Caribbean Trade Law and Development

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  • 10 Trade Policy Developments to watch in 2020

    10 Trade Policy Developments to watch in 2020

    Alicia Nicholls

    Happy New Year! It is both a new year and a new decade, but several stories we were following in 2019 have spilled over into 2020. 2019 started off as a year of uncertainty and volatility with increased trade restrictive measures and slowing global merchandise trade growth and foreign direct investment (FDI) flows.

    Towards the end of 2019 some positive developments occurred and so 2020 does present some potential bright spots, such as the likely ratification of the US-Mexico-Canada (USMCA) Agreement, a now definitive date for Brexit and what appears to be an initial US/China deal.

    There are many things which are likely to impact global trade in 2020, including geopolitical developments, technological advancements, data privacy rules, climate change and the growing demand for more environmentally-friendly goods and services. All of these have the potential to either positively or negatively impact, inter alia, freight rates, supply chains and firms’ import, export and investment decisions, and on a wider scale, the global economy.

    While this is not meant to be an exhaustive list, here are the top ten trade developments we will be watching in 2020:

    1. WTO Reform

    The WTO is celebrating its 25th year of existence, but is also facing several challenges which threaten to undermine some seventy years of a rules-based multilateral trading system. Key this year to watch will be whether there will be a solution to the now defunct Appellate Body, and whether there will finally be a conclusion to the fisheries subsidies negotiations which again failed to yield an agreement last year. The US also continues to argue for a revamping of the current system of eligibility for Special & Differential Treatment. The 12th WTO Ministerial Conference will be held in Nur-Sultan, Kazahstan in June 2020, and will therefore be one of the organisation’s most important ministerial meetings to watch.

    2. Brexit

    After several missed deadlines for leaving the European Union (EU), the decisive victory handed to the Conservatives in the December 12, 2019 snap United Kingdom (UK) election meant that Prime Minister Boris Johnson was able to get parliamentary approval of his deal with the EU. The UK is now on track to leave the current 28-member grouping on January 31, 2020. Some political and economic uncertainty remains, however, especially with the stronger electoral performance of the Scottish National Party (SNP). Will the Scottish opposition to leaving the EU undermine the unity of the UK and will there be yet another Scottish independence referendum? What kind of post-Brexit trade agreement will the UK and EU eventually negotiate?  

    3. Trade Wars: US/China and Japan/South Korea

    After a year of continued touch and go negotiations and escalating tensions between the US and China, a ‘Phase One’ trade deal, which was announced in December 2019, will be signed January 15, 2020. The text of the Agreement has not yet been released, but it reportedly contains chapters on intellectual property, technology transfer, agriculture, financial services, unfair currency practices, trade expansion and dispute resolution. Under the agreement, China has agreed to increase imports from the US, and the US has deferred implementing the List 4B Section 301 tariffs which were to have come into effect on December 15, 2019 and decreased some of the List 4A tariffs.

    Receiving much less attention is the Japan-South Korea trade tensions which escalated in summer 2019 with fears that it could have harmed the global economy. The two Asian economic behemoths have had a challenging political history, but tensions flared up in July 2019 when Japan restricted the export of three chemicals (fluorinated polyamides, photoresists, and hydrogen fluoride) to South Korea. Japan is the major exporter of these chemicals which are needed in the production of semi-conductors and display screens – top export products for South Korea. Senior-level negotiations between the two countries were held in December and there appears to be some de-escalation in tensions.

    4. US Presidential Election

    Without doubt, the inauguration of President Donald Trump in 2017 saw a radical shift in the US’ trade and foreign policy. At this stage, it is unclear who the democratic nominee will be. However, trade policy is likely to be a major issue in the US election campaign, and even among the current democratic contenders there are some differences in their approaches to trade policy.

    What is certain, however, is that a Trump re-election in November 2020 would entail four more years of economic nationalism, a continued retreat from multilateralism, undermining of the rules-based multilateral trading system, and climate change denial.

    4. Regional Trade Agreements: USMCA, RCEP and AfCFTA

    After much uncertainty about the fate of the US-Mexico-Canada Agreement (USMCA) – the agreement which seeks to update and replace the NAFTA – a revised agreement was eventually signed in December 2019. It will need to be ratified by each of three parties in order to enter into force.

    Another agreement to watch will be the Regional Comprehensive Economic Partnership (RCEP) whose negotiations began in 2012. At the Bangkok Summit in November 2019, it was announced that the text has been agreed. Although India pulled out of the RCEP negotiations, it appears that the remaining fifteen parties are on track to sign the Agreement in 2020.

    Phase II negotiations on the operationalisation of the Africa Continental Free Trade Agreement (AfCFTA) will begin in 2020 and will focus on investment, competition policy and intellectual property.

    5. IMO shipping fuel standards

    The United Nations International Maritime Organisation (IMO) Low Sulphur Regulation comes into effect January 1, 2020. From this date, the IMO requires all shipping companies to reduce their sulphur emissions by 85%. The sulphur in fuel oil must be reduced to 0,50 from 3,50% for all sea-going vessels. This is an important move for reducing shipping emissions, although concerns have been raised about the possible freight rate increases.

    6. ACP-EU Post-Cotonou Negotiations

    The Cotonou Agreement – the partnership agreement which sets the framework for cooperation between the European Union (EU) on the one hand, and the countries of the ACP (renamed to the Organisation of the African, Caribbean and Pacific Group of States (OACPS) – is due to expire in 2020. The Cotonou Agreement was signed in 2000 and revised in 2010. Negotiations on a successor agreement will continue into 2020.

    7. Second Review of the EU-CARIFORUM EPA

    2020 would make it twelve years since the EU-CARIFORUM EPA has been provisionally applied between the EU and CARIFORUM countries. The second review on the implementation and impact of the EPA is currently on-going and consultations were held in 2019. The first EPA review in 2014 found that the EPA had not led to a significant increase in CARIFORUM exports to the EU, and there was still implementation work to be still done on both ends. The results of the second review will be important to gauging what additional progress has been made.

    8. Pending CCJ Advisory Opinion on freedom of movement

    The Caribbean Court of Justice (CCJ) will this year deliver its first advisory opinion pursuant to Article 212 of the Revised Treaty of Chaguaramas (RTC) on the circumstances under which it is lawful for CARICOM Member States to “opt-out” of CARICOM Heads of Government decisions that involve fundamental objectives of the Community. Last year the Court held a two-day hearing where it heard oral submissions. The ruling will be critical to clarifying Community law on opt-outs.

    9. UNCTAD XV – October 2020

    All eyes will be on Barbados and the United Arab Emirates in October 2020 when the two nations will co-host the UNCTAD XV quadrennial. This will be a good opportunity for Barbados to help influence the trade and development agenda for the next four years, highlighting issues such as climate change and small States issues.

    10. COP26 Climate Talks

    2020 is a ‘make or break’ year for climate action. By most measures, the UNFCCC COP25 was a disappointment despite being the longest UN climate talks on record. Agreement on Paris Agreement Article 6 (carbon markets) and common timeframes, for instance, remains elusive and has been pushed back again to COP26. It should be noted that 2020 is the year when parties are expected to undertake their first global stocktake under the Paris Agreement and ratchet up their climate ambition by submitting more ambitious nationally determined contributions (NDCs). Climate change both impacts and is impacted by trade. As such, these talks will be key to follow.

    As usual, we at the CTLD Blog will be monitoring these developments. We welcome you to follow them with us by reading our weekly Caribbean Trade & Development News Digests. You can subscribe here to receive the mailings directly to your inbox:

    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 trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

    DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.

  • Top 6 Trade Policy Developments Affecting the Caribbean in 2019 – Infographic

    Top 6 Trade Policy Developments Affecting the Caribbean in 2019 – Infographic

    Happy New Year all! Are you curious about what were the major trade policy developments affecting the Caribbean in 2019? The Caribbean Trade Law & Development (CTLD) Blog and Barbadian-based logistics company RDL Eagle Trade have collaborated to bring you an infographic highlighting these major developments.

    Click the infographic below to access the full document:

    This infographic was brought to you as a collaboration between the Caribbean Trade Law & Development (CTLD) Blog and RDL Legal Eagle.

  • A new UK Parliament and a new deal: What are the implications for Brexit?

    A new UK Parliament and a new deal: What are the implications for Brexit?

    Renaldo Weekes, Guest Contributor

    Renaldo Weekes

    On December 12, 2019, the United Kingdom (UK) held its second general election since 2015 which resulted in Prime Minister (PM) Boris Johnson retaining his position as the Conservative party regained the majority it lost in 2017.  It is apparent that Brexit dominated the campaign leading up to the election and some argue that the Conservatives’ win shows that the country is in alignment with PM Johnson’s views on the matter. Now that Mr. Johnson has a comfortable majority of 365 seats in the House of Commons, he is free to push through his Brexit agenda without the shackles of a minority that held him and his predecessor Theresa May back. We have already gotten a demonstration of his new found power as the second reading of his Withdrawal Bill has been passed on December 20 without any hiccups. The Bill that was passed, however, is somewhat different from the Bill the PM presented before Parliament agreed to an election. With a new Bill and a new Parliament, one must now consider what changes are contained in the new deal, the implications of those changes and the road from here on out.

    What is in the new deal?

    As Boris Johnson inherited a minority Government, he had to grant many concessions to opposition Members of Parliament (MPs) to increase his chances of getting his bill passed. This meant adding clauses favourable to the opposition. They included allowing MPs to approve extensions to the transition period and approve negotiating objectives; aligning UK workers’ rights with those of the European Union (EU) and adhering to the political declaration that accompanied the withdrawal agreement. With a newly secured majority, Mr. Johnson no longer needs to retain those concessions and as such, has removed them. The PM has also taken the liberty of adding his own clauses which, among other things, outlaw extensions to the transition period, grant Ministers power to change laws through secondary legislation and remove the Northern Ireland backstop that his predecessor put in place to prevent a hard border from being erected between Northern Ireland and the Republic of Ireland since Northern Ireland would be leaving the EU with the UK while the Republic of Ireland remains a member.

    Implications of changes in the new deal

    With no ostensible obstacle in Mr. Johnson’s way, one must seriously consider the implications of the changes to his withdrawal bill as they will likely become law. The removal of the concessions previously granted to MPs essentially strips power related to Brexit away from the Commons. Concomitant with that is the granting of Ministers with more power over the process. This bolsters Johnson’s position as he no longer has to submit to what may be an uncooperative House of Commons.

    Of main concern to the main opposition UK Labour Party was UK workers’ rights not being aligned with EU workers’ rights. Much of the UK’s employment standards are derived from EU standards so leaving the EU without any guarantee that EU standards will be retained is quite concerning for good reason. Mr. Johnson has not completely dismissed the idea, however, as he opted to address the issue of worker’s rights in a separate employment bill. The question is how long will it take for his Government to address those issues? This also brings up the broader question of the UK’s ability to make its own laws which was a motivating factor behind Brexit. Some argue that Brits should have faith that their country can competently draft its own laws. Some go further by saying that in many respects, UK law actually goes further than EU law. For example, UK maternity law goes up to 52 weeks versus the EU’s 14 week minimum.  Employer-employee relationships will certainly change as employers may have less responsibility to their employees, even if only for a short time.

    The decision to outlaw extensions to the transition period signals to MPs and the wider public that the Prime Minister is serious about getting Brexit done, even if no deal is reached by the end of the transition. In the context of almost back-to-back general elections, MPs’ stubbornness and a divided UK, Mr. Johnson feels it is his duty to end the Brexit issue, no matter what. As mentioned earlier, the fact that he returned with a comfortable majority reflects that the public agrees with him. His attempt to prevent an extension to the transition period may not necessarily stand as, depending on how negotiations go, he may seek an extension and amend the law as necessary.

    PM Johnson’s new arrangement for Northern Ireland is one that is welcomed by many Brexiteers who previously opposed Mrs. May’s backstop because they viewed it as tethering the UK to the EU; preventing a true Brexit. They did not buy into the idea that the backstop was necessary. Under Mr. Johnson’s new bill, Northern Ireland will be a part of Great Britain’s customs territory but will remain somewhat aligned to the EU’s single market. This creates special status for the territory and goods travelling between it and Great Britain. Goods travelling between the two areas will be subject to EU tariffs and other EU procedures if they are at risk of moving into the EU, whether in part or in whole.

    Critics argue that this new arrangement divides the UK by virtue of checks that will have to be performed on goods travelling between Northern Ireland and Great Britain; similar to what would have happened between Northern Ireland and the Republic of Ireland. Given the large amount of goods that will be subject to checks due to trade that occurs between the UK and EU members, especially since Northern Ireland and the Republic of Ireland share a physical space, the UK divide is a real possibility in theory. In practice, however, the UK will be free to make ambitious trade agreements with countries all over the world including the US, the UK’s largest trading partner. This may help to mitigate any UK dependence on the EU and thus, mitigate any split that may occur between the Northern Ireland and Great Britain.

    Considering that Northern Ireland will be partially under two different regulatory regimes, the UK and the EU will have to coordinate with each other to ensure that goods travelling through the territory are classified correctly. The UK has also taken the extra step of giving the Northern Ireland Assembly the ability to consent to the arrangement. If the assembly decides to not retain it, then the issue of the hard border will arise once again, meaning that in theory, the issue is not completely solved. Given the consequences should they not consent, the assembly is likely to approve.

    The road from here

    Passage of PM Boris Johnson’s Brexit bill without any major defections from his party shows that we are on our way to the Brexit that many envisioned we would have since March 29, 2019. ‘Remainer’ MPs and citizens hoping to have Brexit reversed have even less of a chance of doing so in the face of a more united Conservative party; though the chances were already quite slim. The chance for even a delay has been, on its face, eliminated as the Government has made it illegal to delay the transition period, thus making no extra time for negotiations. Though this may be subject to change if the Government has a change of position, without the pressure from the House of Commons that PM Boris Johnson and his predecessor had before the December 12 general election, it is very unlikely that this will be the case.

    With a more certain path for the UK’s future, UK businesses and citizens, and the wider world can rest assured that plans for their future will no longer suffer from uncertainty either. The constant questions of “will they?” or “won’t they?” may no longer pervade casual discourse. Though some persons will still argue that the UK should not leave the EU, the voters have spoken twice; in the 2016 referendum and in the 2019 general election. Nevertheless, considering how divisive Brexit has been since the referendum results were announced, we can only hope the PM Boris Johnson secures the best he can for the UK and mend a country that has been too focused on Brexit, much to its detriment at times.

    Renaldo Weekes is a holder of a BSc. (Sociology and Law) who observes international affairs from his humble, small island home. He has keen interest in how countries try to manoeuvre across the international political and legal stage.

  • Africa-Caribbean cooperation, regional integration and climate change action among priorities of new CARICOM chairman

    Africa-Caribbean cooperation, regional integration and climate change action among priorities of new CARICOM chairman

    Alicia Nicholls

    Within the next six months, the Caribbean Community (CARICOM) will seek to jointly host the first ever African Union-CARICOM Summit. This announcement was made again by Barbados’ Prime Minister, the Hon. Mia Amor Mottley, QC, who assumed chairmanship of the 15-member grouping from January 1, 2020 under its six month rotating chairmanship system.

    In her New Year’s Message as incoming chairperson, Prime Minister Mottley intimated that the summit should lay the foundation for tangible progress in  “direct air and sea access across the Atlantic, greater trade in goods and services, and more cultural exchanges between our regions.”

    2019 saw renewed interest in deepening Africa-Caribbean relations, with two African leaders (President Nana Akufo-Addo of Ghana and President Uhuru Kenyatta of Kenya) making official state visits to the region. In late 2019, Prime Minister Mottley accepted on behalf of CARICOM an offer of shared office space in Nairobi from the Government of Kenya for the hosting of a joint CARICOM Mission. For many CARICOM countries, such a mission would be their first on the African continent.

    Regional Integration

    Barbados has lead responsibility for the CARICOM Single Market and Economy (CSME) under the CARICOM quasi-cabinet. Many regional observers hope that the invigorated leadership provided by Prime Minister Mottley will add much needed energy to the regional integration process, especially in the aftermath of the mirror image provided by the Jamaica-commissioned Golding Report.

    Indeed, there appears to be renewed commitment by Barbados to the CSME under current leadership. Barbados became the first country to ratify the Protocol on Contingent Rights and will also be the first to offer other CARICOM nationals free access to public schools once certain requirements are met.

    Likening the regional integration process to a relay race, Prime Minister Mottley stated that Caribbean leaders “are duty bound to continue this journey across the Community whether as a collective of the whole or in twos and threes”. However, she also sought to temper unrealistic expectations, noting that the much more resource-endowed and longer-established European Union (EU) was still working on perfecting its own regional process.

    The new CARICOM Chairman outlined several priorities with regard to the regional integration process. These are: removing the obstacles to passport-free movement and facilitating movement for work where there are opportunities; advancing the process of a single domestic space for transport and communications in the region by working to provide more affordable and reliable air and sea links between our countries; to establish a single domestic rate for telecommunications and phone calls within CARICOM; and to work with the private sector and the labour movement to provide further opportunities.

    Climate Change Action

    Since taking office as Prime Minister of Barbados, Miss Mottley has made climate change one of her signature issues on the international stage. She noted the need “to pool the funds of the region in order to be able to finance our own development trajectory for sustainable development so that we may adapt to the new realities of the climate crisis”.  

    Prime Minister Mottley took over the chairmanship from St. Lucia Prime Minister, the Hon. Allen Chastanet, whose term was July 1 – December 31, 2019. Barbados’ chairmanship will last until June 30, 2020. The last time Barbados held the chairmanship was in 2015 under then Prime Minister, the Hon. Freundel Stuart.

    The new CARICOM chairman’s speech may be watched here.

    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 trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

    DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.