Tag Archives: Caribbean

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.

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Caribbean Trade & Development Digest – January 1 – 13, 2019

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.

Eight Key Outcomes from the St. Anns Declaration on CSME

Alicia Nicholls

Caribbean Community (CARICOM) Heads of Government met from December 3-4, 2018, in Port of Spain, Trinidad last week for the 18th Special Meeting of the Conference of Heads of Government of CARICOM which was a special meeting on the CARICOM Single Market and Economy (CSME).

The CSME envisions deepened economic integration among participating CARICOM Member States by creating a single economic space for the free movement of Community goods, services, capital and labour, with the aim of promoting economic development and increased well-being of Community nationals. All independent CARICOM Member States, except the Bahamas, are part of the CSME, while Haiti is not yet a full participant.

Progress towards implementation of the CSME has been painstakingly slow, a point noted in numerous reports commissioned to look at this issue, including the Jamaica-government commissioned Golding Commission Report released earlier this year which examined Jamaica’s relations within the CARICOM and CARIFORUM frameworks.

At the end of the special CSME meeting last week, CARICOM leaders released their St. Ann’s Declaration on CSME in which they recommitted to the regional integration process and outlined several priority areas for immediate action, including setting timelines for some action areas.

Based on the St. Ann’s Declaration on CSME, here are eight key outcomes from the CSME Special Meeting:

1.Recommitment to national action to further CSME implementation

CARICOM leaders recommitted to take action at the national level to advance the regional integration agenda. In their preamble to the Declaration, they reiterated that the CSME “continues to be the most viable platform for supporting growth and development” in CARICOM Member States, but acknowledged that progress on the CSME should have been further advanced by now. They welcomed Haiti’s commitment to full integration into the CSME by 2020.

2.Greater voice for private sector and labour

CARICOM leaders have agreed to establish a formalised and structured mechanism to facilitate dialogue between the Councils of the Community and the private sector and labour. They also agreed to amend the Revised Treaty of Chaguaramas to include representative bodies of the regional private sector and labour as Associate Institutions of the Community.

3. Full Free Movement in 3 years (for willing Member States)

CARICOM leaders have set a timeline of the next three years for those Member States which are willing to do so to move towards full free movement. The leaders have also agreed to reinforce the operation of their security mechanisms to ensure the integrity of the regime allowing the free movement of CARICOM nationals.

4. Expansion of categories of skilled nationals entitled to move

Agricultural Workers, Beauty Service Practitioners, Barbers and Security Guards will be added to the categories of skilled nationals who are entitled to move freely and seek employment within the Community.

CARICOM leaders also reiterated that a skills certificate issued by one Member State would be recognised by all Member States. They also agreed to complete domestic legislative and other arrangements for all categories of free movement of skilled persons.

5. Greater CARICOM-OECS collaboration

They have mandated that steps be taken to deepen cooperation and collaboration between the Secretariats of CARICOM and the OECS “to avoid duplication and maximise the utility of scarce resources”.

6. Single Domestic Space for passengers in the Region

CARICOM leaders agreed to examine the re-introduction of the single domestic space for passengers in the Region and agreed to work towards having a single security check for direct transit passengers on multi-stop intra-Community flights. They also agreed to conduct a special session on Air and Maritime Transportation at the Intersessional meeting of the Conference to be held next February to focus on this matter.

7. Public Procurement and Mutual Recognition of Member States’ incorporated companies

CARICOM leaders set a timeline of 2019 for the finalization of the regime that permits citizens and companies of the Community to participate in Member States’ government procurement processes. They also agreed to take the necessary steps to allow for mutual recognition of companies incorporated in a CARICOM Member State.

8. Restructured Commission on the Economy

CARICOM leaders have restructured the Commission on the Economy to advise Member States on a growth agenda for the Community. Leading Barbadian-UK economist, Professor Avinash Persaud, has been appointed to lead this restructured commission, while its nine other members include distinguished regional and international persons.

The text of the St Ann’s Declaration on CSME may be viewed 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.

Have Caribbean Citizenship by Investment Programmes Run Their Course?

Alicia Nicholls

Caribbean Citizenship by Investment (CBI) programmes, and to a lesser but growing extent, residence by investment (RBI) programmes, are facing a rough ride. The latest blow came when the Paris-based Organisation for Economic Cooperation and Development (OECD) deemed CBI/RBI programmes operated by 21 jurisdictions, including those in the Caribbean, as “high risk to the integrity of the Common Reporting Standard”. While the OECD has clarified that this was not a blacklist, the list puts another glaring spotlight on Caribbean CBI/RBI programmes which are already battling to justify their existence to an increasing choir of skeptics.  In October, the European Union (EU) released a report analysing the state of play, issues and impacts of its own members’ programmes. With the mounting scrutiny being placed on Caribbean countries’ CBI/RBI programmes and stiffened competition from other investment migration programmes globally, have Caribbean countries’ CBI programmes run their course?

What are CBI Programmes?

CBI programmes are one of the two main types of investment migration programme – programmes which offer high net worth (HNW) investors accelerated citizenship or residence of the host country in exchange for a pecuniary contribution. Unlike RBI programmes which only confer accelerated permanent residence status, CBI programmes grant a qualifying investor, upon making a specified economic contribution to the host country (usually in real estate, investment in a business or in a specified government fund), accelerated citizenship for himself/herself and his/her qualifying spouse and/or dependents, once all relevant fees are paid and due diligence requirements are met. It means that a person can acquire citizenship or residence of another country in just a few months, compared to several years under regular naturalisation procedures.

Five Caribbean countries currently operate CBI programmes: St. Kitts & Nevis (the world’s oldest CBI programme), Dominica, Grenada, Antigua & Barbuda and St. Lucia. International examples include the EU member states of Austria, Cyprus and Malta, and the Pacific island nation of Vanuatu.

Second citizenship is a booming international industry reportedly worth US $3 billion, according to Citizenship by Investment.ch. There are now over one hundred CBI/RBI programmes worldwide, which seek to lure an expanding and highly mobile class of global High Net Worth Individuals (HNWIs) seeking the advantages a more favourable second passport could bring for themselves and their families. These advantages include greater mobility and security, tax planning advantages, and business opportunities.

The British Overseas Territory of Anguilla is the most recent Caribbean jurisdiction to commence a RBI programme, but versions of these programmes are also operated in the Bahamas, Barbados, Montserrat and Turks & Caicos, for example. Examples of RBI programmes in developed countries include the United States’ EB-5 programme and the United Kingdom’s Tier 1 Visa.

Challenges to Caribbean CBI/RBI programmes

Those Caribbean countries which operate them view these programmes as a pathway for economic diversification and development, bringing greatly needed foreign exchange and foreign direct investment (FDI) inflows, infrastructure development, and employment opportunities. In its Article IV Report on Dominica, which had been badly affected by category five Hurricane Maria in September 2017, the International Monetary Fund (IMF) noted that “fiscal performance deteriorated sharply due to the fall in tax revenue after the hurricane, but was partially offset by a surge in grants and buoyant Citizenship-by-Investment (CBI) sales revenues.”

Despite their economic benefits, CBI programmes have always been controversial due to some governments’ philosophical aversion to what many have called the “commodification of citizenship” or “selling of passports”. Indeed, CARICOM Member States remain philosophically divided on the desirability of CBI programmes.

There have also been, in some cases, legitimate concerns about the efficacy of the due diligence procedures, the perceived absence of a ‘genuine link’ between recipients of citizenship under CBI programmes and the host country, and reports of alleged instances of misuse of passports obtained under CBI programmes, which have brought increased international scrutiny of Caribbean countries’ CBI programmes.

One of the pull factors of Caribbean countries’ CBI programmes is the visa free access. For example, on the Henley & Partners Passport Index published by the world’s leading investment migration firm, Henley & Partners, St. Kitts and Nevis ranked the highest among Caribbean CBI countries in the strength of its passport,  providing visa-free access to 151 countries. Unfortunately, this advantage may be undermined if third countries, as is their right, decide to revoke visa-free access to citizens originating from countries offering CBI programmes, due to national security concerns. For example, Canada imposed visa requirements for citizens from St. Kitts & Nevis in 2014 and from Antigua & Barbuda in 2017 over similar concerns. Both countries have subsequently made changes to their programmes, but their citizens have not yet regained visa-free access to Canada.

The US Government has also repeatedly flagged Caribbean CBI programmes as possibly being used for financial crime, including in its International Narcotics Control Strategy Report 2017. With the current US administration taking an even tougher stance on national security,  US scrutiny of Caribbean CBI programmes is likely to continue or even intensify.

The European Commission has already sounded the alarm about the potential security risks that golden passport programmes operated by its own members could pose to the bloc. It reiterated this in its recently released report on those programmes operated in the EU.  But this scrutiny is not limited to EU CBI/RBI programmes. In a recently released report, global NGOs, Transparency International and Global Witness, also recently called on the EU to review its visa waiver schemes with those Caribbean countries operating CBI programmes.

In light of this scrutiny, other CARICOM Member States which do not operate programmes have feared that they themselves may suffer reputational and security risks due to the CBI programmes of other Member States. The CARICOM Secretariat has been examining the issue of CBI programmes operated by member states, but there appears to be no public information on what have been the outcomes of this examination thus far.

The other risk comes from increased global competition. The list of countries offering some kind of CBI or RBI programme has grown exponentially in the years since the global economic and financial crisis. For instance, this year Moldova started its own CBI. Moreover, while St. Vincent & the Grenadines is currently the only independent member of the Organisation of Eastern Caribbean States (OECS) to not offer a CBI programme due to the current government’s philosophical opposition to these programmes, the leader of St. Vincent & the Grenadines’ opposition party recently reaffirmed his support for launching a CBI programme there. What this shows is that countries around the world still see the economic potential of these programmes and it also means that competition is increasing.

Caribbean countries’ CBI programmes have ranked high on the Professional Wealth Management (PWM) Index. Regrettably, the increased competition between Caribbean CBI programmes both inter se and with other CBI programmes internationally has led to an apparent ‘race to the bottom’ among Caribbean CBI programmes in the form of price competition.

The OECD Challenge to CBI/RBI programmes

In early 2018, the OECD announced that it was examining CBI/RBI programmes as part of its Common Reporting Standard (CRS) loophole strategy and requested public input into the misuse of these programmes and effective ways of preventing abuse. The CRS is an information standard approved by the OECD Council in 2014 for the automatic exchange of tax information among tax authorities of countries which are signatories. CRS jurisdictions are required to obtain certain financial account information of their tax residents from their financial institutions and automatically share this information with other CRS jurisdictions on an annual basis. Most Caribbean IFCs are early adopters of the CRS.

While noting that CBI/RBI programmes may have legitimate uses, the OECD stated that CBI/RBI programmes are a risk to the CRS because they can be misused by persons to hide their assets offshore and because the documentation (such as ID cards) obtained through these programmes could be used to misrepresent an individual’s jurisdiction of tax residence. This, the OECD noted, could occur when persons fail to report all the jurisdictions in which they are resident for tax purposes.

In April 2018, the OECD published a compilation of the responses it had received, which also included responses by countries in the Caribbean offering CBI programmes. In its list of ‘high risk CBI/RBI” programmes to the integrity of the CRS” published in October 2018,  the OECD focused on those CBI/RBI programmes which gave access to a lower personal income tax rate on offshore financial assets and those which did not require an individual to spend a significant amount of time in the host jurisdiction.

It should be noted that reporting for CRS purposes is based on tax residence and that just because an investor has obtained citizenship of a country under a CBI programme, does not mean that he or she is automatically deemed to be a tax resident of the country. For example, a person may obtain St Lucian citizenship under St. Lucia’s CBI programme pursuant to the Citizenship by Investment Act and regulations, but under the St. Lucia Income Tax Act, he or she is only deemed to be resident for income tax purposes in St. Lucia for a given income year if he/she has been physically present there for not less than 183 days in that income year.

While the OECD has clarified that the list of ‘high risk CBI/RBI programmes’ was not a blacklist, there is concern about what reputational impact this list may have on the countries whose programmes were named. Financial institutions have been told by the OECD to bear in mind its analysis of high-risk CBI/RBI schemes when performing their CRS due diligence, which potentially brings increased scrutiny for Caribbean countries, which are already suffering the loss of correspondent banking relationships due to de-risking practices by risk-averse global banks.

Have CBI programmes run their course?

Given the growing array of challenges outlined, have CBI programmes run their course? While I do not think Caribbean CBI programmes have run their course, I think that there needs to be strong consideration by each of the countries concerned, and their citizens, of whether the economic benefits justify the increasing reputational and security risks, and to consider what further changes could be made to make their programmes more sustainable.

Caribbean countries are well aware that it is not in their interest for their CBI/RBI programmes to be perceived as loopholes for tax evasion or other criminal activity. It is, therefore, in their interest to work with the OECD to address the concerns raised about the potential for misuse of their CBI programmes.

According to the communique released at the 66th Meeting of the Organisation of Eastern Caribbean States (OECS) Authority, that organisation’s highest body, it was noted  as follows:

“The Heads engaged in extensive discussions on the matter, noting the unreasonableness of the OECD position, and resolved to undertake comprehensive reviews of the respective CBI and RBI Programmes to ensure that areas where they may be limitations are identified and strengthened.”

This is a promising development and it is hoped that these reviews will be conducted in a timely manner, that the results will be made public in the spirit of transparency and that the recommendations made will be implemented.

To their credit, there already exists cooperation among the Citizenship by Investment Units or equivalents of the Caribbean CIP countries through the Association of the Citizenship By Investment (CIPA). They have also been receiving the assistance of  the Joint Regional Control Centre arm of the CARICOM Implementation Agency for Crime and Security (IMPACS).

There is the real risk that countries may become overly dependent on CBI programme revenues for their fiscal and macroeconomic stability during boom times, leaving them vulnerable during periods of leaner revenue inflows. Since 2010, revenues from its programme have buoyed St. Kitts & Nevis’ economy, but the IMF in its Article IV Report of 2017 warned that “ the recent slowdown in CBI-related inflows and the ending of the five-year holding period for CBI properties call for close monitoring of the implications for the financial sector through the real estate market and banks’ exposure to real-estate-related activities.”

On a broader note, a comprehensive study of the economic contribution these CBI programmes have made and are making to the economies and societies of these Caribbean countries is recommended. This would provide empirical evidence of whether the macroeconomic benefits outweigh the reputational and national security risks. In this regard, the recent EU study on its own programmes could provide a good model for CARICOM or the OECS in terms of analysing the state of play and the impacts of Caribbean countries’ CBI/RBI programmes and making recommendations for mitigating the risks identified.

Such a study will require sound data. This brings me to another problem with these programmes – the transparency deficit, which was also highlighted by Transparency International and Global Witness in their report. Obtaining data on these programmes remains regrettably difficult due to the unfortunate reluctance by some authorities to share data publicly, even with researchers. Though some data on the macroeconomic contribution of these programmes may be obtained from those countries’ IMF Article IV reports, other data, such as employment generated by these programmes, are not.

Making data on these programmes publicly available will not only negate the perceived opacity of these programmes’ operation, but facilitate evidence-based planning, monitoring and evaluation of these programmes.

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.

Jamaica remains easiest place in CARICOM to do business, according to World Bank Doing Business Report 2019

Alicia Nicholls

Jamaica has maintained its spot as the easiest place to do business in the Caribbean Community (CARICOM) in the just released World Bank Doing Business Report 2019.  This is the 16th edition of this flagship World Bank publication which objectively ranks 190 economies globally on their ease of doing business based on a number of indicators. The theme of this year’s report is Training for Reform.

Jamaica has an overall ranking of 75 out of the 190 economies ranked. Of note is that overall, Jamaica also ranked as the 6th easiest place to start a business and 12th in the ease of getting credit. With respect to significant business reforms, the World Bank highlighted Jamaica’s improved access to credit information by distributing data from utility companies.

No Caribbean country has made the top 50. The rankings of the other Caricom countries are as follows: St. Lucia (93), Dominica (103), Trinidad & Tobago (105), Antigua and Barbuda (112), The Bahamas (118), Belize (125), Barbados (129), St Vincent and the Grenadines (130), Guyana (134), St Kitts and Nevis (140), Grenada (147), Suriname (165) and Haiti (182).

The Dominican Republic, which is not a CARICOM country but is part of CARIFORUM, has a ranking of 102. Puerto Rico, a Commonwealth of the US, is the Caribbean region’s easiest place to do business, with a ranking of 64.

Globally, New Zealand was ranked the easiest place to do business (1), while Somalia was ranked as the least (190). Turning to small States, Singapore was ranked second, while Mauritius continued its upward climb, with a current rank of 20th.

The World Bank reported a record 314 regulatory reforms between June 2, 2017 and May 1, 2018. Some 128 economies introduced ‘substantial regulatory improvements’ which made doing business easier in all areas measured. The following economies internationally were singled out as having made the most improvement: Afghanistan, Djibouti, China, Azerbaijan, India, Togo, Kenya, Cote D’Ivoire, Turkey and Rwanda.  

The full World Bank Doing Business Report 2019 may be accessed 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.

Could Promoting Bilingualism Give Caribbean Countries a Trade and Investment Advantage?

Alicia Nicholls

What do Mauritius, Malaysia, and Singapore have in common? Besides being examples of highly competitive emerging economies, these countries have multilingual populations which they proudly count as part of their country’s competitive advantage.

Prime Minister of Jamaica, the Most Honourable Andrew Holness, recently announced his government’s hope to adopt Spanish as a second language given the longstanding and growing importance of foreign direct investment (FDI) from Spain to Jamaica’s economy. Spanish chains are a growing presence in Jamaica’s tourism, wellness and construction  sectors and have injected US$1.7 billion in Jamaica’s tourist industry, according to the Prime Minister in his speech.

Similar statements on the need for improving our populations’ language competencies have also been made by current and previous Commonwealth Caribbean governments. Could the promotion of bilingualism give our hitherto monolingual Commonwealth Caribbean countries a trade and investment edge in an increasingly interconnected global marketplace?

 ‘Everyone speaks English!” Or do they?

I am not aware of any data on the rates of bilingualism (that is, proficiency in two or more languages) in the Commonwealth Caribbean. However, anecdotal evidence suggests that aside from local dialects, anglophone Caribbean countries have mostly monolingual (one language) populations.

It is not uncommon to hear some persons strongly proclaim “everyone speaks English, so why must I learn another language?”. Though English is currently the most learnt second language internationally, this chart from the World Economic Forum shows that English is actually the third most spoken mother tongue in the world, with 372 million first-language speakers in 2017. The second most spoken language was Spanish, with 437 million speakers. But the most spoken was Chinese (Mandarin) with 1,284 million speakers, which is not surprising given the population of China.

While the English language has been the global lingua franca since the 20th century, it has not always been, and it may not always be either given China’s growing economic dominance and promotion of its culture and language.  In recognition of this fact, China Daily has reported that there is growing interest in western countries for learning Mandarin. In Russia, for example, the number of Chinese language learners has reportedly increased from 17,000 in 2007 to 56,000 in 2017 and Mandarin is now an elective language in that country’s national college entrance examination.

That aside, the Commonwealth Caribbean is surrounded not only by its Spanish, French and Dutch speaking Caribbean island neighbors, but also Spanish-speaking Latin American countries and Portuguese-speaking Brazil, which present still largely undertapped export and tourist markets.

Bilingualism enhances labour force quality

There is a corpus of research highlighting the cognitive, psychological and social advantages to human beings learning a second language. These include sharpened memory, improved decision-making skills, multi-tasking capability, problem-solving and mental dexterity. Knowledge of another language also increases a person’s employability, cultural sensitivity, earning potential and labour market opportunities. As a multilingual person, I can personally attest to the doors which knowledge of other languages have opened for me professionally.

Internationally, employers’ demand for bilingual persons has increased not only as trade with other countries has increased, but because of the recognition by firms of the benefits to their export strategies of employing bilingual persons. A report of March 2017 by New American Economy found that demand for bilingual workers in the US is growing at both the higher and lower ends of the employment spectrum. This is further supported by a report by the Economic Intelligence Unit, which surveyed 572 executives globally and found that organisations with international ambitions were increasingly expecting prospective employees to be fluent in key foreign languages.

Taken as a whole, improving a population’s language competency makes for a more attractive labour force to international investors. This advantage has not gone unrecognized by some countries. Mauritius, whose population speaks French, English and French Creole, proudly touts its bilingual population as one of its unique selling points as a place for international business. In Switzerland, which has four national languages, a report from 2008 estimated that country’s linguistic advantage as equivalent to about 9% of its GDP.

In an increasingly interconnected world, I believe monolingualism will put our human resource, which is our greatest resource, at a distinct disadvantage in attracting international investment and tourism.

Bilingualism/Biculturalism as Business Advantages in Cross-Border Transactions

Effective communication is essential to the success of cross-border deals, which means that linguistic and cultural differences are frequent barriers to cross-border trade and investment. The previously mentioned report by the Economic Intelligence Unit found that “misunderstandings rooted in cultural differences present the greatest obstacle to productive cross-border collaboration”. For instance, a handshake or kiss on the cheek may be perfectly acceptable in one culture, but may cause offense in another.

A UK-based report also found that “over time the trade cost to the UK resulting from language barriers has varied in magnitude, but has been consistently large.”  While I am unaware of similar research conducted in the Commonwealth Caribbean, anecdotal evidence shows that this may also be the case here as well.

It is not uncommon for some businesses seeking to export to feel that it is not necessary to invest in developing a multilingual strategy or capacity given the increasing availability and accuracy, for example, of online translation services. However, online translation services miss subtle cultural nuances, which may be fatal when engaging in cross-border business negotiations, especially with enterprises from ‘high context cultures’. ‘High context’ is the term used in international business to describe those cultures which place greater emphasis on context, non-verbal cues and on interpersonal relations when conducting business. Examples would be most African, Middle Eastern and Asian countries. ‘Low context’ cultures usually rely mainly on verbal cues, and interpersonal relationships have less importance in the business context. These cultures include many Western European countries, the US and Canada.

In the Commonwealth Caribbean most of our international trade is currently with low context cultures with which we share cultural, linguistic and historical ties. But, as our firms seek to diversify, and as China (a high context culture) expands its economic footprint in the region, there will be need for greater understanding of the Chinese language and culture.

Prior knowledge of the language and cultural norms of a target export market is also invaluable when conducting market research into the business, legal and regulatory environment of that potential export market.

Bilingualism can foster wider Caribbean integration

Promoting bilingualism can foster closer Caribbean integration. By accident of geography, the Caribbean Region is divided by water. By accident of history, these divisions are furthered by language. However, greater linguistic and cultural awareness among our islands can bridge these divisions.

As an example, the French-speaking island of Martinique is one of the top tourist source markets for St. Lucia, its neighbor just 40 miles to the south.  Its tourist and business ties with Martinique are facilitated not just by geography and reliable transportation links, but also the mutual intelligibility of the Martinican and St. Lucian creoles and some shared cultural similarities. St. Lucia, nicknamed Helen of the West, changed colonial hands fourteen times between France and England, giving the island a unique culture and patois which is a mélange of its French and English colonial roots.

A new programme called the Trade Enhancement for the Eastern Caribbean (TEECA) programme seeks to promote trade and investment between Member States of the Organisation of Eastern Caribbean States (OECS) and Martinique, which became an OECS associate member in 2015. The success of this programme will undoubtedly hinge on OECS firms seeking to create or expand business with those in Martinique having an understanding of the Martinican cultural, business and legal context and knowledge of the French language.

Building a Bilingual Advantage

Promoting greater language competency among our populations could bring trade and investment advantages to Caribbean countries which rely disproportionately on their human resource. While not a panacea, it can provide for a more employable and attractive labour force, facilitate our export market diversification efforts, strengthen integration with the non-anglophone Caribbean and improve trade and investment ties with the wider LAC region

Of course, creating a bilingual society cannot happen overnight. First of all, we need to determine what language competencies our Governments will seek to promote. Spanish and French are increasingly being taught in Commonwealth Caribbean secondary schools, but should Mandarin also be included on the curriculum?

Moreover, expanding language instruction at the primary school level would be key, as well as promoting greater cultural exchanges. Languages should not be seen  solely as subjects for study, but as a door to further business opportunities, creating an edge for our people in an increasingly interconnected and competitive global environment.

As it is firms which trade and not countries, it is incumbent on regional firms to increase their in-house language capacity by employing persons with the linguistic skills and cultural knowledge of their export target markets, and also, where appropriate, invest in developing the language proficiency of their existing staff.

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.

Human Rights in the context of the International Climate Change Agenda

Stefan Newton, Guest Contributor

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Stefan Newton

In her address to the 73rd Session of the United Nations General Assembly (UNGA), Prime Minister of Barbados, the Hon. Mia Mottley, abandoned a scripted speech and made a passionate appeal to United Nations (UN) Member states to make good on their commitments to climate change under the United Nations Framework on Climate Change (UNFCCC). She urged States to accelerate mobilizing the necessary funding for climate adaptation and mitigation under The Green Climate Fund.

In thinly veiled remarks, she criticized the current position of the United States of America (USA) by refusing to acknowledge the reality of climate change, noting “For us it is about saving lives. For others it is about saving profits”. It is well known by now that the USA has regrettably withdrawn from the Paris Climate Agreement: which builds upon the UNFCCC and for the first time brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects, with enhanced support to assist developing countries to do so.

Moreover, the Prime Minister pointed to the need for UN Member States to recognize that “mighty or small we must protect each other in this world”. In closing her speech, she appealed to the international community to exercise empathy and care for those States and their citizens who are most vulnerable to the effects of climate change. I humbly submit that this is perhaps the most significant speech given by a Barbadian leader to the United Nations, as it impinges on Barbados’ very survival as a nation State. Indeed, if climate change ambitions are not met, Barbados and its citizens will face very certain demise due to the effects of climate change.

Climate Change is a Human Rights Problem

While climate change is most often viewed as an environmental problem, it is also very much a human rights problem. Mary Robinson, the former president of Ireland and former High Commissioner for Human Rights, has described climate change as “probably the greatest human rights challenge of the 21st century”.

Explicit mention of human rights is now being made in international climate agreements. The Preamble to the Paris Agreement to the UNFCCC calls for all States, when acting to address climate change, to “respect, promote and consider their respective obligations on human rights”. The World Bank Report on Human Rights and Climate Change highlights the relevancy of international human rights law to climate change by linking particular social and human impacts of climate change to special human rights standards under international human rights treaties, thereby confirming human rights impacts. For example, the right to life is the most fundamental human right and well enshrined in the Universal Declaration on Human Rights and International Covenant on Civil and Political Rights.

A number of observed and projected effects of climate change will pose direct and indirect threats to the human right to life. The Intergovernmental Panel on Climate Change (IPCC) projects with high confidence an increase in people suffering from death, disease and injury from heat waves, floods, storms etc. Equally, climate change will affect the right to life through an increase in malnutrition, cardio- respiratory morbidity and mortality related climate change effects.

Despite the clear human rights implications of failure to act to combat climate change, the international community is not “grasping the baton firmly” enough through decisive policy actions to reach the ambitions of the climate change agenda. The USA- Trump led administration seems to be a lost cause with its view that climate change is a fiction. Heeding Prime Minister Mottley’s call to climate action will most likely be viewed by them as a mere courtesy, not an obligation. However, it can be soundly argued that Prime Minister Mottley’s urging of States to protect each other from the effects of climate change, are not merely aspirational or appeals to international consciousness, but are linked to and grounded in legally binding international human rights principles.

Legal Link between Human Rights and Climate Change

The Office of the High Commissioner for Human Rights (OHCHR) has set out the essentials of the legal dimensions link between Human Rights and Climate Change. International Human Rights principles to respect, protect and fulfill the human rights of all people without discrimination gives rise to a wide range of duties for State in acting on climate change. I will touch on three.

First, under these principles is the duty to mitigate climate change and to prevent its negative human rights impacts. Failure to take affirmative action to prevent human rights harms caused by climate change, including foreseeable long-term harms, breaches this obligation. Second is the duty to ensure that all persons have the necessary capacity to adapt to climate change. Falling under this duty States must ensure that appropriate adaptation measures are taken to protect and fulfil the rights of all persons, particularly those most endangered by the negative impacts of climate change e.g. small islands, riparian and low-lying coastal zones. Third, under core human rights treaties, States acting individually or collectively are obliged to mobilize and allocate the maximum available resources for the progressive realization of economic, social and cultural rights, as well as the advancement of civil and political rights and the right to development. The failure to adopt reasonable measures to mobilize available resources to prevent foreseeable climate change harm breaches this obligation.

Incorporating Human Rights into Climate Change Policy Discussions

Besides recognizing the legal implications of international human rights law as it pertains to climate change, Caribbean policy makers should also recognize the value added of incorporating human rights into discussions around climate change policy.

Among other things, a focus on human rights law may serve to locate policy within the framework of internationally agreed obligations and acceptance of certain goods, interests or goals as rights. This has the effect of establishing a hierarchy of importance among policy goals, helping to ensure that human rights are not traded off among interests lacking that status. Simply put, human rights place people before profits. This is critical as more firms and investors enter the Caribbean market whose activities may have climate and environmental impacts.

Additionally, human rights offer a normative and institutional framework for strengthened accountability and international co-operation for those responsible for adverse impacts of climate change. It may be argued that states should be encouraged to take climate action on this basis and do more in their capacity to assist and contribute to the financing of climate adaptation programs. This might be a useful bargaining chip in the realm of international relations and negotiations. For small developing states, such accountability can be used as a tool of moral suasion against large carbon emitting States like the USA which have retreated from global actions on climate change, or to spur States who are already implementing climate action targets to redouble their efforts.

Diagonal Environmental Rights

Further to policy, human rights law has an incredible potential to fill in a missing legal gap present in the international legal framework addressing climate change. The carbon emissions from large industrial States have a disproportionate impact on small lesser emitting States. Citizens of small developing States are thus marginalized and face aggravated vulnerability to human rights impacts from climate change. Yet currently there exists no formal legal mechanism for citizens to claim climate justice against large states responsible for impacting on and violating their human rights. This is referred to a Diagonal Environmental Rights; a term coined by John Knox the United Nations Independent on Human Rights relating to a safe, healthy and sustainable environment. Without going into the theory of a State’s extra-territorial human rights obligations, and proving causation, I submit that the ability to claim climate justice is well founded in the principles of international law.

As previously stated, no formal international diagonal environmental rights legal mechanism exists. Given the state of geo- political madness that has taken hold of multilateralism, I also do not see one being created and implemented by UN Member States. As the experience of the Paris Agreement has shown, it is a challenge just to get a critical mass of countries- let alone all countries- to participate in an international environmental agreement.

Therefore, the greatest hope is that existing international human rights mechanisms, such as the Inter-American Court on Human Rights (IACHR), and domestic courts are flexible enough to accommodate climate change litigation. There has been jurisprudence emerging from domestic courts that successfully incorporates rights-based arguments to climate change e.g. Pakistan in the case of Leghari v Federation of Pakistan.

Albeit these claims were made in the context of litigation by citizens against their own State for failing to respond to climate change. Nevertheless, such cases do much to add shape and contour to this emerging body of climate justice jurisprudence. They set precedents on which international, and broader litigation may find success.

Stefan Newton is a graduate of the University of the West Indies Faculty of Law.  The views reflected here are entirely his own.

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