Author Archives: caribbeantradelaw

ECJ Brexit Ruling: What are the implications?

Renaldo Weekes ping pong

Renaldo Weekes, Guest Contributor 

The European Court of Justice (ECJ) ruled on Monday, December 10th, 2018, that a European Union (EU) member state has the ability to unilaterally revoke its notification of intent to leave under Article 50 of the EU’s Lisbon Treaty. This ruling comes at a time when anti-Brexit and pro-Brexit persons alike are showing great opposition to British Prime Minister Theresa May’s Brexit deal. Anti-Brexit persons, in particular, are feeling vindicated by this ruling because it allows them to double down on their stance and try to force Prime Minister May into submission.

However, the British Government stood its ground despite the ECJ’s ruling, with British Environment Secretary, Michael Gove, arguing that the British people voted to leave the EU in 2016 and it will not reverse that decision. The Government even argued that point in the ECJ case, saying it does not plan to reverse its decision so the question of whether the United Kingdom (UK) can unilaterally revoke its Article 50 notification was merely hypothetical and of no consequence.

May’s Brexit deal in more peril

Can the British Government continue to take its tough stance in light of the ECJ’s ruling and all the controversy that shrouds Brexit? Some may find it admirable that the Government is not willing to waver, even in the face of fierce opposition. At some point, however, it must face facts. Anti-Brexit lawmakers will be less likely to back down. As part of its judgement, the ECJ said that the UK’s decision to revoke their Article 50 notification reflects a sovereign decision. This has essentially put absolute power into the hands of UK Members of Parliament (MPs) to change course as they do not have to yield to the EU. There is no doubt that MPs will exercise that power. To anti-Brexit lawmakers, there are no more excuses that Prime Minister May can use to prevent a second referendum or prevent Brexit. In light of this, lawmakers are more likely to vote down on the deal; though there was no doubt that they would have done otherwise.

Responsibility and accountability

The ECJ ruling also puts ultimate accountability on the Prime Minister and her team. The European Commission and the Council argued in the court case that article 50 could not be interpreted as allowing a member state to unilaterally revoke its notification; the member state would need the EU’s permission to revoke the notification. If this turned out to be true, and the EU refused to allow the UK to change its decision, Government would have been able to argue that the EU is at fault for restricting the UK’s sovereignty. That, however, is not the case now. Should the government refuse to reverse Brexit or, at the very least hold a second referendum, there is no other institution that holds responsibility for any ensuing consequences that should come from what is likely to be a hard or even no deal Brexit.

Abuse of the process

Another possible impact of the ECJ ruling was actually cited by the European Commission and the Council during their argument to the court. They noted that if member states can unilaterally revoke their notification to leave, they may abuse that process in order to retrigger the 2 year negotiation period should the original negotiations not go their way. On the face of it, this argument may not hold much weight as there is already a process through which a member state can request an extension of the negotiating period. However, should the member state not agree to the extension period proposed by the council, it may still seek to retrigger the mandated 2 year negotiating process which forces the council into a position where it must agree to the member state’s desired negotiation period. The member state may also opt to not apply for an extension and immediately retrigger the process.

The effects that the ECJ’s ruling may or may not have on the UK and other member states notwithstanding, we must still wait to see if the British government will budge in any way as the March 2019 deadline approaches against the backdrop of MPs threatening to upend the deal and a shaky Government trying desperately to maintain its power.

Renaldo Weekes is a holder of a BSc. (Sociology and Law) who observes international affairs from his humble, small island home. He has keen interest in how countries try to maneuver across the international political and legal stage.

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Eight Key Outcomes from the St. Anns Declaration on CSME

Alicia Nicholls

Caribbean Community (CARICOM) Heads of Government met from December 3-4, 2018, in Port of Spain, Trinidad last week for the 18th Special Meeting of the Conference of Heads of Government of CARICOM which was a special meeting on the CARICOM Single Market and Economy (CSME).

The CSME envisions deepened economic integration among participating CARICOM Member States by creating a single economic space for the free movement of Community goods, services, capital and labour, with the aim of promoting economic development and increased well-being of Community nationals. All independent CARICOM Member States, except the Bahamas, are part of the CSME, while Haiti is not yet a full participant.

Progress towards implementation of the CSME has been painstakingly slow, a point noted in numerous reports commissioned to look at this issue, including the Jamaica-government commissioned Golding Commission Report released earlier this year which examined Jamaica’s relations within the CARICOM and CARIFORUM frameworks.

At the end of the special CSME meeting last week, CARICOM leaders released their St. Ann’s Declaration on CSME in which they recommitted to the regional integration process and outlined several priority areas for immediate action, including setting timelines for some action areas.

Based on the St. Ann’s Declaration on CSME, here are eight key outcomes from the CSME Special Meeting:

1.Recommitment to national action to further CSME implementation

CARICOM leaders recommitted to take action at the national level to advance the regional integration agenda. In their preamble to the Declaration, they reiterated that the CSME “continues to be the most viable platform for supporting growth and development” in CARICOM Member States, but acknowledged that progress on the CSME should have been further advanced by now. They welcomed Haiti’s commitment to full integration into the CSME by 2020.

2.Greater voice for private sector and labour

CARICOM leaders have agreed to establish a formalised and structured mechanism to facilitate dialogue between the Councils of the Community and the private sector and labour. They also agreed to amend the Revised Treaty of Chaguaramas to include representative bodies of the regional private sector and labour as Associate Institutions of the Community.

3. Full Free Movement in 3 years (for willing Member States)

CARICOM leaders have set a timeline of the next three years for those Member States which are willing to do so to move towards full free movement. The leaders have also agreed to reinforce the operation of their security mechanisms to ensure the integrity of the regime allowing the free movement of CARICOM nationals.

4. Expansion of categories of skilled nationals entitled to move

Agricultural Workers, Beauty Service Practitioners, Barbers and Security Guards will be added to the categories of skilled nationals who are entitled to move freely and seek employment within the Community.

CARICOM leaders also reiterated that a skills certificate issued by one Member State would be recognised by all Member States. They also agreed to complete domestic legislative and other arrangements for all categories of free movement of skilled persons.

5. Greater CARICOM-OECS collaboration

They have mandated that steps be taken to deepen cooperation and collaboration between the Secretariats of CARICOM and the OECS “to avoid duplication and maximise the utility of scarce resources”.

6. Single Domestic Space for passengers in the Region

CARICOM leaders agreed to examine the re-introduction of the single domestic space for passengers in the Region and agreed to work towards having a single security check for direct transit passengers on multi-stop intra-Community flights. They also agreed to conduct a special session on Air and Maritime Transportation at the Intersessional meeting of the Conference to be held next February to focus on this matter.

7. Public Procurement and Mutual Recognition of Member States’ incorporated companies

CARICOM leaders set a timeline of 2019 for the finalization of the regime that permits citizens and companies of the Community to participate in Member States’ government procurement processes. They also agreed to take the necessary steps to allow for mutual recognition of companies incorporated in a CARICOM Member State.

8. Restructured Commission on the Economy

CARICOM leaders have restructured the Commission on the Economy to advise Member States on a growth agenda for the Community. Leading Barbadian-UK economist, Professor Avinash Persaud, has been appointed to lead this restructured commission, while its nine other members include distinguished regional and international persons.

The text of the St Ann’s Declaration on CSME may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international 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 – December 2-8, 2018

Welcome to the Caribbean Trade & Development Digest for the week of December 2-8, 2018! We are happy to bring you the major trade and development headlines and analysis from across the Caribbean Region and the world from the past week.

THIS WEEK’S HIGHLIGHTS

This week, CARICOM Heads of Government held a Special Session on the CARICOM Single Market and Economy (CSME) in Port of Spain, Trinidad. They issued the St. Ann’s Declaration on CSME in which they recommitted to the process of CSME implementation and outlined some key priority areas for implementation.

The CARICOM Competition Commission (CCC) has indicated that it is closely monitoring the proposed sale of Scotia Bank’s operations in several Caribbean jurisdictions to the Trinidad-based Republic Financial Group Ltd. Read the CCC’s full statement here.

Members of the European Parliament (MEPs) and parliamentarians from ACP countries held their  36th session of the Joint Parliamentary Assembly (JPA) in Cotonou, Benin. They adopted several resolutions, including their Declaration of the Co-Presidents on Post-Cotonou Negotiations on the occasion of the meeting of the 36th Joint Parliamentary Assembly

Below we share the other major trade and development headlines from across the Caribbean region and the world for last week:

REGIONAL

CARICOM to open government procurement to regional companies

LoopBarbados: A portal called CIMSuPro – the CARICOM Interactive Marketplace and Suspension Procedure – will be established as a managed market place for CARICOM companies to post their raw material, goods and services.  It would be made available to regional and global purchasers. Read more

More Categories of Workers to Be Granted Free Movement Within CARICOM

Caribbean360: More Caribbean Community (CARICOM) nationals are to be allowed to seek work in fellow member states, it has been revealed, as CARICOM leaders reaffirmed their commitment to the vision of free movement and a shared market space. Read more

CCJ Issues Record Number of Judgments in 2018

CARICOM: During 2018, the Caribbean Court of Justice (CCJ) issued 34 judgments and reasons for decision, its highest number of judgments delivered in a calendar year since it began its operations in 2005. Throughout that period, the CCJ also heard 28 new matters in both its Original and its Appellate Jurisdictions. Read more 

CARICOM Committee of Ambassadors charting enhanced role

CARICOM: CARICOM Secretary-General Ambassador Irwin LaRocque in welcome remarks, told the ambassadors their role, both individually as the link between the regional and the national, and as a constituent group within the governance structure of the Caribbean Community, assumes even greater significance in the renewed drive to implement the provisions of the CSME and other critical areas of the community’s work. Read more 

No plans for Jexit 

Jamaica Observer: Jamaica’s Prime Minister Andrew Holness yesterday reiterated that the decision to establish a commission to review his country’s relationship with the Caribbean Community (Caricom) was not intended to create an avenue for it to leave the 15-member regional integration movement. Read more

Tackle CSME Issues Head On, Urges CARICOM Chairman

Caribbean360: Caribbean Community (CARICOM) Chairman, Prime Minister Andrew Holness of Jamaica, has urged a “head on” approach to tackling of complex issues during the Special CARICOM Heads of Government Meeting on the CARICOM Single Market and Economy (CSME) underway in Trinidad and Tobago. Read more

Guyana pushes trade and investment at OIC meeting in Turkey

Caribbean News Now: Guyana attended the 34th meeting of the Standing Committee for Economic and Commercial Cooperation of the Organisation of Islamic Cooperation (COMCEC), which was held last week in Istanbul, Turkey. Representing Guyana at the meeting was its permanent ambassador to the United Nations, Michael Ten-Pow, who promoted the opportunities for trade and investment in his country. Read more

Exxon Mobil could push Guyana past Mexico, Venezuela in oil output

Houston Chronicle: The small South American nation of Guyana could become the continent’s second-largest oil producer thanks to the offshore discoveries made by Exxon Mobil, according to a new report. Read more 

Sugar sales down, total exports down (Belize)

The Reporter (Belize): Revenue earned from sugar exports, Belize’s largest export earner, were down in the month of October, contributing largely to an overall decrease in export revenues of 5.1 percent, according to the Statistical Institute of Belize. Read more

Region’s Coconut Industry gets EDF boost

CARICOM: The coconut industry in Barbados and the rest of the Caribbean should soon be receiving a further boost. That is because the 11th European Development Fund (EDF) will be financing a second coconut project in the region. Read more 

Prensa Latina: The Caribbean Sugar Association (SAC) reported that its members met approximately 80 percent of Caricom”s raw sugar needs during 2017/18 harvest. Read more

IMF thumbs up for Barbados

Nation News (Barbados): The International Monetary Fund (IMF) likes the way the Barbados economy is being fixed, calling it an “excellent start”. Read more 

INTERNATIONAL

COP24 fails to adopt key scientific report

BBC: Attempts to incorporate a key scientific study into global climate talks in Poland have failed. The IPCC report on the impacts of a temperature rise of 1.5C, had a significant impact when it was launched last October. Read more 

Macron threatens to scupper EU-Mercosur trade deal over climate

Euractiv: French President Emmanuel Macron has warned that he will oppose a trade deal between the EU and Mercosur if Brazil’s incoming far-right president pulls his country out of the Paris Agreement. Read more 

Mercosur and EU trade negotiators meet in Brasilia

The Rio Times: The foreign ministers of Mercosur and EU members are meeting in Brasilia on Thursday (December 6th) in an effort to advance the partnership agreement between the two economic blocs. This is the first time Mercosur and the UE are meeting after statements made by France’s Macron caused tension and doubt about the partnership. Read more 

Why Qatar left OPEC

Al Jazeera: Explaining the motivation behind the decision, Saad Sherida al-Kaabi, Qatar’s minister of state for energy affairs and president and CEO of Qatar Petroleum, said that Qatar’s exit from OPEC “is not political, it was purely a business decision for Qatar’s future strategy towards the energy sector.” Read more 

RCEP: Experts to evaluate pact to strengthen India’s position

Hindu Business Line: To sharpen India’s bargaining position in the Regional Comprehensive Economic Partnership (RCEP), which is being negotiated among 16 countries, the Commerce Ministry has roped in experts from academic institutions and think-tanks to carry out a detailed study of the pact and give their recommendations. Read more 

#ACPEU – MEPS agree on a partnership tailored to international context

EU Reporter: During the 36th session of the Joint Parliamentary Assembly (JPA), which took place from 3 to 5 December in Cotonou (Benin), Members of the European Parliament and their counterparts from 78 African, Caribbean and Pacific (ACP) countries debated and adopted several resolutions. Read more 

Japan-EU trade pact clears hurdle on road to Feb. 1 start

Nikkei Asian Review: Japan’s parliament approved an economic partnership agreement with the European Union early Saturday, keeping one of the world’s biggest free trade zones on course to take effect Feb. 1. Read more 

EU agrees post-Brexit import quotas for other WTO members

Reuters: The European Union endorsed on Friday new tariff rate quotas (TRQs) that the bloc will apply mainly for agricultural products coming from other World Trade Organization members after Brexit. Read more 

Britons scramble to get E.U. passports before Brexit

NBC: With the U.K. due to leave the European Union in March, the demand among Britons for citizenship and passports from the other 27 countries in the bloc has skyrocketed. Read more

DG Azevêdo in US: This is a “once-in-a-generation opportunity” to renew trading system

WTO: Speaking in Washington DC on 5 December, Director-General Roberto Azevêdo said that WTO members have “a once-in-a-generation opportunity to renew the trading system”. He argued that in responding to the range of challenges in the global trading system today, momentum was building towards strengthening and improving the work of the WTO. The Director-General was speaking at the National Foreign Trade Council’s annual World Trade Dinner. Read more 

Argentina initiates WTO dispute complaint against Peruvian measures on biodiesel imports

WTO: Argentina has requested WTO dispute consultations with Peru concerning anti-dumping and countervailing measures imposed by Peru on biodiesel imports from Argentina. Argentina’s request was circulated to WTO members on 5 December. Read more 

Panels established to review India, Swiss complaints against US tariffs

WTO: At its meeting on 4 December, the WTO’s Dispute Settlement Body (DSB) agreed to requests from India and Switzerland for the establishment of panels to examine tariffs imposed by the United States on steel and aluminium imports. Read more 

United Kingdom submits draft post-Brexit services commitments to WTO

WTO: WTO members received today, 3 December 2018, the United Kingdom’s draft schedule outlining its WTO commitments for services once the UK leaves the European Union. Members now have 45 days to review the schedule before certification. Read more 

China confirms its working on independent WTO reform

Asia Times: China is planning to put forward an independent proposal to promote WTO reform, Yicai.com reported, citing a government official and several sources. Read more

The Caribbean Trade & Development Digest is a weekly trade news digest published by the Caribbean Trade Law & Development Blog. Liked this issue? To read past issues, please visit here. To receive these mailings directly to your inbox, please follow our blog.

The Draft Brexit Withdrawal Agreement: What implications for future CARIFORUM-UK Trading Relations?

Alicia Nicholls

After nearly two years of negotiations between the European Union (EU-27) and the United Kingdom (UK), European leaders endorsed the “The Draft Agreement on the Withdrawal of the United Kingdom from the European Union and the European Atomic Energy Community”and the “Political Declaration Setting out the Framework for the Future Relationship between the European Union and the United Kingdom” at a special meeting of the European Council on November 25, 2018.

This process is taking place pursuant to Article 50 of the Treaty on European Union (TEU), which sets out the terms and timelines for the withdrawal of any Member State from the EU. The text of the UK’s draft Withdrawal agreement, which was released on November 14, 2018, delineates the terms of the UK’s withdrawal from the EU, while the Political Declaration outlines broad aspirations for the constitutive elements of the two parties’ future trading relationship.

This article takes a brief look at what possible implications the draft Brexit Withdrawal Agreement may have for future CARIFORUM-UK trading relations, which are currently under negotiation and are reportedly close to being finalised.

Essential Elements of the Withdrawal Agreement

The UK ceases to be an EU Member State on March 29, 2019. During the transition period (March 29, 2019 to December 31, 2020), and subject to certain limited exceptions, EU law and the EU institutions and agencies will continue to be applicable to the UK, although it will no longer be an EU Member State. The UK will, however, be ineligible to be represented on, or participate in the decision-making processes of these institutions. This arrangement was deemed necessary to ensure a ‘smooth’ transition and provide for some certainty for traders while the parties hammer out the details of their future trading relationship. The Joint Committee may extend the transition period only once and this must be exercised before July 1, 2020.

The Protocol on Ireland and Northern Ireland includes the controversial “backstop” option, whereby in the event that the EU and UK fail to negotiate an agreement which prevents a ‘hard border’ between Northern Ireland (a country of the UK) and the Republic of Ireland (an EU Member State) within the transition period, the UK will be part of a single UK-EU customs territory until such an agreement is made. However, both the EU and UK have expressly stated their intention to conclude such an agreement by July 1, 2020.

Both the EU and UK Government have openly stated that they consider the negotiations on the two agreements closed, and have argued that the deal was the best that could be achieved in the circumstances. Although EU leaders endorsed both agreements, approval and ratification by the UK parliament is also needed under the EU (Withdrawal) Act 2018. UK House of Commons support appears questionable at this stage given the fervent opposition by both Remain and Leave MPs to the current Withdrawal Agreement. The House of Commons will debate the deal on December 11, 2018.

Implications for CARIFORUM-UK Trading Relations

Traders from CARIFORUM currently have preferential access to the UK market under the CARIFORUM-EU Economic Partnership Agreement (CARIFORUM-EU EPA). While CARIFORUM-EU trading relations will remain unchanged once the UK leaves the EU, the same cannot be said for CARIFORUM-UK relations.

For most Anglophone CARIFORUM countries, the UK is their main trading partner within the EU, as well as a major source market for tourism and investment. It has been reported that UK-CARIFORUM bilateral trade totaled £2.1 billion in 2016.

Under the Withdrawal Agreement, the UK remains bound to all EU international agreements, including trade agreements such as the CARIFORUM-EU EPA, to which it is party by virtue of being an EU Member State. However, during the transition period, the UK must not engage in actions deemed “likely prejudicial to EU interests” and its representatives will be barred from participating in the work of any bodies established pursuant to such agreements, unless it does so in its own right or upon invitation by the EU. This would include any bodies, such as the Joint CARIFORUM-EU Council, established pursuant to the CARIFORUM-EU EPA.

The Withdrawal Agreement does not preclude the UK from negotiating, signing and ratifying its own trade agreements with third States or groupings, such as CARIFORUM, during the transition period. But the entry into force and application of said agreements during the transition period would be subject to EU authorization. With respect to CARIFORUM, the grouping is currently negotiating a roll-over of the EPA concessions with the UK to minimize any disruption to CARIFORUM-UK trade. Such a CARIFORUM-UK trade agreement, therefore, would be subject to EU authorization if it is to enter into force during the transition period. In any case, as noted above, the UK will remain a party to the EPA and bound to apply EPA concessions to CARIFORUM traders during the transition period.

But what about the UK’s future trading relations with the EU? A ‘no deal Brexit’ is still a possibility as the draft Withdrawal Agreement needs ratification by each of the EU 27 countries. There is also still that pesky question of the negotiation of the future UK-EU trading relationship. The Political Declaration envisions a UK-EU free trade agreement, the terms of which remain to be negotiated.

A ‘no deal Brexit’ would make it difficult for CARIFORUM firms looking to use the UK as a stepping stone to EU markets, which means a climate of uncertainty will continue to prevail for Caribbean firms seeking to use the UK as a conduit for accessing the EU market until the full details of future UK-EU terms of trade are agreed.  It was recently reported that the agreement between the UK and CARIFORUM was close to being reached and has taken into account the possibility of a ‘no deal Brexit’.

The climate of uncertainty may also impact CARIFORUM-UK trade and investment from the UK side. Although some UK businesses have by now conducted risk assessments and built in Brexit contingency plans, the continued political and economic uncertainty and volatility of sterling will continue to weigh on their export, hiring and investment decisions.

The Withdrawal Agreement takes us one step closer to some idea of what the future UK-EU relations will be, but a climate of political and economic uncertainty will remain for some time, which may have an impact on CARIFORUM-UK trading relations.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international 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 – November 25 – December 1, 2018

Welcome to the Caribbean Trade & Development Digest for the week of November 25-December 1, 2018! We are happy to bring you the major trade and development headlines and analysis from across the Caribbean Region and the world from the past week.

THIS WEEK’S HIGHLIGHTS

This week, leaders of the EU-27 at their summit in Brussels approved the draft Brexit deal struck between the UK and EU. Ahead of the UK parliamentary vote later this month, Prime Minister Theresa May has been trying to sell the deal to UK parliamentarians and the UK public alike, including in a public letter to the nation.

G20 leaders met in Buenos Aires from November 30-December 2 for the group’s thirteenth summit and its first held in a South American country. Specifically, the leaders noted the following at paragraph 27 of their declaration:

International trade and investment are important engines of growth, productivity, innovation, job creation and development. We recognize the contribution that the multilateral trading system has made to that end. The system is currently falling short of its objectives and there is room for improvement. We therefore support the necessary reform of the WTO to improve its functioning. We will review progress at our next Summit.

On the sidelines of the G20 Summit, the leaders of the US, Mexico and Canada signed the US-Mexico-Canada Agreement (USMCA), meant to replace NAFTA. The deal now needs domestic ratification.

In regional news, The Bank of Nova Scotia (Scotia Bank), announced its withdrawal from nine Caribbean countries. Its operations are being sold to the Trinidad-based financial services group, Republic Financial Holdings. This move has raised concern in several of the affected countries.

Some sad news is that the Geneva-based International Centre for Trade and Sustainable Development (ICTSD) closed its doors this week. Through its publications, the ICTSD was a reliable source for free, timely, high quality and cutting-edge trade reporting and analysis relied on by trade and development academics, practitioners and policymakers alike. Their presence will indeed be missed.

Please see below some of the other major headlines:

REGIONAL

T&T to host special CSME meeting in December

LoopTT: Trinidad and Tobago will host a Special Meeting of the Heads of Government of the Caribbean Community (CARICOM) from December 3 to 4 which will focus on the CARICOM Single Market and Economy (CSME).  Read more 

Takeover of Scotiabank likely to be raised in caucus at special CARICOM meeting

Stabroek: Republic Bank’s planned acquisition of Scotiabank’s operations in Guyana and eight Caribbean countries is not on the agenda of the upcoming special meeting of the Caribbean Community Heads of Government on the CARICOM Single Market and Economy (CSME) but Foreign Affairs Minister Carl Greenidge expects that it will be raised in caucus. Read more 

Republic Financial Holdings to acquire Scotiabank in nine Caribbean countries

Nation News: Republic Financial Holdings Limited (RFHL) announced today, that it has entered into an agreement to acquire Scotiabank’s banking operations in Guyana, St Maarten and the Eastern Caribbean territories, including Anguilla, Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines. Read more 

Josie Warns Of Potential For Dire Consequences From Scotiabank Sale

St Lucia Times: Former government minister, Peter Josie, has warned of potential dire consequences from a decision by Scotiabank to exit nine Caribbean countries, including Saint Lucia. Read more

 

CARICOM Sugar Industries prepared to supply total regional demand

RJR News: The Sugar Association of  the Caribbean has stated that for the 2017/18 crop, its members met 80 per cent of  the brown sugar needs of  Caribbean Community (CARICOM). Read more 

T&T can lose CARICOM market for fuel

Trinidad Guardian: T&T faces the pos­si­bil­i­ty of los­ing Cari­com mar­kets for the ex­port of fu­el as the price of fu­el com­ing out of T&T is like­ly to in­crease. Read more 

Cuba’s most valuable exports: its doctors

TRT World: Cuba over the last 50 years has honed in on its medical expertise to be able to punch above its weight in the international arena and garner soft power. Cuba has begun to withdraw more than 8,300 Cuban doctors from Brazil, potentially leaving millions of Brazilians, particularly its indigenous communities, without access to basic healthcare. Read more

CARICOM Leaders claim T&T has unfair advantage in manufacturing sector

Power 102 FM: Prime Minister, Dr Keith Rowley, says CARICOM leaders believe this country has an unfair advantage in the manufacturing sector because it benefits from lower electricity rates. Read more

CARICOM calls for seat on ICAO council

Stabroek: CARICOM is calling for a seat on the Council of the International Civil Aviation Organization (ICAO) as a means of having its concerns properly represented. Read more 

CARICOM highlights work against gender violence in the region

Prensa Latina: The Secretary General of the Caribbean Community (Caricom), Irwin LaRocque, highlighted on Sunday the important work being done in the region against gender violence. Read more 

CARICOM Secretary General describes new management system

CARICOM: A detailed update on the new Results-Based Management (RBM) System being pursued by the Caribbean Community (CARICOM) Secretariat was described by Deputy Secretary-General, Ambassador Dr. Manorma Soeknandan during a courtesy visit with Prime Minister Dr. the Honourable Timothy Harris. Read more 

US Government makes US$1 million computer equipment to CARICOM IMPACS

Bajan Reporter: U.S. Embassy Bridgetown, through its Office of International Narcotics and Law Enforcement Affairs (INL), participated in an official handover ceremony to commemorate the Government of the United States of America’s U.S. $1 million computer equipment donation to the CARICOM IMPACS/Joint Regional Communication Centre (JRCC). Read more 

INTERNATIONAL

G20 agreement backs ‘rules-based’ order but bows to Trump on trade reforms

The Guardian: World leaders have signed off on an agreement which reaffirms a basic commitment by the world’s biggest economies to multilateral trade and a “rules-based international order”, but bows to US demands for urgent reform of the World Trade Organisation (WTO). Read more 

G20: US and China agree to suspend new trade tariffs

BBC: US President Donald Trump and his Chinese counterpart Xi Jinping have agreed to halt new trade tariffs for 90 days to allow for talks, the US says. Read more

WTO reform: EU proposes way forward on the functioning of the Appellate Body

EU: The EU together with other members of the World Trade Organisation (WTO) – Australia, Canada, China, Iceland, India, Korea, Mexico, New Zealand, Norway, Singapore and Switzerland – unveiled a proposal for concrete changes to overcome the current deadlock in the WTO Appellate Body. The proposal will be presented at the meeting of the WTO General Council on 12 December. Read more

USTR Statement on China’s Auto Tariffs

USTR: U.S. Trade Representative Robert Lighthizer released a statement regarding China’s tariffs on U.S.-produced automobiles. Read more

Brexit: Trump says May’s Brexit plan could hurt UK-US trade deal

BBC: Donald Trump has suggested Theresa May’s Brexit agreement could threaten a US-UK trade deal. The US president told reporters the withdrawal agreement “sounds like a great deal for the EU” and meant the UK might not be able to trade with the US. Read more

Argentina, India agree to increase trade flows

Prensa Latina: Argentine President Mauricio Macri and India”s Prime Minister Narendra Modi pledged on Saturday to increase trade flow on several fronts and delved into the possibility that Argentina exports lithium to India. Read more

EU leaders agree UK’s Brexit deal at Brussels summit

BBC: EU leaders have approved an agreement on the UK’s withdrawal and future relations – insisting it is the “best and only deal possible”. Read more 

U.S., Mexico and Canada ink new trade agreement, but final ratification remains big hurdle

USA Today: President Donald Trump and the leaders of Mexico and Canada signed a revised trade pact Friday that changes many of the rules governing the free flow of commercial goods across North America.  Read more 

After signing new North American trade pact at G-20, Trump turns sights to China

Washington Post: President Trump suggested his Saturday showdown with Chinese President Xi Jinping could produce a cease-fire in the tariff war, capping a day that saw the American leader reach a milestone in his populist economic crusade by signing a regional trade deal with Mexico and Canada. Read more

Parties to government procurement pact approve UK’s terms of participation post-Brexit

WTO: At a meeting of the WTO’s Committee on Government Procurement on 27 November 2018, parties to the Government Procurement Agreement (GPA) approved in principle the United Kingdom’s final market access offer to take part in the GPA, in its own right, following its departure from the European Union. Read more

New WTO publication analyses potential impact of Blockchain on international trade

WTO: Amid growing interest and debate on Blockchain, the WTO launched a new publication today (27 November) that seeks to demystify the technology and analyse its capacity to transform world trade. The publication entitled “Can Blockchain revolutionize international trade?” explores how the technology could enhance areas related to WTO work and examines challenges that will have to be tackled to unlock the technology’s potential. Read more 

World Trade Outlook Indicator signals further loss of momentum in trade growth into Q4

WTO: Trade growth is likely to slow further into the fourth quarter of 2018 according to the WTO’s latest World Trade Outlook Indicator (WTOI) released on 26 November. The most recent WTO reading of 98.6 is the lowest since October 2016 and reflects declines in all component indices. It is below the previous value of 100.3 and falls under the baseline value of 100 for the index, signalling that trade growth in the coming months is expected to be below-trend. Read more 

Unlocking Africa’s trade potential

Forbes Africa: The African Export-Import Bank (Afreximbank) has identified intra-African trade as a critical factor for unlocking Africa’s trade potential. Read more 

Study: Trade supports over 36 million jobs across the EU

EU: Two new studies published today by the European Commission highlight the increasing importance of EU exports for job opportunities in Europe and beyond. Read more 

The Caribbean Trade & Development Digest is a weekly trade news digest published by the Caribbean Trade Law & Development Blog. Liked this issue? To read past issues, please visit here. To receive these mailings directly to your inbox, please follow our blog.

Have Caribbean Citizenship by Investment Programmes Run Their Course?

Alicia Nicholls

Caribbean Citizenship by Investment (CBI) programmes, and to a lesser but growing extent, residence by investment (RBI) programmes, are facing a rough ride. The latest blow came when the Paris-based Organisation for Economic Cooperation and Development (OECD) deemed CBI/RBI programmes operated by 21 jurisdictions, including those in the Caribbean, as “high risk to the integrity of the Common Reporting Standard”. While the OECD has clarified that this was not a blacklist, the list puts another glaring spotlight on Caribbean CBI/RBI programmes which are already battling to justify their existence to an increasing choir of skeptics.  In October, the European Union (EU) released a report analysing the state of play, issues and impacts of its own members’ programmes. With the mounting scrutiny being placed on Caribbean countries’ CBI/RBI programmes and stiffened competition from other investment migration programmes globally, have Caribbean countries’ CBI programmes run their course?

What are CBI Programmes?

CBI programmes are one of the two main types of investment migration programme – programmes which offer high net worth (HNW) investors accelerated citizenship or residence of the host country in exchange for a pecuniary contribution. Unlike RBI programmes which only confer accelerated permanent residence status, CBI programmes grant a qualifying investor, upon making a specified economic contribution to the host country (usually in real estate, investment in a business or in a specified government fund), accelerated citizenship for himself/herself and his/her qualifying spouse and/or dependents, once all relevant fees are paid and due diligence requirements are met. It means that a person can acquire citizenship or residence of another country in just a few months, compared to several years under regular naturalisation procedures.

Five Caribbean countries currently operate CBI programmes: St. Kitts & Nevis (the world’s oldest CBI programme), Dominica, Grenada, Antigua & Barbuda and St. Lucia. International examples include the EU member states of Austria, Cyprus and Malta, and the Pacific island nation of Vanuatu.

Second citizenship is a booming international industry reportedly worth US $3 billion, according to Citizenship by Investment.ch. There are now over one hundred CBI/RBI programmes worldwide, which seek to lure an expanding and highly mobile class of global High Net Worth Individuals (HNWIs) seeking the advantages a more favourable second passport could bring for themselves and their families. These advantages include greater mobility and security, tax planning advantages, and business opportunities.

The British Overseas Territory of Anguilla is the most recent Caribbean jurisdiction to commence a RBI programme, but versions of these programmes are also operated in the Bahamas, Barbados, Montserrat and Turks & Caicos, for example. Examples of RBI programmes in developed countries include the United States’ EB-5 programme and the United Kingdom’s Tier 1 Visa.

Challenges to Caribbean CBI/RBI programmes

Those Caribbean countries which operate them view these programmes as a pathway for economic diversification and development, bringing greatly needed foreign exchange and foreign direct investment (FDI) inflows, infrastructure development, and employment opportunities. In its Article IV Report on Dominica, which had been badly affected by category five Hurricane Maria in September 2017, the International Monetary Fund (IMF) noted that “fiscal performance deteriorated sharply due to the fall in tax revenue after the hurricane, but was partially offset by a surge in grants and buoyant Citizenship-by-Investment (CBI) sales revenues.”

Despite their economic benefits, CBI programmes have always been controversial due to some governments’ philosophical aversion to what many have called the “commodification of citizenship” or “selling of passports”. Indeed, CARICOM Member States remain philosophically divided on the desirability of CBI programmes.

There have also been, in some cases, legitimate concerns about the efficacy of the due diligence procedures, the perceived absence of a ‘genuine link’ between recipients of citizenship under CBI programmes and the host country, and reports of alleged instances of misuse of passports obtained under CBI programmes, which have brought increased international scrutiny of Caribbean countries’ CBI programmes.

One of the pull factors of Caribbean countries’ CBI programmes is the visa free access. For example, on the Henley & Partners Passport Index published by the world’s leading investment migration firm, Henley & Partners, St. Kitts and Nevis ranked the highest among Caribbean CBI countries in the strength of its passport,  providing visa-free access to 151 countries. Unfortunately, this advantage may be undermined if third countries, as is their right, decide to revoke visa-free access to citizens originating from countries offering CBI programmes, due to national security concerns. For example, Canada imposed visa requirements for citizens from St. Kitts & Nevis in 2014 and from Antigua & Barbuda in 2017 over similar concerns. Both countries have subsequently made changes to their programmes, but their citizens have not yet regained visa-free access to Canada.

The US Government has also repeatedly flagged Caribbean CBI programmes as possibly being used for financial crime, including in its International Narcotics Control Strategy Report 2017. With the current US administration taking an even tougher stance on national security,  US scrutiny of Caribbean CBI programmes is likely to continue or even intensify.

The European Commission has already sounded the alarm about the potential security risks that golden passport programmes operated by its own members could pose to the bloc. It reiterated this in its recently released report on those programmes operated in the EU.  But this scrutiny is not limited to EU CBI/RBI programmes. In a recently released report, global NGOs, Transparency International and Global Witness, also recently called on the EU to review its visa waiver schemes with those Caribbean countries operating CBI programmes.

In light of this scrutiny, other CARICOM Member States which do not operate programmes have feared that they themselves may suffer reputational and security risks due to the CBI programmes of other Member States. The CARICOM Secretariat has been examining the issue of CBI programmes operated by member states, but there appears to be no public information on what have been the outcomes of this examination thus far.

The other risk comes from increased global competition. The list of countries offering some kind of CBI or RBI programme has grown exponentially in the years since the global economic and financial crisis. For instance, this year Moldova started its own CBI. Moreover, while St. Vincent & the Grenadines is currently the only independent member of the Organisation of Eastern Caribbean States (OECS) to not offer a CBI programme due to the current government’s philosophical opposition to these programmes, the leader of St. Vincent & the Grenadines’ opposition party recently reaffirmed his support for launching a CBI programme there. What this shows is that countries around the world still see the economic potential of these programmes and it also means that competition is increasing.

Caribbean countries’ CBI programmes have ranked high on the Professional Wealth Management (PWM) Index. Regrettably, the increased competition between Caribbean CBI programmes both inter se and with other CBI programmes internationally has led to an apparent ‘race to the bottom’ among Caribbean CBI programmes in the form of price competition.

The OECD Challenge to CBI/RBI programmes

In early 2018, the OECD announced that it was examining CBI/RBI programmes as part of its Common Reporting Standard (CRS) loophole strategy and requested public input into the misuse of these programmes and effective ways of preventing abuse. The CRS is an information standard approved by the OECD Council in 2014 for the automatic exchange of tax information among tax authorities of countries which are signatories. CRS jurisdictions are required to obtain certain financial account information of their tax residents from their financial institutions and automatically share this information with other CRS jurisdictions on an annual basis. Most Caribbean IFCs are early adopters of the CRS.

While noting that CBI/RBI programmes may have legitimate uses, the OECD stated that CBI/RBI programmes are a risk to the CRS because they can be misused by persons to hide their assets offshore and because the documentation (such as ID cards) obtained through these programmes could be used to misrepresent an individual’s jurisdiction of tax residence. This, the OECD noted, could occur when persons fail to report all the jurisdictions in which they are resident for tax purposes.

In April 2018, the OECD published a compilation of the responses it had received, which also included responses by countries in the Caribbean offering CBI programmes. In its list of ‘high risk CBI/RBI” programmes to the integrity of the CRS” published in October 2018,  the OECD focused on those CBI/RBI programmes which gave access to a lower personal income tax rate on offshore financial assets and those which did not require an individual to spend a significant amount of time in the host jurisdiction.

It should be noted that reporting for CRS purposes is based on tax residence and that just because an investor has obtained citizenship of a country under a CBI programme, does not mean that he or she is automatically deemed to be a tax resident of the country. For example, a person may obtain St Lucian citizenship under St. Lucia’s CBI programme pursuant to the Citizenship by Investment Act and regulations, but under the St. Lucia Income Tax Act, he or she is only deemed to be resident for income tax purposes in St. Lucia for a given income year if he/she has been physically present there for not less than 183 days in that income year.

While the OECD has clarified that the list of ‘high risk CBI/RBI programmes’ was not a blacklist, there is concern about what reputational impact this list may have on the countries whose programmes were named. Financial institutions have been told by the OECD to bear in mind its analysis of high-risk CBI/RBI schemes when performing their CRS due diligence, which potentially brings increased scrutiny for Caribbean countries, which are already suffering the loss of correspondent banking relationships due to de-risking practices by risk-averse global banks.

Have CBI programmes run their course?

Given the growing array of challenges outlined, have CBI programmes run their course? While I do not think Caribbean CBI programmes have run their course, I think that there needs to be strong consideration by each of the countries concerned, and their citizens, of whether the economic benefits justify the increasing reputational and security risks, and to consider what further changes could be made to make their programmes more sustainable.

Caribbean countries are well aware that it is not in their interest for their CBI/RBI programmes to be perceived as loopholes for tax evasion or other criminal activity. It is, therefore, in their interest to work with the OECD to address the concerns raised about the potential for misuse of their CBI programmes.

According to the communique released at the 66th Meeting of the Organisation of Eastern Caribbean States (OECS) Authority, that organisation’s highest body, it was noted  as follows:

“The Heads engaged in extensive discussions on the matter, noting the unreasonableness of the OECD position, and resolved to undertake comprehensive reviews of the respective CBI and RBI Programmes to ensure that areas where they may be limitations are identified and strengthened.”

This is a promising development and it is hoped that these reviews will be conducted in a timely manner, that the results will be made public in the spirit of transparency and that the recommendations made will be implemented.

To their credit, there already exists cooperation among the Citizenship by Investment Units or equivalents of the Caribbean CIP countries through the Association of the Citizenship By Investment (CIPA). They have also been receiving the assistance of  the Joint Regional Control Centre arm of the CARICOM Implementation Agency for Crime and Security (IMPACS).

There is the real risk that countries may become overly dependent on CBI programme revenues for their fiscal and macroeconomic stability during boom times, leaving them vulnerable during periods of leaner revenue inflows. Since 2010, revenues from its programme have buoyed St. Kitts & Nevis’ economy, but the IMF in its Article IV Report of 2017 warned that “ the recent slowdown in CBI-related inflows and the ending of the five-year holding period for CBI properties call for close monitoring of the implications for the financial sector through the real estate market and banks’ exposure to real-estate-related activities.”

On a broader note, a comprehensive study of the economic contribution these CBI programmes have made and are making to the economies and societies of these Caribbean countries is recommended. This would provide empirical evidence of whether the macroeconomic benefits outweigh the reputational and national security risks. In this regard, the recent EU study on its own programmes could provide a good model for CARICOM or the OECS in terms of analysing the state of play and the impacts of Caribbean countries’ CBI/RBI programmes and making recommendations for mitigating the risks identified.

Such a study will require sound data. This brings me to another problem with these programmes – the transparency deficit, which was also highlighted by Transparency International and Global Witness in their report. Obtaining data on these programmes remains regrettably difficult due to the unfortunate reluctance by some authorities to share data publicly, even with researchers. Though some data on the macroeconomic contribution of these programmes may be obtained from those countries’ IMF Article IV reports, other data, such as employment generated by these programmes, are not.

Making data on these programmes publicly available will not only negate the perceived opacity of these programmes’ operation, but facilitate evidence-based planning, monitoring and evaluation of these programmes.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international 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 – November 18 – 24, 2018

Welcome to the Caribbean Trade & Development Digest for the week of November 18-24, 2018! We are happy to bring you the major trade and development headlines and analysis from across the Caribbean Region and the world from the past week.

THIS WEEK’S HIGHLIGHTS

This was another busy week in trade news! The WTO published its report on G20 trade measures showing that trade restrictive measures have increased significantly. The EU Summit saw the approval by EU leaders of the UK-EU Brexit Withdrawal Agreement but the agreement still has several other hurdles to overcome, including approval by the UK parliament where it remains deeply unpopular.

Please see below some of the other major headlines:

REGIONAL

Barbados overhauls corporate tax regime, slashes tax rate on local companies more than 20 per cent

Caribbean360: Barbados will harmonise its domestic and international corporation tax regimes by December 31, 2018, slashing the tax burden for some local companies by up to 29 per cent. Read more

Guyana and the EU reach an agreement to promote trade in legal timber products and improve forest governance

Antigua Observer: Guyana and the European Union (EU) have concluded a six-year process of negotiations towards a Voluntary Partnership Agreement (VPA), which aims to improve the application of forest laws, strengthen forest governance and promote trade in legal wood products. Read more 

Glasgow University To Pay Reparations For £200m Extracted From Region

Jamaica Gleaner: Vice Chancellor of The University of the West Indies (UWI) Sir Hilary Beckles has reported that The University of Glasgow in the United Kingdom (UK) has agreed to pay reparations for £200 million (approximately J$34 billion) taken from the Caribbean. Read more 

Bahamas’ WTO membership is no “fait accompli”

Tribune 242: The Government’s chief World Trade Organisation (WTO) negotiator yesterday said The Bahamas’ accession was no “fait accompli”, telling accountants: “I’m not tied to any outcome.” Read more 

Bahamas Chamber hires consultant for WTO Impact analysis

Tribune 242: The Bahamas Chamber of Commerce has hired Oxford Economics to study the likely economic impact of this nation’s accession to full World Trade Organisation (WTO) membership. Read more 

UK Hydrographic Office presents Guyana with marine geospatial data

Government of the UK: UKHO presents Guyanese Government with findings from a recent seabed mapping campaign to support the sustainable growth of its blue economy. Read more 

Full CSME implementation needs to be advanced in light of global trade wars – CARICOM

CARICOM: The CARICOM Single Market and Economy (CSME) could be used to insulate the region from the fallout of escalating global trade wars suggests the CARICOM Secretary-General. Read more

CARICOM Development funds must be replenished soon 

Loop News Barbados: The CARICOM Development Fund (CDF) has stimulated higher incomes and expanded trade for the Caribbean region. However, you cannot pour from an empty cup, therefore members states are being urged to put their monies forward to ensure the Fund can continue to deliver for the islands, and can look into forging partnerships to garner more benefits for small and medium enterprises as well. Read more 

CARICOM Looking To Re-Introduce Single Security Check

St Lucia Times: The Caribbean Community (CARICOM) is seeking to re-introduce the single security check for direct transit passengers on multi-stop intra-community flights. Read more 

 

INTERNATIONAL 

EU leaders agree UK’s Brexit deal

BBC: EU leaders have approved an agreement on the UK’s withdrawal and future relations – insisting it is the “best and only deal possible”. Read more 

China is paying for Most of Trump’sTrade War, Research says 

Bloomberg: President Donald Trump is succeeding in making China pay most of the cost of his trade war.That’s the conclusion of a new paper from EconPol Europe, a network of researchers in the European Union. Read more

Africa-China trade hits $230bn

Business Report: Over the past decade China’s trade with Africa increased from $100 billion (R1.4 trillion) in 2007 to $230bn by the end of 2017. Read more 

Africa: Trade Misinvoicing Costs South Africa U.S.$7.4 Billion in Tax a Year

All Africa: While SARS is scrambling to meet collection targets, a new report estimates the country lost $37-billion in revenue to trade misinvoicing in five years. Trade misinvoicing is thought to be the largest component of illicit financial flows, draining developing countries of much-needed finances. Read more 

Trudeau meets key trade partners to talk about future of Pacific trade deal

Toronto City News: Prime Minister Justin Trudeau is spending his last day at a major economic summit meeting with two key trading allies across the Pacific in the shadow of an ongoing trade war between the world’s two biggest economies. Read more 

Investors hope for trade war ceasefire at G20 summit

The Guardian: There are hopes, however limited, that the meeting between the two leaders in Buenos Aires will result in a calming of tensions which have so far resulted in huge share price drops, most notably in US tech stocks. Read more 

India seeks binding commitments to simplify services trade in RCEP 
Economic Times: India has asked 15 Asia-Pacific countries to make “binding and commercially meaningful” commitments to simplify trade in information technology and business services aimed at easing movement of skilled professionals in the proposed Regional Comprehensive Economic Partnership (RCEP) agreement being negotiated. Read more

Panels established to review US steel and aluminium tariffs, countermeasures on US imports

WTO: At its meeting on 21 November, the WTO’s Dispute Settlement Body (DSB) agreed to requests from seven members for the establishment of panels to examine tariffs imposed by the United States on steel and aluminium imports. Read more 

WTO report shows sharp rise in trade-restrictive measures from G20 economies

WTO: The WTO’s 20th monitoring report on Group of 20 (G20) trade measures issued on 22 November shows that the amount of trade covered by new import-restrictive measures hit a new high during the current reporting period.  Read more 

WTO, UNCTAD, ITC sign MoU to provide businesses with better access to trade data

WTO: The WTO, the United Nations Conference on Trade and Development (UNCTAD) and the International Trade Centre (ITC) signed today (23 November) a Memorandum of Understanding to advance the development of an online platform — the Global Trade Helpdesk — aimed at providing businesses, and particularly small businesses, with faster and easier access to trade data and information on potential export markets. Read more 

Items proposed for consideration at the next meeting of the Dispute Settlement Body

WTO: The WTO Secretariat has circulated a meeting notice and list of items proposed for the next meeting, on 4 December 2018, of the Dispute Settlement Body, which consists of all WTO members and oversees legal disputes among them. Read more 

Morocco files appeal against panel ruling in dispute with Turkey over steel duties

WTO: Morocco filed an appeal on 20 November concerning the WTO panel report in the case brought by Turkey in “Morocco — Anti-dumping Measures on Certain Hot-Rolled Steel from Turkey” (DS513). The panel report was circulated to WTO members on 31 October. Read more

Panama files appeal against compliance panel ruling in dispute with Colombia over import measures

WTO: Panama filed an appeal on 20 November concerning the WTO compliance panel report in the case “Colombia — Measures Relating to the Importation of Textiles, Apparel and Footwear (Recourse to Article 21.5 of the DSU by Colombia and Panama)” (DS461). The compliance panel report was circulated to WTO members on 5 October. Read more

WTO members review regional trade agreements covering EU, Ghana and EAEU

WTO: WTO members reviewed the interim Economic Partnership Agreement between the European Union and Ghana at the 19 November meeting of the Committee on Regional Trade Agreements. Members also considered the Eurasian Economic Union (EAEU) treaty and EAEU accessions of Armenia and the Kyrgyz Republic. Read more

The Caribbean Trade & Development Digest is a weekly trade news digest published by the Caribbean Trade Law & Development Blog. Liked this issue? To read past issues, please visit here. To receive these mailings directly to your inbox, please follow our blog.

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