Caribbean Trade Law and Development

Tag: Caribbean

  • My Opinio Juris piece: Will FDI help or hinder SDG achievement in the Caribbean?

    My Opinio Juris piece: Will FDI help or hinder SDG achievement in the Caribbean?

    This week I was pleased to contribute a piece to a timely Investment Law Symposium entitled “Is Foreign Direct Investment a Blessing or a Grift?” on the renowned Opinio Juris academic blog. The convenors were Prof. Mohsen Al Attar and Dr. Rafael Quintero Godinez. My piece looked at whether FDI can help or hinder achievement of the sustainable development goals in the Caribbean.

    If this is an area of interest, I encourage you to have a read of the excellent and thought-provoking contributions to this Symposium by renowned academics in the investment law and policy field.

    My piece may be accessed here.

  • Global tax reforms and Caribbean countries’ investment policy implications

    Global tax reforms and Caribbean countries’ investment policy implications

    Alicia Nicholls

    As of August 12, all Caribbean Community (CARICOM) Member States have now endorsed the Organisation for Economic Cooperation and Development (OECD) statement on a ‘Two-Pillar Solution to Address the Tax Challenges Arising From the Digitalisation of the Economy’ of July 1, 2021. The OECD statement, signed now by 133 member jurisdictions of the OECD/G20 Inclusive Framework, is not a fait accompli per se but has been described as a ‘conceptual agreement’ indicating their ambition for global tax reform. The stated purposes behind this latest phase of the OECD Base erosion and profit shifting (BEPS) initiative, described as ‘BEPS 2.0’, are to ensure that multinational enterprises (MNEs) “pay their fair share of tax” and to stop a “race to the bottom” in countries’ corporate tax rates. As such, pillar one of the two-pillar solution seeks to ensure a fairer distribution of profits and taxing rights among countries with respect to the biggest MNEs globally, in particular large tech companies. Pillar two – and the more controversial for our region – aims to prevent tax base erosion by setting a global minimum corporate income tax of at least 15%.

    The technical details behind this solution remain to be worked out. As the statement notes, a detailed implementation plan and the remaining issues are to be finalised by October 2021. But what does this mean for the investment policies of Caribbean countries, especially in a COVID-19 climate where foreign direct investment (FDI) will be key to sustainable economic recovery efforts?

    In its latest IIA Issues Note entitled “Recent Developments in the IIA Regime: Accelerating IIA Reform”, UNCTAD (2021) devotes several paragraphs to the possible impact that ongoing global tax reform efforts might have for international investment patterns and global and national investment policies and policy-making. UNCTAD (2021) identified several possible implications. One implication is that it would discourage multinational corporations (MNCs) from shifting profits and tax revenues to low tax-countries, and second, stop the race to the bottom among countries’ tax rates which have occurred over the past three decades.

    Let us look at these first two implications. Not all Caribbean jurisdictions have low CIT rates, but some do, particularly those which have large international business sectors. A global minimum CIT, of course, would have implications for those countries (particularly low tax and no-tax jurisdictions) whose favourable tax regimes have traditionally been a key component of their value proposition to potential and existing foreign investors. Contrary to popular opinion, it is not only small island international financial centres (IFCs) which have made a favourable tax environment part of their investment attraction strategy, but some larger countries, including in the EU, such as the Republic of Ireland and Luxembourg.

    The possible loss of business from raising their CIT to meet a possible minimum global CIT of 15% could have implications for the macroeconomic stability of countries dependent on FDI inflows, as well as possible loss of jobs. Governments would need to conduct the appropriate economic analyses to ascertain the potential impacts of raising their tax rates to meet the proposed global minimum CIT, if and when it is decided. The possible socio-economic implications must be considered and weighed.

    A third implication raised by UNCTAD (2021), and what several Caribbean countries are currently undertaking, is the need to engage in a comprehensive review of their tax incentive regimes to attract investment. Indeed, those countries whose tax rate was their main value proposition will be forced to develop other areas of competitiveness which would make them attractive to global business. This, of course, is not a negative thing and could force our countries to build other areas of competitiveness and pay greater attention to accelerating on-going investment facilitation and wider business facilitation reforms.

    A fourth issue raised by UNCTAD (2021), and which must be seriously considered, is the implications for host country obligations under international investment agreements (IIAs) signed. More specifically, should host States decide to raise their tax rates to the proposed minimum standard (once agreed), there is the possibility of legal exposure to investor-State claims brought by investors under IIAs, especially relying on nebulous clauses such as the fair and equitable treatment (FET) standard. This is a real possibility as the majority of Caribbean countries’ bilateral investment treaties (BITs) are older generation treaties with broad investor protections and few, if any, explicit provisions for State regulation in the public interest. Even where a host State ‘wins’ an ISDS dispute, the costs incurred through the need to hire (often foreign) legal representation and the negative press surrounding such a dispute might be just as harmful.  

    While the threat of possible treaty-based investor claims would not be a concern for those Caribbean countries with few or no BITs in force, those whose investment promotion strategies have historically relied on the signing of BITs should pay close attention to this possible unintended consequence as they formulate new tax regimes.

    Caribbean  IFCs are in uncharted and hostile global regulatory waters, and not for the first time. The ideal response would have been unity among affected countries to contest this latest blatant encroachment on our sovereignty, in particular, our ability to determine our own tax regimes and by extension, investment policies. However, it appears that many countries have decided that it was in their own national interests to sign on to the initiative because of the very realistic possibility of victimisation (through arbitrary blacklisting, for example) and reputational risk at a time when they are already dealing with the impact of de-risking practices by global banks. Another stated reason for joining is the prospect of influencing and shaping the developments from within. Let us hope that by having a seat at the table, we can at least ensure our voices will be heard in an initiative that is likely to be consequential for our Caribbean small island developing States at a time when we most need FDI inflows for a sustainable post-COVID-19 recovery.

    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.

  • Deadline Extended (June 4) – Call for Blogs – Afronomicslaw Symposium: Prospects for Deepening Africa-Caribbean Economic Relations

    Deadline Extended (June 4) – Call for Blogs – Afronomicslaw Symposium: Prospects for Deepening Africa-Caribbean Economic Relations

    Total trade volumes between African and Caribbean countries remain small, but the potential and opportunities for enhancing trade, investment and economic cooperation between these two regions are encouraging based on shared historical and cultural ties. To this end, the Caribbean Community (CARICOM) has announced steps to formalize relations with the African Union (AU).Several CARICOM countries have also sought to deepen bilateral ties with individual African countries. Africa-Caribbean Economic Relations and cooperation are even more critical now as countries on both sides of the Atlantic aim to kickstart economic recovery following the devastation wrought by the COVID-19 shock. Indeed, vaccine cooperation became another form of Africa-Caribbean cooperation when the AU offered CARICOM access to some of the approved vaccines from a shipment it was receiving.

    Given the limited but promising trade and investment relationship between both regions, there is a dearth of scholarly analysis on the Africa-Caribbean economic relationship. This Symposium aims to address this gap in international economic relations scholarship through considered analytical pieces exploring aspects of this understudied relationship.

    We invite authors to submit contributions which critically analyze and examine this relationship from a variety of perspectives, including but not limited to:

    • Geo-political and economic ties (both historical and present) between these two regions; 
    • The future of trade and investment relations between both regions in light of WTO-plus mega-regional trade agreements popping up;
    • EU-ACP relations e.g. EU-EPAs and issues relating to fragmentation and dilution of negotiating positions by African and Caribbean countries;
    • The impact of COVID-19 on the vulnerability of trade and investment regimes in both regions;
    • Comparative perspectives from both regions on the role of education in the advancement of critical thought in international economic relations scholarship;
    • Comparative perspectives from both regions on the regulation of digital trade/e-commerce;
    • Africa-Caribbean collaboration in multilateral fora, e.g., WTO, ACP, Commonwealth, UNCTAD; •
    • Comparative perspectives from both regions on approaches to cooperation and regional integration; 
    • Comparative perspectives from both regions on Sustainable Development, e.g., approaches to mainstreaming regulation of renewable energy, the green and blue economy into trade and investment regimes;
    • Air Connectivity/Tourism/Travel Trade, e.g., prospects for promoting leisure and business travel between CARICOM and African countries;
    • Cultural Industries collaboration;
    • Role of the private sector in shaping future Africa-Caribbean trade and investment relations;
    • Investment relations, e.g., opportunities for Africa-Caribbean FDI, cooperation on investment rule-making reform.

    Submission Guidelines:

    Essays that are submitted as part of this symposium must be analytical and original. Authors must comply with the Afronomicslaw.org blog submission guidelines accessible here. Blogs are to be submitted to afronomicslaw@gmail.com with the title ‘African-Caribbean Relations Blog Submission’.

    Deadline for Submission of Essays:

    May 14, 2021.

    Inquiries or clarifications relating to this call should be directed to Ohio Omiunu (ohio.omiunu@dmu.ac.uk) and Alicia Nicholls (alicia.nicholls@cavehill.uwi.edu)

  • Caribbean Trade and Development News Digest – May 9-15, 2021

    Caribbean Trade and Development News Digest – May 9-15, 2021

    Welcome to the Caribbean Trade and Development News Digest for the week of May 9-15 2021! We are pleased to bring you the major trade and development news headlines and analysis from across the Caribbean Region and the world from the past week.

    THIS WEEK’S HIGHLIGHTS

    The Caribbean Community (CARICOM) will have its first female Secretary General as of August 15, 2021. This week, Heads of Government unanimously selected Belizean Dr. Carla Barnett to be the incoming SG. Read more about what awaits the new SG here.

    Jamaica is exploring once again the possibility of creating an Economic Residency Programme. Read more here.

    According to the World Trade Organization (WTO), Bolivia has notified  its need to utilise the flexibility under the TRIPS  2017 amendment. Read more

    United States Trade Representative (USTR) Ambassador Katherine Tai testified this week at a Senate Finance Committee Hearing on the President’s Trade Agenda. Read her remarks here.

    Afronomicslaw Symposium: Prospects for Deepening Africa-Caribbean Economic Relations – Call for Blogs (Extended Deadline: June 4)

    Given the limited but promising trade and investment relationship between both regions, there is a dearth of scholarly analysis on the Africa-Caribbean economic relationship. This Symposium aims to address this gap in international economic relations scholarship through considered analytical pieces exploring aspects of this understudied relationship. We invite authors to submit blog contributions which critically analyze and examine this relationship from a variety of perspectives. Read the full Call for Blogs here.

    REGIONAL NEWS

    Regional integration and the CSME to be taught in CARICOM classrooms

    Loop News Caribbean: Starting on Monday, around the region, the teaching of regional integration and the Caribbean Community (CARICOM) Single Market and Economy (CSME) will be done in classrooms as part of a new indicative by the CARICOM Secretariat. Read more

    CARICOM launches regional integration and CSME pilot programme

    Searchlight: The Caribbean Community (CARICOM) Secretariat is continuing efforts to increase the teaching of regional integration and the CARICOM Single Market and Economy (CSME) in CARICOM classrooms via a new initiative that was due to start yesterday, Monday May 10, 2021. Read more

    More Protection For Condensed Milk And Clinker In CARICOM

    JIS: Minister of Industry, Investment and Commerce, Hon. Audley Shaw, has informed that condensed milk and clinker (used in cement production) supplied within the Caribbean Community (CARICOM) “have [now] been afforded an additional layer of protection”. Read more

    State Entities That Facilitate Imports And Exports To Be Digitised

    JIS: Some 20 State entities that facilitate imports and exports are earmarked for digitisation under the Jamaica Electronic Single Window for Trade (JSWIFT) initiative. Read more

    Barbados AG: UK listing disappointing, but not surprising

    Nation News: Statement from Attorney General Dale Marshall on the UK Government’s listing of Barbados as a High-Risk Third Country. Read more

    Barbados, Dominica collaborating on resilience investment

    Barbados Today: Barbados is engaging the services of the International Financial Corporation (IFC) in association with Dominica, as the two countries seek to embark on a pilot project to spur private sector investment in resilience. Read more

    St Kitts PM makes global appeal for regional vaccine availability

    NYCaribNews: Prime Minister Dr. Timothy Harris Friday called on the United States and other vaccine producing countries to ensure the equitable distribution of the vaccine needed to curb the spread of the coronavirus (COVID-19) that has killed thousands of people in the Caribbean Community (Caricom) grouping. Read more

    CARICOM states ‘lack green energy drive’ despite ‘ambition

    Barbados Today: Warning that it will take upwards of $40 billion (US$20 billion) in investment for CARICOM to reach the goal of 100 per cent renewable energy use and energy efficiency, a senior regional civil servant has expressed disappointment at the slow pace of some member states in going green. Read more

    BTMI relaunches Barbados tourism brand

    Nation News: The Barbados Tourism Marketing Inc. (BTMI) virtually relaunched Barbados’ tourism brand to the world earlier today, unveiling the new brand theme “Little Island; Big Barbados”. Read more

    BTMI chief introduces National Tourism Marketing Committee

    Barbados Today: A new National Tourism Marketing Committee (NTMC) has been established under the Barbados Tourism Marketing Inc. (BTMI) to focus on the strategic marketing of niche tourism product offerings, the state tourism agency said Friday. Read more

    Barbados exports down

    Barbados Advocate: According to the data, overall domestic exports brought in income of $102.8 million, compared to $117.2 million a year earlier and $135 million in the same three-month period in 2019. Read more

    Increase trade in services – EU delegation

    Jamaica Gleaner: Head of the European Union (EU) Delegation to Jamaica, Marianne Van Steen, is encouraging Jamaica to increase trade in services to better exploit opportunities within the 27-member trade bloc. Read more

    Government of Belize Reconstitutes a National Trade Negotiating Commission

    LoveFM: Distance, language, tariffs, and import quotas are barriers that often put small and medium-sized economies at great trading disadvantages. But with the formation of the National Trade Negotiating Commission, Belize is hoping to even the playing field. Read more

    Bahamas ambassador promotes Caribbean priorities for EU partnership agreement

    EyeWitnessNews: Maria O’Brien, ambassador extraordinaire and plenipotentiary of The Bahamas to the Kingdom of Belgium and head of mission to the European Union, recently represented The Bahamas at an official ceremony to finalize a new partnership agreement between the Organisation of African, Caribbean and Pacific States (OACPS) and the European Union. Read more

    Trinidad & Tobago Trade Ministry promotes opportunities in the UK market

    Trinidad Express: As the Government of Trinidad and Tobago continues to actively increase the country’s exports to extra-regional markets, the Ministry of Trade and Industry in collaboration with exporTT Limited recently hosted a Virtual Awareness Session on the CARIFORUM-United Kingdom (UK) Economic Partnership Agreement (EPA). Read more

    Trade Minister meets with TT Chamber’s new Head

    Trinidad Express: Senator the Honourable Paula Gopee-Scoon, Minister of Trade and Industry held a virtual meeting earlier today with the newly installed President of the Trinidad and Tobago Chamber of Industry and Commerce (TTCIC), Mr. Charles Pashley. During the meeting several matters related to supporting the growth and expansion of the local private sector were discussed. Read more

    Use of The Bahamas’ vast ocean resources — Bahamas Development Bank looks at the potential and offers grants for training

    EyeWitness News: The recent Blue Economy Think Tank hosted by the Strategic Development and Initiatives Unit of the Bahamas Development Bank (BDB) attracted over 340 registered participants and 20 panelists from The Bahamas and abroad, who examined ways in which Bahamians can benefit from sustainable use of the country’s vast ocean resources. Read more

    IDB urges Caribbean countries to do more to meet their Paris Agreement commitments

    Jamaica Observer: The Inter-American Development Bank (IDB) says Latin America and the Caribbean countries must include finance and planning perspectives to their climate policies and commitments in their nationally determined contributions (NDCs) if they expect to deliver on their Paris Agreement objectives and promote a sustainable recovery. Read more

    INTERNATIONAL NEWS

    WTO DG fixes July ministerial meeting on over-fishing rules

    Reuters: The head of the World Trade Organization plans to host a ministerial meeting on July 15 where she hopes an agreement can be reached on cutting fisheries subsidies after 20 years of talks, a document showed on Monday. Read more

    WTO Aims for Agreement on Fisheries Subsidies in July 2021

    IISD: World Trade Organization (WTO) members reviewed work undertaken in March and April to advance negotiations on an agreement to curb harmful fisheries subsidies. WTO members are aiming to reach an agreement in July 2021. Read more

    How global trade can save lives and livelihoods – and help protect the planet

    WEForum: Global trade has a role to play in saving lives in the COVID-19 pandemic, creating jobs and sustainable development that mitigates against climate change. This was the view of the panellists at the World Economic Forum’s latest Agenda Dialogues session on the Global Trade Outlook. Read more

    Piyush Goyal, US Trade Representative discuss COVID-19 vaccine production, TRIPS waiver

    Business Today: During a meeting with Commerce and Industry Minister Piyush Goyal, United States Trade Representative (USTR), Katherine Tai, reaffirmed the commitment of the US to help India. Read more

    China, WTO need to upgrade overdue digital trade rules

    Hellenic Shipping News: Over the years, the digital economy has developed greatly throughout the world. But World Trade Organization (WTO) digital trade rules have stagnated. Since the new Director-General Ngozi Okonjo-Iweala took office in February, reforms regarding digital trade rules are facing greater challenges and opportunities. Read more

    ‘Hostile environment’: After Brexit, some EU citizens in the UK are worried about their future

    CNBC: Many EU citizens who are still living in the U.K. after Brexit have said they do not feel treated equally to British citizens and feel worried about their rights, a new survey has found. Read more

    After India-EU Summit, Is a Free Trade Agreement on the Cards?

    News18: Even as the European Union has got politically weakened by Brexit, internal tensions between western European countries and eastern ones, notably Hungary and Poland, over issues of democracy and European values, problems of migration, Islamism, terrorism and rise of right-wing forces, and, in addition, economically enfeebled by the still-uncontrolled COVID crisis, India has decided to draw closer to it, driven by its own political and economic challenges. Read more

    EAC Secretary General promises to increase intra-regional trade from 20% to 50% in the next five years

    EAC: The EAC Secretary General, Hon (Dr.) Peter Mathuki has promised the business community in the region that he will do everything within his power to address the vice of Non-Tariff Barriers to trade and trade wars, and work towards raising the volume of intra-regional trade from the current level of below 20% to more than 50% over the next five years. Read more

    Cotonou 2.0: A bad trade deal for Africa?

    DW: The new EU-OACPS Partnership Agreement is only a few weeks old, but already many in Africa are calling for an update. What are the reasons for the dissatisfaction? Read more

    Impact of COVID-19 on financing of free trade in Africa assessed

    ESI Africa: African Export-Import Bank, the UN Economic Commission for Africa, the African Development Bank and Making Finance Work for Africa Partnership have released a special African Trade Finance Survey Report assessing the impact of the COVID-19 pandemic on trade finance in Africa. Read more

    Kazungula Bridge to boost regional trade and commerce

    AllAfrica: The recently constructed 923-metre-long rail and road Kazungula bridge, linking Zambia and Botswana, was inaugurated on Monday in an effort to boost bilateral and regional trade. The bridge across the Zambezi River, co-financed by the two governments, is expected to boost trade and commerce between the two countries as well as increase economic activities and prospects of other Southern African Development Community (SADC) countries, including Namibia, Zimbabwe, Malawi, DRC and Mozambique. Read more

    Belarus, South Africa to strengthen business contacts

    BELTA: Belarus and South Africa plan to strengthen business contacts. The matter was discussed during the online meeting of the representatives of the Belarusian Chamber of Commerce and Industry (BelCCI) with President of the South African Chamber of Commerce Mtho Xulu, BelTA learned from the BelCCI website. Read more

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