Caribbean Trade Law and Development

Category: Trade

  • 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.

  • A step towards progress between Haiti and the Dominican Republic?

    Alicia Nicholls

    The news this week of progress in the talks at Jimani between Haiti and the Dominican Republic to address, inter alia, the long-standing migration issue between the two countries is welcomed news. The fragile diplomatic relationship between the Dominican Republic and Haiti took a sharp turn for the worse in the latter part of last year following a controversial ruling by the DR’s Constitutional Court  on September 23.

    The DR’s Constitutional Court had been called on to consider an application made by Ms. Juliana Deguis Pierre that the Electoral Office be ordered to issue her with a national ID card which she had been denied on the basis that she was the child of Haitian parents and not Dominican. Ms. Pierre was born and raised in Los Jovillos, an area in Yamasa municipality (in Monte Plata province) where many persons of Haitian origin live. Denying her request, the Court ruled that Ms. Pierre was not a Dominican citizen but a child born of ‘foreigners in transit’. Using the case as an opportunity to elaborate on Dominican nationality law, the Court applied the restriction on the jus soli principle per Article 18 of the 2010 Constitution, holding that under Dominican law birth on Dominican soil did not automatically confer citizenship on an individual and that for a person born after 1929 to be deemed a citizen of the Dominican Republic, he or she must have been born to at least one parent with legal status in the country. All other persons who did not meet this criterion would be classified as being ‘extranjeros en transito” (foreigners in transit) and therefore as never having had Dominican citizenship.  A copy of the court’s judgment can be read here (in Spanish).

    The principle in Dominican immigration law of “foreigner in transit” is not new as it was included in the Constitution of 1929 and in subsequent constitutional reforms, including as recently as in Article 18.3 of the reformed constitution of January 26, 2010. However, prior to the 2010 Constitution, citizenship in the Dominican Republic was conferred on an absolute jus soli basis as evidenced by the language used in previous constitutions, which excluded any reference to the requirement of being born of Dominican parentage. The Court’s retroactive ruling which applies the jus sanguinis principle, established in Article 18 of the 2010 Constitution, to those born after 1929 (and not just to those born after 2010) leaves several generations of Dominicans of foreign descent in a legal limbo as to their status. The retroactive application by the Court of Article 18 to this case seems especially harsh given that the 2010 constitution itself does not indicate that it is meant  to apply retroactively, evidenced by Article 18.2. which states that “Dominicans [also] include those who enjoyed nationality before the entry into force of the Constitution”. A copy of the 2010 Constitution may be found here (in Spanish).

    While persons born to parents of other nationalities will be affected, it is persons of Haitian descent who make up the overwhelming majority of persons to whom this ruling would apply.  Some human rights groups estimate that as many as 200,000 persons of Haitian descent may be affected by the ruling. Haiti and the Dominican Republic, which share the Caribbean island of Hispaniola, have always had a tense and complicated relationship which has its roots in the colonial era and in subsequent historical events. These events include the 22-year Haitian occupation of the Dominican Republic in the immediate post-colonial period before the latter attained its independence, and the slaughter of thousands of Haitians by the Trujillo dictatorship in 1937. The socioeconomic disparities between the two states and their cultural, religious, linguistic and racial differences, a legacy of colonialism, have only helped to further deepen the gulf between these two sister nations. A constant source of tension between the two states has been undocumented Haitian migration to the Dominican Republic. Ever since the 1920s when Haitian workers were actively recruited to work in the Dominican Republic’s sugar industry, the Dominican Republic has been an attractive employment market for seasonal and long-term Haitian workers searching for a better life for themselves and their families. Many of those affected by the ruling include Haitians who had been brought in to work on Dominican farms during the 1920s and their descendants born and raised in the DR.

    Haitian emigration to the Dominican Republic has helped to foment anti-Haitian sentiment among some Dominicans, a sentiment which is also boosted because of the Dominican Republic’s own racially stratified society where darker skin is still synonymous with being poor and uneducated.

    The immigration policy of states is always a touchy subject because of the importance it has for national security. Indeed, it is no doubt that inherent in being a sovereign nation is the right of the state to protect its borders. Both customary international law and the Montevideo Convention of 1933 provide that no state has the right to intervene in the internal or external affairs of another. Further, international law gives states the right to dictate their own policies in regards to conferring nationality.

    However, these rights are not absolute as they are subject, inter alia, to the various international human rights treaties which States, like the DR, have acceded to, and by which they agree to respect human rights and to be held accountable for any violation thereof. The human rights implications of the constitutional court’s ruling cannot be overlooked on the basis that the ruling is solely in the province of the DR’s internal affairs. The ruling has been condemned by CARICOM states (of which Haiti is a member) and by various human rights groups as being ‘racist’ and ‘xenophobic’ in nature and with potentially devastating human rights consequences.

    Although Dominican authorities deny that the ruling leaves anyone stateless and argue that a plan for naturalisation of affected persons would be implemented, the Court’s retroactive application of Article 18 of the 2010 Constitution does have the effect of stripping those affected of citizenship, depriving them of the rights inherent with nationality, such as the right to vote, the ability to get married and the right of access to basic services such as education, employment and health care, and bringing with it the possibility of expulsion from the land of their birth. Like Juliana Deguis Pierre, many of those three generations of Haitians who are affected were born in, and have lived in the Dominican Republic all their lives, have little or no ties to Haiti and speak no Haitian creole.  In light of the ruling, CARICOM has agreed to indefinitely defer consideration of the Dominican Republic’s longstanding application to accede to CARICOM.

    Happily, it appears tentatively that some progress is being made to address this unfortunate state of affairs. Both countries have agreed to establish a Joint Commission to discuss not just issues relating to migration, but also matters of trade, the environment, security, among others. The Dominican Republic has stated that it will as shortly as February 27th bring legislation to address the situation of those born in the Dominican Republic but who currently have no documentation. It is hoped that such legislation will undo the human rights injustice which this ruling portends, affirming the right of those affected to Dominican nationality and being a needed step towards addressing and correcting  the discrimination which many native born Dominicans of Haitian  descent continue to face.

    Alicia Nicholls is a trade policy specialist and law graduate. She can be followed on Twitter at @Licylaw. 

  • What does the Bali Package mean for Small Vulnerable Economies like CARICOM?

    Alicia Nicholls

    Five days of intense negotiations have given birth to the first major trade agreement to be agreed to by all WTO members since the WTO’s formation at the conclusion of the Uruguay Round. Termed “a leap forward for developing countries” by WTO Director-General Roberto Azevedo, the Ninth WTO Ministerial Conference held in Bali, Indonesia, in December of last year has been heralded as the injection of confidence needed to bring new life to a Doha Round which seemed to be tottering on the brink of failure.

    The Doha Development Agenda which, in the thirteenth year since its launch at the WTO’s Fourth Ministerial Conference in Doha, Qatar, has the unfortunate title of being the longest and most contentious multilateral trade round to date. It contains an ambitious work programme which covers about twenty areas of trade, including: agriculture, services, market access for non-agricultural products, trade facilitation, WTO rules, the dispute settlement understanding and trade and the environment. The disappointment with the lack of progress in the Doha Round since 2008 has led  many powerful WTO member states to turn their attention to bilateral agreements, including so-called “mega-trade deals” like the controversial Trans-Pacific Partnership (TPP). Entrenched interests and lack of political will have been blamed for the doldrums to which the Doha Round has been relegated since 2008. It is therefore no surprise that in his statement at the opening of the Bali Ministerial, Director General Azevedo noted that the future of the WTO and the Multilateral Trading System hung in the balance.

    Coming out of the Bali Ministerial Conference, the Ministers adopted the “Bali Package” on 7 December 2013, a package of ten agreements covering three of the more easily reconcilable cluster of issues of the Doha Agenda, namely trade facilitation, agriculture, cotton and development and LDC issues. CARICOM has always been a loyal supporter of the multilateral trade system, a sentiment reiterated by Guyanese Minister of Foreign Affairs, Carolyn Rodrigues Birkett, in her capacity as CARICOM’s Ministerial spokesman on WTO matters. The question to be explored in this article is what implications do the agreements and decisions contained in the Bali Package have for small vulnerable economies like those in CARICOM and the wider Caribbean?

    The Agreement on Trade Facilitation

    The Agreement on Trade Facilitation seeks to facilitate global trade by speeding up, and providing transparency and efficiency in customs procedures. The provision on goods in transit is of importance to landlocked countries which rely on ports in neighbouring coastal states for the import of goods. Keeping up with the times, there is also the requirement that information be placed online. The language of the Agreement is primarily ‘best endeavour’ for the simple fact that the ability of most states to abide by the provisions will be contingent on their receipt of funding to defray the costs of implementation. Indeed, the implementation of these requirements, while important for the multilateral trade system, will be costly for cash-strapped CARICOM states in terms of updating their existing infrastructure and training customs officials. The technical and financial assistance and capacity-building provided for in the Agreement,  in-keeping with the principle of special and differential treatment for developing states, will be vital to help CARICOM states meet these new obligations. The issue of the US’ illegal embargo on Cuba since 1960 threatened to hold up any agreement on trade facilitation. Cuba, Venezuela, among others objected to the removal of a provision relating to the embargo from the text. A compromise was struck by which a provision was added upholding the principle of non-discrimination on transit trade, which spoke  to the embargo situation.

    Agriculture

    The main contentious issue at the Bali Ministerial was the complex issue of public stockholding programmes for food security, a practice where governments purchase food from local farmers at favourable prices in order to guarantee food security and to support low income farmers.  The US was insistent on the expiry of the “Peace Clause” (Article 13 of the Agreement on Agriculture) which prevents support measures and export subsidies of a member which are legal under the Agreement on Agriculture from being challenged for their illegality under another WTO agreement. India, however, which operates MSPs programmes on a number of agricultural products, strongly objected to the proposed expiry of the ‘peace clause’ without provision being made for a permanent solution. A compromise was finally struck whereby the peace clause would remain in the interim until a more permanent solution was found.  The implication of this is that for now developing country members’ public stockholding programmes for food security in times of food crisis cannot be challenged under any WTO agreement even if they go over their Aggregate Measure of Support (AMS).

    Tariff Quota Administration

    With respect to the administration of under-filled tariff quotas, the agreement was reached that members would engage in a combination of consultation and providing information where such under-filling occurs. However, importantly several countries, including the CARIFORUM states of Barbados and the Dominican Republic, reserved the right not to apply the system after six years.

    Market Access for Least Developed countries

    Of particular concern to Haiti, the only LDC in CARICOM, are the four documents on market access for LDCS, which have remained unchanged from the versions negotiated at Geneva. These include decisions for granting duty-free, quota-access for least developed countries to export to developed country markets, simplified preferential rules of origin for goods from LDCs, a “services waiver for preferential treatment for LDC service providers” and a “monitoring mechanism on Special and Differential Treatment”.

    Of general interest to all countries of the region, decisions were also taken by the Ministers on five aspects of the WTO’s regular work. Members agreed not to bring “non-violation” cases in intellectual property to the WTO dispute settlement process, import duties would not be charged on electronic transmissions and special consideration would be given to the issues of small economies. Ministers also reaffirmed their commitment to Aid for Trade and affirmed that their Geneva delegations would be directed to continue examining the link between technology transfer and trade. However, the details of these latter decisions remain to be elaborated upon in future negotiations.

    Implications for SVEs like CARICOM?

    The conclusion of the Bali Package is a small but important step towards the achievement of the Doha Agenda for the simple fact that it gives a new infusion of confidence and credibility to the WTO as the pre-eminent forum for trade negotiations. This is only the beginning however. The Bali package focuses mainly on low hanging fruits, while negotiations on more contentious areas of interest to CARICOM, like services trade, remain. Other priority areas important for ensuring SVEs like CARICOM reap the benefits of the multilateral trading system are still to be finalised, including the work programme for SVEs,  Aid for Trade, the issue of appropriate flexibilities for SVEs in the NAMA negotiations, trade and technology transfer, more flexible accession for SVEs, and reforms of the dispute settlement process to take into account the difficulties faced by SVEs in ensuring compliance by larger states with dispute settlement body decisions.

    In their Ministerial Declaration, the Ministers instructed the Trade Negotiations Committee to prepare “a clearly defined work program on the remaining Doha Development Agenda issues” within the next twelve months, building on the Bali decisions and prioritising areas where binding decisions had been unable to be made. Director-General Azevedo has optimistically stated that the WTO hopes to have a full agreement by year-end.  Small developing economies like those in CARICOM have a lot riding on the outcome of the Doha Round and stand to lose the most should the round fail or not fulfill its mandate of being development-focused. However, the success of the Doha Round will depend on whether WTO member states, particularly the richer countries, are willing to set aside their entrenched political interests in the effort of delivering a truly development-centred final package.

    Alicia Nicholls is a trade policy specialist. She can be followed on Twitter at @LicyLaw.

  • Small dots but big footprints: Caribbean Countries and International Organisations

    Alicia Nicholls

    Another daughter of the soil has been called to serve on one of the world’s most eminent and most important intergovernmental organisations. This time it is Barbados’ Chief Medical Officer, Dr. Joy St. John who has been appointed Chairwoman of the Executive Board of the World Health Organisation (WHO).

    Dr. Joy St. John, a medical doctor, joins a growing list of Barbadian and CARICOM nationals who have been called to serve in the highest echelons of some of the world’s most prestigious international bodies. Casting our minds a bit back in time, one would recall another Barbadian woman who made a notable contribution to public health issues at the international level. Barbados’ former Governor-General, Dame Ruth Nita Barrow, served as a nursing advisor to the WHO and the Pan-American Health Organisation for more than a decade. Though a midwife and nurse, Dame Nita had also served as President of the International Council on Adult Education in 1975 and 1986.

    Outside of the health arena and more contemporarily, Mrs. Elizabeth Thompson, former Barbados Labour Party (BLP) cabinet minister and well-esteemed environmental lawyer and negotiator, was appointed as a United Nations Assistant Secretary General. In 2010 she was appointed by UN Secretary General Ban Ki-Moon as Executive Coordinator of the UNCSD Rio +20 Conference. In the field of trade in intellectual property, Mr. Trevor Clarke is the World Intellectual Property Organisation (WIPO)’s Assistant Director General for the Culture and Creative Industries Sector. Further in the area of culture, Alissandra Cummins, the Director of the Barbados Museum and Historical Society, is currently the Chairperson of the Executive Board of UNESCO  (2011-2013) and had also made history as being the first Caribbean and female president of the International Council of Museums between 2004-2010.

    We in the Caribbean often regard ourselves as small states. Indeed, by our geographic, demographic and economic size, we are. However, our contribution in international organisations, particularly on issues of greatest concern to us as small states,  should serve to us as a reminder that while we may appear as no more than little dots on a map, our footprint in these organisations often belies our size.  One would recall that it was Trinidad & Tobago under the leadership of then Prime Minister A.N.R. Robinson which was instrumental in pushing for the establishment of the International Criminal Court (ICC). Again in the field of law, eminent Jamaican law professor and former principal of the Norman Manley Law School, Dr. Stephen Vasciannie, served on the prestigious UN Law Commission whose mandate is the codification and progressive development of international law.

    There are many others that can be listed but I have made my point. The ability of Caribbean people to assume and function effectively in these key positions and the faith that other nations have put in the representation of our nationals stand as testament and vindication of the solid investment that our governments have tended to put in developing our greatest resource, that is, our people.

    I wish Dr. St. John all the best in her new position as she continues to fly our Barbadian and CARICOM flags high.

    Alicia Nicholls is a trade policy specialist and law student at the University of the West Indies – Cave Hill. You can contact her here or follow her on Twitter at @LicyLaw.