Caribbean Trade Law and Development

Tag: Coronavirus

  • COVID-19: Caribbean begins ‘to flatten curve’ but economic damage inevitable

    COVID-19: Caribbean begins ‘to flatten curve’ but economic damage inevitable

    Alicia Nicholls

    Weeks of COVID-19 induced shutdowns and travel restrictions in most Caribbean countries appear to have yielded results. As the English-speaking Caribbean’s rate of new cases slows, several regional governments have cautiously embarked on phased re-openings in the belief that the curve has finally begun to flatten.

    This is indeed welcomed news, both from a human and economic standpoint. However, in addition to the human toll, there is no denying that COVID-19 presents an economic shock the likes of which the region has not witnessed in decades. Reduced domestic economic activity, halted tourist arrivals and growing unemployment, as well as the possible economic fall-out in our major trading partners and tourism source markets, are poised to send the region’s economies into a tailspin.

    Biggest Contraction Economic Activity in History

    New growth projections released this week by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) warn that the COVID-19 pandemic will lead to the ‘biggest contraction in economic activity’ in the Latin America and Caribbean region’s history.

    In her press conference, the organisation’s Executive Secretary, Alicia Barcena stated categorically that  borrowing is not an option for Caribbean countries, many of which already have unsustainable debt levels and will need access to concessional financing and debt relief.

    As it currently stands, many Caribbean countries have been graduated from accessing many forms of concessional financing merely on the basis of being ranked by the World Bank as ‘middle income’ or ‘high income’ economies, without regard to the many inherent vulnerabilities they face.

    Barbados PM’s Renewed Call for a Vulnerability Index

    On this latter point, Barbados’ Prime Minister the Hon. Mia Amor Mottley’s renewed call for a vulnerability index instead of the current income per capita method for determining countries’ eligibility for concessional financing is timely. Her remarks were made during an eleven-minute interview with CNN International’s legendary journalist Christiane Amanpour in which she discussed the human and economic impact of COVID-19 on Barbados and the wider Caribbean Community (CARICOM), of which she is currently the Chairman.

    In the must-see interview, Prime Minister Mottley both praised and called for a revisiting of work conducted by The Commonwealth Secretariat on a Vulnerability Index over thirty years ago. On this note, the Shridath Ramphal Centre of The University of the West Indies (UWI) Cave Hill Campus has already begun conceptual work on a Trade Vulnerability Index.

    Caribbean Countries’ Economic Responses

    Within the limited fiscal space available, several Caribbean countries have announced stimulus packages whose social component aims at assisting the most vulnerable in their societies and supporting Small and Medium-sized Enterprises (SMEs) which have been among the most affected by the economic fall-out.

    Barbados, which will enter Phase 2 of its lockdown exit strategy from May 4, has not only announced a BDS$20 million stimulus package but has also established a Jobs and Investment Advisory Council to help the island navigate the current headwinds.

    The COVID-19 pandemic could not come at a worse time for Barbados which since October 2018 has been implementing an economic recovery and transformation programme supported by the International Monetary Fund (IMF)’s Extended Fund Facility. This week, a staff-level agreement was reached on the third review of the programme. In its first quarter economic review, the Central Bank of Barbados also this week forecasted a double-digit contraction in the Barbados economy this year due to the pandemic.

    COVID-19 lessons and legacies?

    From the start of the pandemic, the Caribbean’s leading tertiary institution, The UWI, has shown exemplary thought-leadership on this crisis through its research support to governments and general outreach activities.

    In an intellectually stimulating presentation during a conference entitled ‘COVID-19: Approaching Code Red’ hosted by The UWI’s Mona Campus, Ambassador Dr. Richard Bernal acknowledged the serious economic challenges posed by COVID-19, but also outlined some of the possible positive outcomes, such as the greater reliance on technology, more stringent health precautions taken by the airline industry, and the likelihood that the region’s tourism industry might rebound quickly as North Americans may prefer to travel closer to home.

    Like the Global Financial Crisis of 2008 whose economic impact it is predicted to surpass, the COVID-19 pandemic is leaving us with many lessons and legacies that will be debated by academics and policy makers for years to come. What is not debatable, however, is that this pandemic has further reinforced the vulnerability of many small States whose narrow export base and import dependence increase their susceptibility to external shocks such as this. As Prime Minister Mottley and many others before her have argued, there must be a rethink by the international community of eligibility for concessional financing.

    But the Caribbean must also take responsibility for its own fate. For starters, reliance on a single industry – in most cases tourism – for economic activity and employment has never been and will never be a sustainable economic path. Greater economic diversification, particularly into value added industries, is a must, as well as creating a facilitative environment for business, sustainable foreign direct investment (FDI) and entrepreneurship.

    The region’s high reliance on the importation of medical products and food remains unsustainable. Industrial and innovation policies are an imperative, and there is the need to, where possible, build manufacturing capacity for products which would be needed during a pandemic. On this score, it is commendable that several regional rum and spirit manufacturers have begun manufacturing rubbing and surgical alcohol and hand sanitisers to address regional supply shortages. The Bahamas has sought to reduce its dependence on imported masks by banning their importation and developing its own mask manufacturing industry. Regarding food security, CARICOM agricultural ministers met virtually on April 20 to discuss plans for boosting the region’s food production.

    The sometimes awkward shift from the face to face to online provision of services during the shutdowns reveals that the region’s governments and private sector still have far to go to fully take advantage of the digital age. Let us hope that even when the COVID-19 pandemic has been ‘conquered’ by a proven vaccine, Caribbean governments and businesses will continue to prioritise the embrace of technology.

    Additionally, it should not be forgotten that members of the Caribbean diaspora are among those who have tragically lost their lives to COVID-19, particularly in New York. Many of these persons would also have been supporting loved ones back in the region through remittances. That said, however, the diaspora can and has been a powerful resource, including by making donations of supplies and expertise.

    On a final note, I wish to extend my condolences to all families across the region and beyond who are mourning loved ones lost to this dreaded virus. I also join with many others in extending heartfelt kudos to all the essential workers who daily put their lives on the line to ensure we still have some measure of ‘normalcy’ in these abnormal times.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant. You can also read more of her commentaries at www.caribbeantradelaw.com and follow her on Twitter @LicyLaw.

    DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.

  • What COVID-19 trade measures have WTO members notified so far?

    What COVID-19 trade measures have WTO members notified so far?

    Alicia Nicholls

    The World Trade Organization (WTO) has this week called on Members, including those in the Caribbean, to notify trade and trade-related measures they are implementing nationally to fight the spread of COVID-19 and to support their economies during these unprecedented times.

    This is part of the WTO’s efforts to monitor the impact of the COVID-19 crisis on global trade. It is also consistent with the WTO’s role as the guardian of the multilateral trading system by, inter alia, promoting transparency of Members’ trade laws and policies.

    To this end, both this initiative and the Director General’s decision to establish a special taskforce of experts from across the WTO Secretariat to monitor the impact of COVID-19 on trade flows and the overall global economy are welcomed.

    What has been notified so far?

    According to the WTO’s new COVID-19 and world trade page, the following Members have notified trade/trade-related COVID-19 measures thus far: Albania, Brazil, Kyrgyz Republic, Mauritius, Indonesia, Kazakhstan and the Russian Federation.

    As many countries turn inward to fight the outbreak, it is little surprise, though unfortunate, that many of the notified measures are trade-restricting. The majority of measures have been notified as technical barriers to trade (TBTs), but sanitary and phytosanitary (SPS) measures and quantitative restrictions have also been notified. Several of the notifications relate to export bans or licensing arrangements for the export of medical equipment, while others restrict imports of live fish and fish products, mammals and exotic pets from certain affected countries, particularly China where the virus originated.

    WTO Secretariat List of Members’ Trade-related COVID-19 measures

    The WTO Secretariat has also compiled its own list of Members’ trade and trade-related COVID-19 measures based on official and other public sources. The list as at March 26 may be found here.

    In addition to some trade-restrictive measures, the list shows that there have also been some trade-enabling measures implemented, such as reductions or eliminations of customs duties on medical supplies.

    Another example of a trade-enabling measure is Argentina’s suspension of its anti-dumping duty on imports of hypodermic syringes from China and parenteral solutions from Brazil and Mexico.

    The wider perspective

    More broadly, there has been growing concern over bans or restrictions being implemented by some countries on the export of medical supplies, such as pharmaceutical drugs, disinfectants and face masks. An insightful analysis by Global Trade Report (2020) found that “as of 21 March 2020, 46 export curbs on medical supplies have been introduced by 54 governments since the beginning of the year”.

    Let us consider a few examples. The European Union (EU) has temporarily introduced export authorisation requirements for exports of personal protective equipment outside of that bloc. Amidst a surge in global demand, India has announced an export ban on the anti-malarial drug hydroxychloroquine, believed by some to be a possible cure for COVID-19 but this remains scientifically unproven. The United Kingdom (UK) has banned the parallel exporting of certain medicines critically for treating COVID-19 patients in intensive care units.

    Export bans are now being extended to food items, which the United Nations Food and Agriculture Organisation (FAO) has warned could cause a global food shortage. For instance, in order to ensure enough rice supplies during the COVID-19 outbreak, Vietnam has halted the signing of new rice export contracts until March 28th. Kazakhstan has banned the export of key food items.

    What about the Caribbean?

    Although announced as temporary measures, these developments are particularly disconcerting for import-dependent small States like those in the Caribbean which not only rely on the importation of food products, but depend on the importation of medical supplies needed to combat the spread of the highly contagious virus. These export bans and restrictions will not only restrict the availability of these needed medical supplies, but make sourcing them more expensive, with dire implications for affected importing countries’ ability to save lives.

    How have Caribbean countries responded to the COVID-19 crisis to date? No Caribbean WTO Member has notified any COVID-19 trade-related measures so far. Indeed, Caribbean countries’ policy responses to the crisis have been largely in the form of fiscal stimulus packages and economic and social support for affected workers and businesses, as opposed to any export-related measures.

    Nonetheless, to assist the WTO Secretariat in its monitoring of Members’ trade/trade-related COVID-19 policy responses and to comply with our general notification obligations under the various WTO Agreements, it is advisable that our governments notify any COVID-19 trade/trade-related measures or economic support measures which may have a possible trade impact.

    Caribbean countries should also advocate for greater international cooperation to ensure that they and other poorer countries are able to access needed medical supplies and foods.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant. You can also read more of her commentaries at www.caribbeantradelaw.com and follow her on Twitter @LicyLaw.

    DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.

  • COVID-19: How have Caribbean governments responded so far?

    COVID-19: How have Caribbean governments responded so far?

    Alicia Nicholls

    Declared a pandemic by the World Health Organisation (WHO) on March 11, 2020, the COVID-19 outbreak has now spread to well over 100 countries worldwide, including most Caribbean countries. As of March 22, Belize and St. Kitts & Nevis are the only English-speaking Caribbean countries to have not yet reported a confirmed COVID-19 case.

    Globally, the number of confirmed cases is over 300,000. In the Caribbean, the number is over 300 (if the Dominican Republic and Cuba are included). Detailed COVID-19 statistics for each English-speaking Caribbean country as at March 21, may be found here.

    While the number of cases and deaths in the Caribbean currently remain low compared to other regions, the economic fall-out is far more daunting. Tourism associations across the region have reported booking cancellations, a reduction in flight bookings and the real possibility of some accommodations having to close their doors temporarily. Similarly, many businesses across the region have begun to feel the economic pinch from declining patronage and event cancellations.

    This article takes a brief look at some of the various policy responses instituted by Caribbean governments so far to mitigate the human and economic impact of the highly contagious virus.

    Caribbean Government Policy Responses

    As the COVID-19 pandemic spreads across Caribbean shores, regional governments have stepped up their responses which vary according to the severity of the outbreak in the country concerned.

    Based on media reports and government public announcements, below is a non-exhaustive list of some of the major COVID-19 policy measures implemented by Caribbean governments to date:

    A. Containment Policies

    1. Mandatory quarantining of all travellers (both nationals and foreigners) coming from selected countries – mainly the US and Europe, China, South Korea, and Iran e.g: Barbados
    2. Temporary restrictions of entry of foreign nationals from selected countries e.g: many Caribbean countries
    3. Restrictions on non-essential travel by nationals to certain affected countries e.g: many Caribbean countries
    4. Suspension of international flights or flights from certain countries e.g: Dominican Republic, Jamaica, Trinidad & Tobago
    5. Refusal of docking for cruise ships with cases of respiratory illness onboard e.g: most Caribbean countries now
    6. Temporary closures of land borders, and most or all ports of entry (except for citizens or permanent residents returning home – they will be placed in quarantine on arrival) e.g: Belize, Dominican Republic, Jamaica, Suriname, Trinidad & Tobago
    7. Restrictions on mass events, public gatherings and public events over a certain number of persons, e.g: in Barbados the number is now restricted to 25 persons
    8. Closure of beaches e.g: Tobago has closed beaches to control public gatherings
    9. Mandatory closures of bars, restaurants, casinos e.g: Jamaica, Trinidad & Tobago
    10. Restrictions on public visits at hospitals, polyclinics and geriatric hospitals e.g: Barbados, Trinidad & Tobago
    11. Temporary closures of schools and other educational institutions e.g: several Caribbean countries
    12. Declaration of state of emergency e.g: Haiti, Dominican Republic
    13. Imposition of curfew with penalties for non-compliance e.g: The Bahamas, Haiti

    B. Communication Policies

    1. Establishing dedicated COVID-19 hotlines e.g: several Caribbean countries
    2. Regular press briefings on the status of the outbreak in the country and measures being taken e.g: Barbados
    3. Public service announcements/campaigns e.g: many Caribbean governments are running public service announcements on respiratory hygiene and social distancing

    C. Social and Economic Policies

    1. Stimulus package e.g: the Government of Barbados, which is currently undergoing an IMF-sanctioned adjustment programme, announced a BBD $20 million stimulus package to assist people and businesses impacted by the outbreak. The Jamaica government has also outlined a JAM $25 billion fiscal stimulus package.
    2. Tapping into disaster funds e.g: Cayman Islands has tapped into its National Disaster Fund to set aside $3 million for its COVID-19 response.
    3. Anti-price gouging policies e.g: Barbados has instituted a COVID-19 basket of goods
    4. Additional benefits for affected workers, such as extending the period of non-certified sick leave and increasing the duration period of unemployment benefits e.g: Barbados
    5. Providing assistance to affected families and small businesses e.g: increasing welfare cheques and recapitalising funds for assisting businesses
    6. Enlisting private sector and civil society support
    7. Reinstatement of standpipes e.g: Dominica
    8. Efforts to stimulate local food production e.g: The British Virgin Islands has set aside $2 Million to stimulate local food production and assist fisherfolk under its stimulus package “The Rapid Response Fishing and Farming Production Programme”.

    D. Providing external assistance to other affected countries

    Cuba has reportedly sent 144 health care workers to assist affected countries.

    This article will be updated periodically .

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant. You can also read more of her commentaries at www.caribbeantradelaw.com and follow her on Twitter @LicyLaw.

    DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.

  • COVID-19 and MSMEs: Impacts and Options

    COVID-19 and MSMEs: Impacts and Options

    Image by Vektor Kunst from Pixabay

    This article has been updated.

    Alicia Nicholls

    Businesses which fall under the category of micro, small and medium-sized enterprises (MSMEs) are among the most impacted by the economic and financial fall-out from the COVID-19 pandemic globally.

    These businesses, while not large participants in international trade, are significant contributors to national economic activity and employment. For instance, SMEs account for 93 per cent of enterprises in non-high income, non-OECD countries, while MSMEs comprise over 95 per cent of all enterprises in OECD countries according to the WTO’s World Trade Report 2016. Moreover, according to this same report, in “a sample of firms from 99 emerging and developing countries (World Bank Enterprise Surveys), SMEs accounted for two-thirds of formal non-agricultural private employment”.  

    With the pandemic’s growing impact on the global economy, its concomitant impact on MSMEs cannot be ignored – whether it is a ‘mom and pop’ corner shop experiencing declining footfall, the catering company which lost out due to a cancelled event or a hotel facing increased guest cancellations.  

    This article briefly looks at the possible impacts of COVID-19 on MSMEs and what options these businesses could consider to help mitigate the impact. It also briefly discusses some policy measures governments could put in place to assist MSMEs during this difficult period.

    Possible impacts on MSMEs

    The possible direct and indirect impacts of the COVID-19 pandemic on MSMEs differ according to the individual business and sector, but it is likely that those businesses in ‘high contact’ sectors– such as the hospitality and retail sectors – will be the most adversely affected.

    There is, of course, the human impact, such as the loss of productivity due to increased sick leave and the loss to the business of know-how, expertise and skill where a valued and skilled employee dies from the virus.

    Reduced sales due to a fall in demand, whether locally or from international customers, could also affect businesses’ ability to make payroll and their bottom-line.

    Supply chain disruptions could lead to difficulty sourcing final products or inputs for final goods, with knock-on effects for fulfilling contractual obligations.

    Another possible impact has been the increase in panic buying by consumers, generating increased sales in the short-term, but possibly causing inventory shortfalls, especially where supply chains have been disrupted.  

    For many small business owners around the world, there is the real fear of having to lay off staff, closing temporarily or completely going out of business.

    How can MSMEs cope?

    Because of their size, MSMEs generally face greater challenges and resource-constraints than larger businesses, like multinational enterprises (MNEs). Limited access to capital can often constrain MSMEs’ ability to respond to, and weather crises. However, there are steps that these businesses, regardless of size, can put in place.

    Below are some of the main ones.

    • Protect health of employees

    Employees are a business’ most valuable asset. As such, protecting the health of your employees must be foremost, especially those businesses in ‘high contact’ sectors. This is particularly so for frontline workers, such as receptionists and cashiers who interface with the general public, placing them at higher risk. Unlike other workers, frontline workers do not have the luxury of working from home. Therefore, they should be equipped with adequate supplies to keep themselves safe, such as hand sanitizer and wipes, as they go on about their jobs.

    In compliance with the social distancing advice given by WHO and national health authorities, many businesses globally have started reducing the number of employees working in the same space, instituting ‘work from home’ policies and remote meetings where possible, cancelling meetings which involve bringing in persons from abroad, and restricting non-essential employee travel, especially to affected countries.

    Protecting the health of employees also includes their mental health as well. Where lay-offs are an inevitability, employers should adopt a humane approach. Ensure any lay-offs are done in accordance with the law and that the employees’ rights are not violated.

    • Follow national and international best practices as they evolve

    According to the WHO, COVID-19 is a highly contagious virus and is particularly problematic for those persons with compromised immune systems, such as the elderly and those with existing illnesses. It should be noted that here in the Caribbean, we not only have a growing senior population, but a high and increasing incidence of persons with Chronic Non-Communicable Diseases (CNDCs), such as diabetes and hypertension.

    Businesses should formulate customized organization policies aimed at preventing and reducing transmission.  Your office protocols should be informed by the guidelines developed by your country’s national public health agency and the WHO. They should be updated regularly. Check out in particular WHO’s “Getting your workplace ready for coronavirus” pamphlet.

    Some simple measures can go a long way in creating a low-transmission environment. These include providing hand sanitiser dispensers, sticking up posters on good respiratory etiquette and hygiene, requiring sick employees to remain home, encouraging employees to regularly sanitise their personal work spaces, adequately stocking the company’s medicine cabinet with infrared thermometers, masks, gloves and alcohol, and increasing the frequency of scheduled work place cleaning.  

    Businesses should also formulate humane and non-discriminatory policies and protocols on what should be done in case of suspected or confirmed incidents of COVID-19 among employees, or where employees come into contact with an infected customer. What support systems, such as counselling, will be put in place where an employee dies as a result of the virus, bearing in mind the impact the death could have on the morale and well-being of other employees?

    Other good resources are the Coronavirus Guidelines for Business published by the International Chamber of Commerce, as well as the guidelines published by your local or national small business association or chamber of commerce.

    • Fight ‘fake news’ by keeping employees and customers informed

    Businesses must also battle against rumors and misinformation about the virus being spread on social media. Combating ‘fake news’ requires keeping your clients/customers informed of the current state of your operations and the measures you have put in place to prevent or deal with any transmission. Rely on information from trusted sources, such as the national public health authority, the Caribbean Public Health Agency (CARPHA), Pan-American Health Organisation (PAHO) and the WHO.

    • Manage your risks

    Now is the time for your business to either prepare or review/update your contingency and business continuity plans.

    An essential part of preparation is reviewing your current contracts with suppliers/purchasers and examining whether a COVID-19 outbreak would impact your ability to perform your contractual obligations.

    Managing risks also might require diversifying your sourcing in the event your usual supplier goes out of business or is otherwise unable to fulfill your order request.

    Many businesses have some form of business interruption insurance. Speak to your insurance agent about what is covered and not covered in your policy. For businesses in the exporting business, they should also review their insurance coverage.

    • Consider Capital Access Options

    Businesses should consider beforehand their capital access options in cases where drops in demand could negatively affect their cashflow and ability to meet obligations. These options may range from a loan from a family member or friend, to commercial bank loans to special loan schemes provided by Government. Those in the exporting business should review their trade finance options.

    • Refrain from price gouging

    Businesses should refrain from engaging in price gouging, which can reduce public ‘goodwill’ towards your business and drive customers to your competitor.

    How can governments assist?

    Policymakers around the world are increasingly cognizant of the important economic role played by MSMEs and have sought to find ways to assist businesses during this challenging period. In the US, affected small businesses in some states impacted by COVID-19 can access low-interest federal disaster loans, while the European Commission hasset out a coordinated response to counter the economic impact of the Coronavirus, particularly on SMEs.

    In some Caribbean countries, direct support, through the provision of concessional loans and grants to SMEs, may or may not be an option depending on the Government’s fiscal constraints. However, there could be indirect support such as delaying payment of taxes, debt forgiveness, and other measures to assist SMEs facing cashflow difficulties. Other policy interventions Governments could consider include providing support for employees affected, including those laid-off or placed on ‘short time’. Governments can also temporarily suspend tariffs on the importation of needed medical supplies to make it easier for businesses and the public at large to more cheaply access these goods.

    In this period of much uncertainty, it is doubly important that Governments and the private sector keep open channels of communication and continue to work hand in hand on current preparation and mitigation efforts to reduce both the economic and human impact of the outbreak.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international trade and development consultant. You can also read more of her commentaries at www.caribbeantradelaw.com  and follow her on Twitter @LicyLaw.

    DISCLAIMER: All views expressed herein are her personal views and do not necessarily reflect the views of any institution or entity with which she may be affiliated from time to time.