Caribbean Trade Law and Development

Author: caribbeantradelaw

  • World Economic Forum Releases Global Enabling Trade Index 2016; Caribbean countries continue to lag

    World Economic Forum Releases Global Enabling Trade Index 2016; Caribbean countries continue to lag

    Photo source: Pixabay

    Alicia Nicholls

    The World Economic Forum (WEF) and the Global Alliance for Trade Facilitation released the 2016 edition of the Enabling Trade Report today November 30, 2016. Singapore topped the ranking for the 5th time in a row and was in the top 3 for 5 of the 7 pillars.

    For Latin America and the Caribbean, Chile was the top economy and led in all but 2 pillars. With a rank of 21st out of 136 economies, Chile was also the highest ranked emerging economy on the index. According to the WEF, the two main findings from this edition of the index were (1) a large part of the world is still excluded from globalization, and (2) some of the world’s largest economies offer limited market access. Another major finding is that the ASEAN market has become more accessible than European Union (EU) and the United States markets.

    Caribbean countries’ performance 

    Only three Caribbean economies were included on this year’s index: Dominican Republic (78), Jamaica (89) and Trinidad & Tobago (106).

    Dominican Republic

    The Dominican Republic ranked 78 out of 136 economies in 2016, compared to 77 out of 134 in 2014 and has not as yet ratified the WTO Trade Facilitation Agreement. The Dominican Republic’s best performance was on Pillar 4: Availability and Quality of Transport Infrastructure where it ranked 54th. Its worst was on Pillar 6: Availability and Use of ICTs where it ranked 95th.

    The most problematic factors identified for importing were tariffs/non-tariff barriers, burdensome import procedures, high cost or delays caused by domestic transportation, corruption at the border and high cost or delays caused by international transportation. The most problematic factors identified for exporting were difficulties in meeting quality and quantity requirements of buyers, identifying potential markets and buyers, high cost or delays caused by domestic transport, access to trade finance and inappropriate production technology and skills.

    Jamaica

    Jamaica ranked 89 out of 136 economies in 2016, compared to 88 out of 134 economies in 2014 and has ratified the WTO Trade Facilitation Agreement. Jamaica’s best performance was on Pillar 2: Foreign Market Access where it ranked 34th. Its worst was on Pillar 5: Availability and Quality of Transport Services where it ranked 108th.

    The most problematic factors identified for importing were burdensome import procedures, tariffs/non-tariff barriers, corruption at the border, crime and theft, and domestic technical requirements and standards. The most problematic factors identified for exporting were identifying potential markets and buyers, difficulties in meeting quality and quantity requirements of buyers, access to imported inputs at competitive prices, access to trade finance and inappropriate production technology and skills.

    Trinidad & Tobago

    Trinidad & Tobago ranked 106 out of 136 in 2016, sliding from 93 out of 134 in 2014 and ratified the WTO Trade Facilitation Agreement. Trinidad & Tobago’s best performance was on Pillar 6: Availability and Use of ICTs where it ranked 57th. Its worst performance was on Pillar 7: Operating Environment where it ranked 119th.

    The most problematic factors identified for importing were: burdensome import procedures, tariffs/nontariff barriers, corruption at the border, crime and theft and high cost/delays caused by international transportation. The most problematic factors for exporting were: identifying potential markets and buyers, access to trade finance, difficulties in meeting quality and quantity requirements of buyers, access to imported inputs at competitive prices and technical requirements and standards abroad.

    About the Index

    The Enabling Trade Index ranks economies according to “their capacity to facilitate the flow of goods over borders and their destination”.The index is useful as countries seek to implement the World Trade Organisation’s Trade Facilitation Agreement concluded in 2013 at the Bali Ministerial. It helps countries to see where they are excelling and where there is a room for improvement. It is therefore disappointing that more Caribbean countries are unable to be ranked.

    On this year’s index, one hundred and thirty-six (136) economies, accounting for 98 percent of world GDP and 98.3 percent of world merchandise trade, were ranked on seven pillars: domestic market, foreign market, efficiency, transparency and border, availability and quality of transportation infrastructure, availability and quality of transport services, availability and use of ICTs and operating environment.

    The full report may be accessed here.

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

     

  • Happy 50th Anniversary of Independence Barbados! Tribute to Barbados at 50

    Happy 50th Anniversary of Independence Barbados! Tribute to Barbados at 50

    Alicia Nicholls

    I would like to take this opportunity to extend a happy 50th Anniversary of Independence to all my fellow Barbadians both at home and in the diaspora. Our country Barbados, with an area of just 166 sq miles and a population of around 280,000, may be little more than a small dot on the geographical map but it is hard to deny how far we have come from a small British colony prior to November 30, 1966.

    Barbados lacks any real natural resources. But thanks to the steady hand of successive governments, we became a country that former UN Secretary General, Kofi Annan, once described as “punching above its weight”. We are known as the inventors of road tennis, home to the third oldest Parliament in the world, the birthplace of international superstar Rihanna, the greatest cricketer the world has ever seen Sir Garfield Sobers and the inventor of the precursor to the search engine Alan Emtage, just to name a few.

    We cultivated a reputation both in the Caribbean and abroad as a country with an enviable level of social development, respect for the rule of law, good governance, a strong democratic tradition,  a 99% literacy rate, and a well-educated people who make our country proud wherever we roam. We punch above our weight on social indicators, ranking high on the Human Development Index. We are classified by the World Bank as a high income non-OECD country. In our 50 years of independence, we can boast of always having peaceful transitions of power. Political assassinations, coup d’etats, dictatorships and civil wars are alien to the Barbadian way and have never occurred in our country.

    On the global stage we have earned the respect of fellow countries by joining with other developing countries to provide decisive leadership on international issues affecting small island developing states such as climate change, and on issues critical to small vulnerable economies in the World Trade Organisation (WTO).

    Like every country, Barbados is not without its challenges. The post-Global Recession years have not been kind, exposing structural weaknesses which have festered for too long and need to be addressed by decisive leadership. There are things we need to improve upon to ensure that the gains our forefathers, like the late father of independence, Errol Walton Barrow, worked hard to build, will remain for future generations. Complacency will do us no favours.

    However, despite the challenges, I have no doubt we have the skills and creativity to overcome them. We just need the will. When I saw the recent newspaper article which showed some 110 people became new Barbadian citizens at the latest citizenship ceremony, it reiterated to me why we Barbadians are so proud of our country. For all its faults, there is no place like the 246. No matter where we roam, the “Rock” will always be home.

    Happy 50th Anniversary of Independence, Barbados!

    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.

  • Dominica Ratifies WTO Trade Facilitation Agreement

    Dominica Ratifies WTO Trade Facilitation Agreement

    Photo source: Pixabay

    Alicia Nicholls

    Dominica has become the latest Caribbean Community (CARICOM) member state to ratify the World Trade Organisation’s (WTO) Trade Facilitation Agreement, according to a WTO press release. On November 28, 2016 Dominica, along with Mongolia, deposited its instrument of acceptance to the WTO. These two ratifications bring the number of WTO member states to have ratified the Agreement to 100, just 10 shy of the number (two thirds of WTO membership) needed for the Agreement to go into effect, according to the press release.

    The Trade Facilitation Agreement, which was concluded at the WTO’s Bali Ministerial in 2013, aims to lower trade costs by expediting the movement, clearance and release of goods, thereby cutting red tape, and improving cross-border customs cooperation on trade and customs compliance issues. Upon the request of developing and least developed country (LDC) WTO members, a Trade Facilitation Agreement Facility  was established in 2014 to assist them with implementing and gaining the benefits from the Agreement.

    The WTO expects the Agreement to  boost global merchandise exports by up to $1 trillion per year if fully implemented. As I had noted in a previous post on the Agreement, ratification and full implementation  of the Trade Facilitation Agreement by all CARICOM states could also improve Caribbean regional integration by easing transaction costs of exporting across CARICOM states. Implementing these reforms would also send a strong signal to the international business community of these countries’ commitment to improving their ease of doing business.

    The following other CARICOM countries have already ratified the Agreement: Trinidad & Tobago, Belize, Guyana, Grenada, St. Lucia, Jamaica and St. Kitts & Nevis.

    The WTO press release may be viewed here.

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

  • WTO Panel Rules US Tax Incentive to Boeing a Prohibited Subsidy

    WTO Panel Rules US Tax Incentive to Boeing a Prohibited Subsidy

    Photo source: Pixabay

    Alicia Nicholls

    In the latest saga of the on-going battle between aircraft giants Airbus and Boeing, a World Trade Organisation (WTO) dispute settlement body panel on November 28, 2016 has ruled that Washington State’s business and occupation (B&O) aerospace tax rate for the manufacturing or sale of commercial airplanes under Boeing’s 777X programme currently in development is a prohibited subsidy under the WTO’s Subsidies and Countervailing Measures (SCM) Agreement. The tax breaks to Boeing had been extended by Washington State in 2013 from 2024 to 2040.

    The Dispute

    The dispute DS487: United States — Conditional Tax Incentives for Large Civil Aircraft was brought by the European Union (EU) which claimed that seven tax incentives extended by Washington State to the civil aerospace industry, which would benefit Boeing’s 777x programme, constitute prohibited subsidies under Articles 3.1(b) and 3.2 of the WTO’s Subsidies & Countervailing Measures Agreement because they de jure require Boeing to use domestically assembled and not imported body and wings for its 777x jets.Such a measure would fall under a prohibited subsidy under Article 3.1(b) of the SCM Agreement as it is a subsidy tied to the use of local content. The EU had claimed that Boeing would gain over $5.7 billion in benefits from the measures.

    Findings

    The Panel found that all seven of the measures at issue were subsidies under Article 1 of the SCM but found that only the B&O aerospace tax rate for the manufacturing or sale of commercial airplanes under the 777X programme was a prohibited subsidy under the SCM Agreement as it was contingent on the use of domestic over imported goods.

    The Panel recommended that the US withdraw this prohibited subsidy without delay and within 90 days.

    With respect to the six other challenged measures, the Panel held that the EU did not demonstrate that the aerospace tax measures are de jure contingent upon the use of domestic over imported goods and were therefore not prohibited subsidies.

    Reactions

    Interestingly, both sides appear to have claimed victory which is perhaps not surprising as the WTO ruled only one out of the seven contested measures to be prohibited.

    The European Commission has hailed the ruling a “major win” in its press release following the ruling. In that release EU Trade Commissioner, Cecilia Malmstrom is quoted as stating:

    “Today’s WTO ruling is an important victory for the EU and its aircraft industry. The panel has found that the additional massive subsidies of USD 5.7 billion provided by Washington State to Boeing are strictly illegal. We expect the US to respect the rules, uphold fair competition, and withdraw these subsidies without any delay”.

    Boeing’s rival, the EU-based Airbus termed it a “knock-out blow”. In its own press release, Airbus claimed that “Boeing has caused at least $95 billion in commercial harm to Airbus, opening the door to trade sanctions against the US in an equivalent amount.”

    In its response to the ruling, Boeing stated that “the World Trade Organization (WTO) today rejected virtually all of the European Union’s challenges to the Washington state tax incentives”. Boeing’s General Counsel, J. Michael Luttig stated that “we fully expect Boeing to preserve every aspect of the Washington state incentives, including the 777X revenue tax rate.”

    What next?

    Either party can appeal the ruling and it is expected that this will occur. This dispute is just the latest in the 12-year old dispute between aerospace rivals Airbus and Boeing over the extent of “illegal” government support the manufacturers have received from EU member countries in the case of Airbus, and the US in the case of Boeing.

    The ruling comes on the heels of a report by a WTO compliance panel released September 2016 which held that the EU had not complied fully with a ruling against support provided to Airbus in the EC and certain member States – Large Civil Aircraft dispute. In 2017 the WTO is also expected to issue its ruling on another case regarding US support for Boeing.

    The full panel report may be viewed here.

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