Caribbean Trade Law and Development

Tag: Caribbean

  • Caribbean Reflections on Soft Power

    Caribbean Reflections on Soft Power

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    Jo-Ann Hamilton, Guest Writer

    What do China and the United States have in common? Global influence? Economic Hegemony? Let’s throw Qatar and Iceland into the mix. Any thoughts? The answer is soft power. China invests globally in infrastructure around the globe often in countries largely ignored by the international community. The Chinese government also gives away millions in scholarships to students around the globe to be educated in its Chinese universities.

    Whilst traditionally the Americans have often wielded hard power in the form of military might, they have also pioneered the concept of soft power through their powerful media business, namely American cinema. Silicon Valley’s technology in the form of Facebook, Google and Twitter are just a few examples of the American brands associated with innovation and the American entrepreneurial spirit.

    Qatar’s regional and international influence is being channeled through its state-funded global media network, Al Jazeera. The creation of the Qatar Foundation is the mini state’s approach to developing itself into a knowledge based economy whilst at the same time sharing this knowledge globally.

    Lastly, there is Iceland, a small nation in Northern Europe. Unlike its powerful neighbours the UK and other countries in the EU it wields no great power. What it does have is a clever and innovative approach which sets it apart as a leader in fields as diverse as science, computer research and public health. They are not too dissimilar to its other Northern European neighbours, such as Sweden and Finland who are global leaders in the area of sustainability.

    But what does this have to do with the Caribbean? The Caribbean is usually on the receiving end of soft power. What can the region do to leverage its soft power? How can it persuade and influence both collectively and individually to position itself as players in the global economy?

    Brand Caribbean.

    Brand Caribbean must be carefully orchestrated by each individual nation within the region but first it must gain significant buy-in from the citizens of each nation, who tend to possess a silo-ed pride. Like any good branding campaign, Brand Caribbean must position itself as being a source of inspiration, changing the world, doing good and developing its people.

    One great example of this is in the United Arab Emirates. Its Vice President Sheikh Mohammed bin Rashid Al Maktoum, who is also the Emir of Dubai, recently released his UAE strategy for the Future, in which he stated,

    “ As a nation, we have always been forward-looking and planning for the future, which has been a key driver of our success. With our future planning model, we will serve as a model for the world. The citizens of the UAE are our most important resource in building our future. To nurture their skills, we will strengthen education and training initiatives.”

    This is a brand based on upliftment, where collaboration, strategy, education and an investment in its human capital is key to its success.

    Brand Caribbean must speak with one voice and with a unified message. One may ask how can an entire Caribbean region which is so nuanced and diverse speak in one tone? How can this be achieved? The answer is simple, if the Caribbean region has a strong desire to propel itself and its people into the future, it has no choice. With the right leadership, enthusiasm, patience, confidence and discipline nothing is impossible. This is not a job solely for governments, but for the region’s intellectuals, culturalists, innovators,
    entrepreneurs and changemakers, both at home and in the diaspora.

    “Leadership is the capacity to translate vision into reality” Warren G. Bennis

    Brand Caribbean should be infused in every aspect of our wider societies and communities, leaving no one behind and promoting a society for all. So, what exactly is Brand Caribbean? Brand Caribbean is the representational self image of regional pride and ambition, which will lead the region beyond sun, sand and sea. Many reading this will think, the Caribbean is not a superpower, it is not wealthy, it has no military might or
    massive oil fields. Yes, this is all accurate but the beauty and brilliance of soft power is that it requires introspection, depth, emotional maturity and intellect. It is not measurable by any international standard it is merely a way to gain influence by using what you have. It is based on being who you are and begins with where you are.

    Soft power affects behaviour, it changes attitudes and perceptions, which in turn attracts the right kind of attention and visibility. This power is influential and stems from knowing one’s own worth. Unlike relational power it does not seek to position itself by comparisons to a wider authority or through deference but through self efficacy and knowing that it indeed has something unique to offer the world.

    Singapore is a small first world nation in South-East Asia, which was 50 years ago a member of the third world club. It was once dismissed as a nation barely surviving. Today it boasts world class universities, and is a global finance, commerce and trade hub amongst other notable things. It holds many firsts and exists in a world of superlatives.

    “The most valuable of all capital is that invested in human beings.” Alfred Marshall

    The Caribbean is the “Green Queen” which makes her a region for innovation on all matters sustainable from renewable energy to agriculture to fashion and all in between. She boasts the world’s best athletes, with a legacy spanning cricket, baseball and track and field. She has a vibrant literary, music and theatrical culture and she is a land of many people, living together for the most part peacefully resulting in every hue and cultural mix imaginable to the human race.

    This makes her an example for diversity and cultural capital of all forms. Each nation has
    something special. Her unique selling points are capable of solving some of the world’s biggest problems where the environment and diplomacy are concerned. Her music, art and culture can act as a hub for innovation centering peace and conflict resolution. Her diaspora is vast, therefore scope and reach are unlimited.

    In the end the biggest convincers of Brand Caribbean are not outsiders but those inside the
    community. We must first become our own early adopters and appreciate the diverse cultures, values and traditions we bring to the world.

    What do all of the Caribbean nations have in common? There are no low costs reliable ferries or planes offering multiple daily services throughout the region. Island hopping is extremely difficult and in some cases impossible. In many instances most Caribbean nationals do not travel inter-regionally. If we do not know ourselves how can we set goals for our region and make decisions which enable and have a long lasting impact? If soft power rests on ideas which are appealing, how can this be accomplished if we don’t know each other? In the end what we think of ourselves, is much more important than what others think of us. May our self esteem lead us into a new era, where our region leads with soft power.

    Jo-Ann Hamilton is a Caribbean-born, globally active freelance writer, UN Women Global Champion, consultant and the founder of SecretBirds which empowers women and young girls through entrepreneurship. You can follow her on Twitter at @JAlexandrHamil and read more of her work at SecretBirds Headquarters.

    The views and opinions expressed herein are solely those of the guest author and are not necessarily representative of those of the Caribbean Trade Law & Development Blog.

  • What may a Trump presidency mean for future US-Caribbean relations?

    What may a Trump presidency mean for future US-Caribbean relations?

    Alicia Nicholls

    In what for many pollsters and poll watchers was an astounding turn of events reminiscent of the June 23rd Brexit vote decision in the United Kingdom (UK), the American people have chosen the Republican presidential nominee, Mr. Donald J. Trump, to become their 45th president. Mr. Trump, a billionaire real estate developer who has never held elective office, beat veteran campaigner and Washington establishment favourite, former Secretary of State, Mrs. Hillary Clinton despite late polls predicting a slim victory for Mrs. Clinton.  In addition to winning the White House, the Republicans have also retained control of both houses of Congress.

    The merits and demerits of a Trump presidency will dominate news headlines for the next few days and perhaps years. However, we in the Caribbean must now pivot from our fascination with what was a surprising conclusion to the US Presidential Election campaign of 2016, to consider what will be the possible implications of a Trump presidency for future US-Caribbean relations.

    Many may wonder why we in the Caribbean, like other parts of the world, so keenly follow the US presidential elections. After all, unlike Mexico, Syria, Russia and Iran, Caribbean countries did not feature in any of the major foreign or economic policy discussions, and the region has lost much of its geostrategic importance to Washington since the end of the Cold War.

    The reasons why the US elections matter to us are simple. Firstly, the US is a major trading partner for many Caribbean countries, a provider of foreign aid and a foreign policy ally. Secondly, for several Caribbean countries, the US is also the largest source market for tourist arrivals.  Thirdly, the US is home to the largest population of persons of Caribbean descent living outside of the Caribbean.  As such, any change in US foreign, economic and commercial policy will have implications for the small open economies of the Caribbean region.

    Trade Policy

    A central plank of now President-elect Trump’s campaign to “Make America Great Again” is to “negotiate fair trade deals that create American jobs, increase American wages, and reduce America’s trade deficit”.It is expected that there will be dramatic changes to US trade policy under a Trump Presidency towards a more zero-sum, protectionist approach. This will have implications for US-Caribbean trade relations, which have not always been smooth.

    Outside of the Dominican Republic which is a party to the US-Central America and Dominican Republic Free Trade Agreement (CAFTA-DR), Caribbean States do not have a free trade agreement with the US. Most Anglophone Caribbean countries, however, benefit from unilateral access to the US market for most goods under the Caribbean Basin Initiative, a legacy from the Reagan era. The preferences extended under CBERA are non-reciprocal; Caribbean countries do not have to confer reciprocal access to US originating goods. They are also unilateral which means preferences can also be unilaterally revoked by the US. Some Caribbean countries also benefit from the United States’ Generalised System of Preferences (GSP), another unilateral, non-reciprocal regime.

    It is unclear what would be the future of these unilateral non-reciprocal preference schemes under a Trump presidency. Perhaps one saving grace is that these programmes are generally seen to be a benefit to US manufacturing and jobs, and the region has a trade deficit with the US. According to the Report to Congress released in December 2015, “[t]he value of U.S. exports to CBERA beneficiary countries grew 2.5 percent in 2014, exceeding the growth rate for total global U.S. exports, which grew 2.1 percent”.

    On a more sober note, US-Caribbean trade relations have encountered many bumps over the years, including the famous bananas wars in which the US and Latin American countries successfully challenged the European Union’s preference regime for bananas from African, Caribbean & Pacific (ACP) countries in the World Trade Organisation (WTO).

    More recently, Antigua & Barbuda challenged the US’ restriction on the cross-border supply of online gambling services from Antigua & Barbuda in the World Trade Organisation’s dispute settlement mechanism. After the US lost its appeal and failed to comply with the Appellate Body’s ruling, Antigua & Barbuda was authorised to retaliate through the suspension of concessions and obligations to the United States in respect of intellectual property rights. However, to this day Antigua & Barbuda has not received any compensation from the US following the rulings.

    There has been little progress on either the US-Antigua gambling dispute or on the rum dispute which Caribbean states have been hesitant to take to the WTO. It remains to be seen whether any progress will be made under a President Trump whose only stated concern in regards to trade relations is for “American jobs, wages and trade deficit” and who has hinted at withdrawing the US from the WTO.

    Immigration and Race Relations

    Much of Mr. Trump’s anti-immigrant rhetoric has been against Mexicans, as exemplified by his promise to build a wall along the US’ border with Mexico. The Caribbean diaspora in the US, however, may be impacted by his immigration policies as well. In an interesting article on Caribbean migration to the US, Zong and Batalova noted that “the United States is the top destination for Caribbean emigrants, accounting for more than 60 percent of the 6 million Caribbean emigrants worldwide”.

    Immigration has for quite some time been a touchy subject in US-Caribbean relations, mainly in regards to the mass deportation of those Caribbean nationals who have committed crimes in the US. The main argument advanced by Caribbean governments is that many of the deportees were socialised in the US and are sent back to the Caribbean after serving time in US prisons as hardened criminals. They also argue that these deportees have little to no cultural or familial ties to the Caribbean which makes their integration into Caribbean society difficult. Such deportations have been blamed by regional politicians for the increase in criminality in the region.

    Mr. Trump’s 10-point plan for immigration, includes not only increasing the deportation of criminals, but establishing immigration controls, ensuring that open jobs are offered to American workers first, banning immigration from certain countries, ending sanctuary cities and reforming legal migration. Not only will those living illegally be affected, but there may be implications for that vast majority of Caribbean immigrants living legally and making a solid contribution to US society. He has spoken of a “complete and total shutdown of Muslims entering the US”. What does that mean for the Muslim minority in some Caribbean countries who may wish to visit or migrate to the US?

    A less discussed issue is that of Trump’s possible impact on race relations in the United States. Most Caribbean immigrants are either mainly black or Latino so this dovetails with the immigration issue. Mr. Trump has had a checkered past on race issues, including, inter alia, calling Mexican immigrants “rapists”, supporting the Birther Movement which sought to discredit America’s first African-American president (President Obama) as a foreigner, and being prosecuted by the US Justice Department along with his father for refusing to rent to black tenants during his early years. To what extent can a Trump presidency, whose open endorsement by the KKK and other white nationalists raised concerns, begin to mend race relations? For instance, what will be his future policies on stop and frisk and on police brutality against minorities, particularly against African-American males?

    Climate Change

    Climate change is an existential issue for the world, and particularly for small island developing states in the Caribbean, which, despite their negligible contribution to global greenhouse gas emissions, have been the most vulnerable to the adverse and deadly effects of climate change.  As I indicated in a previous article on this subject, the election of Mr. Trump, a climate change sceptic, will be weighing on the minds of officials at the climate talks in Marrakech, Morroco over the next weeks.

    Mr. Trump, has famously called climate change a “Chinese hoax” and has gone as far as threatened to cancel the Paris Agreement. Although it would take about four years before the US can formally withdraw from the Paris Agreement, in the intervening time President Trump can still undo the US’ progress on climate change action by overturning the executive actions President Obama has implemented to fight climate change, cancelling funding for clean energy initiatives, and reducing and eliminating aid to developing countries for climate change adaptation and mitigation.

    It also means that there may be little to no US support for global climate change action, a frightening prospect if the international community is to meet the Paris Agreement’s goal of “holding the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 degrees Celsius”.

    Foreign Aid

    According to a 2016 report “US Foreign Assistance to Latin America and the Caribbean: Recent Trends and FY2016 Appropriations”, since 1946, the LAC region has received more than $160 billion of assistance (in constant 2013 dollars. This aid has included assistance in fighting crime and drugs trafficking, as well as for climate change mitigation and adaptation.  However, foreign aid saw spending cuts under President Obama as the US sought to rein in its budget deficits.

    Mr. Trump has not said much in his campaign plans on his views towards foreign aid, though one can conclude that his more inward looking policies would suggest that he will probably be in favour of less aid for the region if this is not in sync with his wider foreign policy goals. It will be left to be seen the extent to which the LAC region will continue to receive aid under a Trump presidency and what would be the aid priorities.

    Withdrawal of Correspondent Banking

    Indigenous banks in the Caribbean have been seeing the restriction or termination of correspondent banking relationships by international banks, many of which are US-based. Caribbean governments have been engaging in high-level advocacy and have targeted relevant US departments. There has so far been limited success. To what extent will Mr. Trump and his future Secretary State and Treasury Secretary be concerned with the problems of Caribbean economies which face exclusion from the global trade and financial system if this issue goes on unabated?

    Cuba-US Relations

    President Obama’s presidency saw a rapprochement in US-Cuba relations. Since the early 1960s, successive US governments have imposed an illegal economic, commercial and financial embargo on Cuba which is not only contrary to international law but has hindered the country’s economy development.  In December 2014 US Mr. Obama outlined a new direction to normalise Cuba-US relations. Efforts at normalisation since 2014 have included, inter alia, the removal of Cuba from the US State Sponsors of Terrorism List in May 2015, the re-opening of embassies in July 2015 and the progressive relaxation of some sanctions.

    The prospect of normalisation of US-Cuba relations appears bleak now as President-elect Trump has consistently supported the embargo against Cuba. However, it remains to be seen whether he will reverse some of the executive actions President Obama has made and whether he will impose additional sanctions.

    So what does this mean for future US-Caribbean relations?

    The American people have made their choice and while it may not have been an internationally popular one, what is done is done. What Caribbean leaders need to consider going forward is what will be the priorities for them in regards to their relations with the Trump White House. And how will they create constructive dialogue and meaningful action on issues such as the on-going gambling and rum trade disputes, security, deportations, correspondent banking and climate change?

    It is no secret that since the end of the Cold War the Caribbean has lost much of its geostrategic significance to Washington. However, the geographic proximity of the Caribbean as the US’ “backyard” means that US-Caribbean cooperation remains crucial to US national security on issues of mutual interest such as drug enforcement, transnational organised crime, money laundering and terrorist financing. In June 2016  H.R. 4939 – United States-Caribbean Strategic Engagement Act of 2016, a bi-partisan bill sponsored by New York Representative Eliot Engel (Democrat) passed without objection in the House and was referred to the Senate Committee on Foreign Relations. The objective of the law is “to increase engagement with the governments of the Caribbean region, the Caribbean diaspora community in the United States, and the private sector and civil society in both the United States and the Caribbean, and for other purposes”. What will be the future of this initiative?

    What is clear is that there needs to be constructive dialogue and re-engagement with the US. How successful will this be under a Trump presidency is anyone’s guess. His campaign rhetoric appears to foreshadow a future US foreign policy that will be a lot more isolationist, inward-looking and protectionist than seen in recent times. With a Republican majority in Congress, Mr. Trump will likely have unfettered power to push through his agenda, however good or bad.

    On the flip side, it is entirely possible that Mr. Trump may soften his stance on some of his most contentious issues. For instance, in his victory speech he adopted a more conciliatory tone both towards to his opponent Mrs. Clinton and towards the international community, stating “All people and all other nations. We will seek common ground, not hostility; partnership, not conflict.” Another thing is that Mr. Trump’s policy proposals have been generally vague on specifics. There are many unknowns at this stage. We also have no idea as yet, besides speculation, on who will be the members of his cabinet, including key posts such as Secretary of State and Treasury Secretary. It is also unclear where Mr. Trump stands on some issues with importance to the region, including on offshore financial centres and the withdrawal of correspondent banking.

    While President-elect Trump’s campaign proposals and rhetoric give us much food for thought, there remains much uncertainty about what a Trump presidency may actually portend for the region. What is certain, however, is that there will likely be a new tone set for US-Caribbean relations going forward. Caribbean leaders will need to be pro-active, united and strategic as they seek to engage constructively with what will be at least a four-year Trump administration when Mr. Trump assumes office in January 2017.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • Caribbean Response to the Withdrawal of Correspondent Banking

    Alicia Nicholls

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

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

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

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

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

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

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

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

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

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

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

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

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

  • Jamaica is Commonwealth Caribbean’s Easiest Place to do Business, World Bank Doing Business Report 2017

    Alicia Nicholls

    Jamaica has once again topped the Commonwealth Caribbean as the easiest place in which to do business, according to the recently released World Bank Doing Business Report 2017. This flagship annual index  measures and benchmarks countries around the world on the ease in which a hypothetical local entrepreneur can open and run a small to medium-size business when complying with relevant regulations.

    Economies are ranked on 11 regulatory areas reflecting the life cycle of a business, namely starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labor market regulation. A total of 190 economies were included in this year’s index.

    Jamaica’s Performance

    Jamaica had an overall rank of 67th, down 2 places from its ranking of 65th on the 2016 index.  The World Bank noted that both Jamaica and Grenada “made significant upgrades to their electronic platforms, resulting in a substantial decrease in the time required for international trade processes”. The World Bank also praised Jamaica for making tax paying less costly by increasing tax depreciation rates and the initial capital allowance for assets acquired on or after January 1, 2014. Those reforms earned the country a leap of 39 places on the “paying taxes” indicator.

    However, one criticism made by the World Bank was of Jamaica’s removal of the ability to complete next-day company incorporation which the Bank argued made starting a business more difficult. Outside of the indicators “paying taxes” and “trading borders”, the island saw slippage in its rankings on all other indicators. Its most precipitous fall was in its ranking on “getting electricity” where it slipped 20 places to 101st place.

    Other Caribbean Countries’ Performance

    Overall, Puerto Rico was the highest ranked economy in the Latin America and Caribbean (LAC) region with a rank of 55th, up one place from its rank of 56th in the 2016 index. Honourable mention must be made of Guyana which rose 16 places to 124th place. The Dominican Republic retained its 103rd rank.

    All other Caribbean countries saw declines from their 2016 rankings. The biggest decline was St. Lucia which dropped 8 places to 86th from 78th in 2016.

    The rankings of all Caribbean countries are as follows:

    WorldBankDoingBusinessCaribbean2017.jpg
    Doing Business Data 2017

    Global Rankings

    On a global scale, the top 5 easiest places in which to do business were as follows: New Zealand, Singapore, Denmark, Hong Kong and the Republic of Korea. The bottom 5 economies were South Sudan, Venezuela, Libya, Eritrea and Somalia.

    The full  Doing Business 2017 report may be accessed here.

    Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.