The arbitrary inclusion by the European Union (EU) of some Caribbean Community (CARICOM) Member States on its EU-wide blacklists for tax and anti-money laundering/countering the financing of terrorism (AML/CFT) purposes ranks high among several pressing issues occuping the minds of regional leaders when they meet over the next two days. The Thirty-Second (32nd) Inter-Sessional Meeting of CARICOM Heads of Government kicked off today, Wednesday February 24, 2021. The virtual meeting is being chaired by incoming Chairman of Conference, Dr. the Hon. Keith Rowley, Prime Minister of Trinidad & Tobago.
At the Opening Session held today, outgoing Chairman of Conference, Dr. the Hon. Ralph Gonsalves, Prime Minister of St. Vincent & the Grenadines, strongly condemned the EU’s inclusion of Dominica on its revised list of non-cooperative jurisdictions for tax purposes and its lack of a consultative approach in this exercise. Barbados was removed from this revised tax blacklist and placed on the grey list temporarily, pending its supplemental review by the Global Forum of the Organization for Economic Cooperation and Development (OECD). However, it should be noted that Barbados remains on the EU’s updated list of high risk third jurisdictions with strategic AML/CFT deficiencies released in May 2020 and entering into force October of that year.
Indeed, the blacklisting situation is a longstanding bugbear in the otherwise strong EU-CARICOM relationship, and compounded this time by the poor timing of the release of these revised lists in the middle of a pandemic. A jurisdiction’s inclusion on such a list not only has implications for how transactions originating from or involving individuals or entities from such jurisdictions are scrutinised by financial institutions, but can have implications for that jurisdiction’s ability to both attract and retain foreign investment. It should be borne in mind that Caribbean countries can neither recover nor build resilience on public revenue alone, but will also need private foreign capital injections, such as through foreign direct investment (FDI) inflows.
Indeed, Caribbean countries are among the most severely affected by the COVID-19 pandemic. Most are tourism-dependent economies, which have already suffered significant declines in revenue and job losses due to the reduction, and at one point, sudden stop in tourism arrivals resulting from both national and international COVID-19 containment and mitigation strategies. The EU’s inclusion of Dominica on its list of non-cooperative tax jurisdictions is particularly worrying given that country’s utter devastation by category five Hurricane Maria in 2017 and from which it is still rebuilding and recovering.
COVID-19 will also be a major theme in the two-day discussions. Lamenting the “loss of lives and livelihoods” caused by the pandemic, CARICOM Secretary-General Ambassador Irwin Larocque, however, revealed that CARICOM was taking steps to devise strategies for a resilient recovery. Over the coming days, the Heads of Government would be considering, inter alia, proposals on revivng the tourism industry, agriculture, advancing implementation of the CARICOM Single Market & Economy (CSME) and addressing fiscal challenges. Ambassador Larocque further noted that social partners will share their perspectives on the way forward.
Both Secretary-General Larocque and Chairman Rowley reiterated CARICOM’s call for a global summit to address the equitable access to vaccines, and also highlighted how instances of south-south cooperation in vaccine procurement have assisted the region. The Secretary-General noted that CARICOM has signed on to the African Medical Supplies Platform and the African Union has graciously provided 1.5 million doses of vaccines to CARICOM which they received through their procurement arrangement. These, he noted, will supplement those to be received under the COVAX Facility. The Secretary General also thanked the Governments of Barbados and Dominica for sharing with other Member States vaccines they had received as a gift from the Government of India.
On the basis of income per capita, many CARICOM countries are unable to qualify for most types of concessional financing from multilateral lending institutions, an especially grave situation for fiscally-constrained countries and which already generally have high debt to GDP ratios. In his address as incoming chairman, Dr. Rowley again appealed on behalf of CARICOM for a broadening of existing vulnerability indices to facilitate greater access by SIDS to finance their recovery and to build resilience.
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. All views herein expressed are her personal views and should not be attributed to any institution with which she may from time to time be affiliated. You can read more of her commentaries and follow her on Twitter @LicyLaw.