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World Economic Forum Releases Global Enabling Trade Index 2016; Caribbean countries continue to lag

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Alicia Nicholls

The World Economic Forum (WEF) and the Global Alliance for Trade Facilitation released the 2016 edition of the Enabling Trade Report today November 30, 2016. Singapore topped the ranking for the 5th time in a row and was in the top 3 for 5 of the 7 pillars.

For Latin America and the Caribbean, Chile was the top economy and led in all but 2 pillars. With a rank of 21st out of 136 economies, Chile was also the highest ranked emerging economy on the index. According to the WEF, the two main findings from this edition of the index were (1) a large part of the world is still excluded from globalization, and (2) some of the world’s largest economies offer limited market access. Another major finding is that the ASEAN market has become more accessible than European Union (EU) and the United States markets.

Caribbean countries’ performance 

Only three Caribbean economies were included on this year’s index: Dominican Republic (78), Jamaica (89) and Trinidad & Tobago (106).

Dominican Republic

The Dominican Republic ranked 78 out of 136 economies in 2016, compared to 77 out of 134 in 2014 and has not as yet ratified the WTO Trade Facilitation Agreement. The Dominican Republic’s best performance was on Pillar 4: Availability and Quality of Transport Infrastructure where it ranked 54th. Its worst was on Pillar 6: Availability and Use of ICTs where it ranked 95th.

The most problematic factors identified for importing were tariffs/non-tariff barriers, burdensome import procedures, high cost or delays caused by domestic transportation, corruption at the border and high cost or delays caused by international transportation. The most problematic factors identified for exporting were difficulties in meeting quality and quantity requirements of buyers, identifying potential markets and buyers, high cost or delays caused by domestic transport, access to trade finance and inappropriate production technology and skills.

Jamaica

Jamaica ranked 89 out of 136 economies in 2016, compared to 88 out of 134 economies in 2014 and has ratified the WTO Trade Facilitation Agreement. Jamaica’s best performance was on Pillar 2: Foreign Market Access where it ranked 34th. Its worst was on Pillar 5: Availability and Quality of Transport Services where it ranked 108th.

The most problematic factors identified for importing were burdensome import procedures, tariffs/non-tariff barriers, corruption at the border, crime and theft, and domestic technical requirements and standards. The most problematic factors identified for exporting were identifying potential markets and buyers, difficulties in meeting quality and quantity requirements of buyers, access to imported inputs at competitive prices, access to trade finance and inappropriate production technology and skills.

Trinidad & Tobago

Trinidad & Tobago ranked 106 out of 136 in 2016, sliding from 93 out of 134 in 2014 and ratified the WTO Trade Facilitation Agreement. Trinidad & Tobago’s best performance was on Pillar 6: Availability and Use of ICTs where it ranked 57th. Its worst performance was on Pillar 7: Operating Environment where it ranked 119th.

The most problematic factors identified for importing were: burdensome import procedures, tariffs/nontariff barriers, corruption at the border, crime and theft and high cost/delays caused by international transportation. The most problematic factors for exporting were: identifying potential markets and buyers, access to trade finance, difficulties in meeting quality and quantity requirements of buyers, access to imported inputs at competitive prices and technical requirements and standards abroad.

About the Index

The Enabling Trade Index ranks economies according to “their capacity to facilitate the flow of goods over borders and their destination”.The index is useful as countries seek to implement the World Trade Organisation’s Trade Facilitation Agreement concluded in 2013 at the Bali Ministerial. It helps countries to see where they are excelling and where there is a room for improvement. It is therefore disappointing that more Caribbean countries are unable to be ranked.

On this year’s index, one hundred and thirty-six (136) economies, accounting for 98 percent of world GDP and 98.3 percent of world merchandise trade, were ranked on seven pillars: domestic market, foreign market, efficiency, transparency and border, availability and quality of transportation infrastructure, availability and quality of transport services, availability and use of ICTs and operating environment.

The full 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.

 

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Ranking Caribbean Countries’ Competitiveness: WEF Global Competitiveness Index 2016-2017

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business-561388_960_720Alicia Nicholls

A few days ago, the World Economic Forum (WEF) released its Global Competitiveness Report 2016-2017. Two things immediately struck me as I perused the list of 138 economies which made the GCI 2016. The first was that because of data shortages only 4 Caribbean countries (Barbados, Jamaica, Dominican Republic and Trinidad & Tobago in order of rank) were included in this year’s index. The second was that all four of these economies were in the bottom 50 per cent of the survey sample, with the highest ranked (Barbados) at only 72nd place.

The WEF in its Global Competitiveness Report defines competitiveness as “the set of institutions, policies, and factors that determine the level of productivity of an economy which in turn sets the level of prosperity that the country can achieve”.The GCI’s 114 indicators are grouped into 12 pillars which are further grouped into 3 sub-indices.  Collectively they measure an economy’s performance on a variety of concepts which impact on productivity and prosperity. Some of these include basic requirements such as institutions, infrastructure and macroeconomic environment to more sophisticated indicators dealing with business sophistication and innovation.

In the preface to this year’s report, the World Economic Forum team highlighted that “many of the competitiveness challenges we see today stem from the aftermath of the financial crisis”.  Productivity and GDP growth in advanced economies and increasingly emerging economies remain subdued. This equally applies to Caribbean countries whose small open economies enhanced their vulnerability to the effects of global financial and economic crisis of 2008, and face many competitiveness disadvantages inherent in their smallness. However, not all of the region’s competitiveness challenges are structural and many are within our power to address.

Caribbean Countries’ WEF GCI Performance 2016-2017

So how did the region fare on the GCI this time around?  Barbados, whose economic recovery remains fragile, topped the CARIFORUM rankings with a rank of 72. Due to data shortages, the island had not been included in the 2015-2016 index but has dropped several places since its rank of 55 out of 144 economies on the 2014-2015 index.

Barbados commendably tops the Latin America and Caribbean region in infrastructure, labour market efficiency and technology. However, the island’s most problematic factors for doing business are as follows: poor work ethic in national labour force, inefficient government bureaucracy, tax rates, restrictive labour regulations and access to financing. Unlike the other three Caribbean economies included, corruption was not seen as a major problem in Barbados.

Trinidad & Tobago, which is currently in recession, has also lost ground, ranking 94 out of 138 economies in 2016-2017, compared to 89 out 140 in 2015-2016. The top 5 problem areas for Trinidad & Tobago for doing business were poor work ethic in national labour force, corruption, inefficient government bureaucracy, crime and theft and foreign currency regulations. But there is a silver lining. The WEF GCI identifies three stages of development: Stage 1 (Factor-driven), Stage 2 (Efficiency-driven) and Stage 3 (Innovation-driven). Trinidad was the only Caribbean country listed as a stage 3 economy (innovation-driven). Barbados was ranked as transitioning between stages 2 and 3. Jamaica and the Dominican Republic were classified as stage 2.

Some more good news is that Jamaica saw forward movement on the index, moving to 75 out of 138 in 2016-2017 from 86 out of 140 in 2015-2016, as well as the Dominican Republic which ranked 92 out of 138 countries in 2016-2017 compared to 98 out of 140 countries in 2015-2016. The Dominican Republic’s reforms were mentioned in the report.

Importance of Country Competitiveness Indices

The WEF GCI is the most comprehensive benchmark of national competitiveness of economies worldwide. This year’s index comprised 98% of the global economy. It is, therefore, quite disappointing that not only does no Caribbean country currently rank among the top 50, but that so few Caribbean countries are included in the 2016-2017 index compared to previous indices as a result of data shortages.

These rankings are important for several reasons.The GCI is a useful tool for policy makers not only  for benchmarking the economy’s current performance  across over 100 competitiveness indicators against its historical performance, but also against other economies in the same bracket. As such, it provides good empirical evidence for setting policy priorities and interventions as national competitiveness strategies are crafted and refined.

Secondly, and importantly for small economies which depend significantly on foreign direct investment inflows, the WEF GCI is one of several indices, along with the World Bank’s Doing Business Index, which discerning investors consult when considering potential investment locations. For this reason, it is not uncommon for investment promotion agencies to reference their country’s favourable performance on these indices when marketing to prospective investors.

The Way Forward

It is axiomatic for any economy that  competitiveness should not only be long-term but sustainable. What the current WEF GCI makes clear is that economies in the Caribbean region have a lot of room for improvement, particularly in these problem areas: inefficient government bureaucracy, work ethic in the national labor force and corruption. Improving our competitiveness, however, is not a government responsibility alone. It requires continued strategic and enhanced  public-private sector collaboration and partnership.

Governments, the private sector and other stakeholders including trade unions and other civil society actors, therefore, need to closely examine the causes and solutions for these problematic areas. For example, what are the factors which contribute to the perception of “poor work ethic”? What country-level and firm-level productivity enhancing reforms are working and which need revising or implementing? What can we do improve the vexing issue of “inefficient government bureaucracy”? This year’s Global Competitiveness Report focused heavily on the Fourth Industrial Revolution. What role can ICTs play in improving our weak areas?

We can also take lessons from those economies which consistently rank as the most competitive economies and those which saw tremendous improvement. The top five economies in this year’s GCI were in order of ranking: Switzerland, Singapore, United States, Netherlands and Germany. What best practices can we learn from these countries? How about those countries like India, which made the biggest leap of any country in this year’s index by climbing 16 places? Or Mauritius, a SIDS, ranks 45th , having climbed two places? Even our own Jamaica and the Dominican Republic which saw improved rankings may hold valuable lessons.

Businesses also need to play their part. It is unacceptable that the region is so poorly represented on the GCI year after year. A few years ago, I was part of the survey team which administered the WEF  Executive Opinion Survey in Barbados, the main instrument used for gathering the data utilised in a whole suite of WEF reports, including the Global Competitiveness Report. While in each instance our team was able to meet our quota, one of the challenges we found was the unwillingness of some business executives either to participate in the survey, or to complete it properly and in a timely manner. This is after repeated attempts to impress upon them the importance of the data collected in the survey for judging Barbados’ competitiveness and to ensuring Barbados was ranked on this important index. If insufficient businesses answer the survey, the country will not be included in the index. To encourage greater private sector participation in the survey in each country, I suggest there be closer collaboration between the country partner institutes and the various private sector bodies in the countries.

The full WEF GCI 2016-2017 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.

A step towards progress between Haiti and the Dominican Republic?

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Alicia Nicholls

The news this week of progress in the talks at Jimani between Haiti and the Dominican Republic to address, inter alia, the long-standing migration issue between the two countries is welcomed news. The fragile diplomatic relationship between the Dominican Republic and Haiti took a sharp turn for the worse in the latter part of last year following a controversial ruling by the DR’s Constitutional Court  on September 23.

The DR’s Constitutional Court had been called on to consider an application made by Ms. Juliana Deguis Pierre that the Electoral Office be ordered to issue her with a national ID card which she had been denied on the basis that she was the child of Haitian parents and not Dominican. Ms. Pierre was born and raised in Los Jovillos, an area in Yamasa municipality (in Monte Plata province) where many persons of Haitian origin live. Denying her request, the Court ruled that Ms. Pierre was not a Dominican citizen but a child born of ‘foreigners in transit’. Using the case as an opportunity to elaborate on Dominican nationality law, the Court applied the restriction on the jus soli principle per Article 18 of the 2010 Constitution, holding that under Dominican law birth on Dominican soil did not automatically confer citizenship on an individual and that for a person born after 1929 to be deemed a citizen of the Dominican Republic, he or she must have been born to at least one parent with legal status in the country. All other persons who did not meet this criterion would be classified as being ‘extranjeros en transito” (foreigners in transit) and therefore as never having had Dominican citizenship.  A copy of the court’s judgment can be read here (in Spanish).

The principle in Dominican immigration law of “foreigner in transit” is not new as it was included in the Constitution of 1929 and in subsequent constitutional reforms, including as recently as in Article 18.3 of the reformed constitution of January 26, 2010. However, prior to the 2010 Constitution, citizenship in the Dominican Republic was conferred on an absolute jus soli basis as evidenced by the language used in previous constitutions, which excluded any reference to the requirement of being born of Dominican parentage. The Court’s retroactive ruling which applies the jus sanguinis principle, established in Article 18 of the 2010 Constitution, to those born after 1929 (and not just to those born after 2010) leaves several generations of Dominicans of foreign descent in a legal limbo as to their status. The retroactive application by the Court of Article 18 to this case seems especially harsh given that the 2010 constitution itself does not indicate that it is meant  to apply retroactively, evidenced by Article 18.2. which states that “Dominicans [also] include those who enjoyed nationality before the entry into force of the Constitution”. A copy of the 2010 Constitution may be found here (in Spanish).

While persons born to parents of other nationalities will be affected, it is persons of Haitian descent who make up the overwhelming majority of persons to whom this ruling would apply.  Some human rights groups estimate that as many as 200,000 persons of Haitian descent may be affected by the ruling. Haiti and the Dominican Republic, which share the Caribbean island of Hispaniola, have always had a tense and complicated relationship which has its roots in the colonial era and in subsequent historical events. These events include the 22-year Haitian occupation of the Dominican Republic in the immediate post-colonial period before the latter attained its independence, and the slaughter of thousands of Haitians by the Trujillo dictatorship in 1937. The socioeconomic disparities between the two states and their cultural, religious, linguistic and racial differences, a legacy of colonialism, have only helped to further deepen the gulf between these two sister nations. A constant source of tension between the two states has been undocumented Haitian migration to the Dominican Republic. Ever since the 1920s when Haitian workers were actively recruited to work in the Dominican Republic’s sugar industry, the Dominican Republic has been an attractive employment market for seasonal and long-term Haitian workers searching for a better life for themselves and their families. Many of those affected by the ruling include Haitians who had been brought in to work on Dominican farms during the 1920s and their descendants born and raised in the DR.

Haitian emigration to the Dominican Republic has helped to foment anti-Haitian sentiment among some Dominicans, a sentiment which is also boosted because of the Dominican Republic’s own racially stratified society where darker skin is still synonymous with being poor and uneducated.

The immigration policy of states is always a touchy subject because of the importance it has for national security. Indeed, it is no doubt that inherent in being a sovereign nation is the right of the state to protect its borders. Both customary international law and the Montevideo Convention of 1933 provide that no state has the right to intervene in the internal or external affairs of another. Further, international law gives states the right to dictate their own policies in regards to conferring nationality.

However, these rights are not absolute as they are subject, inter alia, to the various international human rights treaties which States, like the DR, have acceded to, and by which they agree to respect human rights and to be held accountable for any violation thereof. The human rights implications of the constitutional court’s ruling cannot be overlooked on the basis that the ruling is solely in the province of the DR’s internal affairs. The ruling has been condemned by CARICOM states (of which Haiti is a member) and by various human rights groups as being ‘racist’ and ‘xenophobic’ in nature and with potentially devastating human rights consequences.

Although Dominican authorities deny that the ruling leaves anyone stateless and argue that a plan for naturalisation of affected persons would be implemented, the Court’s retroactive application of Article 18 of the 2010 Constitution does have the effect of stripping those affected of citizenship, depriving them of the rights inherent with nationality, such as the right to vote, the ability to get married and the right of access to basic services such as education, employment and health care, and bringing with it the possibility of expulsion from the land of their birth. Like Juliana Deguis Pierre, many of those three generations of Haitians who are affected were born in, and have lived in the Dominican Republic all their lives, have little or no ties to Haiti and speak no Haitian creole.  In light of the ruling, CARICOM has agreed to indefinitely defer consideration of the Dominican Republic’s longstanding application to accede to CARICOM.

Happily, it appears tentatively that some progress is being made to address this unfortunate state of affairs. Both countries have agreed to establish a Joint Commission to discuss not just issues relating to migration, but also matters of trade, the environment, security, among others. The Dominican Republic has stated that it will as shortly as February 27th bring legislation to address the situation of those born in the Dominican Republic but who currently have no documentation. It is hoped that such legislation will undo the human rights injustice which this ruling portends, affirming the right of those affected to Dominican nationality and being a needed step towards addressing and correcting  the discrimination which many native born Dominicans of Haitian  descent continue to face.

Alicia Nicholls is a trade policy specialist and law graduate. She can be followed on Twitter at @Licylaw.