Caribbean Trade Law and Development

Author: caribbeantradelaw

  • WTO DG Candidates kick off their campaigns

    WTO DG Candidates kick off their campaigns

    Alicia Nicholls

    In case you missed it, nominations for the next World Trade Organization (WTO) Director-General closed on July 8, 2020. The first phase of the three-phased DG selection process is now complete.

    Who is running?

    Eight (8) candidates are officially in the running to become the seventh WTO DG after incumbent DG Roberto Azevedo announced in May this year his intention to step down on August 31, 2020, a full year before his second and final term expires. On June 8, nominations were officially opened, and closed July 8.

    All of the candidates are well-experienced and well-qualified. The majority are from developing countries, including three from Africa. Three of the candidates are women.

    The candidates are:

    Dr. Jesus Seade Kuri (Mexico)

    Dr. Ngozi Okonjo-Iweala (Nigeria)

    Mr. Abdel-Hamid Mamdouh (Egypt)

    Mr Tudor Ulianovschi (Moldova)

    Ms Yoo Myung-hee (Republic of Korea)

    Ms Amina C. Mohamed (Kenya)

    Mr Mohammad Maziad Al-Tuwaijri (Kingdom of Saudi Arabia)

    Dr Liam Fox (United Kingdom)

    Their full biographies may be accessed on the WTO’s website here.

    What happens now?

    During this second phase of the three-phased DG selection process the candidates will officially make themselves ‘known’ to WTO Members, starting this week.

    Over the next three days, July 15-17, each candidate will participate in the special meeting of the WTO General Council where he or she will present his or her vision and take questions from the membership, followed by a press conference.

    You can also access each candidate’s statement to the General Council once available here and watch the press conferences live and the recordings on the WTO’s website here.

    Not surprisingly, the selection process has been expedited. This second phase of the DG selection process normally lasts three months but will instead be shorter, expiring September 7.

    It should be noted, however, that even before this official campaigning period started, most candidates had already begun making their case for why they are the best person to lead the WTO at this time through media appearances and op-eds.

    The third and final phase, which involves consultations with Members over their preferences to narrow the field of candidates, will start thereafter and will only last two months. The DG is chosen by consensus.

    As I outlined in a previous article, while the WTO DG’s role is largely administrative and lacks any real formal power, the DG can exert considerable soft power to help members build consensus. This is especially needed at this time given the many challenges the 25-year old institution is currently facing.

    Alicia Nicholls, B.Sc., M.Sc., LL.B is an international trade and development specialist. Read more of her commentaries here or follow her on Twitter @licylaw. All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may from time to time be affiliated.

  • Caribbean Trade and Development News Digest – July 5 – 11, 2020

    Caribbean Trade and Development News Digest – July 5 – 11, 2020

    Welcome to the Caribbean Trade & Development News Digest for the week of July 5-11, 2020! We are happy to bring you the major trade and development headlines and analysis from across the Caribbean Region and the world from the past week.

    THIS WEEK’S HIGHLIGHTS

    With nominations closed on July 8, there are now officially eight (8) candidates in the race to become the next World Trade Organization (WTO) Director-General. The candidates, all well-qualified and experienced, hail from Egypt, Kenya, Mexico, Moldova, Nigeria, Saudi Arabia, South Korea and the United Kingdom (UK). Learn more about the candidates in this Bloomberg piece here.

    Data published by UNCTAD on June 11 show that merchandise trade fell by 5% in the first quarter of the year and forecast a 27% drop for the second quarter and a 20% annual decline for 2020. Read the UNCTAD report here.

    REGIONAL NEWS

    PM Gonsalves: LIAT liquidation unanimously agreed to last month

    LoopBarbados: At the June 27 meeting on LIAT with the major shareholder governments, it was unanimously agreed there would be the liquidation of the airline. Read more

    The pivotal role of air transportation in CARICOM

    Searchlight: Within the past week, Caribbean Community (CARICOM) nationals got wind of the imminent liquidation of LIAT, a process which if carried out, would bring an end to over 60 years of aviation history for the airline. Read more

    Caribbean leaders meet amid concerns over regional transportation, COVID

    Jamaica Observer: Caribbean Community (Caricom) leaders were meeting virtually on Friday, overshadowed by the impact of the coronavirus (COVID-19) on their socio-economic future and the plight of the regional transportation with the decision to liquidate the financially strapped regional airline, LIAT. Read more

    Jamaica’s trade agenda needs to be more ambitious, says Hylton

    Jamaica Observer: People’s National Party spokesman on industry, competitiveness and global logistics, Anthony Hylton says the country’s trade agenda needs to be more ambitious than the current “defensive posture” of Caricom on external trade. Read more

    Antiguan government establishes “travel bubble” for Caribbean travelers

    CARICOM: The Antigua and Barbuda government says it has established a “travel bubble” that will allow citizens from several identified states within the Caribbean Community (CARICOM) to travel to the island without the necessity to have coronavirus ( COVID-19) tests and certificates to be presented upon entry. Read more

    Protocols For Air Travel To Barbados Effective July 12

    Barbados GIS: Visitors to Barbados, once commercial flights resume on July 12, are being strongly advised to undergo a COVID-19 PCR test at an accredited or certified facility, or laboratory before travelling. Read more

    CARICOM Chairman: Several airlines ready to step in for LIAT

    Loop Jamaica: Six airlines have expressed interest to serve the gap that could be left in the wake of LIAT’s current challenges. They include SVG Air, One Caribbean, Caribbean Airlines (CAL), interCaribbean airlines, Silver Airways and Air Antilles. Read more

    Region celebrates first virtual CARICOM Day

    Barbados Today: CARICOM Day, July 4, achieved another first, as the Caribbean Community’s Heads of Mission in the United Kingdom came together to celebrate the achievements of the region with a number of messages, in a special virtual session under the theme “We are CARICOM, Resilient and Diverse”. Read more

    CARICOM granted access to Africa Medical Supplies Platform

    Searchlight: Member States of the Caribbean Community (CARICOM) have been given access to the Africa Medical Supplies Platform (AMSP), a procurement system for supplies and equipment in the fight against COVID-19. Read more

    Caribbean Rum to benefit from maintained Brexit Tariffs

    Searchlight: Despite changes coming as a result of Brexit, Caribbean Rum will continue to be protected from unfair competition from subsidised cheap rum entering the UK market from other countries. Read more

    INTERNATIONAL NEWS

    U.S., Kenya formally launch trade deal talks

    Reuters: Kenya and the United States formally launched negotiations on Wednesday for a bilateral trade pact that the two economies hope could serve as a model for additional agreements across the African continent. Read more

    Trump administration sends letter withdrawing U.S. from World Health Organization over coronavirus response

    Washington Post: The Trump administration has begun the process of withdrawing the United States from the World Health Organization, a move that could hurt the U.N. agency’s response to the coronavirus pandemic and reshape public health diplomacy. Read more

    U.S. slaps French goods with 25% duties in digital tax row, but delays effective date

    Reuters: The Trump administration on Friday announced additional duties of 25% on French cosmetics, handbags and other imports valued at $1.3 billion in response to France’s digital services tax, but would hold off on implementing the move for up to 180 days. Read more

    EU urges U.S. to return to negotiations at OECD on digital taxes

    Reuters: The European Union on Friday urged the United States to return to negotiations about digital taxation at the Organization for Economic Cooperation and Development, but said it stood ready to make a new proposal at the EU level if those talks failed. Read more

    What do you need to know: What comes next in the WTO director-general race

    Borderlex: Dmitry Grozoubinksi on what comes next in the nomination process for the World Trade Organization’s top job. We are now off to the races, but the finishing line is still far away. Read more

    Brexit: UK nominates Liam Fox to lead World Trade Organization

    BBC: The UK government has nominated former cabinet minister Liam Fox as its candidate to lead the World Trade Organization. The body is searching for a new director-general to replace Brazilian Roberto Azevedo at the end of August. Read more

    Free trade ‘will not go away’ – leaders and experts weigh in on trade in a post-COVID world

    World Economic Forum: Free trade is important and it will not go away – it’s for us just to make sure we are on top of it.”Those were the words of Mattias Hedwall, Global Head of International Commerce & Trade at Baker & McKenzie International, at the start of the first public session of the Forum’s Trade Multistakeholder Conversation on 8 July. Read more

    Trade multilateralism need to be sustained in post Covid world: Think-tank

    Economic Times: Trade multilateralism need to be sustained in post Covid world: Think-tank
    Drawing from the historical role that multilateralism has played in fostering global peace and stability, Rohinton Medhora, President of Canada-based Centre for International Governance Innovation, said that “Not just the decline in the volume of trade, we need to understand how that undermined the values of the multilateral trading system”. Read more

    Turkey, UK ‘very close’ to free trade deal

    Anadolu Agency: Turkish Foreign Minister Mevlut Cavusoglu says 2 countries are close to finalizing talks, according to Financial Times report. Read more

    Taiwan Preps for Possible End to Landmark Trade Deal with China

    VoA: China now has the chance to reconsider its 10-year-old Economic Cooperation Framework Agreement with Taiwan, the biggest-ever trade pact between the two rivals, and a Chinese media outlet hints at the agreement’s demise. Read more

    Pandemic highlights importance of AfCFTA

    African Business Magazine: A delay to implementation of the AfCFTA should provide the opportunity for a much-needed rethink of Africa’s development trajectory, says Dianna Games. Read more

    Trudeau ‘concerned’ by U.S. threat of tariffs on Canadian aluminum and steel

    CBC Canada: Prime Minister Justin Trudeau said today he is concerned by reports suggesting Washington is considering reimposing tariffs on Canadian metals just as Canada, the United States and Mexico are celebrating the launch of a new free trade deal. Read more

    Liz Truss: US trade deal ‘won’t mean lower food standards

    BBC: International Trade Secretary Liz Truss has denied the UK is preparing to water down its food safety standards in order to reach a trade deal with the US. Read more

    STRAIGHT FROM THE WTO

    NEW ON THE CTLD BLOG

    This week I participated as a panelist in a UWI Open Campus/Global Executive Trade Webinar on ‘Global Trade & Supply Chains: Tips for your Business to Succeed”.

    I was also presenter at a CAC-ECSEA Webinar on ‘Welcoming the New Normal’ where I discussed the impact of COVID-19 on the Caribbean, the need for a relook of our trade and investment agreements if we are to navigate this ‘new normal’.

    Here is the latest content on the CTLD Blog:

    BONUS

    Watch this great interview by Prof. Gilbert Morris discussing the impact of COVID-19 on the Caribbean and some economic solutions for recovery.

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

  • CAC-ECSEA Webinar – Welcoming the New Normal

    CAC-ECSEA Webinar – Welcoming the New Normal

    On Friday, July 10, I am pleased to be a presenter in the CAC-ECSEA Webinar ‘Welcoming the New Normal’ hosted by the Caribbean-ASEAN Council. Please see flyer for details!

  • COVID-19: Why Caribbean Countries should re-examine their investment treaties

    COVID-19: Why Caribbean Countries should re-examine their investment treaties

    Alicia Nicholls

    All Caribbean countries have signed at least one treaty containing provisions meant to reciprocally protect, promote and liberalise the flow of investments between themselves and their treaty partner(s). Unfortunately, the vast majority of our countries’ international investment agreements (IIAs) are older generation bilateral investment treaties (BITs) which lack many of the development-friendly language and best practices of newer vintage IIAs. The end result is that Caribbean countries could potentially face significant legal exposure to claims brought by investors under these treaties.

    Although most Caribbean countries’ experience thus far with investor claims have been contract-based and not treaty-based, the threat for treaty-based claims looms larger now in the midst of the novel coronavirus (COVID-19) pandemic. This is because Caribbean governments, like those governments around the world, have had to take measures to contain and mitigate the spread of the virus, and may face claims from foreign investors who feel aggrieved by these measures and seek legal protection under these BITs.  

    This article argues that the time is long overdue for Caribbean countries to re-evaluate whether their BITs remain ‘fit for purpose’ and to take proactive steps to mitigate the risk for investor disputes post COVID-19.

    CARICOM Investment treaty landscape

    CARICOM countries are party to a spaghetti bowl of IIAs. Some are investment chapters in free trade agreements, such as the CARIFORUM-EU Economic Partnership Agreement. However, the majority are the 83 BITs signed by individual Caribbean governments with external treaty partners, many dating back to the 1980-1990s. Of these BITS, 56 are currently in force according to data from UNCTAD’s IIA Navigator.

    Although the effectiveness of IIAs at attracting foreign direct investment (FDI) inflows remains debated in the academic literature, countries sign these agreements in order to increase their attractiveness to foreign investors. Signing IIAs shows their commitment to guaranteeing investors and their investments certain minimum standards of treatment, as well as protection from heavy-handed State action, such as, for example, direct or indirect expropriation of investors’ investment(s) without compensation.

    Another feature of IIAs is the inclusion of Investor-State Dispute Settlement (ISDS), allowing investors to by-pass domestic courts and bring a claim against a host State before a neutral and independent arbitration tribunal, either ad hoc or established under the rules of an established arbitration centre, such as the International Centre for Settlement of Investment Disputes (ICSID).

    Though popular back in the 1980s-90s, in recent years, however, the legitimacy of ISDS internationally has been increasingly questioned for many reasons. Firstly, arbitral tribunals have been criticized for their generous interpretation of vaguely drafted provisions, such as the Fair and Equitable Treatment (FET) standard, in favour of investors. Secondly, in many cases, tribunals have arrived at different decisions on the same facts. Thirdly, there is concern about the lack of geographic and other diversity of persons who serve as arbitrators on these panels. Fourth, there is the potential of using Most Favoured Nation (MFN) clauses for treaty shopping.

    A study I conducted a few years shows that there is no consistency in Caribbean countries’ BIT practice, which is reflective of our unequal bargaining power as rule-takers. Moreover, because of their vintage, our older BITs lack the best practices in development, such as more express provisions for the State’s right to regulate in the public’s interest, development exceptions and provisions on investor obligations.

    There are, of course, defences that States can make to investor claims, but many of these older BITs have very broadly drafted protections and lack the exceptions or defences newer BITs have included permitting the State to take action in the interest of public health. Failing this, States would have to rely on other defences under international law, such as necessity.

    ISDS and Caribbean countries

    Caribbean countries have had some experience with claims brought by foreign investors. Although the majority of these claims have been contract-based, one of the most well-known examples of a Caribbean country which was on the losing end of an investor dispute under a treaty-based claim was that of the Dunkeld International Investment Ltd. V Government of Belize. Following Belize’s compulsory acquisition of certain shares in Belize Telemedia Company, in which Dunkeld held an interest, Dunkeld brought a claim against the Government of Belize under the Belize-UK BIT. Belize was ordered by the arbitral tribunal to pay millions of dollars in compensation.

    In an excellent article from April 2020, the International Institute for Sustainable Development (IISD) raised the alarm about a possible deluge in investor claims post-COVID-19 and called for a ‘global, coordinated response’ to this risk. This fear and call to action are not unfounded as in the aftermath of the Global Financial Crisis, Argentina faced a litany of investor claims. The stakes are even higher for small States like ours. Defending investor claims is costly and the award amounts, if on the losing end, can be in the millions or billions of dollars, a cost which cash-strapped Caribbean governments, whose economies have been severely impacted by months of shutdowns and border closures, can ill-afford to pay.  There is also the potential for reputational damage for those countries involved in investor disputes, which could affect their investment attractiveness.  

    How can we get around this?

    Even prior to the COVID-19 pandemic, a growing number of countries around the world have already either suspended or completely overhauled their BITs to limit their legal exposure to investor claims under these treaties. For example, a couple years ago India unilaterally terminated its BITs with over 50 treaty partners, including Trinidad & Tobago, and South Africa terminated BITs with several EU countries.  More recently, in May 2020, 23 EU countries signed an agreement to terminate all intra-EU BITs.

    The CARICOM Secretariat has for many years been working on a Draft CARICOM Investment Code, as well as a template Member States could use for investment agreements with third country partners, incorporating many of the most recent investment treaty best practices. However, to my knowledge, there has not been a systematic review by individual CARICOM countries of their BITs and whether they are indeed ‘fit for purpose’, that is, drafted in a way that promotes investment for sustainable development. Moreover, current economic exigencies may make such a comprehensive evaluation of our BITs low down on the policy totem pole for Caribbean countries.

    Despite this, Caribbean governments should support calls for a multilateral solution to prevent what many anticipate could be a slew of investor claims arising from governments’ COVID-19 measures. However, there are interim mitigating measures they can take, such as deciding with their treaty partners to issue interpretive notes for some of the most used (and abused) provisions by investors or carving out COVID-19 related measures from the application of ISDS.

    On a final note, Caribbean governments need to be more actively involved in efforts to ensure investment rule-making actually creates an environment conducive to attracting investment for sustainable and inclusive development. We must move from simply being ‘rule-takers’ to part of the ‘rule-makers’. As such, our governments should, for example, consider taking an active part in the UNCITRAL Working Group III on ISDS reform.

    Alicia Nicholls, B.Sc., M.Sc., LL.B is an international trade and development specialist. Read more of her commentaries here or follow her on Twitter @licylaw. All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may from time to time be affiliated.