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  • Accelerating Gender Mainstreaming in CARICOM Trade Policy

    Accelerating Gender Mainstreaming in CARICOM Trade Policy

    Dr. Jan Yves Remy and Alicia Nicholls

    While we can all agree that trade offers the potential for inclusive and sustainable growth in small Caribbean states, deployment of a successful trade strategy requires recognition and ultimately monitoring of its differentiated impacts on women and men. Despite immense strides made in empowering women, they remain under-represented in global trade and are disproportionately affected by international competition and technological changes.

    On the occasion of International Women’s Day 2019, we highlight the link between trade and gender and make the case that accelerating gender mainstreaming in trade policies of CARICOM Member States promotes not just gender equality, but inclusive growth as well.

    Gender Equality and Development Nexus

    Under the United Nations Sustainable Development Goal 5, the international community has committed to achieving gender equality and empowering all women and girls by 2030. Not only is enhancing women’s equality and economic empowerment a human right, but the removal of legal and other barriers to women’s economic inclusion has a multiplier effect in the economy due to women’s dual role as caregivers and economic actors. World Bank research has found that women invest up to 90% of their income in their families, with positive spill-overs for their communities and the economy. A recent Mckinsey Global Institute Report found that advancing women’s equality could add $12 trillion to global GDP by 2025.

    Despite this compelling data, and although they account for half of the world’s working age population, women remain under-represented in international trade on account of their unequal access to factors of production and inbuilt gender biases. A recently released World Bank Report entitled “Women Business and the Law 2019” found that out of 187 countries globally, women had equal legal rights to men in only 6.

    Gender and Trade Nexus

    Trade policies are not necessarily gender neutral: they impact women and men differently at both the country and sectoral levels. Recognizing this, a policy of “gender mainstreaming” aims to promote gender equality by integrating gender considerations in the preparation, design, implementation and monitoring of policies.

    Trade creates opportunities for women’s empowerment by creating both employment and business opportunities, but it can also alienate them. For example, while e-commerce can improve women’s access to foreign markets, increased competition through trade liberalisation can displace and marginalize women in agriculture. Because they are both caregivers and economic actors, women often have less time on average than men to engage in entrepreneurial and exporting activities. At the same time, their access to market information is often lower due to fewer networks and lower education levels. Knowing this, ex ante gender-based analysis can assist policymakers to avoid negative gender impacts of policies that they implement.

    A number of international institutions have developed programmes to increase women’s inclusion in trade. For instance, the International Trade Centre (ITC) has created a She Trades electronic platform; and the World Trade Organization (WTO), at its Buenos Aires Ministerial Conference in 2017, adopted a Joint Declaration on Trade and Women’s Economic Empowerment. Regionally, the Caribbean Export Development Agency’s Women Empowered Through Export (We-Xport) initiative supports Caribbean businesswomen looking to export for the first time or to increase their goods and services exports.

    But there is still lots to do in CARICOM. Despite the fact that CARICOM Member States are signatory to a plethora of international treaties aimed at the empowerment of women, their trade policies are to a large extent being enacted and maintained in the absence of evidence and data that is timely, comparable and sex-disaggregated. Mainstreaming gender into CARICOM countries’ trade and development policy-making would help to ensure that initiatives under the CARICOM Single Market and Economy (CSME) and CARICOM’s trade negotiations with third parties are gender-sensitive. It is, therefore, a welcome development that Belize’s recently launched National Trade Policy (2019-2030) incorporates gender equality as a cross-cutting issue. Another praiseworthy development is that in February 2019, it was announced that national consultations were underway on a draft CARICOM Regional Gender Equality Strategy to advance gender equality and equity and the empowerment of women and girls in each of the fifteen CARICOM Member States.

    How can CARICOM Member States promote Gender Mainstreaming in Trade?

    Based on the above, we recommend the following ways in which CARICOM’s trade policies may be more gender-sensitive:

    • Mainstreaming gender in the design and implementation of National Trade Policies. Belize’s new National Trade Policy can serve as a good model;
    • Gender sensitivity training of key technocrats charged with formulating, implementing and monitoring trade and economic policies and their gendered impact. Gender-based policy making and monitoring will require greater resource allocation to the agencies charged with gender affairs;
    • Enlisting the assistance of civil society and the private sector in designing trade policies and measuring their impact;
    • Increasing specific programmes in Member States’ aimed a promoting women’s entrepreneurship and export activities through capacity-building, improving their access to finance and to trade information;
    • Promoting greater inclusion of gender provisions in CARICOM’s free trade agreements (FTAs). The most far-reaching of these FTAs like the Canada-Chile and Chile-Uruguay FTAs, contain dedicated trade and gender chapters. CARICOM’s trade agreements, however, are generally sparse on gender provisions;
    • Continued lobbying of regional policy makers to honour the commitments they have made both regionally and internationally to promote gender equality, particularly their reporting and gender mainstreaming commitments.

    International Aid for Trade programming is becoming increasingly gender-focused. With foreign donors increasingly making gender an important plank of their aid strategies, CARICOM governments seeking development assistance are increasingly under pressure to include gender considerations. However, gender mainstreaming is not just about ensuring CARICOM Member States meet their international treaty obligations or increase their access donor to funding. When properly implemented, gender-sensitive trade policies promote women’s empowerment, eradicate poverty and foster inclusive growth.

    Dr. Jan Yves Remy is the Deputy Director of the University of the West Indies, Cave Hill’s Shridath Ramphal Centre for International Trade Law, Policy & Services. Alicia Nicholls is an international trade and development consultant and contributing author to the UWI SRC’s Trading Thoughts column.

  • CARICOM Protocol on Contingent Rights: An important Step to CSME Consolidation

    CARICOM Protocol on Contingent Rights: An important Step to CSME Consolidation

    Alicia Nicholls

    The Government of Barbados has recently announced a Bill entitled the Caribbean Community (Amendment) Bill 2019, which, when passed, would amend the principal Act to give effect to the CARICOM Protocol on Contingent Rights, making it part of Barbadian law.

    Barbados, along with six other CARICOM Member States, had signed the Protocol during the 39th Regular Meeting of the Conference of CARICOM Heads of Government in Montego Bay Jamaica in July 2018.

    Following the recently held 30th Inter-sessional Meeting of the Conference of CARICOM Heads of Government in St. Kitts & Nevis, it has been reported that all CSME participating Member States have now signed the Protocol. But what is the Protocol about and why is it necessary for the consolidation of the CSME?

    What is the Protocol on Contingent Rights and Why is it Necessary?

    The Revised Treaty of Chaguaramas confers a number of rights to Community Nationals, including the right of establishment, the right to provide services, the free movement of capital and of skilled Community Nationals to seek employment in other CSME participating Member States. However, it was recognised by Member States that despite these rights (called ‘primary rights’) being conferred, additional enforceable rights (or ‘contingent rights’) were needed to ensure that Community Nationals could enjoy them effectively and without frustration.

    For example, there was concern by CARICOM nationals who were working in other jurisdictions about their inability to access social services on the same basis as nationals of the host country, the inability of their spouses to also legally seek employment, and for their children to access primary education on the same basis as the children of nationals of the host country. These barriers frustrate the exercise of the rights conferred in the Revised Treaty.

    The Protocol, which was a long time in the making, confers certain enforceable social and economic rights to Community Nationals and their immediate families who make use of the right of establishment, the right to provide services, the right to move capital and the free movement of skilled labour under the Revised Treaty of Chaguaramas. As such, the Protocol is not only a starting point for addressing some of the issues currently faced by Community Nationals seeking to exercise these rights effectively, but is, therefore, an important step towards the consolidation of the CSME.

    Rights guaranteed under the Protocol

    The framers of the Protocol define ‘contingent rights’ as “rights to which a national and his or her spouse and immediate dependents are entitled, contingent on the exercise by the principal beneficiary of the right of establishment, provision of services, movement of capital or free movement of skills”.

    Subject to certain exceptions, the contingent rights currently guaranteed under the Protocol are:

    • the right of a principal beneficiary resident in a host country, his or her spouse or their dependants to transfer capital into and from a host country subject to Article 43 of the Treaty, which speaks to restrictions to safeguard balance of payments;
    • the right of a spouse or dependants of a principal beneficiary resident in a host country to leave and re-enter a host country;
    • the right of the spouse of a principal beneficiary resident in a host country to work in a host country without a work permit;
    • the right of a principal beneficiary resident in a host country and his or her spouse to access on a non-discriminatory basis lands, buildings and other property for residential or business purposes reasonably connected with the exercise of the rights of the principal beneficiary;
    • the right of dependent children of a principal beneficiary resident in a host country to access primary education on a nondiscriminatory basis, where and to the extent provided by the Government of the host country;
    • the right of a principal beneficiary resident in a host country to import into the host country free of duties within six months of being granted a stay, subject to the principal beneficiary having already satisfied the duty regime in another Member State, tools of trade that are (i) reasonably connected with the exercise of any of the
      primary rights of the principal beneficiary; (ii) in the possession of the principal beneficiary in the exercise of any of those primary rights; and (iii) located in a Member State.

    These are a minimum standard and as such, Article IV of the Protocol specifically notes that Member States are not precluded from granting greater rights once not done in a discriminatory manner in contravention of the non-discrimination principle (Article 7) and more specifically, the Most Favoured Nation principle (Article 8) of the Revised Treaty respectively. It should be noted that consistent with a phased approach, the Barbados Bill adopts the Protocol as is and does not grant any greater rights.

    Who may qualify for these rights?

    Principal Beneficiary

    The Protocol defines a ‘principal beneficiary’ as a national of a Member State exercising one or more primary rights, that is, rights pursuant to the Treaty in relation to the operation of the CSME and described in Articles 32, 34, 36, 40 and 46 of the Treaty, which deal with right of establishment, right to provide services, the movement of capital and free movement of skilled community nationals respectively.

    For example, under the free movement of skilled nationals regime, ten categories of wage earners may move and work freely within CSME participating Member States without having to seek a work permit in the jurisdiction in which they seek to work and once they hold a CARICOM Skills Certificate (formally known as the CARICOM Certificate of Recognition of Skills Qualification).

    The five original categories under the Revised Treaty of Chaguaramas were: University graduates, artistes, musicians, sportspersons, media workers. These were later expanded to include five additional categories: nurses, teachers, artisans with a Caribbean Vocational Qualification (CVQ), holders of Associates Degrees or comparable qualification and Household Domestics with a Caribbean Vocational Qualification (CVQ) or equivalent qualification. These eligible categories will soon include others, namely, agricultural workers, barbers, security guards and beauticians.

    All other Community nationals need to apply for work permits in order to seek employment in another CSME jurisdiction.

    Spouses and Dependents

    With a nod to inclusiveness, the framers of the Protocol adopted a broad definition of ‘dependent’ to include any unmarried child of a principal beneficiary or of his or her spouse provided that such child is under the age of 18 years, under the age of 25 years attending school or university full time or over the age of 18 years who is disabled and dependent on the principal beneficiary. However, the definition of ‘spouse’ is still restricted to heterosexual relationships either via marriage, or via common-law unions to the extent that such unions are recognized by the laws of the host country.

    Built-in agenda and monitoring

    The issue of contingent rights has been a sensitive one as not all CARICOM Member States offer their own nationals the same level of social benefits. There are legitimate fears that there may be undue burdens placed on those States with more generous social welfare programmes, such as free education and free health care, as well as concerns about the potential for abuse of these programs.

    One way the framers of the Protocol appear to seek to address this concern is by allowing for a phased approach through a built-in agenda (Article III). It enumerates a list of potential more extensive rights to be adopted by Member States on a phased approach subject to agreement. It also provides for monitoring and review. Additionally, temporary service providers are not entitled to contingent rights and safeguard measures in Article 47 apply to the Protocol mutatis mutandis.

    Moving from paper to practice

    CARICOM Member States are dualist States, that is, even after a treaty is signed by a Member State, it needs to be translated into domestic law in order for the treaty obligations to be binding on the State domestically. Therefore, the rights under the Protocol can only be enjoyed, and the State bound to provide these rights, once they have been translated into domestic law through an Act of Parliament.

    1. Domestic Ratification Needed by all signatories – For the Protocol to enter into force, it must be signed and then ratified by all parties to the Revised Treaty, which will not be an easy task. The Protocol, however, may be provisionally applied once seven or more of the Parties to the Protocol declare their intention to apply the Protocol provisionally before the Protocol enters into force.The next step is to ensure the Protocol is brought into force as soon as possible, thereby ensuring it is parlayed from mere ink on paper. On this front, it is commendable that Barbados, which has lead responsibility for the CSME in CARICOM’s quasi cabinet, is leading by example through its commencement of the ratification process.
    2. Procedures for implementation and monitoring – Procedures and systems must be put in place domestically and regionally to allow for implementation and monitoring of the Protocol’s operation to ensure Member States are honouring their commitments and to ascertain any problems. Data collection will be key.
    3. Training – Guidance, as well as further training of staff members of agencies which are tasked with implementation and monitoring, may be necessary.
    4. Public Awareness Campaign – As evidenced by the misinformation which was circulated on social media after the Bill was announced in Barbados, it is evident that a public awareness campaign is needed not only to educate CARICOM citizens about the rights contained in the Protocol and how they as nationals may benefit, but to help assuage concerns and fears about the Protocol’s intentions and implications.

    The very timely Golding Commission Report, which had examined Jamaica’s relations within CARICOM and CARIFORUM, had spoken of the CSME implementation deficit and challenged regional leaders to chart a way forward. Having this Protocol enter into force would not only facilitate greater movement, but also be a much-needed injection of confidence to show the region’s populace that the CSME is not moribund. On this note, Barbados’ initiative to begin the ratification process is certainly a commendable one, and it is hoped that other CARICOM countries will swiftly follow suit.

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

  • Caribbean Trade and Development Digest – February 24 – March 2, 2019

    Caribbean Trade and Development Digest – February 24 – March 2, 2019

    Welcome to the Caribbean Trade & Development Digest for the week of February 24-March 2, 2019! We are happy to bring you the major trade and development headlines and analysis from across the Caribbean Region and the world from the past week.

    THIS WEEK’S HIGHLIGHTS

    The Government of Belize this week launched its first National Trade Policy 2019-2030. The full text of the policy may be viewed here.

    Meanwhile, the US released its 2019 Trade Policy Agenda and 2018 Annual Report, in which it warned, inter alia, that “we will not allow the WTO Appellate Body and dispute settlement system to force the United States into a straitjacket of obligations to which we never agreed”.

    CARICOM Heads of Government held their 30th Inter-sessional Meeting this week (February 26-27, 2019) in St. Kitts & Nevis. Agenda items included transportation, the CSME, security, blacklisting and the situation in Venezuela. The communique may be read here.

    Two Caribbean representatives (one from Barbados and the other from Jamaica) are among the list of chairpersons for WTO bodies released by the World Trade Organisation (WTO) on February 28, 2019.

    REGIONAL 

    Amnesty for Venezuelans in Trinidad & Tobago

    St Lucia Online: Cabinet will meet on a policy position for illegal and legal Venezuelans in Trinidad and Tobago to be allowed an amnesty where they will be given ID cards and allowed to work in the country for one year. Read more 

    CARICOM food import bill set to reach US$8-10 billion by 2020

    Stabroek: For all the talk in the Caribbean regarding the relatively food secure status of many of the territories, the real picture is not one that generates unbridled optimism according to an article headlined “Five Overlooked Facts About Caribbean Food Security” authored by the Barbadian writer, Daphne Ewing-Chow, and published on February 20th in Forbes magazine. Read more 

    White House to announce new sanctions on Cuba over Maduro support, source says

    Fox News: The White House will soon impose major new sanctions against the Cuban government over its support for the regime of contested Venezuelan President Nicolas Maduro, a source familiar with President Trump’s national security team told Fox News. Read more 

    CARICOM Says EU’s Shifting Tax Compliance Requirements Encroaching on CARICOM’s Sovereignty

    Caribbean360: Caribbean Community (CARICOM) Secretary-General Ambassador Irwin LaRocque has expressed strong disquiet that the constantly shifting parameters for good tax governance set out by the European Union (EU), are encroaching on the region’s sovereignty. Read more

    CARICOM among four major markets targeted by Jamaica Ministry of Agriculture

    Jamaica Observer: Industry, Commerce, Agriculture and Fisheries Minister, Audley Shaw, says CARICOM is among four major markets being targeted, under the Government’s thrust to attain higher levels of economic growth, through the linkage between agriculture and industry. Read more 

    USTDA Supports Port Cybersecurity in the Dominican Republic

    BN Americas: Last week, the U.S. Trade and Development Agency awarded a technical assistance grant to Fundación Ramon E. Mella (FRM), a maritime and port organization in the Dominican Republic. The grant will support the development of a national cybersecurity risk assessment, reporting, and management capability platform for port facilities across the Dominican Republic. Read more 

    CARICOM Integration advances: All CSME Participating Member States now Signatories to Contingent Rights Protocol

    CARICOM: Chairman of the Caribbean Community (CARICOM) and Prime Minister of St. Kitts and Nevis, Dr. the Honourable Timothy Harris, highlighted the gains made towards the regional integration movement, particularly through the signing of the Protocol of Contingent Rights by all CARICOM Member States, as one of the success stories coming out of the 30th Inter-Sessional Meeting of the Conference of Heads of Government, held at the St. Kitts Marriott Resort, Frigate Bay, from February 26-27. Read more 

    CARICOM Discussions Highlight Concerns about Single Market and Economy

    The Bahamas Chronicle: Efforts to strengthen the advancement of the Caribbean Community (CARICOM) Single Market and Economy (CSME) will continue following recent developments that promote the free movement of people, goods, services and capital, and robust discussions slated for the (CARICOM) 30th Inter-Sessional Meeting of the Conference of Heads of Government of the Caribbean Community (CARICOM). Read more 

    CARICOM countries sign multilateral air services agreement

    St Kitts & Nevis Observer: Several CARICOM Member States including Dominica, Grenada, Jamaica and Trinidad and Tobago, have signed the Multilateral Air Services Agreement (MASA), aimed at expanding the scope for airlines owned by CARICOM nations to provide air services throughout the Community. Read more 

    Belize’s exports second lowest in 15 years

    Breaking Belize News: Belize’s export revenues for the year 2018 amounted to just under $399 million, making it the second lowest amount earned from exports since the $380 million in 2003 according to the Statistical Institute of Belize’s Annual Export Reports 2003 to 2018. Read more 

    INTERNATIONAL

    Reforming the WTO: The Swiss View

    Swissinfo.ch: The crisis-hit World Trade Organization (WTO) is going through difficult times. World leaders have committed to an overhaul of the Geneva-based institution, but it is unclear what the future holds. Swiss ambassador to the WTO Didier Chambovey link gives his view.  Read more

    Australia set to seal Indonesia free trade agreement

    Australia Financial Review: A long-anticipated free trade agreement with Indonesia will be signed in Jakarta on Monday, ending more than eight years of negotiations and offering new economic opportunities for industries including the country’s citrus farmers. Read more 

    ‘India should cut car tariffs for free trade agreement with EU’

    MENA FM – Gulf Times: The proposed India-EU free trade agreement (FTA) cannot be finalised without an Indian commitment to lower import duties on cars and car parts since this is a politically sensitive issue in the European Union (EU), the EU Ambassador to India Tomasz Kozlowski said in New Delhi on Friday. Read more 

    Mexico pushing labour reform, won’t ratify new NAFTA with U.S. tariffs in place

    CBC: Mexico’s Congress will be asked to approve a major labour reform bill this spring as a necessary step to ratifying the new North American free trade pact later this autumn, say Mexican officials. Read more 

    Trump said trade wars are ‘easy to win.’ A year later, here’s a timeline of what’s happened with China

    CNBC: A year ago, President Donald Trump declared “trade wars are good and easy to win.” The White House has since moved toward its goal of revamping global trade deals, largely through a series of tariffs on — and talks with — China. Read more

    U.S., China Are Close to Trade Deal That May End American Tariffs

    Bloomberg: Most or all U.S. tariffs on China are likely to be lifted as part of a trade deal between the world’s two largest economies now in its final stages, said two people familiar with the discussions. Read more 

    International business engagement key to future of trade, ICC Sec Gen

    ICC: Speaking at a conference on current challenges to global trade in Lisbon this week, International Chamber of Commerce (ICC) Secretary General John W.H. Denton AO said business could not afford to sit on the sidelines when it came to global challenges, including reform of the multilateral trade system. Read more

    Thailand to apply to join trans-Pacific FTA this month: official

    The Mainichi: Thailand will apply this month to join a trans-Pacific free trade agreement, aiming to ensure it is not left behind by its competitors in the vibrant region, according to a senior Thai government official. Read more 

    New Zealand’s Two-way trade with CPTPP countries nears $50 billion

    Scoop New Zealand: New Zealand’s two-way trade with the combined Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) countries was $49.6 billion in the December 2018 year, Stats NZ said today. Read more 

    New push for Asia-Pacific mega deal

    Nikkei Asian Review: Ministers from Asia’s leading economies met here to renew their pursuit of a sweeping regional trade deal as an easing of tensions between the U.S. and China gives momentum to multilateral negotiations. Read more 

    Michel Barnier casts doubt on whether UK will leave EU on March 29

    ITV News: Michel Barnier has indicated he does not believe the UK will have enough time to approve Theresa May’s Withdrawal Agreement by March 29. Read more 

    WTO: India insists on flexibilities in negotiations on fisheries subsidies

    Hindu Business Line: India has insisted that larger developing countries should also be extended flexibilities at the fisheries negotiations of the World Trade Organisation that would allow them to retain some subsidy programmes important for small-scale fishers. Read more

    The Commission reinforces procedural rights of parties in EU trade defence investigations

    EU: The Commission has today updated the terms of reference for the Hearing Officer for trade defence proceedings, the independent watchdog that guarantees fairness and impartiality of EU anti-dumping and anti-subsidy cases. Read more 

    EU and New Zealand complete third round of trade negotiations

    EU: Trade negotiators from New Zealand were in Brussels from 18-22 February 2019 for the third round of negotiations for a trade agreement with the EU. Read more 

    U.S. says rejects WTO’s ‘straitjacket’ of trade obligations

    Reuters: The Trump administration filed another salvo at the World Trade Organization on Friday, saying U.S. trade policy was not going to be dictated by the international body and defending its use of tariffs to pressure China and other trade partners. Read more

    EU grants Ghana €40 million under Economic Partnership Agreement

    Business Ghana: The government has signed a €40-million budget support agreement with the European Union (EU). The grant is to support the country’s national development framework, which focuses on jobs as a means to create prosperity and opportunity for all, thereby contributing to the achievement of the Sustainable Development Goals (SDGs). Read more 

    WTO NEWS

    WTO issues panel report regarding Chinese agricultural subsidies

    WTO: On 28 February the WTO circulated the panel report in the case brought by the United States in “China — Domestic Support for Agricultural Producers” (DS511). Read more 

    Summary of General Council meeting of 28 February 2019

    WTO: Report by the Chairman of the Trade Negotiations Committee and Report by the Director-General. Read more 

    DDG Wolff: More institutional cooperation is needed to address shortages of trade finance

    WTO: Speaking to the Expert Group on Trade Finance at the WTO on 28 February, Deputy Director-General Alan Wolff called on the trade finance community to build on the significant progress in recent years in reducing trade finance gaps in developing countries. Read more 

    DG Azevêdo: “The time is now to confront systemic challenges”

    WTO: At a meeting of the full WTO membership today (27 February), Director-General Roberto Azevêdo commented on the emerging debate on ‘WTO reform’, acknowledging the variety of views held by members and arguing that the trading system must be able to evolve if it is to have a bright future. Read more 

    Tunisia initiates new WTO dispute complaint against Morocco book duties

    WTO: Tunisia has requested WTO dispute consultations with Morocco concerning final anti-dumping duties imposed by Morocco on imports of school exercise books from Tunisia. The request was circulated to WTO members on 27 February. Read more Read more 

    UK set to become a party to the Government Procurement Agreement in its own right

    WTO: Parties to the Government Procurement Agreement (GPA) gave their final approval to the United Kingdom’s accession to the pact, in its own right, once it leaves the European Union. At a meeting of the WTO’s Committee on Government Procurement on 27 February, the GPA parties also agreed to grant Paraguay observer status. Read more 

    EIF strategic plan seeks to help least developed countries gain more from trade

    WTO: A new Strategic Plan launched by the Enhanced Integrated Framework (EIF) seeks to deepen efforts to assist least developed countries (LDCs) benefit from trade. The goals of the new plan are to improve the trade environment for LDCs so there is inclusive and sustainable growth, and to increase their exports and access to international markets. Read more 

    Members consider Thai request for panel to rule on Turkish air conditioner duties

    WTO: At a meeting of the Dispute Settlement Body (DSB) on 25 February, WTO members considered Thailand’s request for the establishment of a dispute panel to rule on duties levied by Turkey on imported Thai air conditioners. Members also renewed their discussions on resolving their differences over the appointment of Appellate Body members and heard from several members regarding their efforts to implement WTO rulings. Read more 

    NEW ON THE CTLD BLOG

    My latest commentary is on future CARICOM-US relations beyond the Caribbean Basin Initiative (CBI): Future CARICOM-US Trading Relations Beyond the Caribbean Basin Initiative. 

    The Caribbean Trade & Development Digest is a weekly trade news digest published by the Caribbean Trade Law & Development Blog. Liked this issue? To read past issues, please visit here. To receive these mailings directly to your inbox, please follow our blog.

  • Future CARICOM-US Trading Relations Beyond the Caribbean Basin Initiative

    Future CARICOM-US Trading Relations Beyond the Caribbean Basin Initiative

    Alicia Nicholls

    A bipartisan bill (HR 991) was recently introduced in the United States (US) House of Representatives proposing to extend the Caribbean Basin Trade Partnership Act (CBTPA), one of the key pieces of legislation comprising the Caribbean Basin Initiative (CBI), to the year 2030. The benefits under the CBTPA are currently due to expire on September 30, 2020, unless extended by a subsequent Act of Congress.

    The CBI has generally been regarded by successive US administrations as being mutually beneficial to both the US and CBI beneficiary countries. However, the current US administration’s greater insistence on reciprocity in its dealings with external trading partners and the on-going re-examination of its current trading arrangements mean that the extension of the CBTPA should not be taken for granted as a fait accompli.

    While this article posits that CARICOM countries should indeed lobby for the CBTPA’s extension, it also proposes that, in the long-term, the region should think strategically beyond the CBI by considering a future CARICOM-US trading relationship which best enhances bilateral trade between the US and CARICOM to foster sustainable and inclusive development.

    The Status Quo: The Caribbean Basin Initiative

    Since 1983, preferential trade between CARICOM countries and the region’s largest trading partner, the US, has been governed largely by the CBI – a unilateral preference scheme of the US government which confers to eligible beneficiary countries non-reciprocal preferential access to the US market for a wide range of goods.

    The CBI was first announced by then US President Ronald Reagan during an address before the Organisation of American States (OAS) on February 24, 1982, to facilitate the economic development and export diversification of Caribbean Basin countries, while also advancing US strategic economic and geopolitical interests in its “backyard”.

    In 1983, the Caribbean Basin Economic Recovery Act (CBERA) was finally signed into law, coming into effect the following year. In 2000, after much lobbying by Caribbean countries, the CBTPA was passed and granted enhanced preferences for eligible textile and apparel from CBI countries on par with those enjoyed by Mexico under the North American Free Trade Agreement (NAFTA). While the CBERA was made permanent in 1990, the CBTPA is scheduled to expire on September 30, 2020.

    Seventeen Caribbean countries and territories are currently CBERA beneficiaries, while seven are eligible for the enhanced CBTPA preferences. Haiti also receives additional benefits for its apparel and textiles under the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act of 2006, the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE II) Act of 2008, and the Haiti Economic Lift Program (HELP) Act of 2010, which are scheduled to expire in September 2025.

    Data in the United States Trade Representative’s Twelfth Report to Congress on the Operation of the Caribbean Basin Economic Recovery Act (December 2017) illustrated that for the years 2012-2016, on average about half of US total imports from CBI countries entered the US market otherwise duty-free. This was followed by imports under CBI tariff preferences which accounted on average for less than a quarter of US total imports from CBI countries. Trinidad & Tobago, Haiti and Jamaica were the top three sources of total US imports from CBI countries.

    CBI: Possible Headwinds

    The USTR report noted a 24% decrease in US consumption imports from beneficiary countries in 2016 compared to 2015, and down 58% from 2006. This decline was attributed to lower petroleum prices and an increase in US domestic petroleum production. US imports from CBI countries declined from 0.5% of total US imports from the world in 2012 to 0.2% of total US imports from the world in 2016. Energy products accounted for 39.3% of US imports under CBI in 2016 and textiles and apparel (primarily Haitian apparel) accounted for 34.9%.

    In an article I wrote on this topic a couple of years ago, I outlined some of the structural deficiencies with the CBI as currently operated which I argued circumscribe its effectiveness at promoting economic development and diversification in beneficiary economies. One of those deficiencies is that the CBI preferences apply to goods only, which over time has arguably lessened its value given the increasing contribution of services trade to Caribbean economies.

    Besides the structural issues inherent in the CBI, its continuation faces some possible political headwinds. The CBERA’s incompatibility with the World Trade Organisation (WTO) rules on non-discrimination and its ineligibility for the ‘enabling clause’ exception mean that the US must seek a waiver from the WTO which must be approved by WTO members. The US’ current WTO waiver for CBERA (inclusive of the CBPTA) is due to expire on December 31, 2019. Given this administration’s greater insistence on reciprocity with its trading partners, as articulated in the 2018 Trade Policy Agenda, it should not be taken for granted that the US will seek a new waiver for CBERA. Moreover, the strong opposition made by some developing WTO members the last time the US sought a waiver means that approval of yet another waiver by the WTO is also not a fait accompli.

    Additionally, the current mercantilist tenor of US trade policy has occasioned a greater insistence on reciprocity and enhanced scrutiny of its trade agreements with countries with which the US has a trade deficit. It is this policy shift which hastened the renegotiation of NAFTA and its renaming to the USMCA. While reports do not indicate that the CBI is under the microscope, the programme’s unilateral nature means that preferences thereunder may be unilaterally varied or ended at any time. This adds some uncertainty for Caribbean exporters.

    One element which might be keeping the CBI out of the current administration’s cross-hairs is that the CBI had immediately led to a spike in US domestic exports to CBI countries (then including other Caribbean Basin economies), peaking at $26 billion in 2005. Although US exports to CBI countries have declined since 2005, the US still enjoys a wide trade surplus with CBI countries – the total value of US exports to CBI countries in 2016 was $10.5 billion, while the total value of US imports to CBI countries in that same year was only $5.3 billion, leading to a US merchandise surplus with CBI countries of $5.1 billion in 2016.

    Indeed, in the statement released by US Representative Terri Sewell (D-AL), one of HR 991’s co-sponsors (the other is Brad Wenstrup (R-OH)), the congresswoman noted, inter alia, that “Extending the U.S. Caribbean Basin Trade Partnership Act will expand the United States’ trade with Caribbean basin countries and increase our nation’s economic growth”.

    CBI: Next Steps

    Let me note that even if the CBTPA is not extended, this does not necessarily affect other components of the CBI programme which in the case of the CBERA is currently ‘permanent’ and with regard to the Haiti-specific preferences are due to expire in September 2025.

    Nonetheless, this is not to diminish the importance of retaining the CBTPA tariff preferences, which still account for an important share of US imports from CBI countries. In 2016, the value of US imports under CBERA was $479 million and $252 million under the CBTPA. For this reason, the best immediate option is for CARICOM countries to step up their lobbying for an extension of the CBTPA. This lobbying effort should, of course, be done in collaboration with the regional private sector, the Caribbean diaspora and friends of the Caribbean in the US Congress. It is in this vein that the closure of the US-based Caribbean Central American Action (CCAA), which did excellent work on behalf of the region in the US, leaves a void which will need to be filled.

    Another issue will be finding ways to increase the rate of utilization by CBI exporters of the CBERA/CBTPA preferences. This is a catch-22, of course, as the current wide US surplus with the region is perhaps the reason why CBI has been outside of the current administration’s crosshairs.

    Nevertheless, US foreign policy has recognised that an economically prosperous Caribbean is in the US’ best interests. The Multi-Year US Strategy for Engagement in the Caribbean, pursuant to the US-Caribbean Strategic Engagement Act of 2016, recognizes this by outlining several broad proposals for improving the trade and investment climate between the US and Caribbean. The mechanism of the US-CARICOM Trade and Investment Council, as provided for under the Trade and Investment Framework, should be used as a forum to discuss the implementation of these proposals and ways to improve CBI beneficiaries’ utilization of the preferences with the view to enhancing their economic development.

    Let me hasten to say, however, that underutilization of the CBI is not simply a product of the structural problems of the initiative, but is symptomatic of the chronic under-utilisation by regional firms of current trade agreements in place between CARICOM and its trade partners. This speaks to wider structural issues prohibiting regional exporters from converting market access into market penetration. For one, navigating the myriad of requirements for exporting to the US under the CBI and other trade preference programmes is not easy for businesses, especially MSMEs which lack scale and have limited resources to interpret and meet the legal and other requirements under these arrangements.

    Beyond CBI: Options for Future CARICOM-US Trading Relations

    Given the CBI’s inherent structural problems and the possible political headwinds which may face the CBTPA’s renewal, CARICOM should seriously consider options beyond the CBI for its future trading relations with its most important partner.

    An appropriate policy response should be evidence-based, that is, backed by sound data, as well as broad-based stakeholder consultations on the way forward. However, at least four options are readily apparent.

    • Trading under WTO MFN conditions

    This is not an attractive (or real) option for CARICOM countries as it would result in regional exporters paying WTO Most Favoured Nation (MFN) rates for goods currently benefiting from CBI tariff preferences, thereby reducing what little margin of competitiveness they currently enjoy in the US market.

    • Trading under the US Generalised System of Preferences (GSP)

    The US GSP was created in 1974 and provides duty-free, non-reciprocal access to the US market for a number of goods from 131 designated beneficiary countries, including 44 Least Developed Countries (LDCs). In March 2018 President Trump signed legislation to renew it to March 2020. Similar to the CBI, the GSP’s unilateral nature still adds an element of uncertainty for traders. The rules of origin under the GSP are also stricter than those under the CBI.

    While some US imports from CBI countries do enter the US market under the GSP, these are much less than those entering otherwise duty-free, under CBI and HOPE Act tariff preferences and under WTO Most Favoured Nation (MFN) terms. Additionally, not all CBI countries are GSP designated countries. For example, Antigua & Barbuda, Barbados and Trinidad & Tobago were graduated and are no longer eligible for preferences under the GSP.

    • Acceding to CAFTA-DR FTA

    Acceding to an existing US FTA, such as the CAFTA DR, may be another possible option. Under Article 22.6 (Accession) of the CAFTA-DR, any country or group of countries may accede to the Agreement “subject to such terms and conditions as may be agreed between such country or countries and the Commission and following approval in accordance with the applicable legal procedures of each Party and acceding country.”

    Acceding to CAFTA-DR would create market access openings for CARICOM exporters not only to the US, but to the other CAFTA-DR parties: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, as well as enhanced market access to the Dominican Republic (with which CARICOM already has an FTA).

    Conversely, there are considerations to be borne in mind. Are the commitments under the CAFTA-DR ones that CARICOM Member States are prepared to undertake and capable of implementing? What would be the possible impact of these market access openings on CARICOM’s most sensitive industries?

    There are also political considerations. With the USMCA signed (but still awaiting ratification by all three governments), the current administration is said to be looking closely at the CAFTA-DR, which means that a possible renegotiation of that agreement at some point cannot be ruled out.

    • Negotiation of a CARICOM-US Free Trade Agreement

    The fourth and perhaps best long-term scenario is the eventual conclusion of a CARICOM-US Free Trade Agreement. As noted in the latest USTR Report on CBERA, eight countries (including the Dominican Republic) are no longer CBERA beneficiaries due to being party to FTAs with the US. Indeed, the aim was for the US to conclude an FTA with CBERA beneficiaries as soon as possible.

    There are possible positives to concluding a CARICOM-US FTA, including gaining preferential access to the US market for CARICOM services providers, and the prospect of negotiating a mutually beneficial and binding trading agreement which provides certainty for exporters from both sides.

    However, there are also some potential downsides. An FTA is reciprocal and binding which means CARICOM Member States will be required to make market access concessions to the US as well. CARIFORUM countries are already struggling to implement commitments made under the CARIFORUM-EU Economic Partnership Agreement which has been provisionally applied since 2008. Some CARICOM governments may also worry about the further erosion of tariff revenue.

    It is also doubtful whether the current US administration (or any future one) would agree to the generous level of special and differential treatment as CARIFORUM was able to negotiate with the European Union (EU) under the CARIFORUM-EU EPA. Negotiating a CARICOM-US FTA will also necessitate reconciling differing levels of ambition and competing interests among CARICOM Member States due to asymmetric development levels and capacity for undertaking commitments.

    Nonetheless, of the four future scenarios presented, this is likely to be the most beneficial option for CARICOM. Any post-CBI CARICOM-US trading arrangement should at the very least be reciprocal (not unilateral), provide for special and differential treatment and development assistance, include gender and environmentally sensitive provisions, include an investment chapter which incorporates recent best practices in investment treaty rule-making which seek to ensure a proper balance between investor rights and States’ regulatory rights, and mandate on-going review and monitoring of the agreement to ensure that it is achieving its objectives. These could be best captured in an FTA.

    Conclusion

    In conclusion, the best immediate option for CARICOM at this moment should be lobbying for the CBTPA’s extension. However, given the flaws inherent in the CBI and the possible headwinds facing the programme’s future continuation, CARICOM policymakers would be advised to keep one eye on lobbying for an extension of CBTPA with the other on a longer term view of what its next steps should be regarding the region’s future trading partnership with its most important trading partner.

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