Caribbean Trade Law and Development

Tag: novel coronavirus

  • COVID-19: The Push to Conflict

    COVID-19: The Push to Conflict

    Renaldo Weekes, Guest Contributor

    Renaldo Weekes

    The novel Coronavirus disease (COVID-19): a common threat that has united the world in unprecedented ways. As the pandemic rages on, however, some are getting anxious and want answers. United States (US) officials have accused China of mismanaging the coronavirus response and allege that it originated in a Chinese lab. China responded with allegations that the US military planted the virus in Wuhan. 

    The possibility for escalation is nigh as US President Donald Trump reportedly suggested that China may be punished for its alleged impropriety through new tariffs, sanctions and the lifting of sovereign immunity. As the US seeks to punish China, one wonders what the effects may be on the wider world.

    The Global Economy

    The tariffs being floated by the Trump administration as possible punishments will stifle the global economy since, being the world’s two largest economies, the US and China are very much intertwined in the global economy. Consideration must also be given to how China will retaliate to the tariffs.

    Tariffs, essentially being a tax on imported goods, will make goods more expensive at a time when many businesses and consumers cannot absorb such a cost. What little spending power exists will diminish, further pushing the economy downward. The global economy’s recovery rate will be restricted as supply chains will slowly regain traction amidst low numbers of buyers and sellers. Shocks will hit small open economies especially hard as they greatly depend on foreign production that travels through the US. It is still left to be seen if the US will follow through with such plans however.

    Sanctions have more versatility in the sense that they can be applied to certain businesses or individuals within the US banking system. This is effective because the US has a long reach in the world’s financial system. However, depending on where those sanctions are applied, there could be some disruption in the global supply chain because, as mentioned earlier, China is intertwined in the global system. Again, small open economies that regularly do business with China will be in trouble.

    The lifting of state sovereign immunity allows American citizens and the American Government to sue China for COVID-related issues. Removal of sovereign immunity may have at least two effects. First, it allows the US wants to fight China with its own rules by allowing lawsuits. Secondly, if state-owned or state-related Chinese businesses in US jurisdictions are entangled in lawsuits, China will have to decide if staying in the US is worth the retaliatory lawsuits or risk relocation which may cause disruptions in supply chains.

    Political

    Considering the implications of this clash to the wider world, both parties have been working to push their narrative to their partners for support. This puts a number of countries with mutual relationships in an awkward position as they must now play chess with their words and actions which, as seen through Australia and the European Union (EU), is quite difficult. 

    Australia has, just like the US, called for an investigation into the virus’s origins but has stopped short of saying the virus came from a lab. To China, not overtly opposing those claims is implicit support of the US’ claims and in response, Chinese Ambassador to Australia Cheng Jingye suggested a possible shift in trade relations between the two countries. Acting on those words, China has suspended beef imports from Australia. This underscores China’s willingness to use its economic might against countries politically opposed to it. Such tactics may hurt Australia as China accounts for 36 percent of Australia’s total annual exports. Though both countries claim that the issue is separate from the pandemic, it is hard to defend that point considering the veiled threat laid by the Chinese ambassador. One must ask whether it is possible to separate the two incidents or if it would have happened but for the call for an investigation.

    The EU has been under the spotlight for editing a report related to disinformation campaigns by China to appease China and for allowing China to censor an opinion piece written by the EU’s ambassador to China. The EU’s move is seen as bending more toward China by editing its report and allowing China to censor its piece. Added to this is reporting that the European External Action Service (EEAS), responsible for the bloc’s foreign policy, has been rife with problems related to each EU member state wanting to follow its own agenda. This suggests no real coordinated effort toward handling the issue and a weakening of the EU’s position as this may, theoretically, give China an opening to further cement this divide.

    Despite what may appear to be the case, EU member states have stood up to China. It is reported that China attempted to encourage German Government officials to make positive spins on how it has been handling the virus but it was quickly shot down. France hastily summoned its Chinese ambassador when a Chinese diplomat wrote a piece criticising Western countries on their treatment of the elderly. President of France Emmanuel Macron and German chancellor Angela Merkel have both called for investigations into the origins of the virus but, similar to Australia, have not claimed that the virus came from a lab. Joined with that is the EU’s support of the US’ push for an investigation into the coronavirus’s origins at the WHO general assembly. These examples show that the EU is not necessarily bowing to China. Considering the historically friendly relationship between the two, the EU would not have the same motivation as the US to immediately dismiss China.

    Even the World Health Organisation (WHO)?

    The WHO itself has been dragged into the fray by the US as the Washington has suspended its WHO funding due to accusations that that UN agency facilitated China’s hiding of coronavirus statistics. Such an accusation suggests that the WHO abdicated its duty in order to appease China. The US’ actions also serve to weaken the WHO’s ability to help the world at large; more so those who cannot help themselves. Allowing a spat to spill over into the UN agency for health during a pandemic is seen by many critics as a way for the Trump administration to deflect any blame it is receiving for its handling of the virus domestically; especially since a Presidential election is due this November.

    Conclusion

    COVID-19 has led to a pandemic that took the world by surprise. Most people did not think that a virus in China would spread to the world. Nevertheless it has and people’s magnanimity has shown through like never before. However, it has devolved into a blame game between the world’s most powerful countries about how the pandemic started, capturing many other countries in the fray. But for the pandemic, would the US and China be in this situation? Probably not, but here we are. The only real way for this situation to stop is if the US recants or if China admits fault. At this point, neither seems likely. One can only hope that the war of words between the two countries does not escalate to a point of no return that drags the rest of the world down as a result.

    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.

  • 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.

  • Can Novel Coronavirus ‘COVID-19’ impact the Caribbean?

    Can Novel Coronavirus ‘COVID-19’ impact the Caribbean?

    UPDATE: Several Caribbean countries have now reported cases of COVID-19.

    Alicia Nicholls

    Let me preface this brief article by stating that to date there has as yet been no confirmed case of COVID-19 – the official name given to the novel coronavirus – in any English-speaking Caribbean country. This, nonetheless, does not deny the region’s vulnerability to the shockwaves of the virus’ increasing global spread and concomitant potential impact on global trade, travel and the global economy, on a whole. Besides the possible human impact, Caribbean small open economies – reliant on tourism and trade for our ‘bread and butter’- could be severely impacted by the current outbreak.  

    Global impact to date

    The COVID-19 virus, which is suspected to have originated with bats, was first reported in Wuhan Province, China in December 2019. At the end of January 2020, the World Health Organisation (WHO) – the United Nations (UN) specialised agency in charge of public health matters – declared the outbreak of COVID-19 to be a ‘Public Health Emergency of International Concern’ and issued a set of Temporary Recommendations. According to the latest press briefing of February 28, 2020 by Director General of the WHO, “outside of China, there are now 4351 cases in 49 countries, and 67 deaths”. Further, the WHO has increased its assessment of the risk of spread and the risk of impact of COVID-19 to “very high at a global level”.

    Last week, coronavirus fears caused stock markets to suffer their worst crash since the financial crisis, while the International Energy Agency (IEA) has predicted that reduced Chinese demand for crude oil will lead to the first quarterly decline in global oil demand in over a decade. China – the worst affected country to date by the virus – is expected to see a slowing in its GDP growth to 5.6%, according to the International Monetary Fund (IMF).

    Potential Impact on the Caribbean

    While there has not yet been any confirmed case of COVID-19 in the Caribbean, the Caribbean Public Health Agency (CARPHA) has upgraded the risk of COVID-19 transmission from low to “moderate to high”.

    Of major concern to the majority tourism-dependent countries of the Caribbean is that cases of the disease have appeared in our major tourist markets – the United States, United Kingdom, and parts of Continental Europe which have direct flights to the region.  Naturally, the biggest concern is the possible loss of life, particularly for those persons with impaired immune systems, if the virus outbreak reaches the region. The virus’ estimated 1% fatality rate makes it deadlier than the flu, which is known to kill hundreds of thousands each year. Aside from the very real human impact, there is also the economic impact that could arise from loss of productivity, businesses’ loss of revenue and reduced output.

    It should be noted, however, that even if the virus outbreak does not directly reach the region, we could possibly still be impacted negatively. For example, even though the Caribbean is currently COVID-19 free, the spread of ‘fake news’ may deter persons from travelling to the region, robbing these countries of potential tourist arrivals and needed foreign exchange. This has implications for countries like Barbados, for example, which in January this year launched a year-long home-coming called “WeGathering” which encourages its diaspora to come back to the island.

    Another potential channel of impact for import-dependent Caribbean countries is from the interruption of global supply chains and impact on commodities prices. The outbreak is already having an impact on global shipping. One possible ‘benefit’ for oil-importing Caribbean countries is the slump in oil demand and reduction in oil prices, but this may negatively impact oil exporting countries like Trinidad & Tobago and now Guyana.

    This, of course, is not the first nor will it be the last public health threat the Caribbean has faced. Readers would recall SARS (another type of coronavirus) outbreak, as well as the mosquito-borne diseases of Chikungunya and Zika several years ago. However, Caribbean leaders have rightly taken the COVID-19 threat seriously. Regional governments have so far adopted different responses to the threat, with policy responses ranging from quarantining to banning of travelers originating from outbreak countries, and in some cases, denying entry to cruise ships with cases of persons exhibiting symptoms of respiratory illness. CARICOM Heads of Government have called an emergency meeting in Barbados on March 1, to discuss the latest developments.

    Both regionally and globally, cooperation among governments and with international agencies will be key to mitigating the virus’ spread and its economic impact.  In a joint statement by the WHO and UN World Tourism Organisation (UNWTO), the two agencies called for cooperation and argued that tourism’s response “needs to be measured and consistent, proportionate to the public health threat”.

    Similar sentiments were made by IMF Managing Director, Kristalina Georgieva to the G20 on the economic impact of COVID-19. The Managing Director noted while various scenarios could occur, under the IMF’s current baseline scenario “global growth for 2020 would be about 0.1 percentage points lower” than the 3.3 percent global growth the IMF forecast in January. She further advised that “global cooperation is essential to the containment of the COVID-19 and its economic impact, particularly if the outbreak turns out to be more persistent and widespread.”

    Caribbean officials will be forced to play the delicate balancing act between not overreacting and exacerbating the situation, but also seeking to do their utmost best to protect public safety within the limits of their public health infrastructure and capacity.  Timely communication with the public on, for example, their pandemic preparedness, will be necessary.

    We as citizens also have our part to play by observing hygiene best practices to prevent or mitigate the virus’ spread should it reach our region. Moreover, in light of the potential for “fake news”, it is incumbent that citizens be discerning about our information sources and rely only on official sources such as the WHO and associated regional bodies like CARPHA and PAHO.

    Alicia Nicholls, B.Sc., M.Sc., LL.B., is an international 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.

    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.