access to regional and international markets. After all, States do not trade, firms do.

The TFA addresses one of the biggest constraints of SMEs seeking to do business internationally through the simplification, harmonisation and modernisation of customs procedures, while also fostering transparency and reducing transaction costs. The TFA includes provisions aimed at facilitating the release and clearance of goods through customs, requires States to publish rules and procedures and to establish contact points for enquiries, facilitates border agency cooperation, provides procedures for appeal and review and disciplines for fees and penalties, inter alia.

Developed countries have committed to implementing all of the provisions of the Agreement upon its entry into force, which means accessing those markets should be easier at least from a customs standpoint. Like other WTO developing country and Least Developed Country (LDC) Member States, Caribbean countries’ implementation of the TFA will be based on their ability to do so. Member States are allowed to schedule their commitments for the Agreement’s provisions into three categories: A, B, C, with category A commitments being those which the Member State can implement upon the Agreement’s entry into force (or within one year of entry into force for an LDC). Importantly for Caribbean countries, they will also have access to the Trade Facilitation Agreement Facility which was established to assist developing countries and LDCs in their implementation efforts.

In a world with increasingly globalised supply chains, the smooth flow of trade across borders is important for improving Caribbean countries’ competitiveness and ability to participate in Global Value Chains (GVCs). Implementing the reforms pursuant to the TFA can also be beneficial for intra-regional trade, through the harmonisation of customs procedures.

Trade facilitation has other benefits as well, as noted in the WTO study on this issue. An improved trade and investment climate increases the attractiveness of a country for foreign direct investors. Moreover, transparent customs procedures reduce the opportunity for customs fraud and corruption, and improves revenue collection. It should be noted that not only are foreign direct investment inflows critical for Caribbean economies, but customs and other import taxes remain an important revenue source for many Caribbean governments.

Trade Facilitation Measures in the Caribbean

The encouraging news is that several Caribbean countries have begun trade facilitation reforms, including improvements in port infrastructure and simplification of customs procedures in recent years. As was noted in the World Bank’s Doing Business Report – 2017, Antigua & Barbuda removed the requirement of a tax compliance certificate for import customs clearance, while Grenada streamlined its import document submission procedures.  Haiti has allowed the submission of supporting documents online under its SYDONIA electronic data interchange system.

Trinidad & Tobago was among the first countries to ratify the TFA, while Belize, Guyana, Grenada, Jamaica, St. Kitts & Nevis, St. Lucia and Dominica have also ratified the Agreement. Trinidad & Tobago (in regards to advance rulings) and the Dominican Republic (has not yet ratified the TFA) and Jamaica (authorised traders) are among several countries which have been identified as case studies in the implementation of trade facilitation measures.

With the help of a loan from the Inter-American Development Bank (IDB) Barbados (which has not yet ratified the TFA) has introduced an Electronic Single Window, part of a wider competitiveness programme. Through its Global Logistics Initiative, Jamaica is seeking to take advantage of its location in one of the world’s busiest shipping lanes to become the premier logistics node within the Americas. However, in light of increased competition from other parts of the world, particularly for global investment flows, there is the need for the region to increase the pace of its trade facilitation reforms.

What is next?

Given the benefits that the at-the-border and behind-the-border reforms pursuant to the TFA can have for regional SMEs and for facilitating Caribbean trade, it is hoped that other Caribbean countries will ratify the Agreement. For those which have not yet done so, ratification of the Agreement could serve as a powerful signal to investors of their commitment to trade and business facilitation.

Caribbean countries should move expeditiously to develop and implement national strategies for trade facilitation. This would involve assessing their country’s readiness to implement the various provisions of the TFA through identifying capacity gaps and implementation needs, on which basis they will categorise the provisions and make their notifications. Implementation capacity, of course, varies from one country to another. Caribbean countries should also continue to make use of technical and financial assistance and capacity building support for the implementation of the measures.

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 Trade Facilitation Agreement enters into force

Alicia Nicholls

Today the World Trade Organisation (WTO) Trade Facilitation Agreement, the first multilateral trade agreement to be concluded since the WTO came into being over twenty years ago, has entered into force. The Trade Facilitation Agreement aims to expedite the process of the movement of goods across  national borders and was concluded as part of the Bali Package coming out of the WTO Ministerial in 2013.

For immediate entry into force the Agreement needed to be ratified by two-thirds of the WTO’s membership, that is, 110 member countries. That threshold was met today when Chad, Jordan, Oman and Rwanda submitted their instruments of ratification.

As the World Bank’s Annual Doing Business Reports show, countries’ customs procedures can vary from a few to a multiplicity of steps, which can significantly increase the amount of time goods take to clear borders, which increases costs to both suppliers and consumers. As supply chains become  increasingly globalised, so is the need for more expeditious trade flows and standardisation of customs procedures. The Trade Facilitation Agreement’s provisions provide standards which were inspired by international best practices.WTO economists in the World Trade Report 2015 estimated that the Agreement would lower members’ trade costs by an estimated 14.3% on average.

Developing countries and Least Developed Countries (LDCs) have the option to determine their pace of implementation by designating each of the provisions according to one of three categories: A,B,C, with A being the commitments each country can undertake as soon as the Agreement comes into force. The Agreement also includes provisions on customs cooperation. A Trade Facilitation Facility was also created at the request of developing countries to assist them and Least Developed Countries in implementing the Agreement.

So far besides St. Vincent & the Grenadines, the following countries of the Caribbean Community (CARICOM) have ratified the TFA: Trinidad & Tobago, Belize, Guyana,  Grenada, Jamaica, St. Kitts & Nevis, St. Lucia and Dominica. Reforms undertaken by CARICOM countries pursuant to Agreement could help to facilitate the movement of goods trade within the Community through more simplified customs procedures and lower border costs. Like other developing countries, CARICOM countries would also be able to access the Trade Facilitation Facility to assist in their implementation of the Agreement’s reforms.

For further information, please see the WTO’s press release.

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 discussed at CARICOM 28th Inter-sessional Meeting

Alicia Nicholls

The issue of de-risking by global banks, manifested most prominently by the restriction or withdrawal of correspondent banking relationships with mainly indigenous banks in the Region, was discussed at the Caribbean Community (CARICOM) Twenty-Eighth Inter-sessional Meeting of the Heads of Government of CARICOM which took place in Georgetown, Guyana February 16-17 last week.

CARICOM countries have been engaging in high-level advocacy to raise awareness of the implications of global banks’ de-risking, including the restriction and termination of correspondent banking services to mainly indigenous Caribbean banks. In the Communique released after the Inter-Sessional Meeting, it was noted that Heads of Government recognised the need for a continued regional approach and concerted action on this issue which has the potential to undermine the region’s financial systems and to cut off access to trade, investment and other financial flows, with both economic and poverty-reduction implications.

Heads of Government also  recognised the need for continued urgent action to strengthen the integrity of the financial system in CARICOM Member States and to address the perception of the Caribbean as a high-risk Region. They also commended the Prime Minister of Antigua and Barbuda, and the Committee of Ministers of Finance for spearheading the advocacy initiatives towards resolution of the issue.

Below are the main take-aways from the Communique in regards to Heads of Government’s current and further action on the de-risking issue:

  • Heads of Government considered the Strategy and Action Plan submitted by the Committee of Central Bank Governors, and requested the Committee of Ministers of Finance with responsibility for Correspondent Financing to assume the oversight of its roll-out.
  • The Heads of Government agreed that the Region must continue its robust and unrelenting advocacy on the issue of Correspondent Banking, noting the advocacy initiatives’ success in raising international awareness of the consequences of de-risking.
  • Heads of Government encouraged Member States to seize the opportunity of heightened awareness among International Development Partners (IDPs) to secure the resources and support required to strengthen the domestic and regional financial system.
  • Heads of Government welcomed the efforts of the Caribbean Development Bank (CDB) to assist Member States to strengthen their financial systems and partnering with multilateral financial institutions to determine solutions to the ongoing de-risking threat to the Community.
  • Heads of Government acknowledged the multi-dimensional nature of the several drivers behind the de-risking strategies being pursued by global banks, and called for a comprehensive stock-taking exercise to determine Member States’ status and ensure that national action plans are aligned with the timetable for compliance with global regulatory standards.
  • Heads of Government noted the need to strengthen Member States’ compliance with the global regulatory standards with regard to Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) and Tax Transparency Information Exchange.

More on the 28th Inter-sessional Meeting may be viewed here.

The full communique is available 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.

 

CARICOM 28th Inter-Sessional Meeting; Economic Development and International Relations centre-stage

Source: Pixabay

Alicia Nicholls

On February 16-17, Heads of Government of the 15-member Caribbean Community (CARICOM) converged in Georgetown, Guyana for the Twenty-Eighth Inter-Sessional Meeting of the Conference of Heads of Government.

The meeting, which was chaired by President of Guyana, His Excellency Brigadier (Retd’), David Granger, addressed a wide array of issues currently confronted by the Community. However, economic development and International Relations were among the three broad identified by CARICOM Secretary General, Ambassador Irwin LaRocque, in his opening remarks to the conference. The third was crime and security.

Ambassador LaRocque noted that the issue of economic development, including economic growth, was foremost, observing that the majority of CARICOM member States have been struggling with low growth, high debt and fiscal pressure. Further to this point, it should be noted that just last week the Caribbean Development Bank stated that although they project the Region to experience economic growth of approximately 1.7 percent in 2017, they also suggested that “this will not be enough to stimulate employment, particularly among youth, and reduce high regional debt levels”, and that a long term plan was needed to “facilitate the Region’s participation in global supply chains and drive sustainable economic growth”.

Ambassador LaRocque highlighted the importance of collective action to confront the problems facing the region, and reiterated the fact that the CARICOM Single Market & Economy (CSME) had been identified by member States as the “best vehicle” to promote our overall economic growth and development.

Indeed, a  major discussion point in the meeting was the status of the CSME. According to the official communique from the meeting, the Heads of Government received a review of the status of the CSME and noted the “the significant progress” in its implementation. They also agreed on priority areas to be addressed, including the challenges of payments for goods and services traded within the Region and the completion of the protocol on procedures relating to the facilitation of travel. They also supported the need for continually reviewing the impact of the CSME in both achieving the objectives of the Revised Treaty of Chaguaramas and on the lives of CARICOM peoples.

According to the communique, the Heads of Government also considered some impediments to furthering the CSME. Noting the importance of transportation to the movement of Community nationals, they called for a focused discussion on transportation in the context of the integration movement and also urged greater collaboration among the regional airlines.

Indeed, transportation issues also featured in the Heads of Government’s discussion on tourism,  which they reiterated was a vital sector for CARICOM member States. Inter alia, the Heads of Government called for “an urgent meeting of the Council for Trade and Development (COTED)-Transportation to address air transport issues in particular, including those related to the tourism sector”.

De-risking strategies of global banks, which include the restriction or withdrawal of correspondent banking services to banks in the region, was again an important agenda item. The Heads of Government endorsed the need for a continued regional approach to the challenge, including continued concerted action and advocacy. To this end, they considered the Strategy and Action Plan submitted by the Committee of Central Bank Governors and directed the Committee of Ministers of Finance with responsibility for Correspondent Financing to assume oversight of the roll-out.

Turning to the issue of international relations, the recently concluded negotiations by the CARICOM-Cuba Joint Commission on the Second Protocol to the Trade and Economic Cooperation Agreement was welcomed by the Heads of Government, who agreed that it would strengthen the economic relations and cooperation between CARICOM and Cuba.

US-CARICOM relations was another important agenda item. The Heads of Government welcomed the US-Caribbean Strategic Engagement Act of 2016. Emphasising the importance of the long-standing relationship between CARICOM and the US, the Heads of Government expressed their desire to continuing the “fruitful and mutually beneficial relationship with the new US Administration”.

CARICOM is part of the Caribbean sub-grouping of the Africa, Caribbean & Pacific (ACP) group. In light of the impending expiration of the Cotonou Agreement in 2020, Heads of Government noted the Cotonou Agreement’s importance as “a unique and valued instrument from which CARICOM has benefited with regard to trade, development co-operation and political dialogue with Europe” and suggested that the Agreement be renewed. Heads of Government also expressed their desire for the ACP to be strengthened, emphasising that membership in the ACP Group “remains a valuable construct which has facilitated relations with Africa and the Pacific”.

Besides these issues, the Heads of Government also discussed the on-going border disputes between Belize and Guatemala, and Guyana and Venezuela, relations with the Dominican Republic, an update on preparations for CARIFESTA, inter alia.

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.

 

Caribbean Trade & Development Digest – February 12-18, 2017

Source: Pixabay

Welcome to the Caribbean Trade and Development Digest for the week of February 12-18, 2017!  I am pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. 

For past issues of our weekly Caribbean Trade & Development Digest, please visit here.

To receive these mailings directly to your inbox, please follow our blog.

REGIONAL

CARICOM to implement system to measure results of implementation

CARICOM Today: The reform process that is underway in the Caribbean Community (CARICOM) is working towards a Results Based Management (RBM) system that will measure the tangible results of regional integration mechanisms.Read more 

Government looking to strengthen relations with EU

JIS: The [Jamaican] Government is examining ways to more effectively utilise the CARIFORUM-European Union (EU) Economic Partnership Agreement (EPA) to strengthen Jamaica’s trade relations with the 27-member EU. Read more

Minister Rhuggenaath highlights Business Opportunities with Dominican Republic

Curacao Chronicle: The Dutch Chamber of Commerce of the Dominican Republic organized a meeting of partners and representatives of the public and private sector of the Dominican Republic with the Minister of Economic Development of Curaçao, Eugene Ruggenaath. Read more 

Guyana to sign agreement with the EU

Jamaica Observer:  Guyana says it will sign the Voluntary Partnership Agreement (VPA) under the European Union Forest Law Enforcement Governance and Trade (EU/FLEGT) initiative, which Georgetown adopted in 2003. Read more 

Guyana opens High Commission in Trinidad & Tobago

Stabroek: Guyana has opened its first ever diplomatic mission in Port-of-Spain, which is expected to enhance bilateral relations with Trinidad and Tobago. The new High Commission, headed by High Commissioner Bishwaishwar ‘Cammie’ Ramsaroop-Maraj, replaces Guyana’s Honorary Consulate in the sister Caricom state. Read more

CARICOM to hire lobbyists to avoid FATCA fallout

Daily Express: CARICOM countries will jointly contribute some US$240,000 to lobbyists to act on behalf of Carib­bean-based banks to avoid censure and loss of correspon­dent banking access in the face of the looming Foreign Account Tax Compliance Act (FATCA).Read more 

INTERNATIONAL

Asia eyeing bilateral trade pacts with the US after Trump ditches TPP

Singapore Business Times: EVERYTHING old is new again when it comes to trade deals. Read more [Requires subscription]

TPP members to decide its fate in May – Mustapa

New Strait Times: Eleven Trans-Pacific Partnership (TPP) members are expected to decide on the future of the pact in May this year during the Asia-Pacific Economic Cooperation (APEC) trade ministerial meeting in Vietnam. Read more 

European Parliament gives green light to CETA

GTR: The European Parliament has voted in favour of the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada and taken another defiant step toward greater free trade in the face of growing protectionism. Read more

Froman: Withdrawing from Trade Agreements not the Answer

PlanetPrinceton: Compelling economic and strategic arguments exist for keeping agreements like the Trans Pacific Partnership, former US Trade Representative Michael Froman said on Tuesday. Read more 

World Trade Outlook Indicator suggest moderate trade momentum in Q1 2017

WTO: The WTO’s latest World Trade Outlook Indicator (WTOI) suggests that global trade growth will continue to build moderately in the first quarter of 2017 after having strengthened in the final quarter of last year. Read more

Sri-Lanka Singapore free trade agreement

Hiru News: Singapore Prime Minister Lee Hsien Loong said in a Facebook post that the Sri Lanka-Singapore Free Trade Agreement will hopefully be completed this year. Read more

Indonesia files appeal against WTO panel ruling on agricultural import measures

WTO: Indonesia filed a notice of appeal on 17 February 2017 in the cases brought by New Zealand and the United States in “Indonesia – Importation of Horticultural Products, Animals and Animal Products” (DS477 and 478). Read more

Trump says NAFTA deal with Canada will only be “tweaked”

CTV: After his first face-to-face meeting with Prime Minister Justin Trudeau on Monday, U.S. President Donald Trump said he only plans to “tweak” the North American Free Trade Agreement with Canada, while his administration has a lot more work to do with Mexico. Read more 

EU preparing legal challenge against Donald Trump’s US Border Tax Plan

Telegraph: EU lawyers are preparing to mount a legal challenge against President Trump’s hugely controversial US border tax proposals in what could be the biggest case in World Trade Organisation history. Read more 

Bangladesh to sign free trade agreement with Sri Lanka soon

ColomboPage: A free trade agreement (FTA) between Bangladesh and Sri Lanka is currently being discussed to boost the bilateral trade and the governments will sign the agreement soon, Bangladesh Commerce Minister Tofail Ahmed has said. Read more 

Thailand to India: Speed Up Decision on free trade pact

Business Line: Thailand wants India to fast-track its decision on the proposed full-fledged free trade agreement (FTA) with the country to increase trade and investment flows. Read more

NEW ON CTLD BLOG

EU-Canada CETA Approved by European Parliament

“What’s Next for NAFTA?” FITT Trade Elite Chat Recap

Liked this issue? Read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

EU-Canada CETA Approved by European Parliament

Alicia Nicholls

Members of the European Parliament (MEPs) have given their stamp of approval to the Comprehensive Economic and Trade Agreement (CETA) signed by the European Union (EU) and Canada on October 30, 2016. This is according to a press release by the European Parliament yesterday.

In the vote held on February 15, 2017, 408 MEPs out of the 751-member European parliament voted in favour, while 254 voted against it. There were 33 abstentions. The MEPs also approved the EU-Canada Strategic Partnership Agreement complementing the CETA, which will deepen EU-Canadian cooperation on a wide range of non-trade issues.

The 30-chapter CETA aims to strengthen trade and investment ties between EU countries and Canada. Negotiations were launched in May 2009 and took over 5 years of negotiations before being concluded in September 2014.

Among other things, the agreement will upon its entry into force eliminate tariffs on most goods trade between the EU and Canada. A few sensitive industrial and agricultural products will either face longer periods of protection or in a few limited cases, are excluded completely from tariff cuts. Canada has also historically agreed to open its federal and municipal procurement markets. An innovation in the agreement is the establishment of an Investment Court System instead of the much maligned investor-state dispute settlement system for the settlement of investment disputes.

As the CETA is classified as a “mixed agreement” by the European Commission, the next step will be ratification by national and regional parliaments in individual EU countries. According to the press release, MEPs expect that provisional application of the agreement could start by as early as April 1, 2017.

For further information, please see the European Parliament press release.

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.

“What’s Next for NAFTA?” FITT Trade Elite Chat Recap

Alicia Nicholls

Last Thursday I was a panellist for the Forum for International Trade Training’s (FITT) Trade Elite Twitter Chat on “What’s Next for NAFTA” – the North American Free Trade Agreement which comprises the United States (US), Canada and Mexico.

My fellow panellists were Horacio Lopez-Portillo, a Partner at Vazquez, Tercero and Zepeda in Mexico City,  John Boscariol, Partner and leader of the International Trade and Investment Law Group at McCarthy Tetrault LLP in Toronto, Joy Nott, the President and CEO of the Canadian Association of Importers and Exporters (I.E. Canada) in Toronto and  Paola Viviana Murillo, the Founder and Director of Latincouver. The moderator was Jon Yormick, Special Counsel for Phillips Lytle LLP.

The topic is timely in light of new US President Donald Trump’s sustained criticism of NAFTA and his call for a renegotiation of the over two-decades old agreement. The discussion focused on issues surrounding the strengths and weaknesses of NAFTA in its current dispensation, whether there was the need for a NAFTA 2.0, whether other more modern free trade agreements like the recently concluded EU-Canada Comprehensive Economic and Trade Agreement (CETA) could serve as useful models for a NAFTA 2.0,how  issues such as e-commerce, labour, services and the environment should be addressed, and how much blame should really be placed on NAFTA for job losses.

Please feel free to read FITT’s recap of the robust discussion on their website here. Further information on FITT’s past and upcoming Tradeelite Chats can also be found in the FITT website at the previous link.

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 Digest – February 5-11, 2017

Source: Pixabay

Welcome to the Caribbean Trade and Development Digest for the week of February 5-11, 2017!  I am pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. 

For past issues of our weekly Caribbean Trade & Development Digest, please visit here.

To receive these mailings directly to your inbox, please follow our blog.

REGIONAL

Curacao wants to import Dominican products due to Venezuelan crisis

Curacao Chronicle: This week the government of Curaçao said that it is interested in importing agricultural products from the Dominican Republic after the collapse of relations in that field between the island and Venezuela. Read more 

Caribbean Integration in times of Trump

Prensa Latina: Caribbean leaders analyze with worry here this week, the political and economic impact and the regional scenario after the assumption, last January 20, of Donald Trump as President of the United States. Read more 

OECS collaborates with ICAO

St. Lucia Times: Border control officers across the OECS are now better equipped to facilitate regional travel, in conformance with international standards. Read more 

Caricom Review Commission to publish report soon

Jamaican Observer: The report of the Caribbean Community (Caricom) Review Commission is expected to be completed and submitted to Cabinet shortly. Read more 

CTO signs MOU with Airbnb

CTO: The Caribbean Tourism Organization (CTO), the region’s tourism development agency, and Airbnb, whose community marketplace provides access to millions of unique accommodations, today signed a landmark agreement to develop a set of policy principles and recommendations on the sharing economy for Caribbean governments and other stakeholders.Read more

CTO enters Partnership with OAG to provide market insights

CTO: The Caribbean Tourism Organization (CTO), the Caribbean’s tourism development agency, has entered into a marketing partnership with leading air travel data provider OAG to provide members with accurate, timely and actionable insight and analysis to aid decision-making and to spot opportunities in essential markets. Read more

Caribbean Tourism Arrivals at All-Time High

CTO: Caribbean tourism broke new ground in 2016, surpassing 29 million arrivals for the first time ever, and once again growing faster than the global average. Read more

INTERNATIONAL

RCEP nations set for meeting to finalise trade modalities

Nation Multimedia: Officials from 16 countries, including Asean and its six trading partners, will try to conclude the modalities for liberalisation in the trade of goods by the middle of this year. Read more 

Merkel and Uruguay’s Vazquez push to deepen EU-Mercosur ties

Deutsche Welle:  Angela Merkel intends to push trade talks between the EU and Mercosur nations. The chancellor has met with Uruguay’s president to forge new bonds in the wake of Donald Trump’s inauguration in the United States. Read more 

Macri and Temer agree to open Mercosur and to closer ties to Mexico

Mercopress: The leaders of Brazil and Argentina said on Tuesday they would pursue closer ties with Mexico and other Latin American nations alarmed by U.S. President Donald Trump’s promises to tear apart trade deals and build a wall in the Mexican border to protect American jobs. Read more 

Pre-clearance bill would give US border agents in Canada new powers

CBCNews: U.S. border guards would get new powers to question, search and even detain Canadian citizens on Canadian soil under a bill proposed by the Liberal government. Read more 

Reps urge Trump Administration to fix Cyber Trade Agreement

The Hill: A bipartisan slate of representatives with cybersecurity chops is pressuring President Trump’s top national security adviser, Michael Flynn, to change an export agreement many believe weakens international cybersecurity.  Read more 

Trade Agreement to boost MSG Ties

Fiji Times: MINISTER for Industry, Trade and Tourism Faiyaz Koya believes the Melanesian Free Trade Agreement will usher a deeper and stronger trade and economic relations amongst the MSG countries. Read more 

Commission publishes negotiating proposals for EU-Indonesia trade deal

European Commission: European Commission has published nine initial European proposals for the trade agreement under negotiation with Indonesia. Read more 

While Trump and Abe eye bilateral pact, Australia keeps TPP alive

The Diplomat: Japan and the United States have agreed to start new talks on trade and investment, adding to speculation over a bilateral trade deal between the two security allies. However, all is not lost for the Trans-Pacific Partnership (TPP), with Australia’s trade minister vowing to salvage the deal at March talks.Read more 

Brazil files WTO complaint against Canada over alleged subsidies to Bombardier

WTO: On 8 February, Brazil notified the WTO Secretariat that it had requested WTO dispute consultations with Canada regarding alleged subsidies provided to Canadian aircraft manufacturer Bombardier. Read more 

Indonesia files notice of appeal in EU Fatty Alcohols Anti-dumping case

WTO: Indonesia filed a notice of appeal on 10 February 2017 in the case “European Union – Anti Dumping Measures on Imports of Certain Fatty Alcohols from Indonesia” (DS442). Read more 

Germany’s global trade surplus hits a record in 2016

WSJ: Germany’s exports exceeded its imports by the widest yearly margin on record last year. Read more 

BONUS – Caribbean Tourism Breaks New Ground (from Hugh Riley Blog)

This week the Caribbean Tourism Organisation (CTO) released a detailed report on the Caribbean’s tourism performance for 2016, showing the region surpassed a record 29 million stay-over arrivals in 2015. Please see CTO’s Secretary-General, Hugh Riley‘s very informative and detailed breakdown of the market performance on his blog here.

NEW ON CARIBBEAN TRADE LAW & DEVELOPMENT

US Federal Appeals Court Upholds Suspension of Trump Travel Ban

CARICOM and Cuba reach agreement to expand market access preferences

Caribbean Tourism Organisation (CTO) and Airbnb sign partnership agreement

IMF Staff Recommend St Lucia CIP Revenues be used Primarily to Reduce Debt

Liked this issue? Read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

US Federal Appeals Court Upholds Suspension of Trump Travel Ban

Photo credit: Pixabay

Alicia Nicholls

Less than a month after taking office, the Trump Administration received another judicial blow yesterday to one of its major policy actions. The United States’  Court of Appeals for the Ninth Circuit in its decision in State of Washington v Trump dismissed the Government’s motion for a stay pending appeal of an order of the US District Court for the Western District of Washington which had temporarily suspended the travel ban nationwide.

Background

The genesis to the legal dispute was an executive order entitled “Protecting the Nation from Foreign Terrorist Entry into the United States” signed by President Trump on January 27, 2017. Inter alia, the order sought to ban for 90 days entry into the US of all nationals of seven predominantly Muslim countries, namely Iraq, Iran, Sudan, Yemen, Libya, Syria and Somalia, and indefinitely suspended entry of all Syrian refugees into the US. It also sought to suspend the US Refugee Admissions programme for 120 days, with further direction that on recommencement of the programme, the Secretary of State should prioritise refugees of a minority faith in their country (in this case it would be Christians) with claims of religious persecution.

Upon its signature, the executive order’s impact was quick and brutal. Not only were thousands of visas cancelled but US greencard holders were among those who were either stranded at airports, separated from their families or being deported pursuant to the order. Protests erupted across the US and in several other countries. Several legal challenges were filed, including rulings by federal judges in New York and Massachusetts against the ban. Among the chaos, President Trump swiftly fired Acting Attorney General Sally Yates after she refused to defend the constitutionality of the order.

The decisive blow to the travel ban came after the February 3rd ruling of Judge James Robart, federal judge in the United States District Court for the Western District of Washington. In State of Washington v Trump et. al , a challenge brought by the State of Washington, Judge Robart  held that certain actions of the executive order were ultra vires the constitution, enjoining the government from implementing those provisions and granting a temporary nation-wide restraining order. Thereupon, the Department of Homeland Security suspended implementation of the executive order, whilst the Government prepared its appeal.

Issue 

In the instant case, the Court was asked to consider the Government’s request for an emergency stay of the temporary nation-wide restraining order issued by Judge Robart. The Government requested the stay pending appeal of the order.

Arguments

The Government argued that the federal district court lacked authority to enjoin enforcement of the order because the President has “unreviewable authority to suspend the admission of any class of alien” and that his/her decisions on immigration policy and national security are unreviewable even where they contravene constitutionally-enshrined rights and protections. They further submitted that any challenge to such presidential authority by the judicial branch would be a violation of the principle of separation of powers.

Counsel for the Government also argued that the States of Washington and Minnesota had no locus standi in this matter. However, the Court found that by showing the harm caused to their universities’ research and teaching because of the impact of the travel ban on those faculty members and students who are nationals of those countries, the states met the test for standing of “concrete and particularised injury” as was elaborated in Lujan v Defenders of Wildlife.

In their arguments before the lower court, the states had argued that the executive order violated the procedural rights of aliens, including denying entry to greencard holders and non-immigrant visa holders without sufficient notice and without giving them an opportunity to respond. The states had also argued that the damage to their state economies and public universities were in violation of the First and Fifth Amendments to the US constitution and that they violated a wide range of Acts, including the Religious Freedom Restoration Act. Counsel for the states also reminded the court of President Trump’s words during the campaign as support for their argument that it was intended to be a “Muslim ban” and not an act to protect against terrorist attacks by foreign nationals.

In the instant case before the federal appeals court, one of the things the Government had had  to show that it was likely to prevail against the due process claims made by the States.

Judgment

The learned judges, William C. Canby, Richard R. Clifton, and Michelle T. Friedland, considered four main questions in arriving at their decision: likelihood of the Government’s success on the merits of its appeal, whether the applicant would be irreparably injured absent a stay, whether issuance of the stay will substantially injure the other parties interested in the proceedings, and where the public interest lies.

In an unanimous ruling (3-0), the Court denied the Government’s emergency motion for a stay, finding that the Government has neither shown a likelihood of success on the merits of its appeal nor has it shown that failure to enter a stay would cause irreparable injury.

Moreover, in dismissing the Government’s central claim about the unreviewability of the president’s decisions on immigration policy, the court argued that there was no precedent to support this claim and that it is a claim which “runs contrary to the fundamental structure of our constitutional democracy”. The court rightly argued that it was merely exercising its role of interpreting the law. Relying on decided cases, the court held that while courts owe a deference to the executive branch in matters of immigration and national security, this does not mean that the courts lack authority to review compliance of executive branch actions with the constitution.

So what next?

True to form, President Trump used Twitter as his medium of choice to express his displeasure with the verdict. It is likely that the next step for the administration will be to appeal to the US Supreme Court.

The full text of the Court’s judgment 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.

CARICOM and Cuba reach agreement to expand market access preferences

Alicia Nicholls

It has been a while in coming but today the Caribbean Community (CARICOM) Secretariat announced in a press release that CARICOM and Cuba have finally agreed to expand the level of preferential access to each other’s markets as part of efforts to update the Cuba-CARICOM Trade and Economic Cooperation Agreement.

According to the Press Release, CARICOM and Cuba reached agreement at the end of the Tenth Meeting of the CARICOM-Cuba Joint Commission established pursuant to the trade and economic cooperation agreement. This meeting took place between January 30-31, 2017 at the CARICOM Secretariat in Georgetown, Guyana.

The Press release notes the following outcomes agreed to:

  • Duty-free entry for a number of CARICOM agricultural products and manufactured goods, such as beer and fish into the Cuban market
  • Duty-free access for Cuban goods, including pharmaceuticals, into the markets of CARICOM member states
  • More Developed Countries (MDCs) of CARICOM (Barbados, Guyana, Jamaica, Suriname and Trinidad and Tobago) will also determine the level of preference they will grant to Cuba on a number of other items.

The release also notes that exploratory discussions were held on trade in services and there has been agreement to continue the exchange of information and cooperation on services trade, particularly tourism.

The Cuba-CARICOM Trade and Economic Cooperation Agreement is a reciprocal trade agreement between Cuba and thirteen member states of CARICOM. Bahamas and Haiti were not part of the negotiations. The agreement was signed in Canouan,  St. Vincent & the Grenadines. According to a Jamaican Gleaner article from July 2016, negotiations on updating the Cuba-CARICOM Agreement began in 2006 but have been protracted.

It is a partial scope agreement as it mainly covers goods trade. However, the agreement contemplates expansion towards to a full free trade agreement and has a built-in work plan which includes working towards the adoption of double taxation agreements between CARICOM member states and Cuba, to commence services  trade negotiations, to adopt an agreement on intellectual property rights, to negotiate an agreement for the protection and promotion of investment, among other things. On the latter point, Cuba already has individual bilateral investment treaties (BITs) with several CARICOM states, including Barbados, Belize, Jamaica, Suriname and Trinidad & Tobago.

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 Tourism Organisation (CTO) and Airbnb sign partnership agreement

Photo credit: Pixabay

Alicia Nicholls

The Caribbean Tourism Organisation (CTO) has today signed a partnership agreement with one of the most visible faces of the global sharing economy, Airbnb. This is according to a Press Release on CTO’s website posted today February 7, 2017. According to the release, the agreement, which establishes a basis for mutual cooperation, is “to develop a set of policy principles and recommendations on the sharing economy for Caribbean governments and other stakeholders.”

The Agreement was signed by CTO’s Secretary General and Chief Executive Officer Hugh Riley and Airbnb’s Shawn Sullivan, public policy director for Central America, the Caribbean at the CTO’s Headquarters in Barbados.

Airbnb is a peer-to-peer online accommodation platform which was founded in 2008 in San Francisco, California, USA and has over 2,000,000 short-term rental listings in over 191 countries worldwide. A cursory search on Airbnb reveals thousands of listings from across the Caribbean, ranging from modest studio apartments to luxurious villas. Airbnb is just one of several virtual spaces where persons list for rent, or rent, vacation accommodation. Some other similar platforms are Homeaway, VRBO and Owner Direct.

Based on the information outlined in the CTO press release, the prospects for mutual cooperation covered by the CTO-Airbnb partnership agreement appear quite promising and include:

  • Sharing of data and studies with policy makers
  • Identifying ways to make the sharing economy more inclusive
  • Broadening the benefits of tourism to non-traditional actors
  • Attracting new stakeholders and focus on providing amazing and unique travel and cultural experiences to visitors
  • Providing to the CTO an economic analysis of Airbnb’s positive impact on local economies.
  • Based on this, briefing key stakeholders on the value of a peer-to-peer review mechanisms

Why is this timely?

This formalised mechanism for mutual cooperation  between Airbnb and the Caribbean’s regional tourism development agency is an important development and is timely for several reasons. Firstly, peer-to-peer platforms like Airbnb have become important players in the global accommodation sector. As millennials comprise an increasing share of global travel demand, there has been a shift towards a more authentic tourism experience, with a preference for self-catering accommodation (such as villas, apartments and condominiums) being part of that shift.

Secondly, it can be argued that peer-to-peer accommodation platforms allow for a more inclusive tourism model as they allow anyone from a retired person who has an extra room to rent to an expat with a vacation home to rent it for only a very minimal cost.

Thirdly, this demand shift toward self-catering accommodation has not gone unnoticed by the traditional hospitality sector (hotels) which have blamed the shift for weaker revenues and occupancy figures. These concerns are not unique to the Caribbean. A 2013 study (last updated in November 2016), which sought to estimate the impact of Airbnb on the Texas hotel industry found, inter alia, that the impact on hotel revenue was non-uniform, with lower priced hotels and non-business traveller catering hotels being the most affected. As far as I am aware, no similar study has yet been done for the Caribbean. The data sharing pursuant to the MOU could make such a study a possibility.

Fourthly,  traditional accommodation players complain that online market places are competing on an unequal footing. For instance, whereas a hotel has to comply with regulations and pay taxes, depending on the country a person who lists a villa or guest house on Airbnb for rent is not yet captured under the tax net and there may not be regulations for those types of accommodation.

Fifthly, as villas and some other non-hotel accommodation remain unregulated, there are concerns about potential reputational risk to a tourism destination should a guest have a bad experience in a villa or apartment rented through Airbnb or through any other means for that matter.

Given the above, this cooperation agreement is a welcomed and forward-thinking step as it will lay the framework for greater data-sharing to allow policy makers to estimate the size and contribution of the tourism sharing economy and to use this data to make evidence-based policy decisions for supporting and regulating the non-traditional accommodation sector. It will also set the framework for joint collaboration for promoting the Caribbean, bearing in mind shifting consumer tastes towards a more authentic tourism experience, and ensuring that the region’s tourism industry is inclusive and redounds to the benefit of all stakeholders.

For further information, please see the CTO’s official press release.

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 Staff Recommend St Lucia CIP Revenues be used Primarily to Reduce Debt

Alicia Nicholls

In the  Concluding Statement of their 2017 Article IV Mission to St. Lucia released February 6, 2017, International Monetary Fund (IMF) Staff recommended that revenues from the island’s Citizenship by Investment Programme (CIP)  be used primarily to reduce the island’s high public debt and that limits  be placed on the amount of CIP revenues used to finance high-priority expenditure. The recommendations were based on a country mission undertaken by IMF Staff during January 16-27, 2017 pursuant to Article IV of the IMF’s Articles of Agreement. The IMF’s Concluding Statement outlines the preliminary findings made by IMF Staff during their mission.

In their commentary on St. Lucia’s macroeconomic performance, IMF Staff noted that although tourism activity was weak,  unemployment continued to fall. The Staff highlighted the economic reforms programme currently in the process of being rolled out by the Government. The Staff expect positive but moderate short-term growth. However, they cautioned that the island’s high public debt, which currently stands at 82% of GDP, and its “delicate fiscal situation”, require prompt attention. They also made suggestions on how the fiscal package  announced could better achieve its targets.

St. Lucia’s CIP

In January 2016, St. Lucia became the fifth Caribbean country to offer a CIP as an alternative tool for attracting foreign direct investment (FDI), joining fellow Caribbean CIP countries: Antigua & Barbuda, Dominica, Grenada and St. Kitts & Nevis. St. Lucia’s CIP offers four investment options: a monetary contribution to the National Economic Fund (NEF), a real estate investment, a Government bond investment or an Enterprise Project Investment, with qualifying investment amounts set for each type of investment. In an effort to add exclusivity to the programme, the number of applications which could be approved by the Board had been capped at 500.

This was the IMF Staff’s first Article IV country mission to St. Lucia since the CIP’s first full year in operation. In their 2017 Concluding Statement, the IMF staff noted that the island received “relatively few applications in 2016” and that “the [St Lucian] authorities expect that the recent easing in the requirements and lowering of the costs to qualify for this program will encourage an increase in revenues.”

Changes to St. Lucia’s CIP Regulations – 2017 

Effective January 1, 2017, an Amendment to the Citizenship by Investment Regulations No. 89 of 2015  introduced several sweeping changes to St. Lucia’s CIP in an effort to boost its competitiveness. This includes, inter alia, a reduction in the qualifying contributions required, making it the most affordable programme in the Caribbean and the removal of the 500-application cap. A summary of the regulatory changes may be found on CIP St. Lucia’s website here.

However, while the Government’s desire to make its CIP more competitive is understandable, some have legitimately argued that these changes may undermine the programme’s exclusivity and may lead to a “race to the bottom” in terms of competition on price and ease of accessibility among Caribbean CIPs. Indeed, with the number of CIPs in the Caribbean now at five and several other countries around the world also offering CIPs or some form of immigrant investor programme, Caribbean CIPs face stiff competition both inter se and abroad.

As such, as I have argued before, increased cooperation among Caribbean CIP countries will be needed to ensure that high standards are maintained and that countries do not undercut each other in terms of price and robustness of their programmes. There seems to be some support for the need for greater cooperation, as St. Lucia’s Prime Minister, Allen Chastanet, earlier this year called for a joint OECS approach to CIPs.

Moreover, while I strongly believe that CIPs can be legitimate tools for development once managed well through raising revenue, encouraging FDI, infrastructural development, job creation and attracting  High Net Worth Individuals (HNWIs), they should be used as an adjunct and not the main propeller for economic growth and development.

IMF Recommendations

In the Concluding Statement, the IMF Staff made several recommendations aimed at minimising St. Lucia’s risk of fiscal dependence on its CIP revenues, which can be volatile, and to reduce the impact of the global rise in interest rates. These recommendations included:

  • Using CIP revenues primarily to reduce the high debt.
  • Using a capped amount of CIP revenue for investment projects of primary importance
  • The importance of “transparency, appropriate governance, and careful due diligence” to reduce risks of sudden stops in CIP revenue inflows.

More detailed information will be known when the full Staff Report is produced and released at a later date.

The full IMF Staff Concluding Statement 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.

Caribbean Trade and Development Digest – January 30-February 4, 2017

Source: Pixabay

Welcome to the Caribbean Trade and Development Digest for the week of January 30-February 4, 2017!  I am pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. 

For past issues of our weekly Caribbean Trade & Development Digest, please visit here.

To receive these mailings directly to your inbox, please follow our blog.

REGIONAL

Turkey, Dominican Republic agree to boost trade ties 

Hurriyet Daily News: Turkey and the Dominican Republic have agreed to boost cooperation on tourism, Turkish Foreign Minister Mevlüt Çavuşoğlu said during a visit to the Caribbean state on Feb. 2. Read more 

Donald Trump ‘reviewing’ Cuba Policy, says White House

Independent: Donald Trump is to conduct a “full review” of America’s foreign policy towards Cuba, White House press secretary Sean Spicer has announced. Read more 

Governor Scott puts provision in proposed budget to block trade with Cuba

Miami Herald: Following on the heels of last’s week threatened retaliation against Florida ports that sign agreements with Cuba, Gov. Rick Scott has tucked another anti-Cuba provision into his proposed state budget that is even more far-reaching. Read more

CBI Bank Accounts under Scrutiny in Dominica 

WinnFM: There is no official word either from foreign banks in Dominica or the Skerrit administration, that government Citizenship by Investment accounts have been closed.  Read more 

Dominican Republic could become logistics hub

Dominican Today: The Dominican Republic could become a Regional Logistics Centre or Hub for maritime trade in the Caribbean, according to government representatives and national shipping and maritime business owners. Read more 

Dominican Republic to establish a diplomatic presence in Antigua 

Antigua Observer: President of the Dominican Republic, Danilo Medina has agreed to establish diplomatic presence in Antigua and Barbuda. Read more

Falkland lawmaker visiting Caribbean to promote trade links

Mercopress: Falkland Islands lawmaker MLA Ian Hansen is on a Caribbean mission to improve trade and industry links with the region, and seeking political support for the Islands. The tour includes Barbados, Dominica and Guyana, according to Barbados TODAY news agency. Read more 

St. Kitts and Nevis Ranks Number One in Trading Across Borders 

SKN Observer: St. Kitts and Nevis has ranked number one in the CARICOM in trading across borders according to the “2016 Doing Business Report”, says Kennedy DeSilva, Deputy Comptroller of Customs in the Office of the Comptroller, appearing on today’s radio-television show “Working for You” on January 25. Read more 

CARICOM and Switzerland deepen relations

Jamaica Observer: The 15-member Caribbean Community (CARICOM) says it is looking forward to a concrete programme of cooperation with Switzerland after the European country’s diplomat presented his credentials to CARICOM Secretary General Irwin La Rocque on Thursday. Read more 

Jamaican Tourism Interests Optimistic Following Trade Talks with Tour Operators

Jamaica Gleaner: Jamaican tourism stakeholders are expressing optimism after a series of successful meetings with tour operators at the Caribbean Hotel and Tourism Association’s Caribbean Travel Marketplace now under way at the Atlantis, Paradise Island, in The Bahamas. Read more 

Puerto Rico Launches new Push for Statehood

TelesurTV: Puerto Rico Friday approved a measure to hold another referendum to vote on becoming a state, set for June 11. It comes as the U.S. territory continues to struggle with the ongoing effects of colonialism and a major debt crisis. Read more 

Caribbean Tourism Requires Stronger Partnerships

Caribbean360: The Caribbean region’s tourism growth potential in 2017 and beyond is enormous, but not without continued collaborative partnerships between the region’s public and private sectors. Read more 

OECS Supports Geothermal Energy Production

St Lucia Times: Financing and government policy have been identified as the major challenges to the development of geothermal energy in the Eastern Caribbean. Read more 

INTERNATIONAL

Mexico pushes for trade deal with New Zealand

New Zealand Herald: Trade Minister Todd McClay will request that talks on a Mexican free trade deal be placed on the agenda when he meets his counterpart in Mexico in 10 days time. Read more

Brexit Plan Published in Government White Paper

BBC: The government has published an official policy document setting out its Brexit plans. Read more

Homeland Security Suspends Travel Ban

CNN: President Donald Trump’s government moved swiftly Saturday to comply with a federal judge’s order halting his travel ban — even as Trump himself denounced the judge — but readied its legal defense of the controversial executive action. Read more

Trump, Abe to discuss Potential Bilateral Deal and TPP at Washington Summit

ICTSD Bridges: US President Donald Trump has announced plans to meet with Japanese Prime Minister Shinzo Abe in Washington to discuss trade and security matters in what will be the first face-to-face talks between the leaders since Trump took office last month. Read more

US Tax Plan would break tax rules, lawyers say

CNBC: A proposed U.S. corporate tax reform would almost certainly contravene international trade rules if implemented, lawyers told Reuters, risking the biggest dispute in the history of the World Trade Organization. Read more 

Least developed countries propose caps on trade distorting farm subsidies at WTO

ICTSD Bridges: WTO members must agree to cuts and new ceilings for trade-distorting farm subsidies, says a proposal from a group of dozens of the world’s poorest countries at the global trade body. Read more

 

African Union wants its members to pull out of ICC

Daily Nation (Kenya): The African Union (AU) wants its member states to pull out of the International Criminal Court (ICC). Read more 

UK plans to adopt EU’s agreements with third countries

Reuters UK: Britain expects to be able to adopt the European Union’s free trade agreements (FTA) with around 40 countries after it leaves the bloc rather than negotiate new deals, trade minister Liam Fox said on Wednesday. Read more 

Mexico, Turkey to speed up talks to sign trade deal 

Reuters: Mexico and Turkey will speed up negotiations to sign a bilateral trade agreement, Mexican Foreign Minister Luis Videgaray said on Friday at an event in Mexico City with his Turkish counterpart. Read more

India to host key RCEP Meeting at Hyderabad in July

Economic Times (India): India will hold RCEP negotiations meeting this coming July in Hyderabad. Read more 

Nebraska farmers, ranchers wary of Trump ending NAFTA

Omaha World Herald: Like a lot of Midlands farmers, Randy Uhrmacher gets a little nervous when he hears in the news about President Donald Trump looking to shake up free trade agreements. Read more 

Mexican government initiates NAFTA review with private sector

Yucatan Times: The federal government will begin a process of consultation with the private sector, prior to the negotiation of the North American Free Trade Agreement with the US, which will continue on a permanent basis. Read more

Brexit: MPs overwhelmingly back Brexit bill

BBC: MPs have voted by a majority of 384 to allow Prime Minister Theresa May to get Brexit negotiations under way. They backed the government’s European Union Bill, supported by the Labour leadership, by 498 votes to 114. Read more

US Ranchers Look for some action on Country of Origin Labelling

FSN:  Two states known for their cowboys, Wyoming and South Dakota, have seen early introduction of COOL bills in their legislatures, respectively, in Cheyenne and Pierre. Cattlemen headquartered in neighboring Montana have not given up on a national bill. Read more 

US withdrawal from TPPA will hasten negotiations on RCEP

The Star (Malaysia): The withdrawal of the United States from the Trans-Pacific Partnership Agreement (TPPA) will help hasten the process of concluding negotiations on the Regional Comprehensive Economic Partnership (RCEP). Read more 

Brexit: Angela Merkel warns UK PM Theresa May over slashing taxes

Independent (UK): Angela Merkel has hit back at Theresa May’s threat to slash taxes to undercut the EU if it blocks a Brexit deal, warning taxes are the price paid for a just society. Read more 

Trade Ministers on TPP Rescue Mission

RNZ:  (New Zealand’s) Trade Minister Todd McClay will meet his Australian counterpart in Sydney today in a bid to salvage the Trans-Pacific Partnership trade deal. Read more

Canadian Ambassador reassures Mexico on NAFTA

Toronto Star: In an interview with Mexican newspaper Reforma, Pierre Alarie sought to quell fears that Canada would abandon its trading partner during negotiations. Read more 

BONUS

WTO Video on TRIPS Amendment by Mexico’s Perez Motta

In this video statement on the WTO’s Youtube Channel, Mexico’s Eduardo Pérez Motta, a former TRIPS Council chair, says that the impact of the TRIPS amendment should be judged by the prices and supply of critical medicines.

Watch here (English)

Watch here (Spanish)

OECD Releases new brochure “Towards Better Trade Policies” 

The OECD’s new brochure “Towards Better Trade Policies” provides an executive overview of OECD work on trade, and contains comprehensive lists of references to all evidence we have developed over the past five years. Read more 

NEW ON CARIBBEAN TRADE LAW & DEVELOPMENT BLOG

TPP: Acting USTR Submits Withdrawal Letter

Brexit White Paper Released by UK Government

UK-US Trade Inquiry launched by UK Parliament’s International Trade Committee

Brexit Bill Clears First Parliamentary Hurdle

Climate Change, the Caribbean and US-Caribbean Strategic Re-engagement (HR4939)

Liked this issue? Read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

TPP: Acting USTR Submits Withdrawal Letter

Alicia Nicholls

On January 30, 2017, upon the instructions given by President Donald Trump in his January 23rd executive order, the Office of the US Trade Representative (USTR) submitted a letter to the 11 other Trans-Pacific Partnership (TPP) signatories officially withdrawing the US from the Agreement. This is according to a press release on the USTR’s website.

The letter was also submitted to the TPP Depositary and signed by Acting USTR, Maria Pagan. In addition to indicating the US’ withdrawal, the letter further stated, that “the United States remains committed to taking measures designed to promote more efficient markets and higher levels of economic growth, both in our country and around the world.We look forward to further discussions as to how to achieve these goals.”

Withdrawal from the TPP, which he had denounced as detrimental to American jobs, had been one of President Trump’s least controversial campaign promises during the election campaign. The US had signed the agreement via executive action on February 4, 2016 by then President Barack Obama but the Agreement had never been ratified.

The Agreement’s 11 remaining signatories are Australia, New Zealand, Canada, Singapore, Vietnam, Malaysia, Japan, Mexico, Peru, Brunei, and Chile.

The future of the Agreement sans the US remains uncertain. In the wake of the US’ withdrawal, Malaysia has signaled that it will refocus on trade with fellow ASEAN and Asian countries. According to Reuters’ reporting, Chile has indicated its interest in pursuing an FTA with China which is not a TPP party, and has reportedly invited remaining TPP members, China and South Korea to a summit in March on how to proceed. Australia’s Prime Malcolm Turnbull had initially indicated his interest in salvaging the agreement.

There has also been some speculation that China, which potentially stands to benefit geopolitically from the collapse of the TPP, may accede to the Agreement but Beijing has not confirmed whether it will pursue this option. Alternatively, there are some who argue that the Regional Comprehensive Economic Partnership (RCEP) which involves China provides a realistic alternative to the TPP.

Further information is available on the USTR’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.

Brexit White Paper Released by UK Government

Alicia Nicholls

The Theresa May Government has today released its Brexit White Paper . The official policy document, which is entitled “The United Kingdom’s Exit from and new partnership with the European Union“, was introduced into Parliament today by Brexit Secretary, David Davis.

The House of Commons yesterday voted overwhelmingly for the Brexit Bill to proceed to the second parliamentary stage – the Committee Stage where it will be subjected to increased scrutiny by Members of Parliament next week. Already, a number of amendments have been tabled for discussion. However, once the bill becomes law, the Government will have the legal authority to make the UK’s notification of withdrawal from the EU under Article 50 of the Treaty on European Union (Lisbon Treaty).

Setting out the Government’s strategy for its expected upcoming exit negotiations with the EU, the White Paper mostly elaborates on the 12 priorities which had been outlined by Mrs. May in her major Brexit address delivered at Lancaster House last month. The paper reiterated that the objective was not only to build a new partnership with Europe, but to build a “stronger, fairer, more Global Britain”.

Among the priorities identified in the Brexit Strategy are taking control of its own laws, controlling immigration, pursuing a free trade and new customs union agreement with the EU, securing rights of EU nationals in the UK and for UK nationals in the EU, securing new trade agreements with other countries, inter alia. The Plan has received mixed reviews from parliamentarians.

The full White Paper 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.

 

« Older Entries
%d bloggers like this: