Caribbean Trade Law and Development

Author: caribbeantradelaw

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

    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)

    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

    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

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  • Mexico and CARICOM agree new areas for technical cooperation

    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.