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  • Caribbean Trade and Development Digest – January 1-6, 2018

    Caribbean Trade and Development Digest – January 1-6, 2018

    Happy New Year! Welcome to the Caribbean Trade and Development Digest for the week of January 1-6, 2018! We are pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. We hope you enjoy this edition.

    REGIONAL

    Cuba’s Raul Castro Meets Top EU Diplomat to tighten relations

    TeleSur: Cuban President Raul Castro met with the European Union’s top diplomat, Federica Mogherini, at the end of her two-day visit to the country, seeking to construct and reinforce ties between EU member countries and Cuba. Read more

    Exxon Mobil reports Oil Discovery off Guyana

    Fox Business: Exxon Mobil Corp. (XOM) on Friday said it made another positive oil discovery off the coast of Guyana.  Read more

    2017 gold declarations below target

    Stabroek News: The Guyana Gold Board has recorded total gold declarations of 652,000 ounces for 2017, which is below the target of 720,000 ounces. Read more

    Hurricane-hit Caribbean countries slash cost of Citizenship by Investment programs, says report

    Nation News: Caribbean nations ravaged by recent hurricanes are selling citizenship at dramatically discounted prices in an effort to raise emergency funds, sparking concerns that the programmes may be vulnerable to abuse, according to reports here. Read more

    Arrivals of US tourists to Cuba tripled in 2017

    Caribbean News Digital: U.S. tourism to Cuba grew nearly threefold in 2017 over the previous year, mainly due to relaxation of travel ban, a Cuban official said Saturday. Read more

    CARICOM moving to create first climate-resilient region

    Jamaica Observer: Incoming chairman of the Caribbean Community (Caricom), Haiti’s President Jovenel Moïse, says the regional grouping is moving towards creating the world’s first climate-resilient region this year. Read more

    INTERNATIONAL

    Will intra-African trade flourish in 2018?

    The Herald: Overcoming the barriers for intra-African trade to double in a decade can feel like a Sisyphean task – impossible to complete. But that is the objective of the Boosting Intra-African Trade (BIAT) action plan, which targets to double flows between January 2012 and January 2022. Read more

    Rwanda: AU Summit to discuss Continental Free Trade Area

    AllAfrica: The upcoming 30th Ordinary Session of the African Union (AU) Assembly of Heads of State and Government is expected to receive a progress report on the status of negotiations of the African Continental Free Trade Area (CFTA), an official has told Sunday Times. Read more

    US Trade deficit hits $50.5 billion, biggest since 2012

    ABCNews: The U.S. trade deficit rose to $50.5 billion in November, the largest imbalance in nearly six years, as imports and exports both hit records. Read more

    Canada’s NAFTA charm offensive kicks into high gear

    CBCNews: The new year begins with Canada relying on an old strategy for saving the North American Free Trade Agreement. Read more

    UK seek free trade agreement covering goods and services in Phase Two

    RTE: British Prime Minister Theresa May has said the UK will be looking for a free trade agreement with the EU that will cover goods and services in Phase Two of the Brexit negotiations this year. Read more

    Tariffs to be slashed as China-Chile free trade agreement kicks in

    China.org.cn: Nearly 98 percent of products traded between China and Chile will have zero tariffs attached when the new China-Chile free trade agreement is implemented in 2018, according to the Guangdong Entry-Exit Inspection and Quarantine Bureau, reports Chinanews.com. Read more

    Will 2018 be the year of protectionism? Trump alone will decide

    New York Times: The Trump administration will soon face several major trade decisions that will determine whether the White House adopts the type of protectionist barriers that President Trump campaigned on but that were largely absent during his first year in office. Read more

    Will global trade survive 2018?

    Foreign Policy (Blog): The future of the global trade system faces more risk and uncertainty than at any time since it was created after World War II. Read more

    Macron pursues ambitious agenda on first official China visit

    RFI: French president, Emmanuel Macron’s heads to China Sunday hoping to forge closer ties with President Xi Jinping. During the three-day trip which begins Monday, Macron plans to seek a “strategic partnership” with Beijing, notably on terrorism and climate change, an official in the president’s office said. Read more

    Why Britain should be allowed to join the TPP

    The Strait Times: Analysis by James Crabtree Read more

    US-Korea trade talks pit pickup trucks against nuclear threat

    Reuters: The United States and South Korea on Friday completed the first round of review talks on a bilateral trade deal with Washington saying there was “much work to do” to reach a new pact.  Read more

    Will there be a Pacific trade war in 2018?

    Nikkei Asian Review: Analysis by Glen Fukushima Read more

    New Chinese consul general talks tough on trade

    Business in Vancouver: China is eager to conclude a free-trade agreement with Canada, but not at the expense of a set of “baseline” political principles seen as untouchable by Beijing, said the new top Chinese diplomat in the Western Canada region. Read more

    How Nepal’s trade costs could be minimised

    The Himalayan Times: A recent report jointly prepared by the Asian Development Bank (ADB) and United Nations Economic and Social Commission for Asia and Pacific (UNESCAP) titled ‘Trade and Transport Facilitation Monitoring Mechanism (TTFMM) in Nepal’ has suggested the government to set up the TTFMM institutional mechanism to monitor processes in certification, customs, transit and cargo transportation to bring down the cost of trade. Read more

    Brexit: UK Government considers joining TPP trade agreement to help bolster economy after leaving EU

    The Independent: Britain is exploring the possibility of joining a trans-Pacific trade bloc after Brexit in a bid to find alternative markets for exports that currently go to Europe, it has emerged. Read more

    Brexit: May urged to stay in the single market by 20 British MEPs

    The Guardian: Theresa May is being urged to change course and seek full membership of the European single market and customs union by 20 British MEPs, including three Tories and the majority of Labour politicians based in Brussels. Read more

    Pressure grows for UK to bring ban on ivory trade

    The Guardian: Consultation by the government shows huge public support for ending all sales. Read more

    More than 2,300 EU academics resign amid warning over UK university ‘Brexodus’

    The Independent: New figures show a 19 per cent increase in departures of European staff from universities last year compared to before the EU referendum, and a 10 per cent rise from some 2130 resignations in 2015-16. Read more

    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.

  • Season’s Greetings from CTLD Blog!

    Dear Readers,

    Thank you sincerely for your support of the Caribbean Trade Law & Development Blog throughout 2017! Here’s wishing you and your families a very Merry Christmas and a happy and prosperous 2018!

    Alicia

    CTLD Blog

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  • How can Caribbean CIPs survive increased global and regional competition and scrutiny?

    How can Caribbean CIPs survive increased global and regional competition and scrutiny?

    Alicia Nicholls

    Citizenship by investment programmes (CIPs) operated by five Caribbean small island developing States have been receiving increased international competition and scrutiny, with some arguing that a veritable “race to the bottom” has begun. Indeed, these programmes face increased competition not just inter se, but globally as more countries worldwide are turning to citizenship or residency programmes for attracting much needed investment.

    The CIP-operating countries in the Caribbean are currently St. Kitts & Nevis (the world’s longest running), Dominica, Grenada, Antigua & Barbuda and most recently, St. Lucia. As all five of these countries are part of the CARICOM Single Market and Economy (CSME), investors who obtain citizenship under one of these countries’ CIPs are also entitled to the freedom of movement privileges under the CSME, which has caused legitimate national security concern in some non-CIP operating CARICOM countries.

    1. Eliminate price as a factor

    Although Caribbean CIPs are already the most affordable in the world, there are irrefutable signs of increased price competition among Caribbean CIPs.  In January of this year, St. Lucia amended its regulations to, inter alia, reduce the minimum qualifying investment to US$ 100,000 to the National Economic Fund. In the wake of the passage of Hurricane Irma, St. Kitts & Nevis added a lower cost option (US$150,000 plus applicable fees) in the form of the temporary hurricane relief investment option (until March 2018), whereby the invested funds would be earmarked for assisting hurricane-affected areas. This latter change was sharply criticised. Even more recently, Antigua & Barbuda cut the investment threshold for the National Development Fund by 50%.

    Any semblance of price competition among Caribbean CIPs is problematic for several reasons.  Although the majority of persons seeking alternative citizenship do so for the ease of business and travel a good quality passport brings, lowering the minimum investment threshold makes Caribbean CIPs more accessible to those persons who may seek alternative citizenship for nefarious purposes. Even if the due diligence processes remain unchanged, a perceived price war could cause third States to either reimpose visa restrictions or apply more scrutiny to passport holders of those States  (or of other Caribbean States!), which diminishes the value and attractiveness of those CIP-countries’ passports. It lessens the perceived value of the citizenship offered by those countries which may actually be a turn-off to some High Net Worth Individuals who may be more attracted to exclusivity.

    What this speaks to is the need for CIP-operating Caribbean countries to eliminate price as a factor of competition by harmonising their minimum investment threshold, a point I made in a paper I delivered on this topic earlier this year.

    2. Increase due diligence cooperation

    Cooperation among CIP-operating Caribbean countries should also extend to cooperation on issues of due diligence to ensure that an applicant who fails one country’s due diligence requirements is not accepted under another’s. Based on my research, it appears that there is some due diligence cooperation already occurring, but more can be done. Additional options could be to harmonise due diligence requirements and to formulate a harmonised list of excluded countries instead of national lists as currently obtains in some CIP-operating Caribbean countries.  This would also address some of the national security concerns of non-CIP operating Caribbean countries, and third States.

    3. Improve transparency

    Lack of transparency remains a major problem plaguing the perception of Caribbean CIPs. Antigua & Barbuda’s legislation makes it mandatory for a 6-month report to be published and this information is found online. However, generally speaking, there is little information made available about Caribbean CIPs’ operation, except for the economic data found in the IMF’s Article IV consultation reports. With few exceptions, officials are often very reluctant to share data on these programmes’ operation, whether out of fear of competition or negative publicity.

    Failure to share information only adds to the shroud of secrecy plaguing the programmes and it also makes it difficult to analyse the socio-economic impacts of these programmes.

    It would be useful if CIP-operating Member States would use the framework for information sharing as mentioned in the Strategic Plan for the Caribbean Community Plan 2015-2019 to share data on the operation of their programmes for transparency purposes, including their approval and disapproval rates.

    4. Compete on quality

    Competition among Caribbean CIPs should be on quality of service and product without compromising standards. Caribbean countries already have inherent natural advantages which are pull factors for HWNIs, such as their natural beauty, pleasant climates, stable democratic societies and quality of life. But these alone are not enough. What the latest World Bank Doing Business Report 2018 shows is that there are several indicators on which Caribbean countries, including CIP-operating countries, can improve their attractiveness as investment destinations by improving the ease of doing business. Jamaica, which does not offer a CIP, is a good example of a Caribbean country which has been making sound reforms in the quest for  ‘best in class’ status as an investment destination.

    5. Good governance

    Good governance is key to the long-term sustainability of Caribbean CIPs. This includes ensuring that due diligence standards are robust, as well as that transparency and efficiency remain paramount to the programmes’ administration. It also entails keeping the programmes free of political interference.

    6. Residency Criterion?

    Currently, all five Caribbean CIPs are direct citizenship programmes which means that there is no requirement on the investor to reside in the jurisdiction for a fixed period of time before citizenship is granted. The lack of a residence requirement is one of the unique selling points of Caribbean programmes, but it is also one of the reasons why some third States are increasingly critical of these programmes.

    The addition of  a short residency requirement, similar to Malta’s 12-month requirement, could be a possible option for Caribbean CIPs as it would remove some of the transactional nature to the process.

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

  • COP23: Five Negotiation Priorities for Small Island Developing States (SIDS)

    COP23: Five Negotiation Priorities for Small Island Developing States (SIDS)

    Alicia Nicholls

    In about a week’s time, delegates from over 190 countries will convene in Bonn, Germany for the 23rd Conference of the Parties (COP23) to the United Nations Framework Convention on Climate Change (UNFCCC). During this round of climate negotiations, which will last from November 6-17th, the parties will continue work on implementation guidelines for the Paris Climate Change Agreement signed at COP21 in December 2015.

    Despite United States’ President Donald Trump’s statement in June that the United States would be withdrawing from the Paris Agreement, there is some cause for optimism that this year’s COP negotiations will bear fruit. For the first time, a small island developing state (SIDS), the Republic of Fiji, has assumed the presidency of COP and brings to this task first-hand experience from the front lines of the climate change battle.

    Secondly, recent natural disasters worldwide have brought increased international attention to the devastating effects of climate change and the need for urgent action on reducing global greenhouse gas emissions. This point was well-made by President of Fiji, Mr. Frank Bainimarama, who stated at a Pre-COP Ministerial Meeting held on October 17 in Fiji that:

    “We can no longer ignore this crisis. Whether it is fires in California, Portugal and Spain. Flooding in Nigeria, India and Bangladesh. The dramatic Arctic melt. Ice breaking off the continent of Antarctica. The recent hurricanes that devastated the Caribbean and the southern United States. Or the hurricane that has just struck Ireland and Scotland – the tenth hurricane of the Atlantic season this year. It’s hard to find any part of the world that is unaffected by these events.”

    Thirdly, except for the US, political will among the world’s most powerful nations has coalesced on the side of climate action. The 19 other G20 countries reaffirmed their “strong commitment” to the Paris Agreement, calling it “irreversible” in their Summit Declaration following the Hamburg meeting in July.

    Below are five key likely priorities for SIDS as they go into the negotiations:

    1. Scaling up Climate Finance to SIDS

    At COP15 in 2009, developed countries committed to jointly mobilise USD 100 billion annually by 2020 to meet the mitigation and adaptation needs of developing countries. According to an OECD study, climate-related concessional finance has increased in both absolute terms and as a percentage of total concessional development finance, however annual commitments for 2014 were still 20% of the USD100 billion goal.

    SIDS often find it difficult to attract private financial inflows for development purposes due to their small size and economies, and current financing levels do not meet their current needs. Moreover, current graduation criteria have made some middle and upper income SIDS, like those in the Caribbean, ineligible for certain types of concessional financing.

    Pledged contributions, whether to the Green Climate Fund or otherwise, also do not necessarily always lead to timely disbursement, and there is the need for guidelines and protocols for incorporating the Adaptation Fund established at COP7 into the Paris Agreement’s framework.

    Finding innovative and effective ways to attract and increase financial flows, including from both public and private and bilateral and multilateral sources, will be key. For example, Fiji became the first developing country to issue a sovereign green bond, with technical support from the World Bank, to support the country’s mitigation and adaptation efforts.

    1. Loss and damage

    Loss and damage was one of the most contentious topics in the negotiations leading up to the Paris Agreement and was strongly lobbied for by SIDS and LDCs as they are the least culpable but most vulnerable to the harshest impacts of climate change. The concept recognises that there is some irreversible damage which cannot be avoided through mitigation and adaptation strategies.

    The Paris Agreement has recognised the concept of ‘loss and damage’ as a distinct concept of climate action and has made the Warsaw International Mechanism for Loss and Damage permanent. It, however, does not deal with liability or compensation, something which developed countries were adamant they did not wish to be included. The softer language used in Article 8, which, inter alia, itemises areas for cooperation and facilitation, is reflective of these developed country concerns.

    The costliness of this year’s Atlantic hurricane season is an important background against which SIDS should call for greater discussion on concretely addressing loss and damage, including the successful launch of the Clearing House for Risk Transfer which is slated to take place at COP23.

    1. Adaptation and Mitigation

    Developed countries’ continued and increased support will be necessary to assist SIDS in implementing national climate action plans, policies and projects in order to build climate resilience. This support for adaptation and mitigation includes not just financial support, but technology transfer and capacity building and technical assistance.

    Certain groups within societies are particularly vulnerable to climate change, including women and children, the disabled and indigenous and rural communities. As such, the COP23 negotiations will involve operationalizing the Gender Action Plan and the Local Communities and Indigenous Peoples Platforms.

    1. More ambitious NDCs

    Some 163 parties have already submitted their Nationally Determined Contributions which outline their emission reduction targets toward meeting the goal set out in Article 2 of the Paris Agreement of keeping average global temperature increase to no more than 2 degrees Celsius above pre-industrial levels and as close as possible to 1.5 degrees Celsius. These NDCs may be found at the interim NDC registry.

    However, the May 2016 synthesis report on the aggregate effect of INDCs showed that a higher level of ambition will be needed in order to reach the goal in Article 2.

    SIDS will want all parties to communicate to more ambitious NDCs after 2018 in order to meet the temperature goals in the Agreement and in keeping with the Article 4(3) commitment of communicating successively progressive NDCs.

    1. Preparations for Facilitative Dialogue 2018

    The Facilitative Dialogue which will take place in 2018 will be the first initial opportunity under the Paris Agreement to take stock of parties’ collective progress in a transparent manner towards meeting the Agreement’s long-term goal and inform the preparation of NDCs. It will be a precursor to the Global Stock Take, the first of which will take place in 2023 and will occur every five years thereafter.

    The Facilitative Dialogue 2018 will be launched at COP23 and parties will need to organise and decide on the procedures, events and expected outcomes in time for its convening. The President of Fiji, who must be commended on his country’s excellent work on preparations for COP23 to date, has indicated that these talks will approached on the principle of ‘talanoa’, a Pacific concept which values inclusive, participatory and transparent dialogue.

    A copy of the negotiating agenda for COP23 (current as at this date) may be viewed 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 also read more of her commentaries and follow her on Twitter @LicyLaw.