Caribbean Trade Law and Development

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  • Caribbean Trade & Development Digest – June 3-9, 2018

    Caribbean Trade & Development Digest – June 3-9, 2018

    Welcome to the Caribbean Trade & Development Digest for the week of June 3-9, 2018! What a difference a week makes in the world of trade policy, it seems! From the CARICOM High Level Stakeholders’ Consultation on the implementation of the CARICOM Single Market to the tumultuous G7 Leaders’ Meeting, we are happy to bring the trade and development headlines from across the Caribbean Region and the world from last week:

    REGIONAL

    (Belize) Trade Minister Responds to CARICOM Sugar Call

    Channel 5 Belize: On Tuesday, Briceño said G.O.B. should be doing more to export all Belizean sugar to CARICOM. According to Panton, Belize’s sugar has market access at duty free rates but what is lacking is market penetration. Read more

    CSME implementation deficit not Secretariat’s fault – Golding

    InewsGuyana: To blame the Caribbean Community (CARICOM) Secretariat for the gaps in implementation of the CARCIOM Single Market and Economy (CSME) was unfair, a former Prime Minister of Jamaica has said. Read more

    St Vincent PM says T&T extracts most from CARICOM

    Stabroek News: Stating that outstanding issues such as free movement of people and a co-ordinated foreign policy have to be resolved before CARICOM can move to a Single Economy, St Vincent and the Grenadines (SVG) Prime Minister Dr Ralph Gonsalves also cited Trinidad for drawing the most from the integration movement in an uneven relationship. Read more

    Regional leaders have lost faith in CSME realisation

    St. Lucia Times Online: CARICOM members have to become more practical in their approach to the concepts of the Caricom Single Market and Economy (CSME), St Vincent and the Grenadines Prime Minister Dr Ralph Gonsalves said Friday. Read more

    Statement at the Conclusion of an IMF Staff Visit to Barbados

    IMF: At the request of the newly elected Government of Barbados, an International Monetary Fund (IMF) team led by Bert van Selm visited Bridgetown on June 5-7, to have discussions on economic policies and possible IMF financial support of the government’s economic plan. Read more

    Price hike expected due to trade tariffs

    The Reporter: The cost of living in Belize could be taking another hit, as the price of various imported goods are in danger of going up due to an ongoing trade war among the United States, Mexico and Canada. Read more

    Barbados pledges to play greater role in regional integration

    CMC (via Jamaica Observer): Barbados on Tuesday said it would seek to play a greater role in the revitalisation of the regional integration movement, as the new government of Prime Minister Mia Mottley outlined its priorities for the next 12 months.  Read more

    INTERNATIONAL 

    Malaysia’s Mahathir calls for review of Trans-Pacific trade pact

    CNBC: Malaysian Prime Minister Mahathir Mohamad called for a review of the Trans-Pacific Partnership trade agreement, saying smaller economies like Malaysia were at a disadvantage under the current terms. Read more

    Trump against Rwanda in trade war over used clothes

    Deutsche Welle: When East African countries announced a ban on the import of secondhand clothes to help their own textile industries, this irked US President Donald Trump. All but Rwanda have now backtracked. What’s at stake? Read more

    Trump Wants Bilateral Nafta Talks But He Won’t Quit Accord

    Bloomberg: President Donald Trump is seriously considering separate trade negotiations with Canada and Mexico but he doesn’t plan to withdraw from the North American Free Trade Agreement, White House economic adviser Larry Kudlow said. Read more

    EU trade defence: stronger and more effective rules enter into force

    European Commission: The changes which came into force last week are aimed at modernising the EU’s trade defence toolbox. Read more

    EU-US Trade: European Commission endorses rebalancing duties on US products

    European Commission: The College of Commissioners endorsed today the decision to impose additional duties on the full list of US products notified to the World Trade Organisation (WTO), as part of the EU’s response to the US tariffs on steel and aluminium products. Read more

    EU and Chile complete third round of negotiations

    European Commission: Negotiators met in Brussels from 28 May to 1 June for the 3rd round of negotiations for a new, modernised trade agreement between the EU and Chile. Read more

    Azevêdo highlights ‘significant progress’ on trade finance, outlines further actions

    WTO: Speaking at a meeting of the WTO Working Group on Trade, Debt and Finance on 8 June, Director-General Roberto Azevêdo highlighted the significant progress made in improving access to trade finance, in response to the persistent gaps in provision which affect small businesses and poorer countries in particular. Read more

    Mexico initiates WTO dispute complaint against US steel, aluminium duties

    WTO: Mexico has requested WTO dispute consultations with the United States regarding US duties on certain imported steel and aluminium products. The request was circulated to WTO members on 7 June. Read more

    EU, Canada initiate WTO dispute complaints against US steel, aluminium duties

    WTO: The European Union and Canada have requested WTO dispute consultations with the United States regarding US duties on certain imported steel and aluminium products. The requests were circulated to WTO members on 6 June. Read more

    European Union files WTO complaint against China’s protection of intellectual property rights

    WTO: The European Union has requested WTO consultations with China concerning certain Chinese measures which the EU alleges are inconsistent with China’s obligations under the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). The request was circulated to WTO members on 6 June. Read more

    EU initiates new WTO compliance proceedings over Airbus subsidies

    WTO: The European Union has requested WTO dispute consultations with the United States to address the EU’s claim that the EU and its member states have complied with the WTO ruling on subsidies to Airbus which was adopted by the Dispute Settlement Body on 28 May. The request was circulated to WTO members on 06 June. Read more

    South Africa Looks to Deepen Trade Ties with Canada Following G7 Summit

    Footprint to Africa: South Africa is looking to deepen its trade relations with Canada following discussions at the G7 Summit, an annual high profile event that brings together seven of the wealthiest nations in the world. Read more

    Africa bids to unlock trade finance potential

    Africa Business Magazine: Efforts to create a free trade grouping date back to the establishment of the African Economic Community under the Abuja treaty in 1991. In this context, therefore, the CFTA should be celebrated. Nonetheless, it remains more of a beginning than an end to overcoming intra-African trade barriers. Read more

    UNCTAD launches World Investment Report 2018 

    UNCTAD: Global flows of foreign direct investment fell by 23 per cent in 2017. Cross-border investment in developed and transition economies dropped sharply, while growth was near zero in developing economies and with only a very modest recovery predicted for 2018. Read more

    COMESA, IOM sign cross border trade agreement

    Africa Business Communities: COMESA and International Organization for Migration (IOM) have signed a co-delegation Agreement on the implementation of the small scale cross border trade initiative in five border posts within the region. Read more

    BONUS – Trade Tensions Escalate 

    The leaders of the Group of 7 (G-7) wealthiest countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) met in Charlevoix, Quebec, Canada on June 8-9 against a backdrop of escalating trade tensions between the US and major allies, Mexico, Canada and the EU over the former’s imposition of steel and aluminium tariffs and threats of retaliation by the latter.

    The official communique was signed by six countries, the US excepted. Specifically, the six signatories to the communique expressed their support for free trade and the rules-based multilateral trading system and denounced protectionism as follows:

    “We acknowledge that free, fair and mutually beneficial trade and investment, while creating reciprocal benefits, are key engines for growth and job creation. We recommit to the conclusions on trade of the Hamburg G20 Summit, in particular, we underline the crucial role of a rules-based international trading system and continue to fight protectionism. We note the importance of bilateral, regional and plurilateral agreements being open, transparent, inclusive and WTO-consistent, and commit to working to ensure they complement the multilateral trade agreements. We commit to modernize the WTO to make it more fair as soon as possible. We strive to reduce tariff barriers, non-tariff barriers and subsidies.”

    The full text of the communique may be accessed here.

    Liked this issue? To read past issues of our weekly Caribbean Trade & Development Digest, please visit here. To receive these mailings directly to your inbox, please follow our blog.

  • IMO Member Countries adopt pathway to reduce shipping carbon footprint

    IMO Member Countries adopt pathway to reduce shipping carbon footprint

    Alicia Nicholls

    Member countries of the United Nations specialised agency charged with regulating the shipping industry, the International Maritime Organisation (IMO), adopted the first greenhouse gas (GHG) emissions reduction framework for the shipping industry. This decision came at the 72nd session of the IMO’s Marine Environment Protection Committee (MEPC) held in London from April 9-13.

    The Initial Strategy adopted by IMO member countries has set a target of halving greenhouse gas (GHG) emissions from ships by 2050 vis-a-vis emissions levels in 2008. This move brings the shipping industry closer in line with the goals of the Paris Climate Change Agreement signed by over 190 countries in 2015, but to which the shipping industry (like the aviation industry) is not bound.

    Some 80% of the volume of global trade is carried by ships. The phenomenon of mega-ships has seen a doubling in container ship capacity, and improvements in engine efficiency have increased the ability to travel longer distances in shorter time. However, the industry is estimated to account for 2-3% of global GHG emissions, including carbon dioxide and sulphur. A study entitled “Greenhouse Gas Emissions from Global Shipping: 2013-2015” found that CO2 and other emissions from ships were increasing, despite increases in efficiency. Aside from the very real climate impact, emissions  from ships have public health risks for persons who live on or near the coast.

    So what was decided?

    Under the Initial Strategy, IMO States agreed:

    • To reduce total annual GHG emissions from international shipping by at least 50% compared to 2008
    • The peak and decline of GHG shipping emissions completely by the end of the century
    • To reduce the carbon intensity of ships through implementation of further phases of the energy efficiency design index for new ships
    • A working group will develop a program of follow-up actions to the Initial Strategy, and will consider ways to reduce shipping GHG emissions in order to advise the committee and will report at the next session of the MEPC in October 2018
    • The Initial Strategy is to be revised by 2023.

    As noted by the IMO, achievement of these targets will require continued innovations in shipping design and technology to maximise energy efficiency and decarbonisation through use of alternative and renewable energy sources.

    Agreement on the Initial Strategy did not come easy and reflects a compromise. Small Island Developing States, China and the European Union for example, had advocated for a more ambitious emissions reduction target of at least 70%, which scientists argue would put the sector more on track to meeting the Paris Agreement goal to limit global temperature increases to well-below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit increases to 1.5 degrees Celsius above pre-industrial levels.  Others like the US, Saudi Arabia and Brazil had argued for lower targets.

    Some environmental groups have posited that the compromise target of 50% is not enough to bring shipping emissions in line with the target set out by the Paris Agreement.

    Nonetheless, the Initial Strategy is an important milestone as, after years of delay, it represents the first pathway forward for reducing the shipping industry’s carbon footprint. In March this year, a  mandatory data collection system for fuel oil consumption of ships also came into force.

    The full IMO press release may be viewed 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.

  • IMF: Trade tensions could derail global growth prematurely

    IMF: Trade tensions could derail global growth prematurely

    Alicia Nicholls

    Currently strong global growth could be derailed by escalating trade tensions and retaliation. That is the word from the International Monetary Fund (IMF) in its latest World Economic Outlook (April 2018) entitled “Cyclical Upswing, Structural Change”. The lending agency has forecast global growth of 3.9% both for this year and the next, up from 3.8% in 2017, which was the most robust since 2011. Increased trade and investment has been a major propeller of this growth, according to IMF economists, which makes the current trade tensions between the United States and China a cause for concern.

    GDP growth for Latin America and the Caribbean (LAC) is projected to be 2.0% in 2018 and 2.8% in 2019, up from 1.3% in 2017, but still below the projected global average. The IMF projects positive growth for all LAC countries (to varying degrees), with the exceptions of Dominica (-16.3%) which was ravaged by Hurricane Maria last year and Venezuela (-15%), which is currently in the throes of a deep economic crisis.

    Longer-term prospects not as bright

    However, it was not all positive news. While near-term global growth prospects remain positive, the IMF projects a slowing of growth in the medium-term. It was noted that ageing populations, lower rates of labor force participation and low productivity growth all made it unlikely that advanced economies would return to their pre-crisis per capita growth rates any time soon.

    According to the IMF, some emerging and developing economies are likely to achieve longer-term growth rates comparable to their pre-crisis rates, but the outlook for commodities exporters was not as positive even though the outlook for commodities prices had improved somewhat. The IMF emphasised that economic resilience of these economies would be contingent on their diversification.

    The IMF has also again sounded alarm about the rise in global private and public debt levels and the prospect of repayment difficulties due to monetary policy normalisation. This is an issue which is of particular relevance to the region, as some Caribbean countries are among the most indebted in the world.

    Trade tensions could undermine current growth trajectory

    During the press conference launching the report, IMF Economic Counsellor and Director of the Research Department, Mr. Maurice Obstfeld cautioned that while a slowing of growth is predicted in the longer term, “the prospect of trade restrictions and counter-restrictions threatened to undermine confidence and derail growth prematurely”.

    Acknowledging the political imperatives driving the protectionist turn taken by some countries, namely public skepticism about the benefits of free trade and economic integration, Mr. Obstfeld noted that technology as opposed to trade was to blame. He further warned that fights over trade distracted from, rather than advanced the agenda of promoting growth whose benefits were more broad-based.

    Multilateral system  in danger of being torn apart

    In the report, the IMF warned that the multilateral system was in danger of being torn apart. Making the case against unilateral action, the IMF Economic Counsellor argued that inequitable trade practices were best coped with through “dependable and fair dispute resolution within a strong rules-based multilateral framework”.

    He acknowledged that there was room to strengthen the current trading system and that plurilaleral agreements could be used as a “springboard” to more open trade. He also noted that multilateral cooperation was essential “to address a range of challenges in addition to the governance of world trade.”

    The full press conference may be viewed here and the report may be downloaded 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.

  • Global Governance: Why isn’t it working and what can be done?

    Global Governance: Why isn’t it working and what can be done?

    Javier
    Javier D. Spencer

    By Javier D. Spencer, Guest Contributor

    At an exponential rate, the world is convulsing into a single space, which heightens the interconnectivity and interdependence of countries. As a result, it is evident that issues such as climate change, security, human rights among others, instantaneously alter global relations. It can be scary when you think about it, especially since matters arising are becoming more and more complex.

    Our human response to address the complex issues at a global level is to increase the robustness of global governance through multilateralism. We could say that for almost every global issue (sometimes overlapping), there may be at least two or three global institutions created to address that one issue. This, evidently, creates a new global society that is constructed to bring order, reliability, predictability and transparency.

    The New Global society eliminates a central authority and places emphasis on collaboration among states which will seek to encourage common practices and goals. However, as there is growing interdependence for economies to integrate into the global economy, we observe that global governance has acquiesced to the limitations and challenges of multilateralism. It is designed to promote international peace, stability and co-operation; but unfortunately, it does not work, as it should. For this reason, there are challenges arising in the dynamic global economy that undermines the effective institutional outcomes of global governance, including democratic deficits and accountability; representation and power; and compliance.

    Democratic Deficits & Accountability

    Democratic deficits are prevalent in global governance when nothing holds the institutions and regimes accountable to a democratic electorate. There is a divergence between ‘what is’ and ‘what ought to be’ in respect of trust by the masses in the governance regimes and institutions. For example, we have seen a proliferation of trade agreements, like the now defunct negotiations on the Transatlantic Trade and Investment Partnership (TTIP) between the US and the EU, and the Trans-Pacific Partnership (TPP) (which was replaced by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after the US withdrew from the TPP), that were being negotiated in secrecy. Secrecy violates the very basic concept of democracy. Citizens have the fundamental right to be aware and to be able to air their concerns on policies and legislation. The absence of this right results in the deficit as the perception of governance goes beyond the influence of the citizenry.

    There is also a growing concern about lack of accountability at the global governance level.  Accountability includes transparency, consultation, evaluation, and correction. Transparency means that there is visibility present; eliminating decision-making done in secrecy. Additionally, consultation purports an explanation of intentions by one party, and flexibility to adjust plans that will negatively affect another party. Consultation then ushers in evaluation where there is an independent monitoring and assessment of activities; and in the final analysis, there is correction, which means that there are provisions for redress or reform.

    Representation and Power

    An overwhelming question on the issue of representation is, “whose interest do these organizations represent?”   Global Governance regimes were created by and for the most influential states that were too important to fail. Therefore, the goals and objectives are partially beneficial to the major actors in global system. For example, voting at the International Monetary Fund (IMF) remains weighted, which means that one state is does not equal to one vote. How is finance for economic development expected to be achieved? It automatically disenfranchises the global south in crucial development decisions.

    Another case in point is the daunting process of ensuring that developing countries, more specifically Least Developed Countries, are able to participate in international trade at the multilateral level. Although the Nairobi Decision on Rules of Origin and Export competition enables greater LDC participation, facilitation remains elusive. Interestingly, the Nairobi round is a successor to the Doha Round. The Doha Round, which was coined a being ‘development’ oriented failed miserably after many years of negotiations. The main aim of the Doha Round was to further liberalize trade, invest more in development, and address complex global issues. However, the rounds’ failure illumes the shortcomings of global governance regimes, especially for developing and least developed countries.

    There are, however, proposed problems of increased representation at the global governance level. There will be an increased inefficiency, as more participants in the decision-making process could hinder coming to a single decision, due to the diversity of interests and goals. However, inadequate representation results in skewed authority and power within the governance regime. Ultimate power is given to whom it favourably represents and vice versa, representation reflects to the economies with economic dominance and power. It becomes a case where “the strong will do what they can and the weak must accept what they must”.

    Compliance

    If all states are sovereign, who ensures that states comply with these rules to yield an ideal outcome in the governance of the international system?   The enforcement problem arises because that is no authoritative international government since states value their autonomy. For instance, the United States has iterated its right to ignore any rulings from the WTO’s Dispute Settlement Body. Therefore, to what extent are states willing to sacrifice their political autonomy for a well-functioning international economy? None.

    So, what’s next? Reform? How?

    In order to align with the original mandate of international stability, peace, and cooperation, issues of democratic deficits and accountability; representation and power; and compliance must be addressed through speedy reform. The start of attaining reform is by identifying an effective global mechanism that provides strategic guidance. Global issues today are closely knitted into a web. Therefore, strategic guidance must view the international system as a whole.

    At present, there are sufficient agencies created to tackle emanating issues. As such, there is no need to recreate the global governance regime. Instead, the existing structure needs to be appropriately matched to issues, in order to strengthen its efficacy.

    This will certainly result in a change in the global agenda. An agenda that is inclusive, modern, flexible, agile, and resilient.  This envisioned modern-day agenda will mitigate the democratic deficit and increase accountability, linking leadership, vision and institution. An inclusive agenda fosters participation, which balances representation and power. Reform needs to happen faster.

    Javier Spencer, B.Sc., M.Sc., is an International Business & Trade Professional with a B.Sc. in International Business and a M.Sc. in International Trade Policy. His professional interests include Regional Integration, International Business, Global Diplomacy and International Trade & Development. He may be contacted at javier.spencer at gmail.com.