Caribbean Trade Law and Development

Tag: Caribbean

  • The Fall-out from the Russian-Ukraine Crisis for the Caribbean – GUEST CONTRIBUTION

    The Fall-out from the Russian-Ukraine Crisis for the Caribbean – GUEST CONTRIBUTION

    Renaldo Weekes, Guest Contributor

    Image by Wilfried Pohnke from Pixabay

    Renaldo Weekes, guest contributor

    On February 24th, 2022, President of the Russian Federation Vladimir Putin began a large scale invasion of Russia’s neighbour, Ukraine. Many Western governments have been warning of this invasion sometime before it took place and the world waited in anticipation to see if it would actually happen. Now, everyone’s worst fears have been realized. Of course, focus will be on the safety of Ukrainians and all other persons who were caught in the midst of the ongoing invasion. However, there are other effects of the invasion that can be economically damaging for the rest of the world and of course, the Caribbean. Those are: the price of oil, the diversion of aid away from the other parts of the world and potential sanctions.

    The price and supply of oil

    One of the major and most noticeable effects from Russian invasion of Ukraine is the substantial decrease in global oil supply and concomitant increase of the price of oil. This came about because Russia, being the second highest producer of oil in 2021, has not been able to supply the global markets due to many companies and countries protesting the Russian government’s decision to invade Ukraine. As such, there has been an embargo of sorts on Russian oil. With an effective decrease in oil supply on the global market, prices have risen. They’ve risen to above $100 USD per barrel with Brent crude trading at $140 USD at one point but it has since dropped below $100 USD.

    These increases in oil prices have had a significant impact on the prices of products and processes that heavily rely on oil. For example, gas has reached an all-time high of $4.43 per gallon in the United States (US) while here in the Caribbean, countries have seen increases to all-time highs such as $4.13 BBD per litre in the case of Barbados. The Barbados Light and Power Company announced that the price of electricity will also be increasing. These price increases have concomitant effects on normal everyday services that rely on gas such as food, taxi services and generally any service that requires gas and electricity. This can very much apply to almost services offered in the economy and effectively raises the cost of living at a time when many are still recovering from the pandemic and the Organization of the Petroleum Exporting Countries (OPEC) seems reluctant go against its plan to increase its output in phases.

    The rising of oil prices, however, presents opportunities to less advantaged oil producing countries with relatively poor populations. Namely, those in Africa and the Caribbean’s very own Guyana. These countries now have the opportunity to increase their economic fortunes and further develop their societies through social services, infrastructure and the like. Though the projected output of 340,000 barrels a day is nearly not enough to replace Russia’s, a piece of the pie can be considered better than none at all. This is especially likely against the backdrop of world leaders’ search for alternatives to Russian oil, especially those in Europe. For example, it is reported that Prime Minister of the United Kingdom, Boris Johnson has been trying to court the United Arab Emirates and Saudi Arabia in efforts to secure an oil deal though it seems that has not borne fruit thus far.

    The diversion of aid away from the other parts of the world

    Another considerable effect of the Russian-Ukrainian conflict is diversion of attention and funds away from the Caribbean and other regions that depend on aid from Europe and the US. Understandably, world powers are focused on ensuring the safety and protection of Ukrainians and other persons who are directly affected by the current invasion. However, this means that other parts of the world will be placed on the back burner; possibly for a while as these world powers to deal with the same issues of higher oil and gas prices. This is especially so in the face of what some fear could be the start of global conflict akin to a world war. From that perspective, it is difficult to imagine that world powers have the time, energy or resources to consider the rest of us.

    Potential Sanctions

    A third impact of the conflict is sanctions. Up to now, all sanctions have been placed mainly on Russian government officials and those close to them, and in some cases on ordinary Russian citizens. So far, Russian oligarchs that have made Europe their second home with the purchase of luxury homes and multimillion dollar yachts have had their assets seized and various companies have stopped offering their services to those still living in Russia. As a result, ordinary Russian citizens have been fleeing to Finland, which borders Russia, and many of the oligarchs who still had access to their yachts have been sailing off to other countries.

    Following this, there have been reports that the yacht of Russian oligarch Dmitry Rybolovlev was spotted in Antigua and Barbuda, and subsequently St. Vincent and the Grenadines. Rybololev has been named in the Putin Accountability Bill, a sanctions bill making its way through the United States Congress. Against the backdrop of world powers’ intent of punishing Russian powerholders, it follows that they would also punish anyone who is perceived as helping them. This line of thinking was alluded to in a press release for the US’ No Travel for Traffickers Bill which seeks to discourage Citizenship by Investment Programs which are fairly popular in the Caribbean. The release mentions that “Russia is one of the world’s worst offenders when it comes to using these golden passport schemes as a back door into other countries.” Though the Bill is not related to the current Russian invasion, the release shows that Russia is at the forefront of Congressmen’s minds.

    This also begs the begs the question of whether the consequences of visa restrictions resulting from the No Travel for Traffickers Bill could develop into other consequences if the islands do not comply or if they provide what may be deemed as aid to a Russian oligarch. Would simply be docking and being allowed to buy fuel for their yacht be seen as assistance that warrants action as was done in St. Vincent? Maybe not, but it does make one wonder if other oligarchs may make the Caribbean a temporary safe haven or a pit stop on their quest to escape western sanctions and whether allowing them to do such will impact Caribbean islands’ relations with the US and European Union, among others.

    Sanctions can also indirectly affect the Caribbean. Russia, as a result of direct sanctions on them, reportedly has been trying to build stronger ties with China, who has its own SWIFT equivalent called the Cross-Border Interbank Payment System or CIPS. Many theorize that Russia will try to join this system and use the Yuan as its reserve currency as a way to help counteract sanctions. Whether or not this is true, increased cooperation between Russia and any other country puts increased focus on the cooperating country and its own assets. As China has been making more investments throughout the world, especially the Caribbean, one has to wonder if this would have any real, potential impact on us. So far, there hasn’t been any real indication that these ties will hinder us but against the backdrop of increasing hypersensitivity to Russia’s actions, Caribbean leaders too must be hypervigilant to the danger that may lurk around the corner, especially as we are considered America’s backyard.

    Conclusion

    All of these things taken together are concerning considering many are still trying to recover from the pandemic, the Caribbean heavily relies on imports and the general hypersensitivity surrounding the invasion. Though both the Russian and Ukrainian sides have begun peace talks, it doesn’t appear as though those peace talks have resulted in any real ceasefire as yet. With this conflict set to continue for the foreseeable future, leaders must be cognizant of the current and future effects of the conflict as it goes on and what decisions have to be made to ensure the safety and longevity of the region.

    Renaldo Weekes is a holder of a BSc. (Sociology and Law) who observes international affairs from his humble, small island home. He has keen interest in how countries try to maneuver across the international political and legal stage.

    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.

  •  CARICOM Declaration on Climate Change leading up to COP26 (re-issued)

     CARICOM Declaration on Climate Change leading up to COP26 (re-issued)

    CARICOM Secretariat:



    “1.5: Ambition to Defend the Most Vulnerable”
    Underscoring that Small Island and low-lying coastal Developing States (SIDS) are particularly vulnerable to climate change, and have been internationally recognized as a special case for sustainable development,
     
    Recalling the Special Report of the IPCC on 1.5°C and the recent IPCC Report which confirms that the current decade is the final opportunity to keep 1.5°C within reach,
     
    Gravely concerned that global average warming has already reached 1.2°C, and the prospect of exceeding 1.5°C in the 2030s is imminent, noting in this regard that the IPCC projects that global warming could rise to 2.7°C by the end of the century,
     
    Alarmed that even at 1.5°C SIDS will continue to experience the worsening of slow onset events and extreme events including more intense storms, along with heavy or continuous rainfall events, ocean acidification, increased marine heatwaves, rising sea levels together with storm surges resulting in coastal inundation, saltwater intrusion into aquifers and shoreline retreat, as well as the continued overall decline in rainfall, increased aridity, and more severe agricultural and ecological droughts,
     
    Recognizing that these impacts threaten both human and natural systems, and that the already steep social, economic and environmental costs have already exceeded the Region’s overall capacity to adapt,
     
    Underscoring thus the limits to the region’s adaptive capacity, the increasing evidence and the growing toll of loss and damage, with cataclysmic and existential implications for the Caribbean,
     
    Emphasizing with consternation that while the Region emits roughly 0.2% of global greenhouse gases, it is disproportionately bearing the costs of a climate crisis it did not create,
     
    Further emphasizing that the ineligibility of CARICOM Members to access grant or concessionary support has contributed to increasing unsustainable debt burdens that are grossly exacerbated by the economic fallout from the continuing COVID-19 pandemic as well as other shocks including extreme weather events,
     
    Noting that developed countries have failed to deliver on the long-term climate finance goal of providing at least USD100 billion per annum by 2020, and continue to channel most resources to mitigation, with adaptation making up merely 20 percent of climate finance thus far, Noting also that the scale of the current finance goal and the rate of disbursement of financing is incommensurate with the scale of the needs of developing countries to implement their climate plans which is estimated to be in the range of trillions of dollars,
     
    Noting that despite the climate crisis not being of their making, SIDS have had to use their own resources, constrained by COVID, debt, a lack of policy and fiscal space wrought by global financial norms and inflexible rules, an absence of support, and, for some, the millstone of being classified as middle-income countries, to finance the climate crisis, jeopardizing progress towards the attainment of the Sustainable Development Goals.
     
    Highlighting thus the need for a new collective quantified goal on climate finance that shifts from billions to trillions and adequately as well as predictably addresses the needs of developing countries in a timely fashion,
     
    Taking note of the UNFCCC Synthesis Report which concludes that current NDCs fall far short of the mitigation ambition to maintain global temperatures below 1.5°C, and highlighting in particular that the major emitters especially those with historic responsibility have not submitted NDCs consistent with 1.5°C,
     
    Underscoring that members of the Group of 20, who account for 75 percent of global greenhouse gas emissions, have the greatest mitigation potential to curb emissions and keep 1.5°C within reach,
     
    Recognizing that the Conferences of the Parties to the Convention, the Kyoto Protocol and the Paris Agreement are meeting for the first time since the COVID-19 pandemic, and that it is expected to complete the Paris Agreement Work Programme in order to strengthen accountability, transparency and ensure environmental integrity, in line with the Paris Agreement and its subsequent Work Programme,
     
    Recognizing also that this COP marks the first five-year cycle since the adoption of the Paris Agreement and therefore it is a first opportunity to examine Nationally Determined Contributions in light of the goals of the Paris Agreement,
     
    Convinced that, in light of the foregoing, COP26 is the last best chance to keep 1.5°C within reach,
     
    Resolved to engage across all of society to amplify a robust regional response to climate change, and motivated to do so to secure a safe climate future for our young people,
     
    We, the CARICOM Ministers with responsibility for Climate Change, hereby declare that the Region faces a climate emergency and unavoidable loss and damage. We call urgently for unswerving global solidarity to deliver ambition, timely action, and support, for a just transition this decade with the aim of limiting global warming to well below 1.5°C. We demand climate justice and the assurance that our survival will not be compromised. We call upon leaders at COP26 to close the emissions gap, scale up finance particularly for the most vulnerable, and agree on rules to guide parties to progressively increase and demonstrate highest ambition.
     
    To close the emissions gap, we call on leaders of the Group of 20 to commit by COP26 to:
     Urgently close the emissions gap in order to maintain global warming to well below 1.5°C; Deliver, well before the global stocktake in 2023, new NDCs with 2030 targets that are consistent with the 1.5°C temperature goal and credible net zero by 2050 long-term strategies; Support efforts to encourage the aviation and shipping sectors to align with the Paris goals; and, Provide fair and just compensation for ecosystem services provided by forests regarding climate and atmospheric regulation; Support efforts to conserve and enhance reservoirs and sinks of greenhouse gases, including forests. Ensure a green and sustainable approach to the recovery from the COVID-19 pandemic. 
    We resolve to continue to do our part to contribute ambitious climate plans and in this regard:
     Commend fellow Member States who have already submitted ambitious targets and note encouragingly the efforts of others to finalize their submissions; and Commit to marshal all efforts to present low emission development strategies in line with a net zero by 2050 commitment and adaptation communications or adaptation plans, as appropriate. 
    We also underscore the need to optimize synergies between climate action and COVID-19 responses to ensure a green and sustainable approach to the recovery and plea for the international community to urgently support:
     CARICOM Members rapid access to grants and other sustainable and affordable financial instruments, Improved modalities of access for the Region to climate finance including at the sub- national and local levels, direct access modalities as well as direct financing mechanisms, simplified approval procedures, innovative financial arrangements such as debt for climate swaps Regional efforts to develop capacity, and access fit for purpose, state of the art technology, to improve and accelerate responses to climate change, and to strengthen monitoring and reporting, Dedicated funds for adaptation and for loss and damage for SIDS; and,Debt forgiveness, debt relief, and increased liquidity for the region. 
    To close the finance gap, we call on developed countries to:
     Deliver on their goal of at least USD100 billion per annum by 2020, aiming for a balance between mitigation and adaptation, and to progressively scale up finance from the floor of USD100 billion p.a.; Submit a credible plan for the period 2020 through to 2025, on delivering and going beyond the floor of USD100 billion p.a., that includes a specific target to significantly increase finance for SIDSin accordance with our needs, and modalities for fast-track financing in keeping with the emergency we face; Ensure that all CARICOM Member States are able to access climate finance as grants and other concessionary instruments on affordable terms bearing in mind the lender’s responsibility not to undermine a country’s debt sustainability; Provide dedicated funds additional to the USD100 billion p.a. floor to support the Caribbean and other SIDS in proactively responding to loss and damage already being incurred; Support the establishment of a formal replenishment process for the Adaptation Fund; Agree to a process for the new climate finance goal to be disaggregated to address: adaptation; mitigation; loss and damage response; just transition; transparency; readiness and enabling activities; and mechanisms supporting capacity building, technology transfer and providing technical assistance to developing countries; a sub-goal for non-state actors; specific attention to the needs and capabilities of Small Island and low-lying Developing States; and, transparency and consistency in reporting, linked to the enhance transparency framework and the implementation and compliance mechanism of the Paris Agreement; and At the regional level, to enhance capitalization of the Caribbean Catastrophe Risk Insurance Facility. 
    We also welcome the additional support of others in a position to do so.
     
    To finalize the Paris Agreement Work Programme, we commit to work with all delegations:
     Guided by the objective of enabling the highest possible ambition so as to maintain global warming to well below 1.5°C and to keep all Paris goals within reach, to elaborate article 6 rules and guidance emphasizing the need to address the core issues of: environmental integrity, A substantial discount rate on carbon credits in order to accelerate reduction of greenhouse gas emissions for the overall mitigation of global emissions in line with the 1.5°C temperature goal, corresponding adjustments, avoidance of double counting and carryover of Kyoto Protocol units, a defined share of proceeds that provides a significant predictable and sustainable source of finance contributing to the scaling up of adaptation finance that can be channeled to the Adaptation Fund; and capacity building and technology transfer for developing countries to participate in the range of available article 6 approaches; To ensure that in the operationalization of the rules and guidance of article 6 that developing countries are able to fully and effectively participate in, contribute to and benefit from market and non-market approaches; Finalise the arrangements for the implementation of the enhanced transparency framework in line with the modalities, and guidelines agreed under the Paris Agreement Work Programme and in accordance with the principles of transparency, accuracy, consistency, completeness and comparability; and, expand capacity building support for SIDS and LDCs especially for generating data, and for reporting on support needed and received; Synchronize nationally determined contributions (NDCs) preferably on a five-year timeframe with the aim of enabling progressive increase of ambition to limit global warming to well below 1.5°C; Establish a process utilizing the best available science, to support the implementation, and assessment of progress of activities towards achieving the global goal on adaptation; and, Agree on a time bound process for the full operationalization of the Santiago Network on Loss and Damage that will ensure that the Network can deliver on its mandate to developing countries, with adequate support, both institutional and financial.
    Finally, we recall that thirty years ago, SIDS raised the issue of loss and damage and the need therefore for international cooperation to prevent dangerous anthropogenic climate change. Thirty years later we are facing dangerous climate change and the SIDS are dangerously on its frontline. Clearly the models have not worked and there must now be renewed effort, renewed commitment and a different way of thinking.
     
    We urge all leaders at COP26 to finally confront the reality of loss and damage in SIDS and to identify robust options on a way forward for the UNFCCC to deliver action and support that responds to this reality and ensures our survival. We emphasize that there is no more time for equivocation and no more time for delay.
  • USITC Releases latest CBERA Report: Haiti, Barbados & Grenada have highest utilisation rate

    USITC Releases latest CBERA Report: Haiti, Barbados & Grenada have highest utilisation rate

    Alicia Nicholls

    On September 30, 2021, the United States International Trade Commission (USITC) released its latest report on the operation of the Caribbean Basin Economic Recovery Act (CBERA) and its impact on US industries, consumers and on beneficiary countries. Enacted in 1983 and made effective in 1984, the CBERA is one of the constituent acts under the Caribbean Basin Initiative. The CBERA allows the US President to extend to designated beneficiary countries in the Caribbean Basin non-reciprocal and unilateral duty-free or reduced duty access to the US market for a wide range of goods. The CBERA is of indefinite duration in that it has no statutory end date unlike, for instance, the other Acts. The Caribbean Basin Trade Partnership Act (CBTPA) of 2000 extended preferential treatment to textiles and apparels and was most recently renewed in October 2020 until 2030.

    The 17 CBERA beneficiaries in 2020 were as follows: Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, British Virgin
    Islands, Curaçao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Trinidad and Tobago. CBTPA beneficiaries (8) in 2020: Barbados, Belize, Guyana, Haiti, Jamaica, Saint Lucia, and Trinidad and Tobago. The Haiti Economic Lift Program (HELP) Act of 2010 and Haiti Hemispheric Opportunity through Partnership Encouragement Act of 2006 and of 2008 (HOPE I & II) provide special preferences for Haiti and were extended in 2015 until 2025.

    The latest CBERA report found that “the impact of the CBERA program on the US economy and industries continued to be small in 2019 and 2020”, which it attributed to the fact that “the value of US imports under the CBERA preference program are a
    small share of total US imports”. Turning to the future effect of the CBERA program on the US economy, including on U.S. domestic industries and US consumers, the report found that the effect ” is likely to remain minimal for most products, given the relatively small volume of imports from CBERA countries that is unlikely to grow substantially”.

    The report highlighted that the top US imports under the CBERA were petroleum oils, methanol, T-shirts of cotton, sweaters of manmade fibers, and polystyrene. The five largest CBERA exporting countries over the reporting period were Trinidad & Tobago, Haiti, Guyana, Jamaica and the Bahamas. However, Haiti, Barbados and Grenada were the beneficiary countries with the highest utilisation rate (94.7%) of the programme. It is noteworthy that Barbados moved from a utilization rate of just 38.2% in 2016 (one of the lowest) to a utilization rate of 94.7% in 2020. US imports under CBERA as a share of total US imports for consumption remained small (only 0.07% in 2020), while US imports from beneficiaries that receive program preferences as a share of total US imports from beneficiary countries were 33.8% in that same year.

    The 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. All views herein expressed are her personal views and should not be attributed to any institution with which she may from time to time be affiliated. You can read more of her commentaries and follow her on Twitter @LicyLaw.

  • My latest piece for IFC Review: “Why FATF’s Workstream on Unintended Consequences Matters to IFCs”

    My latest piece for IFC Review: “Why FATF’s Workstream on Unintended Consequences Matters to IFCs”

    Please see the link to the online version of my latest piece in IFC Review’s Economic Review entitled “Why FATF’s Workstream On ‘Unintended Consequences’ Matters To IFCs” for IFC Review. It can be accessed here.