Tag Archives: Brexit

Caribbean Trade & Development Digest – April 7 – 13, 2019

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Welcome to the Caribbean Trade & Development Digest for the week of April 7-13, 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.

HIGHLIGHTS

In this week’s highlights, the United States Trade Representative (USTR) released a list of Products for Tariff Countermeasures in Response to Harm Caused by EU Aircraft Subsidies. In response, the EU has indicated it aims to put tariffs on $12 billion of US exports.

In Brexit news, the EU granted the Theresa May UK Government a six month extension to October 31, 2019. Read more here.

Trade was a major topic looming over the IMF/World Bank Spring Meetings held this week. The IMF released its April Outlook in which it noted a deceleration in global growth on the back of several factors, including rising trade tensions. Read the Outlook here. Also watch the panel discussion on “How Trade can promote growth for all” here.

The 12th Annual Update on WTO Dispute Settlement, which provided an overview and discussion on WTO dispute settlement cases and developments in 2018, was held this week. Watch the playback here!

REGIONAL NEWS

Trade between GCC, Latin America and the Caribbean hit $16.3b in 2018

Gulf News: Trade flows between GCC countries and Latin America and the Caribbean (LAC) reached $16.3 billion (Dh59.86 billion) in 2018, while the UAE remained a top trading partner in the Gulf region for LAC countries, according to a new report conducted by Inter-American Development Bank (IDB) in cooperation with the Dubai Chamber of Commerce and Industry. Read more 

Consumer and Business Confidence Up in Jamaica

Caribbean360: Consumer and business confidence in the economy have recorded increases for the first quarter of 2019. Read more

Jamaica deepens ties with China

Jamaica Observer: The Government yesterday signed a Memorandum of Understanding with the People’s Republic of China on that country’s Belt and Road Initiative (BRI), to deepen cooperation and partnership between the two nations for economic development. Read more

Guatemala’s Fishing Trade Spells Trouble for Belize

The Reporter: An investigation into Guatemala’s thriving shark fishing industry reveals serious concerns for our country and fisherfolk. In February 2019, a team of investigative journalists from The Reporter traveled to southern Belize, then to Guatemala to evaluate the number and scope of sharks, fish and other marine species poached from Belizean waters and exported to Guatemala. Their findings were startling and it was discovered that this issue has deep roots. Read more 

The Dominican Republic opens plant species and variety registration office

Fresh Plaza: The Ministry of Agriculture opened the Plant Species and Varieties Registration Office (OREVADO), which seeks to guarantee the institutional framework for people who want to develop new varieties of vegetable crops, innovate in the transfer of technology or invest in production, i.e. breeders. Read more 

Dominican Republic leads Caribbean economies

Global Finance: The economy of the Dominican Republic is set to surpass its regional neighbors this year, notching the highest growth in the Caribbean region. The DR has been gaining attention for its ability to maintain steady robust economic growth. In 2018, GDP rose by 7%, and the latest report by the country’s central bank says all industries are expanding—and that its free-trade zones in particular are drawing investment. Read more

Atlantic International Bank maintains innocence in US Federal Trade Commission accusations but faces international ramifications

LoveFM: Atlantic Bank International is currently unable to process wire transfers, in and out, for its overseas customers who are in need of Belize currency. The stoppage in this service is the direct result of the Bank of New York issuing a ban against Atlantic Bank International after the US Federal Trade Commission has roped in Atlantic Bank International as an ally in the Sanctuary Bay multi-million-dollar scheme that saw several US investors lose money in a project that never came to fruition. Read more

CDB Grant Stirs Up Fuss About Regional White Sugar

Jamaica Gleaner: The April 2 announcement of a more than US$97,000 gift from the Caribbean Development Bank, CDB, to Caricom for a study on plantation white sugar has Jamaican manufacturing representatives lining up on different sides of the hot-button issue. Read more 

Govt to build nation’s quality standards system – Sutherland

Barbados Today: “Government considers this goal as urgent, and of very
high priority, in our efforts to enhance the national competitiveness of our local micro-small and medium size (MSMEs) businesses, industries and the promotion of fair trade,” he said. Read more 

CARICOM vital to regional development: Grenada’s new envoy

Caribbean News Service: CARICOM has been an indispensable force, says new envoy. Read more 

Call for Caribbean to speak out

Barbados Today: The Minister for tourism has issued a call for the Caribbean to take a defiant stand against the international community’s imposition of standards on small states – even as his own Government was racing to comply with new financial reporting rules set by a global watchdog. Read more

US report names several Caribbean nations as “major money laundering” centres

Caribbean News Now: In the latest US International Narcotics Control Strategy Report (INCSR), volume two dedicated to money laundering, the report lists all major Caribbean and Central American countries as “Major Money Laundering Jurisdictions” for the year 2018: Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, British Virgin Islands, Cayman Islands, Colombia, Costa Rica, Cuba, Curacao, Dominica, Dominican Republic, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, St Kitts and Nevis, Saint Lucia, St Vincent and the Grenadines, St Maarten, Suriname, Trinidad and Tobago and Venezuela. Read more 

INTERNATIONAL NEWS

Argentine Elections Could Narrow Brazil’s Mercosur Reform Path

Stratfor: Brazilian President Jair Bolsonaro’s push to reform the trade policy of the Common Market of the South (Mercosur) risks collapsing without the support of Argentina. Read more

Ambassadors pave the way for EU-US trade talks, despite French opposition

Euractiv: Europe is set to start trade talks with the US after ambassadors gave their green light on Thursday (11 April) to a proposed mandate for the European Commission to conduct the negotiations on behalf of the 28 EU member countries. Read more

EU27 is now free to hold summits without the UK

Euractiv: The EU27 will be free to hold official Council meetings and make decisions without the UK despite the country still being a member of the Union, in a move seen as a success for France’s President Macron, who led calls for the restrictions. Read more

Tokyo and Washington finally set to kick off trade talks as American farmers fume over poor Japan access

Japan Times: This week, negotiators from Japan and the United States will meet in Washington to address something that U.S. President Donald Trump considers to be long overdue: trade negotiations to open the Japanese market to more American goods. Read more

China-US trade deal could threaten Beijing’s other trading partners, IMF says

South China Morning Post: Any trade deal between China and the United States must comply with multilateral rules, as not doing so may create economic risks for the Asian nation’s other major trading partners, the International Monetary Fund said. Read more 

South Korea WTO appeal succeeds in Japanese Fukushima food dispute

Reuters: South Korea won the bulk of its appeal on Thursday in a dispute at the World Trade Organization over import bans and testing requirements it had imposed on Japanese seafood in the wake of the 2011 Fukushima nuclear disaster. Read more 

China has good reasons to join Pacific Trade pact, but obstacles remain

The Strait Times: If China joined a massive Pacific trade deal, it could create hundreds of billions of dollars in extra income and spur domestic reforms, say analysts, but signing up would be far easier said than done. Read more 

China, US could win big on no-deal Brexit: UN

France24: If Britain leaves the EU without a deal, the bloc and Britain’s smaller trading partners stand to lose big, but Beijing and Washington could reap huge benefits, the UN said Tuesday. In a fresh report, the UN Conference on Trade and Development (UNCTAD) examined what repercussions it would have for Britain’s trading partners if the country crashes out of the European Union without a deal. Read more 

Commission releases detailed information on requirements for EU goods exported to the UK in case of a hard Brexit

EU: The European Commission has included in its Market Access Database detailed information on the rules that the UK would apply on its imports from the EU in the event of a hard Brexit. It is based on information made publicly available by the United Kingdom authorities. Read more

EU foreign investment screening regulation enters into force

EU: The new EU framework for the screening of foreign direct investments has officially entered into force on 10 April 2019. The new framework is based on proposal tabled by the European Commission in September 2017 and will be instrumental in safeguarding Europe’s security and public order in relation to foreign direct investments into the Union. Read more

India reduces trade deficit with China by $10 billion in FY19

CNbcTV: India’s trade deficit with China fell by $10 billion to $53 billion in FY19 on the back of lower imports, officials told CNBC-TV18. The downtick in the merchandise trade gap was also aided by new market opportunities arising out of the US-China trade war in the neighbouring nation. Read more 

India’s trade ministry says no legal basis to ban e-cigarette imports

Economic Times: India’s trade ministry says it cannot impose a ban on electronic cigarette imports as there is no legal basis for doing so, an internal government memo viewed by Reuters shows, in a boost for those looking to tap into the country’s growing vaping market. Read more 

Africa’s new free trade area faces bumpy road to full implementation

Global Trade Review: The Gambia has become the 22nd nation to ratify the African Continental Free Trade Area (AfCFTA), the number required for the agreement to take effect. While this marks a significant step towards the continent’s ambition to create a single market, the free trade area will face a bumpy road to full implementation. Read more 

Why no-deal Brexit could be a win for South Africa

Business Tech: A no-deal Brexit could damage smaller economies trading with the United Kingdom (UK) – but bring substantial gains for China and other trading partners such as South Africa. Read more 

A US-EU trade war would be a political and economic mistake, says French finance minister

CNBC: With global growth already slowing down, starting a trade war now between the U.S. and the European Union would be both a political and economic mistake, French Finance Minister Bruno Le Maire said Thursday. Read more 

Brexit: UK and EU agree delay to 31 October

BBC: European Union leaders have granted the UK a six-month extension to Brexit, after late-night talks in Brussels. The new deadline – 31 October – averts the prospect of the UK having to leave the EU without a deal on Friday, as MPs are still deadlocked over a deal. Read more

EU Commission split on fertiliser anti-dumping duties

Independent: A serious spat involving two arms of the EU Commission has erupted over attempts by the fertiliser industry to have anti-dumping duties imposed on liquid urea ammonium nitrate (UAN). Read more 

EU-U.S. Trade War Escalates Over Disputed Aviation Subsidies

Bloomberg: The European Union is preparing retaliatory tariffs against the U.S. over subsidies to Boeing Co., significantly escalating transatlantic trade tensions hours after Washington vowed to hit the EU with duties over its support for Airbus SE. Read more

Report to Congress on China’s Engagement with Latin America and the Caribbean

The following is the April 11, 2019 Congressional Research Service Insight report, China’s Engagement with Latin America and the Caribbean. Read more 

EU aid increases, bucking global trend

Euractiv: Development aid spending by EU members saw a slight increase to $87 billion in 2018 (€77 billion) compared to 2017, according to new data published by the Organisation for Economic Co-operation and Development (OECD). Read more 

WTO NEWS

VACANCY: Young Professionals Programme – Apply by April 15, 2019

The WTO Young Professionals Programme was launched in 2016 as an opportunity for qualified young professionals from developing and least-developed countries that are members of the WTO to enhance their knowledge regarding WTO and international trade issues. Read more 

WTO’s Trade Policy Review Mechanism turns 30

The WTO marked on 12 April the 30th anniversary of the Trade Policy Review Mechanism (TPRM), which over the last three decades has contributed to ensuring and facilitating the smooth functioning of the multilateral trading system by enhancing the transparency of WTO members’ trade policies. Read more 

Registration opens for screening of second compliance panel meeting in “EC — Large Civil Aircraft”

At the request of the parties in the dispute “European Communities and Certain Member States — Measures Affecting Trade in Large Civil Aircraft: Recourse to Article 21.5 of the DSU by the European Union and Certain Member States” (DS316), the panel has decided to invite officials of WTO Members and Observers, and the general public, to view a recording of its substantive meeting with the parties and consenting third parties. The public viewing will take place at the WTO headquarters in Geneva on 13 May 2019. Read more 

DG Azevêdo: rules-based trading system is “irreplaceable” but must be ready to evolve

At a speech delivered to the Peterson Institute in Washington DC on 11 April, Director-General Roberto Azevêdo underlined the critical importance of the WTO to the stability and predictability of the global trading system. At the same time “it is clear that the WTO has to be better, faster and more responsive” to the challenges facing the organization and the system as a whole. Read more 

WTO hosts closing ceremony of Model WTO 2019

Over 70 students from around the world came to the WTO’s headquarters on 11 April for the conclusion of Model WTO 2019, a week-long simulation of WTO negotiations organized by a group of students from the University of St. Gallen with the support of the WTO. Read more

WTO establishes panel to review Turkish duties on Thai air conditioners

At a meeting of the Dispute Settlement Body (DSB) on 11 April, WTO members agreed to Thailand’s request for the establishment of a dispute panel to rule on duties levied by Turkey on imported Thai air conditioners. Members also considered Russia’s request for a panel regarding European Union anti-dumping duties on Russian steel products and formally adopted the compliance panel and Appellate reports in the EU’s complaint against US subsidies for Boeing. Read more

Appellate Body issues report regarding Korean restrictions on Japanese food imports

On 11 April the Appellate Body issued its report in the case brought by Japan in “Korea — Import Bans, and Testing and Certification Requirements for Radionuclides” (DS495). Read more

WTO, IMF and World Bank leaders stress vital role of trade in reducing poverty

Director-General Roberto Azevêdo joined with IMF Managing Director Christine Lagarde and World Bank CEO Kristalina Georgieva on 10 April to argue for renewed efforts to leverage trade as a force to reduce poverty. DG Azevêdo argued that the current trade tensions could undermine recent progress in tackling poverty. “We cannot afford to go down this path,” he said. The three leaders were speaking at a joint WTO-IMF-World Bank event in Washington DC titled “Beyond Uncertainty: Leveraging Trade to Reduce Poverty”, held alongside the World Bank-IMF Spring meetings. Read more 

EU initiates WTO dispute complaint against Turkish measures affecting pharmaceuticals

The European Union has requested dispute consultations with Turkey regarding various requirements imposed by Turkey on the production, import and approval for reimbursement, pricing and licensing of pharmaceutical products. The request was circulated to WTO members on 10 April. Read more 

Trade Policy Review: Samoa

The first review of the trade policies and practices of Samoa takes place on 10 and 12 April 2019. The basis for the review is a report by the WTO Secretariat and a report by the Government of Samoa. Read more 

CTLD BLOG NEWS

Read my latest article with Dr. Jan Yves Remy, Deputy Director of the University of the West Indies’ Shridath Ramphal Centre for International Trade Law, Policy & Services exploring the issue of special and differential treatment in the World Trade Organization from a Caribbean perspective Special and Differential Treatment at the WTO: A Caribbean Perspective.

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.

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UK-CARIFORUM Economic Partnership Agreement: What does it all mean?

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Alicia Nicholls

On March 22, 2019, the United Kingdom of Great Britain and Northern Ireland (UK) and nine of the fifteen States comprising the Caribbean Forum (CARIFORUM), a subgroup of the African, Caribbean and Pacific (ACP) countries, signed the CARIFORUM-UK Economic Partnership Agreement (CARIFORUM-UK EPA)  which seeks to ensure that the current trade preferences between the UK and CARIFORUM remain after the UK’s departure from the European Union (EU).

This makes CARIFORUM one of nine trading partners with which the UK has to date successfully concluded a trade continuity agreement. This development has been widely welcomed by businesses and private sector associations in the Caribbean. But why was the CARIFORUM-UK EPA necessary and what does it provide for?

The CARIFORUM-UK EPA is between the United Kingdom of Great Britain and Northern Ireland on the one hand, and the fifteen CARIFORUM States (Antigua & Barbuda, The Bahamas, Barbados, Belize, the Commonwealth of Dominica, The Dominican Republic, Grenada, The Republic of Guyana, Jamaica, St. Kitts & Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname and Trinidad & Tobago), on the other.

Nine of the CARIFORUM countries (Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Kitts & Nevis, St. Lucia and St Vincent and the Grenadines) signed the Agreement on March 22, 2019 at a signing ceremony in Castries, St. Lucia. Two other CARIFORUM States, Trinidad & Tobago and the Dominican Republic, signed on April 1, 2019 and on April 4, 2019, respectively. The remaining CARIFORUM States have indicated they will sign shortly.

Why is the CARIFORUM-UK EPA necessary?

The UK is currently due to leave the EU on April 12, 2019, unless a further extension to June 30, 2019 requested this week by the UK government is granted by the EU-27.  Until the UK officially leaves the EU, the UK’s trade relations with the fifteen CARIFORUM countries remain governed by the CARIFORUM-European Union Economic Partnership Agreement (CARIFORUM-EU EPA) which was signed and has been provisionally applied since 2008.

The CARIFORUM-EU EPA provides for the asymmetric liberalization of trade between the EU and CARIFORUM States. This includes duty-free and quota-free goods access, preferential access for services providers and investors, and protection for intellectual property. It also includes disciplines relating to government procurement and competition, for example, as well as extensive development cooperation provisions.

When the UK ceases to be an EU member, the CARIFORUM-EU EPA will continue to apply between CARIFORUM States and the remaining EU-27. However, the UK will no longer be party to any of the EU’s trade agreements with third parties, including the CARIFORUM-EU EPA. In the absence of a trade continuity agreement, trade between the UK and CARIFORUM would revert to World Trade Organization (WTO) Most Favoured Nation (MFN) rules. This would have implications for businesses, services providers and investors in the UK and CARIFORUM States dependent on the preferential market access provided for by the CARIFORUM-EU EPA.

A great summary of current CARIFORUM-UK economic relations may be found in the report prepared by the Secretary of State for International Trade for the UK Parliament. According to statistics from the UK Office of National Statistics (ONS) cited in that report, total goods and services trade between the UK and CARIFORUM States (excluding Haiti) accounted for 0.2% of total UK trade and was £2.5 billion in 2017.

Although there has been a steady decline in CARIFORUM-UK trade over time, the UK currently remains the main market for CARIFORUM exports to the EU. For example, it is a major market for Caribbean rum, banana and sugar exports. Additionally, the UK remains an important source market for tourists to the Caribbean and in the case of Barbados, remains that country’s largest source market for tourist arrivals and real estate foreign direct investment (FDI).

To avoid any disruption in trade and to create some modicum of certainty for UK and CARIFORUM businesses and consumers once the UK leaves the EU, the UK and CARIFORUM promptly commenced dialogue on the conclusion of a trade continuity agreement that would replicate the provisions of the CARIFORUM-EU EPA, to the extent possible.

What does the CARIFORUM-UK Agreement include?

The CARIFORUM-UK EPA, whose main text comprises seventy-six pages, replicates to the extent possible, the text of the CARIFORUM-EU EPA. The previously mentioned Parliamentary Report provides an excellent synopsis of the Agreement, including the necessary differences between the CARIFORUM-UK EPA and CARIFORUM-EU EPA.

Where necessary, the CARIFORUM-UK EPA has removed and replaced references to the EU in the text,  provided for the continuation of time-bound periods, as well as limited the territorial scope of the Agreement to the CARIFORUM States and to the United Kingdom, its Crown Dependencies and Gibraltar.

The CARIFORUM-UK EPA will only take effect once the UK has left the EU. Similar to the CARIFORUM-EU EPA, the CARIFORUM-UK EPA provides for provisional application which allows it to be provisionally applied before all the parties have done the necessary domestic ratification steps to allow for the Agreement’s entry into force.

Additionally, the CARIFORUM-UK EPA provides a safeguard in the event of a ‘no-deal’ Brexit. A non-legally binding MoU between the UK and participating CARIFORUM countries aims to stop the gap between the date the CARIFORUM-EU EPA ceases to apply to the UK until the date when the CARIFORUM-UK EPA takes effect. Under this MoU, the parties will use their best endeavours to bring the CARIFORUM-UK EPA into effect as between them within three months of the MoU’s coming into effect, during which time the UK will apply the tariff schedule laid out under the CARIFORUM-UK EPA to those CARIFORUM States which have signed both the CARIFORUM-UK EPA and the MoU. So far, the UK has signed an MoU with the original nine CARIFORUM signatories and another MoU with Trinidad & Tobago.

Since the CARIFORUM-EU EPA’s signature in 2008, many developments have impacted on rule-making in trade agreements. Like the CARIFORUM-EU EPA, the CARIFORUM-UK Agreement includes mechanisms for monitoring the Agreement’s implementation, as well as a revision clause allowing for the parties to broaden or amend the Agreement, including the possibility of bringing the UK’s British Overseas Territories within the scope of the Agreement.

The institutions under the CARIFORUM-EU EPA have been replicated in the CARIFORUM-UK EPA. For example, it establishes a Joint CARIFORUM-UK Council responsible for the Agreement’s implementation and operation, as well as a CARIFORUM-UK Trade and Development Committee to assist the Joint Council. Two joint institutions (namely, the Special Committee on Agriculture and Fisheries and the Technical Sub-Committee on Development Cooperation), which had been established after the CARIFORUM-EU EPA’s signature, are directly included through dedicated articles in the CARIFORUM-UK EPA’s text.

What does it all mean?

As of the date of this article’s publication, the UK still remains an EU member. The original Brexit Day (March 29, 2019) has passed and the extension date of April 12, 2019 is fast approaching. In light of British MPs’ rejection of the Draft Withdrawal Agreement for the third time and no clear consensus among MPs on what they believe the future EU-UK relationship should be, the UK Government has asked for a further extension to June 30, 2019. As it stands, the threat of a ‘no-deal’ Brexit still remains a real possibility.

In light of the current Brexit chaos, CARIFORUM countries’ conclusion of a trade continuity agreement with the UK was a prudent move to preserve continuity and certainty for our businesses, consumers and investors. The CARIFORUM-UK EPA will only take effect once the UK leaves the EU and until such time, CARIFORUM-UK trade relations will remain covered by the CARIFORUM-EU EPA. Indeed, it could be regarded as an insurance policy of sorts – providing peace of mind and only used if and when needed.

The text of the CARIFORUM-UK Economic Partnership Agreement may be found  online here, while the Parliamentary Report which provides a good synopsis may be found here.

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.

Text of UK-CARIFORUM EPA Published

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Alicia Nicholls

The text of the United Kingdom-CARIFORUM Economic Partnership Agreement (UK-CARIFORUM EPA) has finally been published online. Whether you are a trade policy nerd or simply a business person concerned about the continuity of trade preferences between the UK-CARIFORUM countries post-Brexit, you would be forgiven for anxiously awaiting the release of the text.

Brexit Day (which was to have been March 29, 2019) has passed and the UK remains an EU member and no closer to any certainty regarding its future trading relationship with the EU-27 post-Brexit.  The UK government has requested a further extension to June 30, 2019 in hopes of getting British MPs to back the Draft Withdrawal Agreement which they rejected three times already.

Brexit chaos aside, on March 22, 2019, it was announced that the UK and CARIFORUM countries had signed a trade continuity agreement called the UK-CARIFORUM Economic Partnership Agreement which would preserve the preferences between the UK and CARIFORUM currently under the CARIFORUM-EU EPA. The CARIFORUM-EU EPA has been provisionally applied since 2008.

This means that CARIFORUM is one of the handful of trading partners with which the UK has managed to so far conclude trade continuity agreements. The UK is the most important trading partner in the EU for CARIFORUM countries and CARIFORUM leaders quickly recognised the need to ensure the continuity of trading conditions post-Brexit between the UK and CARIFORUM States.

The UK-CARIFORUM EPA was signed by the UK and nine CARIFORUM States (Barbados, Belize, The Commonwealth of Dominica, Grenada, The Republic of Guyana, Jamaica, St. Christopher & Nevis, St Lucia and St Vincent and the Grenadines) on March 22, 2019. Trinidad & Tobago signed on April 1, 2019, while the remaining CARIFORUM States have indicated they will sign shortly.

As it currently stands, UK-CARIFORUM trading relations remain governed by the CARIFORUM-EU EPA, and the UK-CARIFORUM EPA is only expected to take effect once the CARIFORUM-EU EPA no longer applies to the UK. For it to enter into force, ratification will be needed by each of the parties. The Agreement’s utility stems from the fact that it ensures the continuity of preferential trading relations between the UK and CARIFORUM States once the UK leaves the EU, particularly in the case of a no-deal Brexit.

The UK-CARIFORUM Economic Partnership Agreement replicates the provisions of the CARIFORUM-EU EPA to the extent possible, including its development cooperation provisions. It also establishes a Joint CARIFORUM-UK Council with responsibility for implementing the Agreement, as well as a CARIFORUM-UK Trade and Development Committee. For further information, please feel free to read my commentary on it here: UK-CARIFORUM Economic Partnership Agreement: What does it all mean?

The text of the UK-CARIFORUM Economic Partnership Agreement may now be found  online here.

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.

 

‘Brexit Plan B’: Key Points from PM May’s Speech

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Alicia Nicholls

After suffering a historic and crushing rejection  of her Draft Withdrawal deal in the House of Commons and barely surviving a no confidence vote brought by the Leader of the Opposition last week, United Kingdom (UK) Prime Minister Theresa May today outlined her ‘Brexit Plan B’ in the House of Commons.

Prime Minister May is in the unenviable position of having to formulate an alternative Brexit Plan which secures the support of MPs of diverging views on the way forward for Brexit, and which would be palatable to the EU. All the while the clock continues to tick on the UK’s scheduled departure from the EU on March 29, 2019, now less than seventy days away. In an effort to break the Brexit impasse, Mrs. May has been holding talks with leaders of the major parties in Parliament.

Prime Minister May noted that in light of Parliament’s overwhelming rejection of the current withdrawal agreement, it was clear that the Government’s approach had to change. But has it?

Here are the key points from Prime Minister May’s address:

  1. While the Prime Minister noted that a ‘no deal’ Brexit should be avoided, she did not explicitly rule it out as an option. Labour Leader, Jeremy Corbyn, has indicated he would not participate in talks with the Prime Minister, unless the ‘no deal’ option is off the table.
  2. Prime Minister May, however, explicitly ruled out the revocation of Article 50 of the Treaty on European Union (TEU) as an option, saying doing this would go against the referendum result of June 23, 2016.
  3. Prime Minister May also ruled out seeking an extension of Article 50 of the TEU, doubting that the EU-27 would agree to any such extension.
  4. She again stated her opposition to a second referendum saying it would set a dangerous precedent for how referendums are handled in the UK. She noted that it would also require an extension of Article 50 and could damage social cohesion in the UK by undermining faith in their democracy. She also doubted there was a majority in the House for a second referendum.
  5. She has promised a more ‘flexible, open and inclusive’ approach in how her Government engages Parliament in the negotiation of the UK’s future partnership with the EU. The Government will consult the Parliament on its negotiating mandate for the next phase of negotiations.
  6. She also promised a more consultative approach, and greater engagement with the devolved administrations, elected representatives in Northern Ireland and regional representatives in England, businesses, civil society and trade unions.
  7. She emphasized that the UK’s exit from the EU should not erode the UK’s protection for environment standards or workers rights and that they would support the proposed amendment to the meaningful vote that Parliament should be able to consider any changes in these areas made by the EU.
  8.  In perhaps the only major policy change of note, Prime Minister May noted that her Government will scrap the £65 fee for EU nationals resident in the UK to register to remain in the UK following Brexit. Those who apply in the pilot phase will have their fees reimbursed. She recommitted to EU nationals resident in the UK continuing to access benefits in the UK both in a deal and no deal scenario.
  9. With regard to the controversial Irish backstop option in the current Withdrawal Agreement, Prime Minister May vaguely noted that her Government will work to identify how they could ensure that they respect the terms of the Belfast Agreement and their commitment to no hard border between Northern Ireland and the Republic of Ireland in such a way that commands the support of the parliament and the EU.

In substance, there was little difference between Prime Minister May’s Plan A and the Plan B outlined. Members of Parliament will vote on the Plan B on January 29, 2019, which would pretty much be the same as the Plan A which they so soundly rejected by 230 votes last week.

The next phase will be continued discussions between Mrs. May and MPs and other stakeholders, which would (or should) inform Mrs. May’s re-engagement with the EU on the way forward.  The uncertainty continues, but it appears that a ‘no deal Brexit’ is increasingly more likely. This also comes against the backdrop of the International Monetary Fund’s downward revision of its global growth forecast, warning today (and not for the first time) that a ‘no deal Brexit’ was a major risk for the global economy.

The text of Prime Minister May’s speech may be read here.

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.

Brexit Withdrawal Agreement Overwhelmingly Rejected by British MPs

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Alicia Nicholls

With just over seventy days to go before the United Kingdom’s (UK) impending withdrawal from the European Union (EU) on March 29, 2019, British Members of Parliament (MPs) in the House of Commons voted overwhelmingly against the current Draft Withdrawal Agreement negotiated by Prime Minister Theresa May’s government. With only 202 MPs voting in favour and 432 voting against the deal, the 230 margin of defeat represents the worst legislative defeat inflicted on a British Government in modern history.

The vote, termed the ‘meaningful vote’, was highly anticipated. Originally scheduled for last December, Prime Minister May had postponed the vote at the last minute in the face of overwhelming opposition to the current deal, particularly the fall-back provisions on the Northern Ireland/Ireland Border – the so-called ‘backstop’. In the interim, Mrs. May unsuccessfully sought to obtain greater concessions from the EU in order to assuage skeptics, including those in her own party. However, the EU had been adamant that the  500-page Draft Withdrawal Agreement was not open for renegotiation.

Indeed, the reaction by the EU to the outcome has been swift. In a statement released immediately thereafter, President of the EU Commission, Jean Claude Juncker, lamented that “the risk of a disorderly withdrawal of the United Kingdom has increased with this evening’s vote.” President Juncker further reiterated that “the Withdrawal Agreement is a fair compromise and the best possible deal. It reduces the damage caused by Brexit for citizens and businesses across Europe. It is the only way to ensure an orderly withdrawal of the United Kingdom from the European Union.”

In her remarks after the outcome, Mrs. May lamented that the vote gave no indication of what the Parliament does support. She promised to continue her pursuit of Brexit as instructed by the British people in their referendum result of 2016. She has again ruled out a second referendum. However, her future appears to be in the balance. Labour leader, Jeremy Corbyn, who has called for a general election, has immediately tabled a motion of no confidence which will be debated tomorrow. In December, Mrs. May survived a no confidence motion within her own party.

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 & Development Digest – January 1 – 13, 2019

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Happy New Year! Welcome to the first Caribbean Trade & Development Digest for 2019! We do hope you all had an enjoyable holiday season! In this first edition for 2019, we are happy to bring you the latest trade and development news and analysis for  January 1-12, 2019! 

THIS WEEK’S HIGHLIGHTS

US and Chinese negotiators met in Beijing from January 7-9 for their first round of US-China trade talks since their declaration of a 90-day tariff truce in December last year. The US-China talks have been hailed as positive by both sides, but the two economic behemoths are still a long ways off from resolving their long-simmering trade differences. The USTR statement released following the conclusion of the talks may be read here, while a translated version of the statement released by China is available here.

While welcomed, the truce may be “too little, too late”. In its Global Economic Prospects – January 2019 report, ominously titled ‘Darkening Skies’, the World Bank has warned of a darkening outlook for the global economy in 2019 in the face of still elevated trade tensions and softening global trade and investment.

The Brexit chaos continues…The British House of Commons MPs last week voted to require the Prime Minister to present to Parliament a ‘Plan B’ within three-days if MPs reject the current Draft Withdrawal Agreement in their upcoming vote this Tuesday (January 15th). Labour Leader Jeremy Corbyn is calling for a general election to break the Brexit ‘deadlock’.

Regionally, Prime Minister of St. Kitts & Nevis, Dr. The Hon. Timothy Harris, has assumed chairmanship of CARICOM (January – June 2019) under the grouping’s rotating chairmanship. Dr. Harris’ New Year’s message as incoming chairman may be viewed here.

The CARICOM divide on the question of Venezuela has widened as some CARICOM Member States voted in favour of, and some against, an OAS Permanent Council resolution to not recognise the second term of Venezuelan President, Nicolas Maduro. Some CARICOM Member States abstained.

Several Caribbean offshore financial centres, including some British Overseas Territories, have been included in a blacklist by the Government of the Netherlands. The backlash by the countries unfairly named has been swift.

Below are the other major trade and development headlines from across the Caribbean region and the world for last week:

REGIONAL

Jamaica takes action to safeguard energy security

JIS News: In an effort to safeguard Jamaica’s energy security, the Government will take legislative action to retake ownership of the 49 per cent shares in Petrojam, which is held by the Venezuelan state-owned oil and natural gas company, PDV Caribe. Read more 

Joining WTO no ‘snap election’ decision

Tribune242: Jeffrey Beckles, the newly-appointed Chamber of Commerce chief executive, told Tribune Business that deciding whether or not it was in The Bahamas’ best interests to become a full World Trade Organisation (WTO) member was a decision that will impact all citizens “for the rest of our lives”. Read more

‘Buy Bahamian’ best defence under WTO

Tribune242: Zhivargo Laing, pictured, speaking as he unveiled The Bahamas’ initial goods and services offers that kickstarted the process of accession to full WTO membership, conceded that Bahamian manufacturers and other vulnerable industries would face intense pricing and other competitive pressures if they lost their existing tariff protection as a result. Read more 

Dutch blacklist unjustified diversion tactic

Caribbean News Now: The Cayman Islands government has accused The Netherlands of including the British territory on its separate blacklist as a way of diverting criticisms of its own tax practices by attacking legitimate tax regimes. Read more 

Regional trade with the US

Trinidad Guardian: T&T exporters to the US could lose up to US$400 million in special tariff benefits next year if the Caribbean Basin Trade Partnership Act (CBTPA) fails to be renewed when it crosses US President Donald Trump’s desk this year, senior trade consultants calculated last week. Read more 

Cuba to expand facilities for foreign trade

Caribbean News Now: Cuba will develop an integrated digital platform this year in order to facilitate foreign trade operations, which will be linked to the simplification of procedures for the export and import of goods. Read more 

Jamaica’s trade deficit with CARICOM widens

Jamaica Gleaner: Jamaica’s trade deficit with the Caribbean Community, (CARICOM), increased to US$351.2 million during the period January to October last year, according to the figures released by the Statistical Institute of Jamaica (STATIN). Read more 

EU provides millions in budgetary support to Montserrat

Caribbean360: The European Union has disbursed EC$17.55 million (US$6.5 million) to the Government of Montserrat as the first fixed tranche under the Multi Sector Sustainable Economic Development Budget Support Programme. Read more 

CARICOM remains divided on Venezuela

TV6: The Bahamas, Jamaica, Guyana, Haiti and St. Lucia supported an Organization of American States (OAS) resolution not recognising the legitimacy of Maduro’s second term as president of Venezuela, while Dominica, St. Vincent and the Grenadines and Suriname voted against the measure. Read more 

Venezuela plans to remap its offshore oil territory

Yahoo Finance: Venezuela will remap its Caribbean oil and gas prospects in a move that could further stoke a century-long border dispute with Guyana and collide with Exxon Mobil Corp.’s venture in the region, people with knowledge of the plan said. Read more

PM Skerrit wants a united approach to investment programme

Jamaica Gleaner: Prime Minister Roosevelt Skerrit has criticised the Organisation for Economic Cooperation and Development (OECD) for labelling several Caribbean countries as tax havens and called for a unified regional approach to deal with the Citizenship by Investment Programme (CBI). Read more 

Ross University Opens in Barbados and Officials Say the Spin-offs Will Benefit Local Education

Caribbean360: The opening of the Ross University School of Medicine’s main campus in Barbados is expected to bring with it a number of benefits to local health care and education. Read more 

Global coconut profile opening huge opportunity for Caribbean economies. But will they seize it?

Stabroek: What is being regarded globally as a breakthrough period for the coconut industry linked to skyrocketing demand for coconut water, oil and other products is being regarded as an opportunity for the region which it cannot afford to pass up. Read more 

Gonsalves reiterates call for unity 

Jamaica Gleaner: Prime Minister Dr Ralph Gonsalves yesterday reiterated a call for the Caribbean Community (Caricom) to adopt a united position regarding the European Union’s request that regional countries pass legislation to deal with what Europe has termed ‘economic substance”. Read more 

Sir Dennis praises Caribbean Court of Justice’s achievements

St Kitts & Nevis Observer: Former President of the Caribbean Court of Justice (CCJ), the Right Honourable Sir Dennis Byron, a native of St. Kitts and Nevis, has praised the accomplishments of the Trinidad-based court, which was established in 2005 to replace the London-based Judicial Committee of the Privy Council as the region’s final court and to function as an international tribunal interpreting the Revised Treaty of Chaguaramas that governs the regional integration movement. Read more 

INTERNATIONAL

Juncker hints at helping out Theresa May over Brexit deal 

The Guardian: has signalled that he will offer a last-minute helping hand to Theresa May in her bid to get her Brexit deal passed by MPs – but hinted at deep scepticism in Brussels at her chances of success. Read more

Macron vows to exclude UK creative industries from future EU deal 

Sunday Express: French President Emmanuel Macron has pledged to restrict market access to the European Union’s markets for Britain’s creative industry in order to protect “cultural diversity” in France. Read more 

US Recession Risks Hit Six-Year High Amidst Trade War and Shutdown 

Bloomberg: Economists put the risk of a U.S. recession at the highest in more than six years amid mounting dangers from financial markets, a trade war with China and the federal-government shutdown. Read more 

Air freight demand flat in November 

IATA: The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), was flat (0%) in November 2018, compared to the same period the year before. This was the slowest rate of growth recorded since March 2016, following 31 consecutive months of year-on-year increases. Read more 

Beijing says latest US-China trade talks were extensive, made progress on forced tech transfers

CNBC: In a Thursday morning statement, China’s Commerce Ministry said the just-concluded round of trade talks with the U.S. were extensive and established a foundation for the resolution of each others’ concerns. Read more 

What is stopping India from joining RCEP trade deal?

Economic Times: If you have been paying attention to developments in global trade, you would already know that the contours of what is poised to become the world’s largest trading bloc is taking shape. India and 15 other nations in Asia and Asia-Pacific regions have been working to sew up contentious remaining areas, forge an agreement and put in place a deal by the end of 2019.  Read more

Design of single African Union passport for all to be unveiled this year

Euronews: The African Union (AU) is set to reveal the design of a passport for all countries, bringing the continent one step closer to completely free movement. Read more

US and China wrap up trade talks in Beijing. What happens next?

CNN: US and Chinese negotiators wrapped up three days of trade talks in Beijing on Wednesday as they seek a way out of the damaging trade war between the world’s two biggest economies. Read more 

New database of all subsidies investigated by EU

EU: The European Commission has made a new database of all its anti-subsidy investigations available on the DG Trade website. Read more

Storm Clouds are brewing for the global economy

World Bank: Growth in emerging market and developing economies is expected to remain flat in 2019. The pickup in economies that rely heavily on commodity exports is likely to be much slower than hoped for. Growth in many other economies is anticipated to decelerate. Read more 

WTO seeks to ban government raids on corporate data

Nikkei Asian Review: As countries such as China tighten control over information flowing across their borders, a group of World Trade Organization members led by the U.S., the European Union, Japan, Singapore and Australia will propose rules that prohibit excessive interference by governments into business-related data. Read more 

Carr to rejoin ‘like-minded’ for next talks on WTO reform at Davos

CBC (Canada): International Trade Diversification Minister Jim Carr’s office has confirmed he’s attending the next gathering of 13 members of the World Trade Organization looking to reform the institution in the face of ongoing threats to the rules-based multilateral trading system. Read more 

Europe ready to help with WTO reform

The Atlantic: A multilateral effort needs to be made to save the World Trade Organization (WTO), the European Union’s Commissioner for Trade Cecilia Malmström said at the Atlantic Council in Washington on January 10, noting that the twenty-four-year-old intergovernmental body to regulate international trade is “under increasing pressure.” Read more 

Brexit: Jeremy Corbyn demands election to ‘break deadlock’

BBC: Labour leader Jeremy Corbyn has stepped up calls for a general election “at the earliest opportunity” to “break the deadlock” over Brexit. Read more 

WTO NEWS

Philippines launches safeguard investigation on ceramic floor and wall tiles

WTO: On 11 January 2019, the Philippines notified the WTO’s Committee on Safeguards that it had decided to initiate on 20 December 2018 a safeguard investigation on ceramic floor and wall tiles. Read more

Venezuela initiates WTO dispute complaint against US measures on goods and services

WTO: Venezuela has requested WTO dispute consultations with the United States regarding US measures affecting goods and services of Venezuelan origin. Venezuela’s request was circulated to WTO members on 8 January. Read more

Turkey launches safeguard investigation on yarn of nylon or other polyamides

WTO: On 3 January 2019, Turkey notified the WTO’s Committee on Safeguards that it initiated on 30 December 2018 a safeguard investigation on yarn of nylon or other polyamides. Read more 

Madagascar launches safeguard investigation on detergent powder

WTO: On 7 January 2019, Madagascar notified the WTO’s Committee on Safeguards that it had decided to initiate on 31 December 2018 a safeguard investigation on detergent powder. Read more

NEW ON THE CTLD BLOG

In Has Canada become Collateral Damage in the US-China Trade War?, our frequent blog contributor, Renaldo Weekes, explores the case involving the arrest of Huawei’s CFO and whether Canada is an unwitting casualty of the US-China trade war.

Have a read of my first blog for the year, Global Trade Policy in 2019: What to Watch?taking a look at the major trade policy news from 2018 and what we’ll be keeping an eye on for 2019!

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.

‘No Deal’ Brexit Scenario Increasingly Likely: What does this mean for CARIFORUM-UK Trade?

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Alicia Nicholls

The countdown is on. With 100 days to go before the United Kingdom’s (UK) scheduled withdrawal from the European Union (EU), and the ratification of the Draft Withdrawal Agreement less likely, both sides have this week announced contingency plans for a ‘No-Deal Brexit’. What do these recent developments mean for CARIFORUM-UK trade, not just at the policy level, but at the firm level as well?

It has been a busy week in Brexit news. After delaying the House of Commons vote on the Draft Withdrawal Agreement which was scheduled for December 11th, UK Prime Minister Theresa May this week announced that the promised vote will be held the week of January 14, 2019. In the interim, Mrs. May will be seeking to obtain additional legal assurances from the EU-27 that the deal’s ‘backstop’ provision would not keep the UK in a customs union with the EU indefinitely.

UK and EU Brexit Contingency Plans Underway

However, in recognition of an increasingly likely ‘no deal’ scenario, the May Government also announced plans to, inter alia, put 3,500 troops on standby, allocate monies from a contingency fund to key government departments, and outlined a post-Brexit immigration plan.

The EU, for its part, has sought to safeguard the interests of its own EU-27 citizens and businesses by implementing a contingency plan comprising 14 legislative measures and targeting key Brexit-vulnerable sectors. Specifically on trade, the EU noted, inter alia, that “all relevant EU legislation on the importation and exportation of goods will apply to goods moving between the EU and the UK”. In a clear signal to the May Government, the EU was quick to point out that its contingency plan is meant to safeguard EU citizens foremost, that the measures do not replicate the benefits of EU membership, and that these will not mitigate all the risks of a ‘no deal Brexit’.

Why is a ‘no deal’ more likely now?

In an article I recently co-authored with Dr. Jan Yves Remy last week, we highlighted at least four scenarios for future UK-EU relations and analysed what each scenario may mean in turn for CARIFORUM-UK relations. Brexit represents the most epochal and seismic shift in UK trade and political policy in recent history. Brexit developments remain quite fluid, but recent developments evince the increasing likelihood of the ‘no deal’ scenario.

EU leaders have repeatedly ruled out a return to the negotiating table. A renegotiated withdrawal agreement, therefore, now appears highly unlikely. Despite calls for a second referendum, including from former British Prime Minister, Tony Blair, this option has been fervently dismissed by the May Administration, which remains committed to her slogan of ‘Brexit means Brexit’, although she had been part of the ‘remain’ camp before the referendum.

Labour leader, Jeremy Corbyn, has tabled a no confidence motion against Prime Minister May which, if successful, could change the current Brexit trajectory. However, despite her current unpopularity, there is no guarantee Mrs. May would be defeated or that her successor would abandon the Brexit plans. As alluring as it sounds, a ‘No Brexit at all’, scenario, therefore, at this stage still appears unlikely.

Possible Implications of ‘no deal’ for CARIFORUM-UK trade

Due to former colonial ties, the UK is currently most CARIFORUM (CARICOM plus the Dominican Republic) countries’ main trading partner within the EU and is also one of the main source markets for tourist arrivals and foreign direct investment to CARIFORUM countries. Given these historic and economic ties, CARIFORUM and the UK are currently in the advance stages of negotiating a roll-over of the concessions under the CARIFORUM-EU Economic Partnership Agreement which currently define CARIFORUM-UK trading relations until the UK leaves the EU. While details about the roll-over negotiations have been sparse, this agreement has reportedly taken into account the possibility of a ‘no deal’ Brexit. It is in the ‘no deal’ scenario that this roll-over arrangement has its most utility as it at least assures CARIFORUM traders of continued preferential market access to the UK if the latter leaves the EU without a transition deal in place.

However, while the EPA ‘roll-over’ preserves the market access status quo, it does not mitigate all the risks of a ‘no deal Brexit’. Without a transition agreement in place, UK goods (and imported goods entering through UK ports of entry) will immediately after March 29, 2019 no longer have free circulation within the EU single market and will revert to World Trade Organisation Most Favoured Nation (MFN) levels – that is, they will be subject to EU import duties and non-preferential rules of origin. This, therefore, takes away the incentive for CARIFORUM firms which, due to a shared language and customs, would have used the UK as a ‘springboard’ for entering the wider EU market by establishing a commercial presence in the UK.

Moreover, because many CARIFORUM countries’ air and sea links to continental Europe are still mainly through the UK, CARIFORUM firms will have to consider what impact these new ‘no deal’ arrangements (such as reimposed customs duties and customs checks) may have on their trade with both UK and EU partners and on their supply chains. New arrangements for aviation and haulage between the EU and UK will also add delays and increased freighting costs. These higher costs will have to be borne in mind in business planning, pricing and other decisions.

One of the biggest threats of a ‘no deal’ Brexit is the volatility of sterling which has seen large drops in value whenever unfavourable news hits the market. If not already done, currency risks will have to be taken into account by CARIFORUM firms when negotiating commercial terms with UK trading partners and in their own risk assessments.

With regard to tourism, the reduced spending power of UK visitors to the region, or any downturn in the UK economy due to fall-out from a ‘no deal’ Brexit’, would adversely impact those CARIFORUM countries where UK tourists account for a sizable market share or where UK purchasers account for sizable real estate purchases. Changes in UK-EU aviation arrangements may also make the cost of travel to the region more expensive for those continental European travellers which have to transit through the UK to reach the Caribbean (those which do not have the benefit of direct flights). As such, it would be beneficial for CARIFORUM countries to expand their direct air and sea links with continental Europe.

In spite of the above, it is not all doom and gloom. There is the opportunity for CARIFORUM to redefine CARIFORUM-UK trading relations by going beyond the mere EPA roll-over and negotiating a new free trade agreement in the future with the new ‘Global Britain’ the May Administration seeks to advocate. It also gives CARIFORUM countries an additional nudge to expand their trading relations with the EU-27 themselves by making better use of the EPA, which is currently underutilised. This is also an opportune time as CARIFORUM, as part of the African, Caribbean and Pacific (ACP) grouping, is in the process of renegotiating a post-Cotonou arrangement with the EU.

The takeaway is that the uncertainty continues! With all the news about Brexit, it is not surprising that some firms or persons may experience ‘Brexit fatigue’. It is, however, incumbent on regional firms which currently do business with, or are seeking to conduct business with those in the UK to keep abreast of these developments and to make the necessary contingency plans to ensure minimal disruption to their trading.

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.

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