Caribbean Trade Law and Development

Category: Economy

  • G-20 Summit Begins in Antalya, Turkey

    Alicia Nicholls

    The leaders of 20 of the world’s largest economies, the G-20, are meeting for the tenth annual G-20 Leaders Summit which begins Sunday, November 15th in the resort city of Antalya, Turkey. The two-day summit which is expected to focus on a myriad of issues, including climate change finance, the global economy, the migrant crisis and the refugee crisis, will likely be overshadowed by the issue of terrorism in light of Friday’s Paris attacks.

    On November 13, 2015 gunmen linked to Islamic State (ISIL) targeted six sites in Paris, killing 129 persons and wounding over 350. The reports that one of the suspects responsible for the attacks may have been a Syrian refugee raises issues for the EU’s response to the migrant crisis, with the right-wing government of Poland pulling out of any plans to accept refugees. In light of the attacks, the President of France, Francois Hollande, announced he will be no longer attending to the G-20 and that Foreign Minister and Finance Minister will attend in his place.

    G-20 leaders have a packed schedule ahead of them and some of the topics on the official schedule include climate change and development, the global economy, terrorism and the refugee crisis, financial regulation and IMF reform, trade and energy. Even with the terrorist attacks in Paris, the issues of terrorism will have dominated the discussions due to the rise in Islamic State from a regional to a global threat. The conflicts in Syria and the resultant refugee crisis are of particular security concern to European countries whose borders have been flooded by Syrian refugees, raising both human rights and national security concerns.

    In its Joint Letter setting out the EU’s agenda for the summit, the European Council and European Commission highlighted several key issues to be discussed at Antalya, including social issues such as youth employment and social inclusion and trade opening. In regards to the issue of taxation, the European Council spoke of the need to tackle cross-border tax avoidance and tax evasion, including finalisation and implementation of the OECD Base Erosion and Profit Shifting action plan (BEPS).

    Another area identified by the EC and said to be a major issue for Prime Minister Narenda Modi of India is climate change. It is hoped that this issue will not be pushed on the backburner in light of the attacks. Action on climate change, particularly climate change finance and commitments for the 21st Conference of Parties (COP21) in Paris, are critical to developing countries, including small island developing states like those of the Caribbean which will be among the hardest hit by the effects of climate change. Other issues of concern to the developing country members of the G-20 are IMF reform, including the reform of the quota system which would give emerging economies more say in that organisation.

    The G-20 is an international forum comprised of 20 major world economies, including 19 countries (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States) and 1 regional grouping (the European Union).

    In light of the attacks, security for the Summit has reportedly been heightened.

    The official programme for the Summit is as follows. It will be interesting to read the Communique and Antalya Action Plan once released upon the conclusion of the summit.

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

  • OECD Trims Growth Forecast and Warns of Trade Deceleration in Latest Economic Outlook

    Alicia Nicholls

    The Organisation for Economic Cooperation and Development (OECD) has again trimmed its global growth forecast slightly downward in its second economic outlook for the year, reflecting the weakness in Emerging Market Economies (EMEs). The Paris-based grouping predicts global GDP will expand by just 2.9% in 2015, down from 3% forecasted in its Interim Outlook this September. Eight years into the crisis this is the weakest growth since 2009. In its report, the OECD noted that the outlook for EMEs is “a key source of uncertainty at present given their large contribution to global trade and GDP growth”.

    While the OECD predicts that global trade and output will recover in 2016/2017 assisted by stimulus measures in China, in his address at the launch of the report, OECD Secretary General, Jose Angel Gurria, emphasised that this improvement is dependent on a variety of factors, including “supportive macroeconomic policies, investment, continued low commodity prices for advanced economies and a steady improvement in the labour market”.

    In anticipation of the COP21 UN Climate Change Conference in Paris, the OECD’s Economic Outlook report includes a chapter on climate change which calls for urgent action to address this global issue. In his address Secretary General Gurria stressed “we are on a collision course with nature and we have to change course” and urged that  “the fragility of economic recovery cannot be an excuse for policy inaction”.

    Key points from the Report 

    • Global output is expected to grow by 2.9 percent in 2015 (weaker than the 3 percent predicted in the September Interim Outlook), with a modest upturn to 3.3 percent in 2016 (slower than the 3.6 percent forecasted in the September Interim Outlook), provided there is smoothening of the slowdown in China and stronger investment in advanced economies.
    • In contrast to 2011 and 2012 where EMEs were propelling global growth, lacklustre EME growth, including recessions in Brazil and Russia and a slowdown in China have negatively impacted global output and trade growth in 2015.
    • Global trade growth has slowed and is precariously close to levels usually associated with a global recession. Noting the link between trade and economic growth, the OECD pointed out that softening Chinese demand for imports is responsible in part not just for the deceleration of global trade but has negatively affected growth in economies which are linked to the Chinese economy. In its report, the OECD noted that “a more significant slowdown in Chinese domestic demand could hit financial market confidence and the growth prospects of many economies, including the advanced economies”.
    • Growth in the Chinese economy is projected to slow to 6.8 percent in 2015 (up slightly from 6.7 percent in the September forecast), 6.5 percent in 2016 and 6.2 percent in 2017 as the Chinese economy rebalances towards consumption and services activity.
    • Advanced economies remain resilient so far. The growth forecast for the United States economy is 2.4 percent in 2015, 2.5 percent in 2016 and 2.4 percent in 2017. Despite steady recovery in output and in employment, workers pay is still subdued. The OECD has expressed its belief that the time is ripe for the Federal Reserve to raise interest rates. This would be the first interest hike by the US central bank since the recession began.
    • Although recovery in the Eurozone is expected to strengthen, growth projections were downgraded from the September Interim Outlook. Eurozone countries are now expected to grow by 1.8 percent in 2016 and 1.9 percent in 2017 thanks to lower oil prices, accommodative monetary policy and an easing of budget tightening.
    • The refugee surge to the EU is expected to promote labour force growth and help offset the effect of an ageing population but this will depend on several factors, including the skill set of the refugees and current labour market conditions.
    • Unemployment in OECD countries is expected to fall but there will still be 39 million people out of work in OECD countries, six million more before the crisis started.
    • Trade and investment protectionism, inequality and productivity are problems which must be countered in order for growth to be achieved. There is also need for accelerating structural reforms.
    • A well-designed climate change policies can bring an improvement in short term outlook.
    • The OECD will release a policy note looking at the labour market and fiscal impact of the European refugee surge in advance of the G20 summit in Antalya.

    The full report and presentations on the OECD Economic Outlook may be found here.

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

  • Jamaica tops Anglophone Caribbean on ease of doing business in Doing Business Report 2016

    Alicia Nicholls

    Jamaica can boast of being ranked as the easiest place to do business among countries of the English-speaking Caribbean, according to the World Bank’s Doing Business Report 2016. Jamaica has an overall rank of 64 out of 189 economies surveyed in the report, improving seven places from a ranking of 71 last year. Jamaica was not only the highest ranked of the English speaking Caribbean countries but was second only to Puerto Rico (57) out of all Caribbean countries. Jamaica was also the only Caribbean economy ranked among the ‘top 10 improvers’ in terms of performance on the Doing Business indicators in 2014/2015.

    Now in its 13th year of publication, the 2016 edition of the Report entitled ‘Measuring Regulatory Quality and Efficiency’ ranked 189 economies globally on the ease of doing business based on 10 indicators which measure and benchmark regulations which pertain to local small to medium-size enterprises throughout their life cycle. The indicators were: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Although presented in the economy profiles, labor market regulation indicators are not included in the aggregate ease of doing business ranking this year.

    On two of the indicators Jamaica ranked among the top 10 economies globally, namely ‘ease of starting a business’ (9) and ‘getting credit’ (7, tied with Puerto Rico). Its lowest rankings were in regards to ‘trading across borders’ (146), ‘paying taxes’ (146) and ‘registering a property’ (122).

    Several reforms introduced by Jamaica during the 2014/2015 period were deemed to have made business easier including, streamlining internal procedures for starting a business,  implementing a new workflow for processing building permit applications, by encouraging taxpayers to pay their taxes online, introducing an employment tax credit, just to name a few. However, the introduction of a minimum business tax, the raising of the contribution rate for the national insurance scheme paid by employers and increased rates for stamp duty, the property tax, the property transfer tax and the education tax were viewed less favourably.

    The average ranking of Caribbean economies on the ease of doing business was 104. After Jamaica (9), the next three top regional performers were St. Lucia (77), Trinidad & Tobago (88) and Dominica (91). Haiti had the lowest rank among CARICOM countries (182), followed by Grenada (135) and St. Kitts & Nevis (124). Of note is Barbados which slipped 3 places from 116 in last year’s ranking to 119 in the 2016 ranking, making it the fourth lowest ranked CARICOM economy by ease of doing business. In regards to the region as a whole, the Report commended the region’s continued “remarkable progress” on reforms to resolve insolvency, including the new insolvency laws adopted by Jamaica and St. Vincent & the Grenadines.

    It should be noted that although no Caribbean country made it into the top 50 economies on the list, the region did well compared to most SIDS globally, with the notable exception of Mauritius which ranked a laudable 32. On average the Caribbean region ranked highest on ‘getting electricity’ (74), ‘starting a business’ (87) and ‘enforcing contracts’ (90), while scoring lowest in ‘registering property’ (144), ‘resolving insolvency’ (114), ‘paying taxes’ (112) and ‘getting credit’ (112). However, individual countries’ performance on each of these indicators showed great variance.

    While it has its limitations, the Doing Business Report, a flagship report of the World Bank, remains one of the best comparative measures of countries’ business environments. After all, it touches on many of the indicators which companies consider when seeking to invest in a foreign market. As such these rankings are and should be used by countries across the region as a guide to measure the success of their regulatory reforms, identify strengths and weaknesses of their business environments, and compare their countries’ business environment ranking regionally, globally and over a time period as they compete which each other for global investment inflows. While Jamaica’s over all performance is praiseworthy, what these rankings demonstrate is that there still remains great room for improvement if Caribbean countries are to become globally competitive as choice destinations for doing business.

    The full Doing Business 2016: Caribbean States Regional Profile may be accessed here, while the full Doing Business Report 2016 is available here.

    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.

  • Securing better statistical data for better Caribbean lives: Reflecting on the data problem in the Caribbean

    Alicia Nicholls

    Statistical offices and associations across the Caribbean will join those around the world this coming Monday October 20 in celebrating the annual UN World Statistics Day which aims to highlight the importance of statistics in shaping our societies. This year’s theme “Better data, better lives” caused me to reflect on two things which caught my eye in the news in recent weeks. The first was the non-inclusion of Barbados in the World Economic Forum’s Global Competitiveness Report 2015/2016 due to the lack of available data. This point was raised by one of our veteran journalists in an article. The second was the description by the Director of the Caribbean Export Development Agency of the lack of data for the region in order to assess the competitiveness of regional exports as “embarrassing”.They got me thinking yet again on this vexing data problem in the region and the serious development implications of this status quo.

    The Caribbean’s data scarcity problem

    A report coming out of an ECLAC workshop in 2003 succinctly sums up the data problem in the region:

    Generally, the Caribbean countries have been described as “data poor” and in the absence of data and information, policies adopted and implemented have been arrived at on the basis of little or no data and less information. The result is years of wandering in the wilderness of development – talking of visions of the promised land of development without the ability to measure proximity to that goal.

    Years later, the data problem repeats itself. Too many reports mention data shortages in regards to the Caribbean; data is often either missing for some indicators or some years. Barbados’ embarrassing omission from the Global Competitiveness Index ranking in the WEF’s Global Competitiveness Report for 2015/2016 due to the absence of data is just one of the latest examples.

    Obstacles to data availability

    The ECLAC report quoted above notes that obstacles to data availability in the Caribbean region include the following:

    • Lack of financial resources, ‰
    • Lack of qualified personnel, ‰
    • Lack of institutional capacity, ‰
    • Lack of coordination between departments, ‰
    • Low priority on the political agenda

    As a researcher, I can certainly add more than my two-cents’ worth of frustration at the difficulty and in many cases, futility, of trying to obtain data from official and private sector sources here in Barbados and elsewhere in the region in a timely fashion. This is not to cast aspersions on any of these actors. After all, there are occasions where I have gotten good data and assistance from willing staff in government departments/agencies, private sector  associations and from businesses for studies I have had the fortune of working on. But sad to say, there are many occasions where this is the exception and not the rule.

    Central Statistical Offices (CSOs) are financed primarily by government budget resources and in some cases have been receiving declining budget allocations as cash-trapped governments in the region seek to minimise government expenditure. As a result, the human resource and finance constraints of CSOs often limit their capacity to collect data or to process data requests from the public in a timely manner. This often leads to long waiting times for accessing data.

    Outside of initiatives like CARICOMStats, there are few online national or regional statistical databases to draw on. The few which exist are often outdated or limited in the datasets available. The best sources for online data in the region still tend to be international databases. There are good data-rich studies which have been conducted which have been commissioned by public or non-state entities but these findings are often not published or are disseminated only to select stakeholders.

    Data scarce or data scared?

    This brings me to a question I often ask; is it only that we are data scarce or are we also data scared? In the Caribbean there is a possessiveness with which we guard data. There is still the archaic mentality among some public and private actors that power requires cornering knowledge, while data sharing weakens power positions. Due to the silo mentality that pervades many of our civil services, there is often limited data sharing between government agencies and there are instances of more than agency collecting the same data. On the flip side, data collection by government agencies is often constrained by non-cooperation by some members of the private sector and the public in providing data to these agencies in a timely manner. Many businesses in the region do not like to complete surveys and/or are extremely guarded about what data they provide to third parties, with or without a confidentiality agreement.

    Often times, therefore, the only way to obtain data in the region is if one knows a contact in a government agency or has a personal rapport with the business owner from which data is requested. Indeed, what needs to be recognised is that data sharing empowers all. It empowers the data sharer, the data gatherer and the ultimate end users (e.g. the policy makers), as well as the beneficiaries of any policies which the data has been used to support and develop. While there are legitimate data security concerns particularly in regards to sensitive data, this should not be used as an excuse to deny data for legitimate goals.

    So what’s the big deal anyway?

    The data situation in the region is one that has many sustainable development implications. The main end users of data are not just governments, but businesses, NGOs and the citizenry in general. The availability of reliable, accurate and timely statistics is needed for evidence-based planning, evaluating and monitoring of policies and programmes at all levels of government, business and civil society, which ultimately impacts on the society at large. For instance, how can we formulate effective poverty eradication policies if we do not have accurate data on the scale, nature and complexity of the poverty problem? How do we know that the targeted interventions to grow premature sectors of our economies are working if we do not have enough data on which to conduct a proper impact assessment? In many cases, as pointed out in the quote above from the ECLAC workshop report, we are making policies, decisions and formulating plans in the dark. How often have you heard public officials give reports on policies or problems but caveat them by saying “(recent) data is not yet available” or something else to that effect?

    What needs to be done?

    We in the Caribbean region know and acknowledge we have a data problem. What then are the possible solutions?

    • Firstly, we need to strengthen the capacity of our national statistical systems and primarily our CSOs. Our governments must provide CSOs with enough financing and qualified staff so they can effectively and efficiently carry out their functions of collecting, interpreting and providing us the public with timely, accurate and reliable data.
    • Secondly, a frequent complaint is that there are not enough people in the Caribbean region trained in statistical methodologies and technologies. We need not only to continuously train existing CSO staff in these methodologies and technologies but to encourage young people to get into the field of statistics. Statistics is often not seen as a particularly “sexy” or lucrative field like say law or medicine. But this can be changed. Many countries offer national scholarships for development purposes. Why not identify statistics as one of the areas eligible for these scholarships?
    • Thirdly, a big problem in our civil service, and our societies, is the endemic phenomenon of silos; various government agencies collecting the same data or not sharing data with each other. We need an integrated data collection and sharing approach among the various government agencies, coupled with greater linkages with the industry stakeholders. Key to this is more communication about the kinds of data needed, agreed methodologies and standards, and the mechanisms for reporting findings to stakeholders.
    • Fourthly, we must change the fear, skepticism and power attitudes many of our government officials and private sector actors have regarding data sharing through greater statistical advocacy. And while we are still on the topic of changing attitudes, our policy makers need to appreciate the importance of evidence-based (and not gut-based) decisions and evaluations.
    • Fifthly,it would be good to know how many countries have actually amended their statistical legislation to take into account the changes as proposed in the CARICOM Statistics Model Bill.

    This World Statistics Day 2015 themed “Better Data, Better Lives” should be a catalyst for our governments, CSOs, private sector and all our people to reflect critically on the importance of statistical data for creating better lives for us all in the Caribbean region. We know the data problem, the implications of it, and we know the solutions. These proposed solutions herein stated are not novel. They have already been posited by many others.

    Looking at the regional landscape there are several initiatives at the CARICOM level which are quite encouraging and are aimed at tackling the previously mentioned data challenges. Many of these initiatives are being done through technical assistance and capacity building programmes with the help of regional and international development partners. In his speech marking the 7th CARICOM Statistics Day 2015 on October 15,CARICOM Secretary General Irwin LaRocque urged member states to invest in improving their statistical production in order to assist with development. He also outlined the work of the Standing Committee of Caribbean Statisticians which has reportedly recently endorsed an action plan identifying the support needs of the region’s central statistical offices. In his key note address at the Second High Level Advocacy Forum on Statistics, in May 2014, the Hon. Dr. Keith Mitchell, the Prime Minister of Grenada, highlighted not only that statistics should be seen as the voice of the people but also reiterated the importance of a regional approach to statistical development and of ICT in the data revolution.

    The data shortage problem is on the regional agenda. What we need to do is to get serious about implementing these solutions at the national level and a big part of that starts with political will and cooperation from stakeholders.

    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.