IMF raises global GDP growth forecast but protectionist policies a threat

Alicia Nicholls

The sharp downtown in global trade in recent years is both a symptom of and a contributor to low growth“. – Making Trade an Engine of Growth for All (IMF, WTO, World Bank Report of April 2017)

Protectionism leading to trade warfare is a ‘salient threat’ to global economic growth, warned the International Monetary Fund (IMF) economists, not for the first time, in their recently released World Economic Outlook for April 2017.

The good news is that the Fund’s April outlook was much more upbeat than its January 2017 outlook. According to the Fund, the global economy is projected to expand by 3.5 percent in 2017, a modest increase from its 3.4 percent projection in its January 2017 outlook but greater than the 3.1 percent growth in 2016. The Fund has maintained its outlook for 2018 at 3.6 percent.

The not so good news, as already noted, is that the tenuous economic recovery remains vulnerable to several downside risks, including protectionism. Bear in mind as well that the global economy expanded on average 4.2 percent between 1999-2008, so the projected rate of growth is still below the pre-crisis rates of growth.

The Fund’s most recent WEO report comes on the heels of the release by the World Trade Organisation (WTO) of its trade growth forecast which projected some recovery in global trade growth to 2.4 percent in 2017. Most readers would remember that 2016 saw the slowest rate of global trade growth since the global economic and financial crisis which coincided with the slowest rate of global economic growth in 2016 since 2009.

As noted by the WTO in its press release, “the volume of world merchandise trade has tended to grow about 1.5 times faster than world output, although in the 1990s it grew more than twice as fast.” However, dampened trade volumes have been linked to a subdued global economy and global trade grew less than global economic growth in 2016. Although, the WTO’s projected rate of growth for 2017 signals a cautious recovery, the rate of merchandise trade growth is still much lower than pre-crisis merchandise trade growth and the forecast risk is higher due to both economic and policy uncertainty.

The IMF’s most recent WEO also follows a joint report released by that institution, the WTO and the World Bank entitled “Making Trade an Engine of Growth for All: The Case for Trade and for Policies to Facilitate Adjustment” in which it was stated, inter alia, that the role of trade in the global economy is ‘at a critical juncture’, and arguing that further trade integration was important for stimulating global growth.

At the same time, the IMF warned that protectionism could lead to trade warfare, citing several factors in mainly advanced economies which have seen greater political support for nationalist and protectionist policies. There is good reason for this concern, stemming from protectionist turns and mercantilist rhetoric emanating from political quarters in advanced economies, namely the US and Europe. Moreover, the communique from the March 2017 G-20 Finance Ministers’ Meeting in Germany  saw, for the first time, the exclusion of the pledge to “resist protectionism”. On the multilateral front, although the WTO’s Trade Facilitation Agreement has come into effect, there has been little progress otherwise on multilateral trade negotiations.

Trade is an important driver of global growth, and helped to propel global growth in the latter half of the 20th century. Trade has also played an important role in boosting competition, productivity and improving living standards and productivity. However, there has been dislocation as a result of free trade. In the case of developing countries, there has been the negative impact of competition from cheaper subsidised (particularly agricultural) imports from advanced countries on domestic industries which have higher production costs due to lack of economies of scale and lower technology use. An Oxfam report noted the  negative impact on Mexico’s corn industry following the introduction of the North American Free Trade Agreement (NAFTA).

While the cheaper imports benefit consumers through lower prices, they, however, can negatively impact domestic industries and jobs, and with implications for countries’ balance of trade, and in the case of the agricultural sector, food security. This is an issue which has been noted by developing countries and development economists for years but only seemed to gain mainstream discussion once the effects became more palpable in advanced economies, such as the US and Europe.

However, this is not to suggest that trade is undesirable or that the negatives outweigh the positives. Trade, as the IMF has rightly noted, is an important driver of the global economy. It does, suggest, however, that there needs to be greater consideration of the “social impact” of trade policies and of the need to make trade policies much more inclusive by ensuring that the most vulnerable to the negative fall-outs of trade, such as women and the poor, are protected through supporting policies and mechanisms. As such, domestic policies to assist with, and mitigate, these trade-related adjustments are important, a point made in the joint report by the IMF, WTO and World Bank.

Besides protectionism, the IMF also noted faster than expected interest rate hikes in the US, aggressive financial deregulation, financial tightening in emerging market economies, geopolitical tensions, inter alia, as among the inter-connected downside risks to global growth. Furthermore, the IMF emphasised the importance that countries’ policy choices will have on the global economic outlook and on reducing risks to this outlook.

To read the full IMF WEO April 2017 report, please visit 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.

WTO Trade Forecast 2017: Cautiously Optimistic about trade growth recovery

Alicia Nicholls

After decelerating considerably in 2016, world merchandise trade growth is expected to recover to 2.4% in 2017. This is according to the cautiously optimistic trade forecast released today by the World Trade Organisation (WTO).

According to the WTO, although global merchandise trade volumes have historically on average grown 1.5 times faster than global GDP, this ratio has slowed to 1:1 since the crisis of 2008. Last year’s merchandise trade growth of 1.3% was the slowest pace of trade growth since the world economic crisis of 2008 and was linked primarily to a weak global economy.

In his press conference remarks, Director-General of the WTO, Roberto Azevedo, explained that early indicators, such as the record increases in global container shipping throughput, the high levels of global export orders, and the expected recovery in world economic output, point to a recovery in global trade in 2017.

However, the WTO Chief also cautioned that this forecast assumes that governments pursue the right policy mix and that forecasts of an expected recovery in global GDP are accurate. The report noted that trade growth could be negatively affected by governments’ trade, monetary and fiscal policies.

Indeed, the Director-General’s remarks to this point perfectly sum this up as follows:

Overall, I think that while there are some reasons for cautious optimism, trade growth remains fragile and there are considerable risks to the downside. Much of the uncertainty around the outlook is of course political — and not only geopolitical. Part of this is driven by people’s concerns about the impact that trade can have.

Given the high levels of uncertainty which have increased the forecast risk factor, WTO economists have also given a growth range of between 1.8 and 3.6% for 2017.

Observing that trade does cause some dislocation, the WTO Director General cautioned governments against protectionism and highlighted that innovation, automation and new technologies, and not trade, were responsible for eighty percent of the loss of manufacturing jobs.

The WTO’s forecasts for 2018 are much more optimistic, with a growth forecast of between 2.1 and 4.0%

For further information, please see the WTO Director-General’s press conference remarks here and the WTO’s press release 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.

Caribbean Trade & Development Digest – April 2-8, 2017

Source: Pixabay

Welcome to the Caribbean Trade and Development Digest for the week of April 2-8, 2017!  I am pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. 

 

REGIONAL NEWS

EPA Plan to be reset

Nation News: Barbados is resetting its implementation strategy of the Economic Partnership Agreement (EPA) with the European Union as Britain prepares to exit the EU. Read more

Trinidad pushes for shift to cleaner fuel

Caribbean360: The Trinidad and Tobago government has invested about $74 million in the first phase of a $295-million project to encourage more drivers to use Compressed Natural Gas (CNG), described by experts here as a preliminary step in the country’s transition to using more sustainable forms of energy. Read more

T&T Recession slows rum sales

Sunday Express: The ongoing recession is affecting local rum sales, the country’s largest legal rum manufacturer said in its results released yesterday on the Trinidad and Tobago Stock Exchange (TTSE). Read more

Trinidad & Tobago trade mission to Guyana

T&T Newsday: Come June 12 and 13 of this year, the Trinidad and Tobago Chamber of Industry and Commerce, in collaboration with the Georgetown Chamber of Commerce and Industry (GCCI) will embark upon a Trade Mission to Guyana, one of the most significant emerging economies in the region. Read more

CARICOM considers how to keep market access in tact after Brexit

Caribbean360: CARICOM has reportedly narrowed down the options it intends to pursue to prevent a break in market access in the United Kingdom due to the UK’s planned exit from the European Union (EU). Read more

Bahamas Trade Information Service Portal Launched
Eleutheran: The initiative is the first of its kind in The Bahamas and one of only a few Trade Information Portals in the Caribbean Region. Read more

Dominican Republic signs trade agreement with Cuba

Jamaica Observer: The Dominican Republic has signed a Partial Scope agreement with Cuba in an effort to boost economic, trade and cooperation between both countries. Read more

OECS needs a unified approach to development, says economist

Antigua Observer: The biggest impediment to growth of the economies of the Organisation of Eastern Caribbean States (OECS) is their small size and scale of production, and the lack of a unified regional approach to development. That’s the view of Dr Vanus James, economist, statistician and regional academic. Read more

Trump reinforces bond between Jamaica and the US

Jamaica Gleaner: United States President Donald Trump says he looks forward to working with the Jamaican Government on bilateral and regional issues. Read more

Jamaica saves $30 billion on oil imports

Jamaica Gleaner: Jamaica reduced its oil import bill by US$242 million ($30 billion) last year, which helped to slash the trade deficit by nearly nine per cent, according to new data from Statin. Read more

PM Launches 7th Biennial Diaspora Conference

JIS: The ‘Jamaica 55 Diaspora Conference’, which is organised by the Ministry of Foreign Affairs and Foreign Trade, will be held at the Jamaica Conference Centre, downtown Kingston, under the theme ‘Partnering for Growth’. Read more

INTERNATIONAL NEWS

WTO creates panel to decide on China, EU flap

The Star: The World Trade Organisation (WTO) set up on Monday a panel to examine the so-called “surrogate country” approach used by the European Union to calculate anti-dumping measures applied to Chinese exports, following a request from Beijing.
Read more
Rwanda: AfDB unveils US $450 million fund to promote export trade
AllAfrica: The African Development Bank (AfDB) has approved $450 million about (Rwf372 billion) trade finance facility for the African Export-Import Bank (Afreximbank). Read more

NAFTA Trade Growth Continues in January

American Shipper: Total cross-border trade between the US, Mexico and Canada jumped 6.7 percent in January 2017, the third straight month of year-over-year increases, according to the Department of Transportation’s Bureau of Transportation Statistics. Read more

Malaysian PM Najib Razak pushes for conclusion of free trade deal

Livemint: Malaysian Prime Minister Najib Razak on Monday called for the speedy conclusion of a free trade pact between the Association of Southeast Asian Nations (Asean) and six other countries including India, saying the regional partnership becomes all the more relevant after the US pulled out of the Trans-Pacific Partnership (TPP). Read more

European Parliament backs red lines resolution for Brexit negotiations

TheGuardian: The European parliament has overwhelmingly voted in favour of a tough negotiating stance towards the British government in the Brexit negotiations. Read more

Pacific looks to improve links with Asian economies

RNZ: Pacific economic ministers meeting in Suva have been looking at how the region can better engage with the growing Asian economies. Read more

South African Court allows domestic rhino horn trade

Environment News Service: South Africa’s Constitutional Court has overturned the current ban on domestic trade in rhino horn. As a result, the sale of rhino horn will be allowed to resume within the country’s borders, but not internationally. Read more

Trump’s NAFTA plans are more than a tweak, Mulroney says

TheGlobeandMail: Brian Mulroney says U.S. plans to renegotiate the North American free-trade agreement are shaping up to be more than a tweak.The former Progressive Conservative prime minister made the comments after briefing the Liberal cabinet committee on Canada-U.S. relations on Parliament Hill. Read more

Canadian Free Trade Agreement Finalised

CNW: Ministers representing the federal, provincial and territorial governments have concluded negotiations on a new Canadian Free Trade Agreement (CFTA) that will help to expand Canadian businesses and increase economic growth across the country.  Read more

US Labor chief wants mores drastic changes to NAFTA from Trump

Reuters: Top U.S. labor leader Richard Trumka on Tuesday blasted the Trump administration’s initial plan to revamp the North American Free Trade Agreement (NAFTA), calling it “very timid.” Read more

Australia moves closer to free trade talks with EU

ABC (Australia): The Federal Government hopes to begin negotiations for a free trade agreement (FTA) with the European Union in the second half of this year, after finalising a key step needed to begin talks. Read more

Brussels mulls excluding UK from trade talks updates

Politico: The EU is considering shutting the U.K. out of sensitive briefings on its trade policy, following warnings that Britain will become a competitor for striking trade deals post-Brexit.  Read more

At US-China Summit, Trump pressed Xi on trade

President Donald Trump pressed Chinese President Xi Jinping to do more to curb North Korea’s nuclear program and help reduce the gaping U.S. trade deficit with Beijing in talks on Friday, even as he toned down the strident anti-China rhetoric of his election campaign. Read more

WTO members discuss trade facilitation provisions in RTAs

WTO: WTO members discussed the relationship between trade facilitation provisions in regional trade agreements (RTAs) and the WTO’s Trade Facilitation Agreement (TFA) at the 3-4 April meeting of the Committee on Regional Trade Agreements. Read more

UK eyes trade agreement with Asean after it leaves European Union

Business Insider: Trade and Industry Secretary Ramon M. Lopez said that the United Kingdom (UK) has expressed interest to pursue a regional trade agreement with the Association of Southeast Asian Nations (Asean), weeks after the European Union (EU) expressed intent to do the same. Read more

Panels established to review EU dumping methodologies, Indian steel safeguard

WTO: At its special meeting on 3 April, the Dispute Settlement Body (DSB) agreed to the establishment of two new dispute panels: one to review a complaint filed by China against the European Union’s measures related to price comparison methodologies in anti-dumping investigations; and the second to review a complaint from Japan regarding India’s safeguard measure on imports of iron and steel products. Read more

Trade Policy Review: Mexico

WTO: The sixth review of the trade policies and practices of Mexico took place on 5 and 7 April 2017. The basis for the review was a report by the WTO Secretariat and a report by the Government of Mexico. Read more

BONUS – Bloomberg Interview with Mexico Economy Minister

In an interview with Bloomberg’s Erik Schatzker, Mexico Economy Minister Ildefonso Guajardo discusses President Donald Trump’s stance on NAFTA, among other things. Have a watch here.

CTLD NEWS

One of my Brexit articles was republished in the leading business magazine in Barbados, the Barbados Business Authority. Have a read here: Seize the Brexit Moment.

For more CTLD News see News & Announcements

NEW ON CTLD BLOG

Will US Financial Deregulation help mitigate the de-risking phenomenon?

Trump’s Trade Executive Orders target deficit and uncollected AD/CV Duties

Liked this issue? 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.

Will US Financial Deregulation help mitigate the de-risking phenomenon?

Alicia Nicholls

The exigencies of complying with a complex and often confusing maze of overlapping regulations, coupled with steep fines for compliance breaches, have been identified as principle drivers for United States-based global banks’ restriction and termination of correspondent banking relationships with respondent banks in other jurisdictions. As part of his promise to “Make America Great Again”, US President Donald Trump has pledged to cut the regulatory noose argued to be strangling US enterprise and growth. Will this deregulatory push have the unintended spin-off of mitigating the de-risking phenomenon facing several countries around the world, including Caribbean States?

President Trump has been adamant that ‘burdensome’ regulations passed during the Obama administration to avert a repeat of the Global Economic and Financial Crisis of 2008, have been fetters on US business activity and prosperity. While most available data point to the contrary, the Trump Administration and Corporate America posit that Obama-era regulations like the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) have reduced bank profitability and risk appetite, culminating in dampened bank lending to consumers and businesses.

President Trump has so far signed two executive actions on financial deregulation. The latter, an executive order dated February 3, 2017, sets out seven core principles for regulating the US Financial System. It mandates Treasury Secretary, Steve Mnuchin, to consult with the heads of the member agencies of the Financial Stability Oversight Committee (FSOC) and to submit to the President within 120 days a review of “laws, treaties, regulations, guidance” inter alia, which among other things inhibit regulation in sync with the Core Principles. There has been reportedly a shift towards more ‘pro-business’ regulators. Perhaps most telling, in contrast to his anti-Wall Street rhetoric during the campaign, President Trump has picked several former bankers (notably Goldman Sachs) for key cabinet and administration positions, including for Treasury Secretary.

Stringent compliance burdens and costs, as well as uncertainty about the interpretation of the regulations, are major drivers for banks’ avoiding, rather than managing risks. Will an unintended consequence of financial deregulation in the US be a mitigation of the de-risking phenomenon? While at first blush this conclusion may appear tempting, I respectfully submit that this may be an overly optimistic view, at least at this early stage, for the reasons which I outline below.

Firstly, the Trump Administration has set its cross-hairs firmly on the Dodd Frank Act which President Trump termed a “disaster”. This Act, which is hundreds of pages long, was passed in the aftermath of the Great Recession. It includes, for instance, rules against predatory lending, sets measures to deal with banks which become “too big to fail”, prohibits proprietary trading by banks for their own profit (Volcker Rule), inter alia. While Dodd Frank is not perfect and has been blamed for contributing to de-risking, repealing it would not only create an environment for a resumption of the pre-crisis risky behaviours by banks and other financial institutions. It would set the stage for a repeat of 2008, in much the same way that deregulation during the 1990s to early 2000s, including changes to the (now repealed) Glass-Steagall Act, laid the groundwork for the Great Recession, almost a repeat of the Great Depression of the 1930s.

Secondly, Dodd-Frank is just one aspect of the de-risking problem. There appears to be no indication that the Trump Administration intends to tackle the constellation of other regulations, including international anti-money laundering, countering the financing of terrorism (AML/CFT), tax and banking regulations (Basel III), with which banks, including in the US, must comply.

In the World Bank’s seminal 2015 global survey on the Withdrawal from Correspondent Banking, some 95% of large banks had cited “concerns about money-laundering/terrorism financing risks” as a driver for withdrawing from correspondent banking relationships. However, it is unlikely that the Trump Administration will try to rollback AML/CFT rules. President Trump’s ‘America First’ ethos has a strong national security undertone. Weakening the US’ AML/CFT rules would likely make him appear ‘soft’ on money laundering and countering the financing of terrorism. International pressure is also a factor as the US’ last Financial Action Task Force (FATF) Mutual Evaluation Report (2016) highlighted some AML/CFT weaknesses, including gaps in timely access to beneficial ownership information.

Thirdly, replacing existing regulators with so-called pro-business regulators does not necessarily mean that there will be a more lenient approach to fines imposed on banks for compliance breaches. Unlike popular belief, most of the large banks which have been made to pay record fines had indeed knowingly committed serious AML/CFT breaches.

Fourthly, even if financial deregulation in the US eases the regulatory pressure on US global banks, it does not affect two core problems which appear to be driving the de-risking of regional banks, namely the perceived unprofitability of providing correspondent banking services to indigenous Caribbean banks, and the Caribbean region’s unjustified characterisation as a ‘high risk’ region for conducting financial services. In the previously mentioned World Bank 2015 Survey, some 80% of large banks cited “lack of profitability of certain foreign CBR services/products” as a driver of exiting correspondent banking relationships.

Further to the latter point, Caribbean countries, particularly international financial centres (IFCs) are consistently and unjustifiably placed on US government lists deeming them as money laundering threats, despite the fact that no Caribbean IFC is currently on any CFATF list of ‘high-risk and non-cooperative jurisdictions’. The most notorious example of this unfair practice is the US’ annual International Narcotics Control Strategy Report, the latest edition of which listed 21 Caribbean jurisdictions without providing (as usual) any evidence to support the conclusions drawn.

Caribbean countries are consistently branded as tax havens in spite of the fact that all Caribbean countries have signed intergovernmental agreements (IGAs) with the US Government pursuant to the extra-territorially applied US Foreign Account Tax Compliance Act (FATCA) passed in 2010. Most Caribbean governments have already passed implementing legislation to bring their IGAs into force. In addition, while the US has opted not to be a part of the OECD’s Common Reporting Standard, several Caribbean countries have elected to be early adopters!

Added to this is that compliance officers in overseas banks usually view the Caribbean as a “collective” and not as individual countries; any perceived risks in one country are transposed to the Region as a whole.

Granted, it is still early days of the Trump Administration and the findings of the Treasury Secretary’s report on which regulations may possibly be earmarked for axing would not be known for some time. What does help, however, is where there is clarification of the rules through clearer guidance. For instance, for a long time it was unclear how far banks’ due diligence requirements were to go. In addition to knowing their customer (KYC), there appeared to be a growing consensus that banks were also supposed to know their customer’s customers (KYCC).  Definitive guidance through the FATF Guidance in October 2016 showed that KYCC was not required. Turning to the US, that same month the US Office of the Comptroller of the Currency (OCC) released guidance to assist banks in the periodic risk reevaluation of foreign correspondent banking relationships.

However, the Region would be well-advised not to expect any serious mitigation of the de-risking phenomenon stemming from US financial deregulation. Despite being a ‘pro-business’ administration, it should be remembered that the overriding goal of the Trump Administration’s regulatory rollback is to “Make America Great Again”, point blank. Any spill-over positive benefits to the Caribbean from Trumpian financial deregulation would be welcomed but unintended, and it is more likely that the regulatory rollback may perhaps be more harmful than helpful to the region.

There is no panacea for the de-risking phenomenon as it is caused by a multiplicity of factors. Regional governments and private sector stakeholders should continue their lobbying and advocacy efforts, including engagement with key US administration officials, regulators and the banking sector. Given the Trump Administration’s ‘America First’ disposition, lobbying efforts which emphasises the implications that possible derisking-related economic and social destabilisation in the Caribbean may have on the US’ homeland security would be more impactful than pure moral suasion.

These advocacy efforts should also highlight to US officials and to US correspondent banks Caribbean countries’ own efforts at continuously improving their AML/CFT frameworks and the compliance efforts of Caribbean banks. Regional banking stakeholders should also continue to explore the possibility of investing in technologies such as Know Your Customer (KYC) utilities and legal entity identifiers (LEIs) to assist in customer due diligence (CDD) information sharing between themselves and their US correspondents.

These were part of the remarks I gave as a panellist at the Barbados International Business Association (BIBA) International Business Forum 2017

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.

Trump’s Trade Executive Orders target deficit and uncollected AD/CV Duties

Alicia Nicholls

United States (US) President Donald Trump has sent a warning signal to those countries which he accuses of engaging in ‘unfair trading practices’ argued to be costing American manufacturing jobs. Proclaiming that the “theft of American prosperity will end,” the President concluded the work week by signing two trade-focussed executive orders aimed respectively at identifying the causes of the US’ reported $500 billion dollar total trade deficit and the $2.3 billion dollars (as at May 2015) in uncollected anti-dumping and countervailing duties owed to the US government. Ultimately, the twinned measures are to “set the stage for the revival of US manufacturing” as noted in the President’s remarks at the signing ceremony.

Presidential Executive Order Regarding the Omnibus Report on Significant Trade Deficits

Taking aim at the US’ trade deficit  blamed for a decline in American prosperity and jobs, President’s Trump executive order mandates the Secretary of Commerce, Wilbur Ross, and the United States Trade Representative (USTR), Robert Lighthizer (yet to be confirmed) to prepare and submit to him an Omnibus Report on Significant Trade Deficits. This is to be done in consultation with relevant departments and agencies. The Secretary of Commerce and the USTR may hold public meetings and receive comments from relevant government and non-governmental stakeholders.

Primarily, this report is to examine the US’ trading relationships country by country. It will identify those foreign trading partners with which the US had a significant trade deficit in goods in 2016, and seek to ascertain the reasons for the deficits, including whether it is because of trade abuses (or what President Trump has termed “cheating”) by these countries, assess the effects of the trade relationship on US employment and wage growth and identify imports and trade practices that may be impairing US national security.

Most Caribbean countries can perhaps breathe a sigh of relief as the US has a trade surplus with the Region, as at the last report on the operation of the CBERA. The exception is the oil-rich Trinidad & Tobago which enjoys a merchandise trade surplus with the United States. According to US Census Bureau data, in 2016, the US imported $2,961 million in goods from the twin-island republic and exported $2,334 million, resulting in a deficit of $617 million. Natural gas, crude oil and petrochemicals comprise the majority of US imports from Trinidad & Tobago as this table shows.

While it may appear that Trinidad & Tobago might potentially be in the Administration’s cross-hairs as it has a trade surplus with the US, it should be noted that (a) the US’ deficit with Trinidad & Tobago in 2016 was not ‘significant’ and has been declining since 2011 (b) the Report is supposed to consider other factors as well, including whether the country engages in ‘unfair trading practices’ which Trinidad & Tobago does not. (c) As the Trump Administration will seek to increase US onshore petroleum production, its imports from Trinidad & Tobago (and its deficit with that country) will continue to decrease.

Presidential Executive Order on Establishing Enhanced Collection and Enforcement of Anti-dumping and Countervailing Duties and Violations of Trade and Customs Laws

In a warning salvo to China, President Trump’s second executive order targets US importers which evade anti-dumping/countervailing duties by improving collection of these duties at the border. Dumping in the trade context refers to where an exporter sells a product in an export market at a price lower than in the home market. Under the WTO’s Anti-dumping Agreement, a country may, after investigation, impose extra duties (anti-dumping duties) on a “dumped” product from another country to ensure the price is close to the “normal value” or to offset injury to its domestic industry.

Specifically, the executive order mandates the Secretary of Homeland Security, through the Commissioner of Customs & Border Patrol (CBP), to “develop and implement a strategy and plan for combating violations of US trade and customs laws for goods and for enabling interdiction and disposal”.

The order also seeks to ensure the timely and efficient enforcement of laws protecting intellectual property rights holders from the importation of counterfeit goods. It therefore requires the Treasury Secretary and the Secretary of Homeland Secretary to take all appropriate steps to ensure that the CBP can share any information with rights holders which is necessary to determine whether there has been an IPR infringement or violation, and regarding merchandise voluntarily abandoned, once such information is shared consistent with the law.

Memo on NAFTA

In other news, last week a leaked draft memo to Congress signed by the Acting USTR revealed what appeared to be the Administration’s orientation towards the renegotiation of the North American Free Trade Agreement (NAFTA), an agreement which Trump had called the “worst trade deal ever signed by the US”. However, during a daily press briefing the White House Press Secretary, Sean Spicer, has said the memo is “not a statement of administration policy”.

Trade had been a major plank of President Trump’s platform, which aimed to stop ‘bad trade deals’ and eradicate the US’ trade deficit. One of his earliest executive orders was mandating the Acting USTR to withdraw the US from the Trans-Pacific Partnership (TPP).

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 Trade & Development Digest – March 26- April 1, 2017

Source: Pixabay

Welcome to the Caribbean Trade and Development Digest for the week of March 26-April 1!  I am pleased to share some of the major trade and development headlines and analysis across the Caribbean region and the World. 

The biggest trade news this week was that the United Kingdom has officially submitted its notification of intention to withdraw from the European Union, and has published its Great Repeal White Paper. United States President Trump signed on Friday two executive orders on trade, one calling for improving the collection of anti-dumping/countervailing measure duties and the other mandating a study on the reasons for the US trade deficit. Turning to the Caribbean, the Golding Commission in Jamaica has turned over its CARICOM Review Report to the Jamaican Prime Minister.

For past issues of our weekly Caribbean Trade & Development Digest, please visit here.

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REGIONAL NEWS

Golding Commission Submits CARICOM Review Report To PM

Jamaica Gleaner: The Bruce Golding-led CARICOM Review Commission has submitted its final report, eight months after it started its work. Read more 

Guyana cleared for paddy exports to Mexico

Stabroek: According to the Ministry of Agriculture, Guyana will now be able to bid on three quotas, totalling 30,000 metric tonnes of paddy for export to Mexico, following the Government of Mexico’s decision to allow the tax free importation of 150,000 metric tonnes of paddy and rice products from outside of the North American Free Trade Agreement (NAFTA) member states. Read more 

Belize economy declines by 1.2% in 4th quarter

Breaking Belize News: For the first time in five years, Belize has seen a decline in the Gross Domestic Product (GDP) fourth quarter of the year. Read more

CARICOM launches new energy efficiency code

Antigua Observer: Jamaica has launched a new initiative aimed at develop a Regional Energy Efficiency Building Code (REEBC).  The project is being undertaken by the Bureau of Standards Jamaica (BSJ) in collaboration with the Caribbean Community (CARICOM) Organisation for Standards and Quality (CROSQ). Read more 

Leveraging opportunities from the EU

Barbados Advocate: Andrea King, Director, Barbados Cultural Industries Development Authority has revealed the recent project that the Barbados Cultural Industries Development Authority is managing on behalf of the Ministry of Culture, Sport and Youth has gained critical market research intelligence to conduct business in the European market. Read more 

Tourism will still be king

Nation News: Tourism will continue to be golden egg in Barbados’ economic basket even as the island pursues diversification via other sectors including renewable energy. Read more 

Local experts to inspect Brazil’s meat processing plants

Jamaica Gleaner: A Jamaican technical team, which leaves this week for Brazil, will undertake a fact-finding mission to determine the validity of reports of tainted meat being processed into corned beef. Read more 

Regional sugar production for 2017 off to steady start

Jamaica Observer: The Sugar Association of the Caribbean (SAC) has reported an increase in sugar production in the region for the month of February when compared to the same period last year. Read more 

10th EDF Technical Barriers Of Trade Programme Is A Resounding Success

ZIZ Online: Media representatives and members of national bureaus of standards in CARIFORUM member countries participated in a close-out regional press conference on Thursday, March 23, which was geared at highlighting the numerous successes of the 10th European Development Fund (EDF) Technical Barriers of Trade (TBT) Programme. Read more

Guyana’s Coast Guard boosts capacity amidst oil production

Demerara Waves: The Guyana Defence Force (GDF) Coast Guard is beefing up its capacity to provide security for offshore oil exploration and production as well as clamp down on illegal activities some of which “distort our economy,”  President David Granger said. Read more 

Ministers finalise Caricom strategy for education, human resource development

Stabroek News: Caribbean Ministers of Education and other educational officials yesterday met to finalise a regional strategy for education and human resource development. Read more 

INTERNATIONAL NEWS

No turning back on ‘Brexit’ as Article 50 triggered

BBC: Britain’s departure from the EU is “an historic moment from which there can be no turning back”, Theresa May has said. Read more 

‘We are ready’: Canada-Europe trade deal set to kick in, mostly, by July 1

CBC News: Canada is preparing to provisionally apply the Comprehensive Economic and Trade Agreement (CETA) by July 1. Read more 

COMESA 53m Euros trade facilitation programme almost complete

CTA: The formulation of projects under the COMESA trade facilitation programme to be financed under the 11 European Development Fund has entered the home stretch. Read more 

EU, Mercosur Negotiators Report Progress, Schedule Future Meetings

ICSTD: Negotiators meeting to advance a planned EU-Mercosur Association Agreement, including a free trade deal, finished their 27th round of talks last Friday in Buenos Aires, Argentina. Read more 

OAS, US Denounce Venezuelan High Court’s Takeover of Legislature

VOA: The Venezuelan Supreme Court’s decision late Wednesday to take control of the opposition-controlled legislature has set off a wave of outrage, with some hemispheric neighbors, including the United States, Mexico, Peru and Argentina, denouncing the measure as a threat to democracy. Read more 

Canada’s ambassador: All Romanian citizens can travel to Canada without visas starting December 1

Business Review: Romanians who own a valid visa for USA or received a visa for Canada in the last 10 years will travel to Canada without visa from May 1 and from December 1 all citizens will travel to Canada without visa, said on Thursday Kevin Hamilton, the ambassador of Canada to Romania, according to Agerpres. Read more

Brexit: UK publishes ‘Great Repeal Bill’ plan to replace EU laws

CNN: The scale of the task facing UK legislators as they try to extricate Britain from the European Union was revealed on Thursday when the British government set out how the process would work. Read more 

Nicola Sturgeon threatens to try and obstruct Great Repeal Bill

Telegraph: Nicola Sturgeon has signalled she will try and derail the Great Repeal Bill by withholding her government’s consent for its plans to give Scotland powers repatriated from Brussels. Read more 

Trump executive orders will target trade ‘cheaters’

USAToday: President Trump promised to crack down on “foreign importers that cheat” Friday, signing two executive orders that he said would lead to a historic reversal of the nation’s trade deficit. Read more 

On ‘Brexit,’ It’s Divorce First, Trade Talks Later, E.U. Tells U.K.

New York Times: Britain must agree to pay its bills and to protect millions of Europeans living in Britain before reaching a new trading relationship with the European Union, Donald Tusk, the president of the European Council, said on Friday. Read more 

Trump administration seeks mainly modest changes to NAFTA

CNBC: The Trump administration is seeking mainly limited changes to the North American Free Trade Agreement with Mexico and Canada, the Wall Street Journal reported on Thursday. Read more 

Germany urges EU to file WTO complaint against U.S. in steel row

Reuters: Germany urged the European Union on Friday to consider filing a complaint with the World Trade Organization (WTO) against the United States over its plan to impose duties on imports of steel plate from five EU member states. Read more

China says U.S. trade orders should respect international rules

Reuters: China called on the United States to respect international trade rules and improve cooperation and dialogue in reaction to two new orders by U.S. President Donald Trump calling for an investigation into trade abuses. Read more 

WTO issues panel report regarding EU tariff rate quotas on poultry imports

WTO: On 28 March 2017 the WTO issued the panel report in the case brought by China in “European Union – Measures Affecting Tariff Concessions on Certain Poultry Meat Products”. Read more

WTO members review new farm policies in Agriculture Committee

WTO: WTO members held discussions about each other’s farm trade policies at a meeting of the Committee on Agriculture on 27 March. The Committee considered 29 questions concerning subsidies and market access in agriculture, with 16 of these items being raised for the first time. They also reviewed notifications of members’ farm policies. Read more 

US universities speak out against Trump travel ban

VOA: A group of 31 U.S. colleges and universities is supporting a legal challenge to President Donald Trump’s restrictions on travel to the United States by refugees and visitors from certain Muslim-majority countries, asserting the executive order would harm their efforts to provide quality education and promote the free exchange of ideas. Read more 

Trump Administration appealing halt of revised travel ban

CNN: The Justice Department has filed a notice to appeal a Hawaii-based federal judge’s ruling that indefinitely halted core portions of the President Donald Trump’s revised travel ban. Read more 

 

CTLD NEWS

I was honoured to be a panellist  representing FRANHENDY ATTORNEYS at the Barbados International Business Association (BIBA) International Business Forum on March 31st in Barbados. The Panel was “The Trump Presidency – Implications and Opportunities for IFCs“. The discussion, which considered the potential implications and opportunities of the Trump Presidency for Caribbean International Financial Centres (IFCs) was ably moderated by Melanie Jones of LEX Caribbean Attorneys-at-Law. I was delighted to share the stage with a distinguished panel which comprised of noted economist Jeremy Stephen, attorney-at-law Cadian Drummond and Executive Director of the University of the West Indies Consulting (UWI Consulting), Lisa Cummins.  I wish to thank BIBA, the moderator, my fellow panellists, as well as those from the two other panels for a very engaging and informative Business Forum as always.

NEW ON THE CTLD BLOG

Brexit begins; UK makes historic Article 50 notification of withdrawal from EU

New Trump Executive Order Reverses Obama-Era Climate Change Policies

Post-Brexit UK-Caribbean Trading Relations: What are the options?

Liked this issue? 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.

Brexit begins; UK makes historic Article 50 notification of withdrawal from EU

Alicia Nicholls

Nine months after 52% of Britons voted yes in the June 23, 2016 referendum on whether the United Kingdom should exit the European Union (EU), British Prime Minister Theresa May has followed through on her “Brexit means Brexit” promise. On Wednesday, March 29, 2017 the May Government submitted a letter to the EU Council’s President Donald Tusk formally notifying of the UK’s intention to withdraw from the EU pursuant to Article 50 (2) of the Treaty on European Union (Lisbon Treaty).

Earlier this month (March 13), the UK Parliament had passed the legislation authorising the Government to make the notification and allowing Mrs. May to meet the end of March deadline she had promised last year.

What happens next?

The UK will be the first EU Member State to withdraw from the EU so the move is not just historic but also brings some uncertainty.  However, on several points Article 50 of the Lisbon Treaty is clear.  The Article 50 (2) notification starts the two year clock towards the UK’s formal exit. The Brexit negotiations will concern not only the terms of the UK’s withdrawal from the currently 28-member trade and economic bloc but also the framework for the future relationship between the UK and remaining EU-27. Article 50(2)  also makes clear that the negotiations are to follow the procedure set out in Article 218 (3) which deals with negotiations of agreements with third States. Regardless of whether or not a deal is reached, the UK automatically ceases to be part of the EU and its treaties once the two year timeframe from the date of the Article 50 (2) notification (March 29 2019) elapses, unless the EU Council (unanimously) and the UK agree to an extension.

The road to Brexit thus far has not been a smooth one, but may be mild compared to what potentially awaits ahead. Mrs May faces likely tough negotiations. Though wishing to preserve as amicable and cooperative a relationship with the UK, the EU Council would not want to make leaving the EU too easy a prospect for those EU member states which might be contemplating their own ‘Brexit’. Moreover, the UK has little experience in trade negotiations because the EU Commission was responsible for negotiations with third States.

For her part, Mrs. May was both firm but cordial in her withdrawal letter, reiterating themes from her major Brexit speech. She noted that while the UK would be leaving the EU, it would not be leaving Europe and she expressed the desire to remain friends and committed allies with the EU-27.

One of the issues to be ironed out would be what level of access will the UK have to the EU for not only its goods and services. Mrs. May has already made clear that the UK will not seek to be a member of the single market or the customs union.

Additionally, another contentious issue is that of residency rights of the 900,000 Britons (according to the Office of National Statistics) living in the EU-27.

The May Government has already stated its willingness to walk away with no deal rather than a bad one.

In addition to possibly tough negotiations with the EU, Mrs. May will also need to manage the home front amidst calls by Scotland’s First Minister Nicola Sturgeon for a second independence referendum. Scotland had voted to remain.

The Brexit negotiations may not start until June which cuts into the two year window for negotiation.

The full Article 50 notification letter 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.

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