Caribbean Trade Law and Development

Author: caribbeantradelaw

  • Courting the Latin Jaguar: Brazil as the world’s 6th largest economy and what this means for CARICOM

    Alicia Nicholls

    One of the biggest news headlines to grab my attention this past week is that Brazil, the roaring king of the Latin America jaguar economies, has overtaken the United Kingdom to become the world’s sixth largest economy according to the Center for Economics and Business Research (CEBR). Brazil’s increased economic prowess is part of a general  tectonic shift in the global economic configuration in which emerging economies are becoming more powerful  political and economic players on the world stage. This  phenomenon has led to increased discussion of what this global reconfiguring means for the enhancing of south-south trade, particularly as many developed countries, traditionally the main export markets for developing countries, continue to reel under the global recession. On this occasion, it is worth reflecting on what Brazil’s growing economic prowess means for the countries of the Caribbean Community (CARICOM) and what potential opportunities our relationship with Brazil presents for our region, particularly from a trade perspective.

    CARICOM-Brazil Relationship

    Brazil and the countries of CARICOM have long enjoyed a healthy political relationship. In recent years there has been increased commitment by Georgetown (seat of the CARICOM Secretariat) and Brasilia towards deepening  political, economic and cultural ties and collaboration. The year 2010 was a pivotal year for the CARICOM-Brazil relationship as it saw the hosting of the  inaugural CARICOM-Brazil Summit which was  held in Brasilia in April of that year. The summit, hailed as a success by all, led to the signing of the Brasilia Declaration, which was bolstered by several bilateral technical cooperation agreements and Memoranda of Understanding which focused on visa exemptions and technical cooperation in several areas of critical importance to the region, including agriculture, health, tourism, energy and civil defence. Brazil has also called for a CARICOM-Mercosur free trade agreement, which would help to foment greater trade and investment links between the two regions.

    Similar to CARICOM’s relationship with China, Brazil’s growing international presence presents opportunities for international collaboration on key issues of importance to the region, such as climate change. However, it also presents opportunities for trade. If there is one thing that can be said about the havoc that the global economic and financial crisis has wrecked on Caribbean economies is that it has reinforced to us the region’s entrenched vulnerability to external shocks, exacerbated by our reliance on too few goods and too few markets for our exports and  tourist arrivals.  CARICOM countries have been forced to accelerate their efforts at export and market diversification. South-south trade has long been mooted as a way of weaning our dependence on our traditional developed country export partners. Brazil, now the world’s 6th largest economy, presents an attractive alternative market for CARICOM. It represents a potential export and tourist market of nearly 200 million people and is Latin America’s largest source country for outward FDI.

    CARICOM-Brazil Trade and Investment

    CARICOM-Brazil trade has been on the increase. Despite a drop in 2009, it picked up in 2010. However, while Brazil’s imports from CARICOM tripled between 2009 and 2010, the region still registers a large deficit in its trade with Brazil. Moreover, despite the Guyana-Brazil Partial Scope Agreement (2001) which grants tariff preferences on selected items between the two countries, and the completion in 2009 of the Takutu Bridge linking the state of Roraima in Brazil to the town of Lethem in Guyana, trade flows between Brazil and Guyana remain low and highly skewed in Brazil’s favour. Besides the obvious disparities in economic size and export capacity between Brazil and CARICOM, several other factors most likely account for CARICOM’s low penetration of the Brazilian market, including limited private sector capacity and/or will to tap into new markets, language barriers and high shipping and transportation costs.

    This huge trade in-balance was one of the issues raised in the inaugural CARICOM-Brazil Summit and several initiatives were proposed to improve it, including agreements on facilitating trade missions. There have been steps taken to address some of these issues. Barbados has sought to tap into the Brazilian tourism market and now receives weekly direct flights between Barbados and São Paulo on GOL Airlines. In July 2011, there was the official launch of the Guyana/Brazil Private Sector Integration Project which seeks to improve trade and investment between the two countries in a more mutually beneficial way.

    As Latin America’s largest outward investor, Brazil brings the prospect of investment in our capital scarce economies, with the potential of bringing much needed capital, technology and know-how.  According to the UNCTAD World Investment Report (2011), Brazilian companies have invested in African LDCs, primarily in the extractive industries, but also increasingly in manufacturing and agriculture. However, Brazilian investment in the region is low and there are currently no bilateral investment treaties between Brazil and any CARICOM country.

    The future?

    Increasing trade and economic engagement with Brazil is not the panacea for our economic problems, nor will it completely solve our vulnerability. However, it is submitted that as emerging economies like Brazil become  greater actors on the world stage, CARICOM countries should court these economies or risk being left even further behind. Brazil represents a key potential export market which should be and is being targeted by the region. Courting this Latin jaguar should be part of our export diversification strategies, with the ultimate goal of parlaying the gains from trade into national and regional development.

    Developed countries are jostling with each other to tap into the Mercosur market via free trade agreements. A potential free trade agreement (FTA) between CARICOM and Mercosur could create greater market access for regional goods and services exporters into the Brazilian and Mercosur markets, while also helping to facilitate inward investment. Regional governments, through their investment promotion agencies (IPAs), should take a targeted approach to the promotion of inward Brazilian investment, by seeking to attract and channel investments to strategic growth sectors in their economies. In addition to the standard investment liberalisation and protection provisions, the investment chapter of any potential CARICOM-Mercosur FTA could perhaps contain strong investment promotion provisions, including commitments by the parties to promote cooperation between their respective IPAs.

    Regional business support organizations (BSOs) play a key role in developing the export capacity of the region’s firms and in helping export-ready producers to tap into the Brazilian market and convert any market access into market penetration.  Part of this export capacity building should involve language training and cultural awareness. Although a growing number of Brazilians, particularly in large cities, speak English, the learning of the Portuguese language (Brazilian Portuguese) should be encouraged in the region. Fortunately, Portuguese is now offered as a course at several academic institutions, and several local hotels in Barbados have provided language training in Portuguese for their staff.

    Alicia Nicholls is a trade policy specialist and a law student at the University of the West Indies. You can contact her by email and follow her on Twitter at @licylaw.

  • ALBA Cultural Research Scholarships 2011-2012 – Call for applications

    I was just perusing Professor Norman Girvan’s blog (a favourite pastime of mine) and came across this call for applications from ALBA’s Cultural Fund.

    ALBA is the Bolivarian Alliance for the Peoples of our America. Three of its eight member states (Antigua & Barbuda, Dominica and Saint Vincent and the Grenadines) are CARICOM states. Its Cultural Fund is offering eight (8) scholarships each with a budget of $5,000  under its “Programme of Research Over Latin America and the Caribbean Cultures”.  The current theme is “Construction Processes of Inclusive Societies, Culturally Diverse and Environmentally Responsible in Latin America and the Caribbean”.

    For more information, please check out: http://www.normangirvan.info/wp-content/uploads/2011/12/alba-cultural-research-call-for-applications.pdf

  • Myrie case going to the Caribbean Court of Justice – Some thoughts

    Alicia Nicholls

    The Myrie case is heading for the region’s highest court early next year.  For those of you who do not know the unfortunate details involved, this case concerns a young Jamaican lady, Shanique Myrie, who was allegedly subjected to a degrading body cavity search at the Grantley Adams International Airport here in Barbados earlier this year. I use the term alleged because in the absence of any substantive information by the two Governments involved, many of the details in this case remain shrouded in a fog of uncertainty and speculation.

    In its original jurisdiction the Trinidad-based Caribbean Court of Justice has compulsory and exclusive jurisdiction to hear and determine disputes concerning the interpretation and application of the Revised Treaty of Chaguaramas Establishing the Caribbean Community Including the CARICOM Single Market and Economy. Naturally therefore, it would be within the Court’s competence to deal with the main issue involved here, that is, the freedom of movement of Community nationals, which is one of the pillars of the CARICOM Single Market and Economy (CSME).

    An intriguing aspect of the CCJ is that per Article 222 of the Revised Treaty, a  person (whether a private individual or company) can, with special leave of the Court, commence proceedings in the Court as a private entity, as opposed to having to rely on its respective State to bring a claim on its behalf.  Outside of investor-state dispute settlement, claims brought by private persons in international dispute settlement fora remain a rarity in international law. However, from a quick perusal of the list of judgments on the CCJ’s website, it seems so far that bringing a  claim as a private entity is the preferred avenue for commencing proceedings in the CCJ in its original jurisdiction (see the most recent case of Hummingbird Rice Mills Ltd v Suriname for example). This lack of preference for State-to-State dispute settlement was also noted by The Honourable Sir Dennis Byron, President of the CCJ in his recent paper.

    Turning back to the case at hand, it appears that this is probably the avenue that counsel for Ms. Myrie’s will be taking. While this may be the more expensive route for the Myrie team, it would arguably prevent the more politically unpalatable and potentially divisive alternative of having two CARICOM States (Barbados and Jamaica) seemingly at loggerheads in our highest regional tribunal. Without doubt, it is regrettable that diplomatic means of dispute settlement have failed to resolve this issue.  After all, this case remains a sore point in the relations between the two countries concerned. Moreover, the victim would have to wait longer for justice. However, from an academic standpoint, this case will present an opportunity to see the Court’s treatment of the issue of freedom of movement of CARICOM nationals, as well as the development of the Court’s jurisprudence.

    Alicia Nicholls is a trade policy specialist and a law student at the University of the West Indies. You can contact her by email and follow her on Twitter at @Licylaw.