Caribbean Trade Law and Development

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  • Caribbean Trade and Development Digest – October 23-29, 2016

    Caribbean Trade and Development Digest – October 23-29, 2016

    Alicia Nicholls

    These are some of the major trade and development headlines and analysis across the Caribbean region and the world for the week of October 23-29, 2016. 

    For past issues, please visit here.

    CARIBBEAN NEWS

    Dominican Republic and Cuba negotiate trade agreement

    Prensa Latina: Cuba”s ambassador to the Dominican Republic, Carlos de la Nuez, reported today that the two countries have begun negotiations for the signing of a partial scope trade agreement. Read more
    EU-CELAC Ministerial Meeting: Santo Domingo Declaration
    We, the Ministers of Foreign Affairs of the Community of Latin American and Caribbean States (CELAC) and of the European Union and the High Representative of the European Union for Foreign Affairs and Security Policy, met on the occasion of our first Inter-Summit meeting, held in the Dominican Republic on the 25th and 26th of October 2016. Read more 
    US Correspondent Banks Snub Stakeholders Conference
    Antigua Observer: Following what organizers have hailed as a successful Stakeholders’ Conference on Correspondent Banking Relations (CBR), Prime Minister Gaston Browne admitted that he was “disappointed” by the no-show of representatives from some of the US corresponding banks. Read more 
    IDB helps thousands of LAC SMEs do business with China

    Sunday Express (T&T): The Inter-American Development Bank (IDB) says it is helping thousands of small and medium enterprises (SMEs) in Latin America and the Caribbean (LAC) do business with Canada. Read more 

     

    US abstains on UN resolution to end embargo against Cuba

    Jamaica Observer: The United States yesterday abstained from a United Nations General Assembly (UNGA) vote on a resolution calling for an end to the decade’s old trade embargo it has imposed on Cuba, a move being regarded as an improvement in relations between the two countries. Read more 

     

    Guyana wants CARICOM help is freeing up honey trade
    Demerara Waves: Guyana is hoping that the Caribbean Community (Caricom) can unblock Trinidad and Tobago as the route through which honey exports must be transshipped  to regional and extra-regional markets, following a US$3,000 fine that La Parkan had to pay for violating the laws of that twin-island nation. Read more 
    Caribbean poultry sector looks for import restrictions to defend industry
    Caribbean News Now: While poultry farms are making serious efforts, including financial investments, to make the region self-sufficient, several issues such as illegal imports from Brazil and cheap ‘dump chicken’ from the US are harming the industry, local entrepreneurs say. Read more
    CARICOM Highlights Importance of Investment for Caribbean Agriculture
    Prensa Latina: The Secretary-General of the Caribbean Community (Caricom), Irwin LaRocque, highlighted today the importance of investment for boosting the development of agriculture in the region. Read more
    Pacific Islands Impressed with CARICOM Agriculture
    Barbados Today: The Caribbean Community (CARICOM) may have made more progress in its agricultural sector than it realises, an official from the Pacific says, as his region takes lessons from the Caribbean ahead of its first Pacific Week of Agriculture, slated to take place next year. Read more 

    INTERNATIONAL NEWS

    CETA: EU and Canada to sign long-delayed free trade deal

    BBC: Canadian Prime Minister Justin Trudeau is finally on his way to Belgium to sign a long-delayed landmark trade deal with the European Union.He will attend a summit in Brussels where a signing ceremony planned for Thursday was cancelled after a Belgian region vetoed the agreement. Read more

    Policy Prescriptions: Trump and Clinton on trade

    CTV News: Donald Trump wants to blow up the way the United States does business with the rest of the world. Hillary Clinton repudiates an ambitious Asia-Pacific trade deal she once praised and vows to appoint a special prosecutor to keep U.S. trading partners in line.Read more

    AGOA Non-Oil trade with Africa grows from $1.4bn to 4.1bn – US Official

    Ghana Business News: Non-oil trade between African countries and the US under the African Growth and Opportunity Act (AGOA) is said to have grown from $1.4 billion in 2001 to $4.1 billion in 2015. Read more

    Trans-Pacific Partnership Trade Deal Doomed, ex-PM Brian Mulroney predicts

    Former prime minister Brian Mulroney says the Trans-Pacific Partnership trade deal is doomed to fail because of hostility in the U.S. Congress and widespread antipathy to trade initiatives in general.Read more

    Trade Agreements Under Attack: Can they be salvaged and is it worth it?

    Huffington Post: Part of the current anti-globalization backlash in advanced countries takes the form of opposition to trade agreements.Read more 

    NEW ON CARIBBEAN TRADE LAW & DEVELOPMENT

    Caribbean Response to Withdrawal of Correspondent Banking

    CETA Trade Deal Deadlock Broken 

    Citizenship by Investment receipts power economic growth in Eastern Caribbean countries 

    Jamaica is Commonwealth Caribbean’s Easiest Place to do Business

    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.

  • Caribbean Response to the Withdrawal of Correspondent Banking

    Alicia Nicholls

    IMF Deputy Managing Director, Mr. Tao Zhang, gave an interesting and comprehensive speech summarising the “Caribbean response to the Withdrawal of Correspondent Banking” at the Conference on the Withdrawal of Correspondent Banking in Antigua & Barbuda on October 28, 2016.

    The following realities stood out to me from Mr. Zhang’s speech:

    1. Almost 60% of the Caribbean Association of Banks’ member institutions,  which it has interviewed, report a loss of CBRs.
    2. In some cases where the banks have been able to hold on to CBRs,  some key services have been discontinued e.g: cheque clearance, trade finance and wire transfers
    3. Some banks face higher costs for the remaining services.
    4. Global correspondent banks are withdrawing from transactions involving money transfer operators.

    Given the above, Mr. Zhang rightly noted that if this continues, not only would it affect the financial stability of affected countries, but also economic growth, financial inclusion, and other development goals. He further reiterated that continued loss of CBRs would drive legitimate transactions underground and encourage increased informality, thereby undermining anti-money laundering and countering the financing of terrorism (AML/CFT) objectives.

    Mr. Zhang then turned to the issues driving this trend. A number of international organisations and agencies have studied this issue, including the IMF, and their findings were echoed in Mr. Zhang’s speech. He noted, for example, the cost-benefit considerations which banks have to weigh; rising expenses associated with compliance and international tax transparency versus limited profitability in some CBRs.

    He made reference to several policy responses being made by Caribbean authorities and other affected regions which he  noted have already started to have some results. He gave the example of the US Treasury Department which has increased its education of financial institutions on the “precise nature of transactions and behaviours that are subject to sanctions”. He further made reference of Eastern Caribbean Currency Union (ECCU) countries’ decision to consolidate their national AML/CFT work into one regional operation under the responsibility of the Eastern Caribbean Central Bank (ECCB).

    Mr. Zhang emphasised that there is “no quick fix” to the problem and reiterated the need for urgent action to mitigate the impact on affected economies.

    In addressing what are the next steps, he outlined three areas for further exploration:

    • Addressing the problem of economies of scale
    • Mitigating cost and technical limitations
    • Improving information flows

    He also set out a number of ways in which the IMF could be of assistance, including for example, facilitating dialogue and encouraging standard-setting bodies to take account of the impact of CBR policies.

    In concluding, Mr. Zhang reiterated the IMF’s continued commitment to working with affected countries on the issue until it is solved.

    The full speech is a must-read and may be accessed 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.

  • CETA Trade Deal Deadlock Broken

    Alicia Nicholls

    UPDATE: Text of the Addendum (in French) is available here.

    The Comprehensive Economic and Trade Agreement (CETA) between the European Union (EU) and Canada has finally won the backing of Belgium’s hold-out Walloon region. This is according to reporting by BBC News which broke the news earlier this evening. According to the BBC, Belgium’s Prime Minister, Charles Michel,  has advised that after internal negotiations among Belgium’s federated bodies, an addendum to the deal has been struck which has “addressed regional concerns over the rights of farmers and governments”.

    Hailed as the EU’s most ambitious agreement with a third party to date, CETA is a  landmark agreement encompassing not just the elimination of customs duties on goods between the EU and Canada, but also deep provisions on trade in services, intellectual property, investment, government procurement, inter alia. Though negotiations formally ended in 2014, the agreement has not yet been signed.

    As a mixed agreement under EU law, CETA requires the signature of all 28 EU member states (in accordance with their own constitutional arrangements). Under Belgium’s federated structure, the consent of its regional legislatures is required before the Belgium federal government can sign trade agreements with third states.

    Wallonia is Belgium’s francophone region, with a population of 3.6 million which is generally less prosperous than Flanders, the Dutch-speaking region.  Wallonia’s minister-president, Paul Magnette had raised a number of concerns over the Agreement’s provisions which he insisted needed to be addressed before Wallonia would give its support. These included, chiefly, the potential impact on Walloon farmer’s in the face of competition from Canadian pork and beef imports and the potential impact of the agreement’s investor-state dispute settlement (ISDS) provisions on governments’ regulatory rights.

    Monday’s deadline which the EU had set for Belgium to address its internal opposition to the agreement was missed and the signing ceremony which had been carded for today, Thursday, was cancelled. The prospect of one region potentially vetoing seven years’ of negotiating work led not only to concerns about the EU’s ability to effectively enter into international trade deals with third parties, but  on whether a similar scenario would play out in the Brexit negotiations with the UK..

    Symptomatic of the anti-globalisation, anti-free trade furor sweeping over western countries, CETA has faced some popular and political opposition in other European countries as well, although all EU governments (including the Belgium federal government) have indicated their intention to sign.

    So, it seems as though disaster has been averted for now and both the EU and Canada can give a sigh of relief. Wallonia’s acquiescence paves the way for Belgium to sign the Agreement. However, two notes of caution must be borne in mind. Firstly, the exact details of the Belgian addendum have not been reported as yet. Secondly, the addendum will need to be accepted by the remaining 27 EU member states. Suffice it to say, the ending of this story has not been written as yet.

    As an update, the text of the Addendum (in French) is available here.

    Read the full BBC article 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.

  • Citizenship by Investment receipts help power economic recovery in Eastern Caribbean Countries

    Citizenship by Investment receipts help power economic recovery in Eastern Caribbean Countries

    Alicia Nicholls

    Receipts from citizenship by investment programmes (CIPs) continue to be a major contributor to economic recovery in the Eastern Caribbean Currency Union (ECCU). This is according to the International Monetary Fund’s latest Staff Report on the ECCU released this month (October 2016).

    CIPs have been an important development tool in Eastern Caribbean countries. In January 2016 St. Lucia became the 5th ECCU country to institute a CIP. The other ECCU countries which run CIPs are St. Kitts & Nevis, Grenada, Dominica and Antigua & Barbuda.

    According to the IMF, most ECCU governments continued to rely on CIP inflows to fund their budgets in 2015. CIP inflows were highest in St. Kitts and Nevis, which has the world’s longest running CIP. In that country, CIP revenues to the public sector were at 17.4 percent of GDP. The report also noted that inflows reached 7.9 percent of GDP in 2015 in Antigua and Barbuda and 3.6 percent in Dominica.

    However, the IMF did mention several potential downsides to the sustainability of the CIPs, including the increased competition ECCU CIPs face not only amongst themselves but from other CIPs and residency programmes worldwide, including Malta’s. Other risks the IMF mentioned include rising global migration pressures, elevated security concerns and geopolitical tensions which may trigger adverse actions by the international community, including suspension of visa-free travel for citizens of CIP countries.

    In order to improve the sustainability of the programmes, the IMF also encouraged authorities to “develop a strong, regionally accepted set of principles and guidelines for citizenship by investment programs in order to enhance their sustainability” The staff suggested that the authorities share due diligence information on clients to prevent citizenship shopping in cases where an application is rejected by one jurisdiction.

    The IMF cited the need to improve the management of the programmes and cautioned against over-reliance on CPI revenues for funding recurrent budgetary operations. Mindful of the threat posed by natural disasters, the IMF posited that CIP countries save the bulk of the CPI revenues in a well-managed fund to address natural disaster shocks and to fund disaster resilient infrastructure.

    Arguing that a comprehensive governance framework is crucial to mitigating increased risks facing CIPs, IMF also recommended more transparency by making data on the programmes public and subject to financial audits.

    The full IMF Staff Report for the ECCU 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.