Caribbean Trade Law and Development

Author: caribbeantradelaw

  • New Canadian Government Presents New Opportunities to Strengthen Caribbean-Canada Relations

    Alicia Nicholls

    The Canadian Federal election campaign and the resultant election of a new federal government have barely made a ripple in news coverage here in the Caribbean. It is a curious fact given that in the words of former CARICOM Secretary General, Edwin Carrington, Canada has always been perceived as a ‘special friend‘ to the Caribbean. This friendship, of course, has endured through consecutive Liberal and Conservative governments, including under the outgoing Conservative-led Stephen Harper administration. Given the current recession in Canada, most of the debates during the 78-day long federal election campaign focused on domestic issues,while foreign policy topics centred mostly on the US-led anti-Islamic State coalition, the Syrian refugee crisis, the Keystone XL pipeline and broader US-Canada relations. Suffice it to say, Canada’s relationship with the Caribbean did not feature in the election campaign, nor was it expected to. In spite of this, the campaign platform of the majority elected Trudeau-led Liberal Party and its young charismatic leader’s call for a “more pro-active diplomacy”, do potentially bode well for enhancing Canada-CARICOM relations.

    Trade Ties

    One of the areas on which this relationship can be deepened is trade. The volume of two-way merchandise trade between Canada and the countries of the Caribbean is admittedly small. As stated in a report, Caribbean trade represents less than one percent of Canada’s total annual trade and as such it is not surprising that the Caribbean is not on the radar of Canada’s current trade priorities. On the flip side, Canada represents the third largest market for CARICOM goods trade, only behind the US and EU markets and CARICOM actually enjoys a rare trade surplus with Canada, helped by the Caribbean-Canada Trade Agreement – CARIBCAN.

    Inaugurated on June 15, 1986, CARIBCAN is a preferential agreement which gives one-way, duty free access for most goods exports originating from beneficiary countries in the Caribbean with the aim of enhancing Caribbean export trade and promoting their economic development. This agreement is limited to countries of the Commonwealth Caribbean namely: Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, Dominica, Grenada, Guyana, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Trinidad and Tobago, and the Turks and Caicos Islands.

    There are several reasons why this current trading arrangement needs to be addressed and replaced by a free trade agreement. Firstly, as a non-reciprocal arrangement which favours only Commonwealth Caribbean countries, CARIBCAN is not compatible with the World Trade Organisation (WTO) non-discrimination rules (more specifically Article 1(1) of the GATT 1994 which deals with Most Favoured Nation (MFN) treatment) and has had to receive successive waivers from the WTO’s membership.

    Secondly, not all goods are afforded duty-free access under CARIBCAN. Those exceptions are products of HS Chapters 50 to 65 inclusive and products subject to MFN rates of duty which are more than thirty-five per cent (35%).Thirdly, CARIBCAN is limited to goods and does not include services-trade, which constitutes the crux of most CARICOM economies. Financial services and tourism are two major areas of services trade between Canada and the Caribbean. According to Caribbean Tourism Organisation (CTO) data, Canada is the region’s third largest source market of long stay arrivals, accounting for 12.3% in 2014, after the US (49.1%) and the UK (19.1%).  In regards to temporary movement of persons, Caribbean countries benefit under the Canadian Seasonal Agricultural Workers Programme ‘Farm Labour Programme.

    Fourthly, CARIBCAN does not provide rules on investment protection or promotion. Canadian companies are major investors in the Caribbean region, particularly in the area of financial services. Three Canadian banks have a strong presence in the Caribbean: First Caribbean (CIBC), the Royal Bank of Canada and the Bank of Nova Scotia. Caribbean low tax jurisdictions like Barbados are preferred domiciles for Canadian offshore businesses. However, only two CARICOM states (Barbados and Trinidad) currently have a bilateral investment treaty with Canada, while only Barbados, Guyana, Jamaica and Trinidad & Tobago have a tax treaty with Canada.

    Under the Stephen Harper government, Canada proactively expanded its trade and investment treaty network considerably, including the recently signed Trans-Pacific Partnership Agreement. CARICOM countries have traditionally not shown much interest in pursuing a free trade agreement with Canada but finally agreed to discussions on a free trade agreement to replace the CARIBCAN arrangement in the 2000s. After seven disappointing rounds of negotiations beginning in 2007, Canada decided to end the negotiations due to the lack of an ambitious liberalisation target by CARICOM. In March 2015, Canada acceded to CARICOM’s request to seek another WTO waiver for CARIBCAN (until 31 December 2023).

    The pros and cons of a CARICOM-Canada trade agreement have already been thoroughly discussed elsewhere. However, broadly speaking, a trade agreement would help create predictability for CARICOM-Canada goods trade and also allow for trade rules on investment protection, liberalisation and promotion and services trade (including mobility of skilled workers). CARICOM countries should use the election of a new Canadian government as impetus to re-engage with Canada on the negotiation and successful conclusion of a mutually beneficial trade and development agreement.

    Marijuana

    Another more ‘taboo’ area is the issue of marijuana. Trudeau has promised to legalise marijuana, a stark shift from the Conservatives’ stance. Jamaica has passed the Dangerous Drugs (amendment) Act which decriminalises possession of two ounces or less of marijuana and more recently, in May Jamaica’s University of Technology received a licence officially authorizing the cultivation of marijuana for scientific research. Under this new environment, there is scope for investment and cooperation between Canadian and Jamaica companies, researchers and research institutions on marijuana research, including medical marijuana, and marijuana-based products.

    Climate Change

    Due to shared values and common interests, Canada and the Caribbean have always had each other’s support on issues of a hemispheric and global significance. The Liberal Party Platform included a more pro-active stance on climate change and Mr. Trudeau repeatedly criticised Mr.Harper’s lack of leadership on climate change issues. This shift in Canadian climate change policy could be of benefit to the Caribbean small island developing states which are particularly vulnerable to the effects of climate change, including sea level rise, coral bleaching and rainfall variability. A Trudeau-led Canada therefore could be a power ally for the Caribbean in continuing global awareness of the vulnerability of SIDS to the effects of climate change. At the same time, some developed countries’ climate change mitigation policies and environmental taxes run the risk of directly or indirectly affecting developing countries. A recent example is the UK’s air passenger duty (APD), which had an adverse effect on Caribbean tourist arrivals from the UK and was mitigated only after much lobbying by Caribbean governments. As such, Caribbean countries will have to lobby to ensure that any climate change mitigation strategies implemented by the new Canadian government help but do not hinder the region.

    Development Aid

    Canada has been an important development partner for the region. Trudeau’s campaign pledge to boost Canada’s foreign aid is encouraging and it is likely that some of the aid initiatives implemented under the Harper administration, such as the Improved Access to Justice in the Caribbean, Judicial Reform and Institution Strengthening in the Caribbean project announced at the Summit of the Americas in April 2015 in Panama City, Panama  will be continued.

    Immigration

    Canada has traditionally had a pretty ‘open door’ immigration policy, of which the Caribbean has been able to benefit. The Harper administration saw the introduction of several controversial measures which Trudeau criticised during the campaign. Caribbean immigrants in Canada have contributed to Canadian society in a variety of fields, including the highest corridors of government. The Haitian-born Michaelle Jean, former Governor General is just but one example. It should be noted that there are Canadians living in and contributing to the Caribbean as well. Trudeau’s platform includes a number of policies aimed at reforming Canada’s immigration policy and includes policies promoting family reunification, restoring the maximum age of dependents and repealing aspects of Citizenship Act under Bill-C-24 which he argued created “second class citizens”.This is encouraging for Caribbean immigrants living and contributing in Canada.

    Taxation

    There is however one area of concern. In a marked shift from Harper’s tax policy, Mr.Trudeau has proposed a middle class tax cut financed by raising taxes on the ‘one percent’ and corporations. Canadian tax policy is of importance to offshore financial centres in the Caribbean, especially Barbados which has traditionally been one of the most attractive jurisdictions for Canadian businesses due to its low taxes. There has been concern that Canada’s widening network of tax information exchange agreements has undermined the attractiveness Barbados has had to Canadian businesses. In an effort to boost revenue collection, it is likely that there will be greater emphasis by a Trudeau administration not just on tax evasion (which is illegal), but also tax avoidance (which is legal), including Canadian companies’ use of Caribbean low tax jurisdictions for more efficient tax management. As such, this is something which Caribbean offshore jurisdictions will have to monitor closely to ensure they are not unfairly branded or punished as ‘tax havens’.

    The economic challenges Canada currently faces, exacerbated by low oil prices and sluggish global growth, will all ultimately determine the new Canadian government’s trade and foreign policy priorities. In spite of this, Canada and the Caribbean’s ‘special’ friendship has been embraced by successive Canadian governments, including under Mr. Harper. Given the tone of Mr. Trudeau’s foreign policy campaign rhetoric, it is unlikely this will change. While not specifically directed to the Caribbean, Mr. Trudeau’s campaign policy proposals appear promising for Canada-Caribbean relations and the many Caribbean descendants living in Canada. They potentially provide scope for greater Canada-CARICOM engagement in a variety of fora, something which Caribbean leaders should continue to actively promote.

    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 international relations.

  • News Digest – October 18 2015

    Jamaican Foreign Minister calls for support for the CCJ

    Foreign affairs and foreign trade minister, Senator A.J. Nicholson, has urged full support for the adoption of the Caribbean Court of Justice (CCJ) as Jamaica’s final appellate court. See more

    ACS Promotes Regional Air Connectivity

    The Association of Caribbean States (ACS) through its Directorate of Transport convened the 24th Meeting of the Special Committee for Transport on 16th October 2015 at the ACS Secretariat in Port of Spain. See more

    Dominica’s tourism sector ready to welcome visitors

    Discover Dominica Authority has partnered with LIAT to launch discounted airfares to hoteliers and travel agents visiting Dominica between October 1 – December 31, 2015. See more

    St. Kitts and Nevis Prime Minister adds voice to reparations call

    Prime Minister Dr. Timothy Harris has declared his government’s unwavering support for the call for reparations for the atrocities of slavery.See more

    Barbados wants more Chinese visitors

    Prime Minister Freundel Stuart wants to see more Chinese tourists coming to Barbados.Stuart expressed this wish recently when China’s new ambassador, Wang Ke, paid him a courtesy call at Ilaro Court. See more

    Mexico hotel chain announces $US 900m in investment in Jamaica

    Mexico-based Karisma Hotel and Resorts has announced plans to invest more than US$900 million to develop nine hotels in Jamaica, adding 4,000 rooms to the country’s stock over the next ten years. See more

    Barbados announces it has spent $20m on CARICOM agencies in 2014

    Prime Minister Freundel Stuart tonight told Caribbean Community (CARICOM) agencies which benefit from millions of Barbadian taxpayer dollars, to spend that money prudently.See more

    CARICOM SG continues advocacy for concessionary funding of vulnerable states

    The CARICOM Secretary General continues to champion the cause for vulnerable states to receive concessional financing due to issues related to climate change. See more

    Caricom-Cuba Science & Technology Links to be Strengthened

    The Hon. Elba Rosa Perez Montoya, Minister of Science, Technology and the Environment in Cuba, is expected to journey to Grenada to sign a Memorandum of Understanding (MOU) jointly with the Rt. Hon. Dr. Keith Mitchell, Prime Minister of Grenada and Prime Minster responsible for Science and Technology (S&T) in the CARICOM. See more

    Food self-sufficiency identified as region’s primary agri thrust, says CARICOM

    PROGRESS towards food self-sufficiency and the achievement of economic and technical efficiency in food production were the primary objectives a senior Caribbean Community (Caricom) trade official identified lastw eek for a renewed agriculture sector.See more

    Man Booker Prize: Jamaican author Marlon James wins prestigious literary award

    Jamaican author Marlon James has won the prestigious Man Booker Prize with his book A Brief History Of Seven Killings.The 44-year-old author is the first Jamaican to win the prize in its 47-year history, with his tale about an assassination attempt on Bob Marley which offers a window into 1970s and 1980s Jamaica. See more

  • Securing better statistical data for better Caribbean lives: Reflecting on the data problem in the Caribbean

    Alicia Nicholls

    Statistical offices and associations across the Caribbean will join those around the world this coming Monday October 20 in celebrating the annual UN World Statistics Day which aims to highlight the importance of statistics in shaping our societies. This year’s theme “Better data, better lives” caused me to reflect on two things which caught my eye in the news in recent weeks. The first was the non-inclusion of Barbados in the World Economic Forum’s Global Competitiveness Report 2015/2016 due to the lack of available data. This point was raised by one of our veteran journalists in an article. The second was the description by the Director of the Caribbean Export Development Agency of the lack of data for the region in order to assess the competitiveness of regional exports as “embarrassing”.They got me thinking yet again on this vexing data problem in the region and the serious development implications of this status quo.

    The Caribbean’s data scarcity problem

    A report coming out of an ECLAC workshop in 2003 succinctly sums up the data problem in the region:

    Generally, the Caribbean countries have been described as “data poor” and in the absence of data and information, policies adopted and implemented have been arrived at on the basis of little or no data and less information. The result is years of wandering in the wilderness of development – talking of visions of the promised land of development without the ability to measure proximity to that goal.

    Years later, the data problem repeats itself. Too many reports mention data shortages in regards to the Caribbean; data is often either missing for some indicators or some years. Barbados’ embarrassing omission from the Global Competitiveness Index ranking in the WEF’s Global Competitiveness Report for 2015/2016 due to the absence of data is just one of the latest examples.

    Obstacles to data availability

    The ECLAC report quoted above notes that obstacles to data availability in the Caribbean region include the following:

    • Lack of financial resources, ‰
    • Lack of qualified personnel, ‰
    • Lack of institutional capacity, ‰
    • Lack of coordination between departments, ‰
    • Low priority on the political agenda

    As a researcher, I can certainly add more than my two-cents’ worth of frustration at the difficulty and in many cases, futility, of trying to obtain data from official and private sector sources here in Barbados and elsewhere in the region in a timely fashion. This is not to cast aspersions on any of these actors. After all, there are occasions where I have gotten good data and assistance from willing staff in government departments/agencies, private sector  associations and from businesses for studies I have had the fortune of working on. But sad to say, there are many occasions where this is the exception and not the rule.

    Central Statistical Offices (CSOs) are financed primarily by government budget resources and in some cases have been receiving declining budget allocations as cash-trapped governments in the region seek to minimise government expenditure. As a result, the human resource and finance constraints of CSOs often limit their capacity to collect data or to process data requests from the public in a timely manner. This often leads to long waiting times for accessing data.

    Outside of initiatives like CARICOMStats, there are few online national or regional statistical databases to draw on. The few which exist are often outdated or limited in the datasets available. The best sources for online data in the region still tend to be international databases. There are good data-rich studies which have been conducted which have been commissioned by public or non-state entities but these findings are often not published or are disseminated only to select stakeholders.

    Data scarce or data scared?

    This brings me to a question I often ask; is it only that we are data scarce or are we also data scared? In the Caribbean there is a possessiveness with which we guard data. There is still the archaic mentality among some public and private actors that power requires cornering knowledge, while data sharing weakens power positions. Due to the silo mentality that pervades many of our civil services, there is often limited data sharing between government agencies and there are instances of more than agency collecting the same data. On the flip side, data collection by government agencies is often constrained by non-cooperation by some members of the private sector and the public in providing data to these agencies in a timely manner. Many businesses in the region do not like to complete surveys and/or are extremely guarded about what data they provide to third parties, with or without a confidentiality agreement.

    Often times, therefore, the only way to obtain data in the region is if one knows a contact in a government agency or has a personal rapport with the business owner from which data is requested. Indeed, what needs to be recognised is that data sharing empowers all. It empowers the data sharer, the data gatherer and the ultimate end users (e.g. the policy makers), as well as the beneficiaries of any policies which the data has been used to support and develop. While there are legitimate data security concerns particularly in regards to sensitive data, this should not be used as an excuse to deny data for legitimate goals.

    So what’s the big deal anyway?

    The data situation in the region is one that has many sustainable development implications. The main end users of data are not just governments, but businesses, NGOs and the citizenry in general. The availability of reliable, accurate and timely statistics is needed for evidence-based planning, evaluating and monitoring of policies and programmes at all levels of government, business and civil society, which ultimately impacts on the society at large. For instance, how can we formulate effective poverty eradication policies if we do not have accurate data on the scale, nature and complexity of the poverty problem? How do we know that the targeted interventions to grow premature sectors of our economies are working if we do not have enough data on which to conduct a proper impact assessment? In many cases, as pointed out in the quote above from the ECLAC workshop report, we are making policies, decisions and formulating plans in the dark. How often have you heard public officials give reports on policies or problems but caveat them by saying “(recent) data is not yet available” or something else to that effect?

    What needs to be done?

    We in the Caribbean region know and acknowledge we have a data problem. What then are the possible solutions?

    • Firstly, we need to strengthen the capacity of our national statistical systems and primarily our CSOs. Our governments must provide CSOs with enough financing and qualified staff so they can effectively and efficiently carry out their functions of collecting, interpreting and providing us the public with timely, accurate and reliable data.
    • Secondly, a frequent complaint is that there are not enough people in the Caribbean region trained in statistical methodologies and technologies. We need not only to continuously train existing CSO staff in these methodologies and technologies but to encourage young people to get into the field of statistics. Statistics is often not seen as a particularly “sexy” or lucrative field like say law or medicine. But this can be changed. Many countries offer national scholarships for development purposes. Why not identify statistics as one of the areas eligible for these scholarships?
    • Thirdly, a big problem in our civil service, and our societies, is the endemic phenomenon of silos; various government agencies collecting the same data or not sharing data with each other. We need an integrated data collection and sharing approach among the various government agencies, coupled with greater linkages with the industry stakeholders. Key to this is more communication about the kinds of data needed, agreed methodologies and standards, and the mechanisms for reporting findings to stakeholders.
    • Fourthly, we must change the fear, skepticism and power attitudes many of our government officials and private sector actors have regarding data sharing through greater statistical advocacy. And while we are still on the topic of changing attitudes, our policy makers need to appreciate the importance of evidence-based (and not gut-based) decisions and evaluations.
    • Fifthly,it would be good to know how many countries have actually amended their statistical legislation to take into account the changes as proposed in the CARICOM Statistics Model Bill.

    This World Statistics Day 2015 themed “Better Data, Better Lives” should be a catalyst for our governments, CSOs, private sector and all our people to reflect critically on the importance of statistical data for creating better lives for us all in the Caribbean region. We know the data problem, the implications of it, and we know the solutions. These proposed solutions herein stated are not novel. They have already been posited by many others.

    Looking at the regional landscape there are several initiatives at the CARICOM level which are quite encouraging and are aimed at tackling the previously mentioned data challenges. Many of these initiatives are being done through technical assistance and capacity building programmes with the help of regional and international development partners. In his speech marking the 7th CARICOM Statistics Day 2015 on October 15,CARICOM Secretary General Irwin LaRocque urged member states to invest in improving their statistical production in order to assist with development. He also outlined the work of the Standing Committee of Caribbean Statisticians which has reportedly recently endorsed an action plan identifying the support needs of the region’s central statistical offices. In his key note address at the Second High Level Advocacy Forum on Statistics, in May 2014, the Hon. Dr. Keith Mitchell, the Prime Minister of Grenada, highlighted not only that statistics should be seen as the voice of the people but also reiterated the importance of a regional approach to statistical development and of ICT in the data revolution.

    The data shortage problem is on the regional agenda. What we need to do is to get serious about implementing these solutions at the national level and a big part of that starts with political will and cooperation from stakeholders.

    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 international relations.

  • Economic Citizenship Programmes in the Eastern Caribbean: A Brief Look

    Alicia Nicholls

    In a world of eroded preferences for traditional Caribbean exports, the small island states of the Eastern Caribbean have had to find non-traditional ways to bolster their small open economies. There is growing global demand for alternative and second citizenship by mobile High Net Worth Individuals (HNWIs), a phenomenon on which an increasing number of states have sought to capitalise. At the Global Citizen Forum 2015 in Monaco last week, Prime Minister of St. Lucia, the Hon. Dr. Kenny Anthony announced his country’s intention to become the latest Caribbean state to offer economic citizenship. St. Lucia will join four other Caribbean countries: St. Kitts & Nevis, Antigua & Barbuda, Dominica and Grenada which operate direct citizenship by investment programmes. This article explores the current programmes in the Eastern Caribbean and whether the offering of economic citizenship is worth the risks involved.

    The concept of citizenship, that is, the status of holding the nationality of a State, is imbued with a whole package of legal, political and other rights and duties. All states of the English speaking Caribbean have citizenship on a jus soli basis, that is, the right to citizenship by virtue of being born in the territory, as well as citizenship through descent and naturalisation. Those states which offer economic citizenship stretch the notion of citizenship to give qualifying investors the right to full legal citizenship and the right to hold a passport for themselves and their families through making a qualifying investment into the local economy.

    Many of these mobile HNWIs are from China, the Middle East and Russia, seeking economic and political security, a more favourable tax climate, and the benefits of hassle free travel a good second passport could bring. According to The Wealth Report 2015, “it is estimated that 76,200 Chinese millionaires emigrated or acquired alternative citizenship over the 10 years to 2013”. Additionally, the US’ system of nationality based taxation and the onerous reporting requirements under FATCA have caused many Americans living abroad to renounce their American citizenship in record numbers (1,335 in the first quarter of 2015 according to this article).

    Economic citizenship and residency programmes are not unique to the Caribbean. Several countries such as Malta and Cyprus operate direct Citizenship by Investment programmes. Some countries offer Immigrant Investor Programmes which use the prospect of citizenship or permanent residence to attract highly skilled HNWIs. The US’ EB-5 visa is a prime example. Similar programmes are also offered by the United Kingdom, Australia and New Zealand. Outside of this, there is a whole wealth and tax planning industry which has built up around advising HNW clients and their families on how and where they can get the best passport for their buck.

    As countries known for their high standards of living, democratic principles, political stability, respect for the rule of law and healthy reputations internationally, it is little wonder several Eastern Caribbean countries have sought to leverage these pull factors and seek to get their share out of the second passport pie. The expected benefits to the host economy include foreign direct investment through purchasing real estate, funding for infrastructure development and the other economic benefits to be derived from HNWIs and their families spending in the economy.

    The investor must meet the application requirements and go through stringent application procedures and invest in one of the options available which differs by country. In return, investors which take advantage of economic citizenship offered by one of those Eastern Caribbean states gets visa free travel to over 100 countries, a second passport, no requirement for residency, as well as second citizenship for themselves and their spouse and dependents. They also can take advantage of the tax benefits offered by a low tax jurisdiction, including no capital gains, wealth or inheritance taxes.

    Below is a brief description of each programme:

    St Kitts & Nevis – It is the oldest continuously operating citizenship by investment programme and has been in existence since 1984. Two options for investment: (1) making a non-refundable donation to the Sugar Industry Diversification Programme of a minimum of US$250,000 plus processing fees or (2) by investing in an approved real estate project worth at least US$400,000 plus registration and other costs.  While the investment in real estate is recoverable, the investor must hold the property for a minimum of 5 years. The next buyer also qualifies for citizenship. For further info: http://stkitts-citizenship.com/

    Antigua & Barbuda – Three methods of investment: (1) Investment of at least US$400,000 in  an approved real estate project to be held for a period of no less than five years, (2) contribution of at least US$200,000 in the National Development Fund, (3) An investment of a minimum of US$1,500,000 directly into an eligible business as a sole investor or a joint investment involving at least 2 persons in an eligible business totalling at least US$5,000,000 and each of those persons individually invests at least US$400,000. For further info: http://cip.gov.ag/citizenship/

    Dominica – Dominica’s programme requires the smallest minimum investment. Citizenship can be obtained through investment either in the Government Fund or the Real Estate Option. According to the website of the CBIU, the generated funds are utilised for public and private sector projects where a need is identified. To qualify for citizenship under the Government fund there are four investment categories with different contribution amounts, based on the number of dependents included in the application. For a single applicant, there is a non-refundable contribution of US$100,000 required. The contribution required increases where a spouse and dependents are involved. To qualify for citizenship of Dominica under the Real Estate Option under the Citizenship by Investment Program, an applicant must purchase authorized real estate to the minimum value of US$200,000 plus government fees which dependent on whether a spouse is included and number of dependents. For further info: http://cbiu.gov.dm/

    Grenada – After a thirteen year hiatus, Grenada restarted its Citizenship by Investment programme in 2014. Application is by invitation only. Citizenship can be obtained by investment of a minimum of US$ 350,000 in an Approved Real Estate project plus fees and costs. The investment is subject to a minimum holding period of four (4) years. The second option is a non-refundable donation to the Island Transformation Fund which is not yet open. For further info: http://www.citizenship.gd/ 

    St Lucia – St Lucia has indicated its programme will begin from January 2016 and details about the programme are not yet available.  It has stated that they expect significant economic benefits from the programme.

    There is little data publicly available on the success of Caribbean CbI programmes. It would be interesting to know the number of applications received and approved on a yearly basis, the countries from which most applicants have come, and what have been the tangible benefits to the host countries. However, the IMF Staff Report  on St Kitts & Nevis noted the citizenship by investment programme in St. Kitts & Nevis, the region’s most successful CbI programme, is bearing fruit. It notes as follows:

    Continued rapid inflows under the Citizenship-By Investment (CBI) program have led to a surge in construction activity, and supported a large increase in government and Sugar Industry Diversification Fund (SIDF) investments and spending, including on the People Employment Program (PEP). These factors, together with the ongoing recovery in tourist arrivals fueled rapid GDP growth of about 6 percent in 2013 and 2014.

    Entangled in the notion of economic citizenship are a whole set of moral and legal issues. For one, the definition of ‘spouse’ in the legislation of these Caribbean countries still means either of a man or woman who are married to each other. In light of competition from other CbI programmes, will this definition eventually be amended to allow gay HNWIs and their spouses to take advantage of these programmes?

    There are also regulatory and national security implications, including concerns about the potential use of second passports to facilitate money laundering, organised crime and terrorist activity. Of course, there are stringent screening methods, including requirements of police certificates of character. After all, all countries prefer to attract investors of good character who are self-sufficient, and willing to make a significant economic investment to the country in which they are seeking citizenship. Under the Antigua & Barbuda programme for example, a person can be deprived of citizenship in several instances e.g: fraud, conviction or failure to spend at least 35 days in Antigua & Barbuda during the period of five calendar years after his registration. There is the potential for attracting ‘undesirables’, even with a rigorous programme.

    A few countries worldwide have found that the potential investment inflows were not worth the risk or they could not cope with the volume of applications. Canada cancelled its Immigrant by Investor Programme, while Hong Kong has suspended its CIES programme. Barbados has clearly stated that for policy reasons it will not go the route of economic citizenship. It currently offers the Special Entry and Reside Programme (SERP) for qualifying HNWIs and their spouses/dependants. In order to qualify as an HNWI in Barbados, the investor must have assets of at less than US$ 5 million. In spite of this, Eastern Caribbean CbI programmes not only have to compete amongst themselves but also face increased competition globally from potentially more attractive CbI and residency programmes worldwide.

    Moreover, countries which offer economic citizenship programmes do open themselves to reputational risks, especially if other States have doubts about the rigor of their screening procedures. The US Treasury has accused persons obtaining St Kitts & Nevis passports for financial crime  and Canada imposed visa requirements on St. Kitts & Nevis nationals on November 22, 2014. The merits of these actions are debatable. However, these are the kinds of risks which countries operating these programmes face. Moreover, they may result in holders of those passports, including natural born citizens, being blacklisted or subject to more scrutiny by foreign jurisdictions, which may redound to more harm than good for that State and undermine the very programme itself.

    In light of the foregoing, any Caribbean state considering a Citizenship by Investment programme must not only consider the possible investment inflows but weigh them carefully against the potential reputational, security and other risks, as well as the sustainability of such a programme.

    Disclaimer: This article is NOT intended to provide investment advice and the Author is not accountable to anyone who relies on the information in this article. The information was taken from sources deemed to be accurate and correct at the time of publication. For further information on the respective CbI programmes stated above, please contact the relevant authorities in the respective countries.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant with a keen interest in sustainable development, public international law and trade.