Caribbean Trade Law and Development

Category: Climate Change

  • A sustainable future for SIDS necessitates an ambitious outcome at COP21

    Alicia Nicholls

    Over the next two weeks (November 30 to December 11), leaders and delegates from over 190 countries are gathered in Paris, France for the 21st Conference of the Parties (COP21) of the United Nations Framework Convention on Climate Change (UNFCCC), with the aim of achieving a legally binding multilateral agreement on climate change.

    For small island developing states (SIDS), which are already suffering the adverse effects of climate change, the stakes are particularly high. The importance of climate change to the post 2015 development agenda has been reflected by its inclusion as Goal 13 of the Sustainable Development Goals. Failure to act on climate change has implications not just for the economies, societies and survival of SIDS, but will undermine their achievement of many of the sustainable development goals, including poverty reduction.

    Vulnerabilities

    SIDS are not the only countries affected by climate change. However, while combined their contribution to global greenhouse gas (GHG) emissions is minuscule, they are among the most vulnerable to the adverse manifestations of climate change. The geographical vulnerabilities of small states, such as their geographic location, small land masses, concentration of human settlements and major infrastructure along coastal and low-lying areas and dependence on limited industries, enhance their vulnerabilities to rising sea levels, ocean acidification, coral bleaching, more frequent and destructive weather events and changing precipitation patterns.

    Several SIDS, including those of the Caribbean Community (CARICOM), are already experiencing beach erosion, more devastating hurricanes, flooding and longer droughts. The situation is even direr in lowlying islands and atolls in the Pacific like Kiribati which face displacement of coastal communities because of rising sea levels.

    Sustainable Development Goals and Climate Change

    Addressing climate change has been made part of the post-2015 development agenda. SDG 13 mandates states to take urgent action to combat climate change and its impacts. The targets under goal 13 include strengthening resilience and adaptative capacity to climate-related hazards and natural disasters, integrating climate change measures in policy frameworks, improving education and awareness, promoting mechanisms for raising capacity for effective climate change planning in LDCs and SIDS and implementing developed countries’ commitment of mobilizing jointly $100 billion annually by 2020 to address the needs of developing countries.

    Climate change poses not only an existential threat to SIDS but also to their ability to meet sustainable development goals. Longer droughts as a result of changing precipitation patterns diminish crop yields and hurt livestock which in turn diminish the livelihoods of farmers and the families which depend on small plots of land for income and food. Low agricultural yields means reduced food production which has an impact on nutrition and food security, with implications for the achievement of SDG 2 – zero hunger. For subsistence farmers, income from surplus yields is used to finance household expenses and education of children. Loss of homes and livelihood from cyclones, droughts and floods has an impact on the eradication of poverty (SDG 1 – no poverty). In many poorer countries, women make up the majority of small farmers and are the ones required to fetch water for their families, highlighting the gendered impact of climate change which affects the achievement of SDG 5 – gender equality.

    The oceans are the lifeblood of SIDS, whether through fisheries or as part of their tourism product. Ocean acidification due to oceanic uptake of CO2, warming seas and coral bleaching cause fish to migrate to more favourable waters resulting in lower fish yields and loss of aquatic biodiversity (SDG 14 – life below water). This in turn leads to loss of income for fishermen, glass bottom boat operators and entire coastal communities which depend on marine biodiversity and fish catches for food and income, again with implications for poverty reduction (SDG 1). Another alarming aspect of climate change is saltwater intrusion into freshwater aquifers which limits the availability of fresh water for human consumption, farming and other economic activities and will undermine the achievement of SDG6 – clean water and sanitation.

    Speaking of the achievement of SDG9 – industry, innovation and infrastructure, the major economic drivers in SIDS tend to be tourism, agriculture, fisheries, which are climate sensitive industries. In Grenada an entire nutmeg harvest was devastated by Hurricane Ivan in 2005. Major infrastructure in many islands, such as hotels, road networks, electrical power plants and such, are concentrated along coastal areas which can become inundated by rising sea levels and destroyed by hurricanes.  Destruction or damage of these ports of entry impact on their ability to receive tourists, which is crippling for economies dependent on tourism.

    Aside from these impacts on economic growth and sustainability, infrastructure and livelihood, the loss of human life is one of the greatest threats. One only needs to consider the devastation by Tropical Storm Erika in Dominica and the loss of life to see that the impact is indeed real. According to the Rapid Damage and Impact Assessment, the damage and loss has been estimated at US $483 million which is equivalent to 90 percent of Dominica’s GDP.

    The scale of the problem

    Climate change has been one foreign policy area on which CARICOM countries have been steadfastly united. They have participated keenly in climate change negotiations and have submitted their intended nationally determined contributions (INDCs) setting out their post-2020 country commitments. A taskforce on climate change was also established.

    Previous attempts by the global community to achieve an internationally accepted binding agreement for the reduction of GHG emissions have left a lot to be desired. The Kyoto Protocol, adopted in Kyoto, Japan in 1997 and entered in force in 2005, is the first multilateral treaty requiring countries to cut their GHG emissions. However, the US, currently the second largest  emiter, never ratified the Agreement and China  (currently the largest emiter) and India, were exempted from the emission cuts because they were not major emiters during the period of industrialisation. Moreover, the emission cut targets of 5.2% under Kyoto are not enough.

    The inertia of the world’s major emiters on substantially cutting emissions and on achieving an ambitious binding agreement so far on climate change has had devastating consequences. The World Meteorological Organisation reported that concentrations of carbon dioxide increased at their fastest rate for 30 years in 2013. Moreover, a World Bank scientific report published in 2012 found that the world is heading towards a temperature increase of 4 degrees celsius by the turn of the century if current emission levels remain. A recent report by the IPCC further reiterated this. Such an increase would be catastrophic for SIDS.

    The current global position for emissions reduction is for limiting temperature increase to no more than 2 degrees above pre-industrial levels. However, any long term temperature increase by 1.5 degrees Celsius over pre-industrial levels will have a devastating impact on SIDS. As such, countries of the Alliance of Small Island States (AOSIS), including CARICOM, have been pushing the “1.5 to Stay Alive” campaign to raise awareness and support for cuts which will limit the increase to no more than 1.5 degrees.

    Moreover, the current level of actual financing provided by developed nations to meet the adaptation needs of small states has been woefully inadequate.

    CARICOM negotiating position

    The Rt. Hon Dr. Kenny Anthony, Prime Minister of St. Lucia, has lead responsibility for climate change for CARICOM.

    In a press conference given by Dr. Anthony, CARICOM’s negotiating position was articulated. It re-emphasises the position taken in the Community’s  Declaration for Climate Action issued pursuant to regular meeting of CARICOM Heads of Government in Barbados in July of this year. As stated by Dr. Anthony, CARICOM is advocating for:

    the retention of the principal of special circumstances and unique vulnerability of SIDS;

    five-year review cycles of green house gas emission reduction targets with the first review to take place prior to 2020, to allow for the adjustments necessary to achieve the goal of 1.5 degrees;

    recognition of loss and damage (the irreversible, slow onset impacts of climate change to which it is not possible to adapt, example sea-level rise and ocean acidification) as a critical issue for SIDS and the development of a mechanism to address this element, treated separately from adaptation;

    support for REDD+ (efforts to reduce emissions from deforestation and forest degradation and the sustainable management of forests);

    adequate provisions for adaptation to help Caribbean countries reduce their vulnerability to effects of climate change and develop great climate resilience where possible; and

    commitment by developed countries to take the lead in scaling up the provision of adequate, predictable and new sources of financing for mitigation, adaptation, loss and damage, and for technology support.

    The threat of climate change to the livelihoods, economies and very existence of SIDS cannot be understated. World leaders in their various statementsleading up to the conference have all recognised that COP 21 represents a critical development juncture where adaptative and corrective action can still be taken towards charting a new course towards a climate friendly sustainable future. However the window of opportunity for avoiding an environmentally catastrophic global temperature increase of 4 degrees Celsius is closing.

    A comprehensive, legally binding agreement with ambitious and substantive commitments on emissions reductions to reduce the global temperature increase to no more than 1.5 degrees over pre-industrial levels, which provides binding commitments for technology transfer, capacity building and adequate financial support for adaptation of SIDS and other vulnerable countries and communities to climate change and which recognises the vulnerability and differentiated responsibility of small states and LDCs will help reverse this. The hope of SIDS for a sustainable future depends on what action or inaction world leaders take over the next few days.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. Please note that the views expressed in this article are solely hers. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • 24th Commonwealth Heads of Government Meeting Concludes in Malta

    Alicia Nicholls

    Heads of Government of the Commonwealth Caribbean joined other leaders of the 53-state Commonwealth Group of Nations for the 24th Commonwealth Heads of Government Meeting in Malta on November 27-29. The meeting was held under the theme “The Commonwealth: Adding Global Value” and comes in the aftermath of the terrorist attacks in Paris and immediately precedes the 2015 United Nations Climate Change Conference (COP21).

    The agenda focused on the following themes: peace and security, human rights and good governance, migration, sustainable development, small states, climate change, trade, youth, gender quality and women’s empowerment, public health, current situations, movement of Commonwealth citizens, Commonwealth collaboration and the election of the new Secretary General.

    Outcomes

    Baroness Patricia Scotland was elected the 6th and first female Secretary General of the Commonwealth. It was agreed that Guyana would be one of the member governments to serve on the Commonwealth Ministerial Action Group (CMAG) for the next two years.

    The final communiqué released by the leaders includes several noteworthy points of specific importance to the Commonwealth Caribbean, and other small island developing states. The leaders also released a separate statement on climate change.

    Climate Change

    • Developed Commonwealth countries committed to assisting in mobilizing US$100 billion per year by 2020 to address the adaptation and mitigation needs of developing countries.
    • A Commonwealth Climate Finance Access Hub has been established to build the capacity of Commonwealth small and other climate vulnerable states to access climate finance with regional support.

    Trade & Freedom of Movement

    • A voluntary Commonwealth Trade Finance Facility was launched to increase trade and investment finance, in particular for small and other developing economies with limited access to trade finance.
    • Leaders acknowledged a proposal for a “Commonwealth Advantage” under which Commonwealth governments will consider measures to enhance access to each others’ countries more easily and for longer in keeping with their national legislation and international obligations regulating visa policies. A working group has already been working on this.

    Peace & Security

    • Commonwealth leaders recognized the growing trend of recruitment of youth persons by extremist groups as fighters, including from some Commonwealth countries.
    • Leaders renewed their commitment to implement and support national strategies to counter these threats, including the need to address recruitment and radicalization of youth via the internet and Commonwealth programmes to raise awareness and prevent young people from falling victim to radicalization and terrorism.
    • They called upon all member governments to implement their obligations under the UN Security Council Resolution 2178(2014) on foreign terrorist fighters in full and to join or fully implement the Arms Trade Treaty.

    Border Disputes in Guyana and Belize

    • The leaders endorsed the outcome statement of the Commonwealth Ministerial Group on Guyana following its meeting in September 2015, and reaffirmed their “unequivocal support for the maintenance and safeguarding of Guyana’s sovereignty and territorial integrity”.
    • They also welcomed the signing of thirteen cooperation agreements between Belize and Guatemala and reiterated their full support for the sovereignty and territorial integrity of Belize.

    Small States

    • A Commonwealth and Maltese government-funded Small States Centre of Excellence will promote the interests of small states and provide targeted capacity building programmes and other support.

    The full statements may be accessed here:

    Commonwealth Leaders’ Statement on Climate Change 

    Final Communique 

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. Please note that the views expressed in this article are solely hers. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • 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.