Caribbean Trade Law and Development

Tag: tourism

  • COVID-19: Side Effects on the World

    COVID-19: Side Effects on the World

    Image by Alexandra_Koch from Pixabay

    Renaldo Weekes, Guest Contributor

    Renaldo Weekes, Guest Contributor

    COVID-19 has been characterised by the disruption of many systems and procedures that the world uses to conduct business and everyday life. It follows, then, that the global economy took a severe hit when the virus spread across the world and forced many countries to close their borders and businesses to halt or slow their operations. Many began to ponder how countries, especially Small Open Economies (SOEs), would survive. Now that a year has passed since the start of the pandemic, many are eager to return to the life we once had.  Though this is possible with the availability of vaccines, there is no doubt that COVID-19 has left a scar on the world that may never be healed. In assessing this, we must consider the ways in which trade is impacted. Namely, through scams and Anti-Money Laundering (AML), tourism and immigration, and the acceleration of technological trends.

    Scams and Anti-Money Laundering

    Scams are schemes used to swindle money out of unsuspecting persons. The money gained from scams are laundered through the bank system in order to legitimize it. AML seeks to prevent the act of laundering money. In the context of the current COVID-19 pandemic, government agencies such as the Federal Trade Commission (FTC) have warned that fraudsters are sending phishing emails, posing as government agencies promising to provide aid in exchange for access to bank accounts.

    As many countries and businesses are slow to recover from the pandemic, many persons remain desperate and vulnerable to scammers who continue to exploit the situation. In light of the increase in scam activity at a time when Governments are hyper focused on providing relief, it is imperative that AML procedures are enforced to ensure that fraudsters do not slip by. National Public Radio (NPR) in the United States (US) reported that so many business requested assistance that the government could not properly vet who actually needed assistance and thus, many fraudsters slipped by. How does this relate to trade?

    Trade is driven by businesses and individuals located in different countries buying from or selling to each other. AML procedures can persuade persons seeking to do business in other countries. They indicate a jurisdiction’s commitment to stopping money laundering which can be used for things such as acts such as terrorism. Persons must be sure that their assets are safe. Scammers’ abilities to continually slip through the cracks during this crisis unscathed may serve as an indication of weak enforcement of AML procedures. Reviews of internal procedures must be prioritized. This issue is more likely to affect countries with an already undesirable AML rating, especially those that may have had the unfortunate privilege of being included on lists such as the European Union’s (EU) list of non-cooperative jurisdictions. Such lists can restrict foreign investment which is especially important to SOEs.

    Tourism and Immigration

    Tourism and immigration are two aspects of trade that are sometimes overlooked. Tourism is only associated with vacationing families and immigration associated with persons moving from one country to another permanently. However, there is more to these two areas. Tourism and immigration are predicated on the movement of people across borders and the pandemic has hindered this significantly, but how does this affect trade? We will consider tourism first. Tourism is defined by the UNWTO as “a social, cultural and economic phenomenon which entails the movement of people to countries or places outside their usual environment for personal or business/professional purposes.” It “has to do with their activities” which involves “tourism expenditure.” This definition notes that tourists travel for business, and contribute to expenditure. A paper entitled ‘Tourism and Trade: A Global Agenda for Sustainable Development’ notes that tourism counts as an export for the destination country and import for the tourists country of origin.

    Tourism expenditure directly involves several companies such as hotels, travel agencies and tour companies, and self-employed persons who focus on tourists. Indirectly, tourism involves companies that provide services to the aforementioned companies. Part of their success depends on the success of those directly impacted by tourism. It is no secret that tourism is major source of revenue for SOEs, especially those in the Caribbean. A decline in a major revenue earner for SOEs counts toward a decrease in their exports and leads to the disruption of the value chains that exist between companies that are involved in tourism.

    In addition to this, tourists aid building the brand of a country. Not only the for the sake of leisure but for the sake of investments. Each product they return home with, review of services and other infrastructure gives insight into the country. Tourists themselves can turn into possible investors. Being physically in a country provides experiences that online-only services cannot provide.

    With this coming to a sudden halt during 2020 and some countries struggling to fully reopen, it remains a struggle to regain ground for those that rely on tourism. Though the distribution of vaccines seems promising, there are reports of a third wave of the pandemic in some parts of the world. This third wave will likely result in the reinstatement of lockdowns which will further hinder the regrowth of tourism. The institution of a vaccine passport is another hindrance as those unable to receive the vaccine will not be able to travel. This is especially for those who live in relatively poor countries that must rely on the COVAX facility and the generosity of wealthier nations for vaccine doses.   

    Immigration

    Immigration, being similar to tourism in terms of the movement of people, is affected in many of the same ways as tourism. Closed borders and the institution of a vaccine passport limit rates of tourism and immigration alike. This notwithstanding, immigration affects trade and concomitant supply links in other in its own ways. Firstly, immigrants add to the number of workers within a country and this increases the capacity of businesses and investment since there would be, in theory, more productivity. Added to this is the fact that immigrants are willing to do jobs that natural born citizens of a country may not be willing to do. For example, immigrants in America perform jobs that native born Americans opt out of. This being the case, immigrants contribute greatly to the export of commodities such as agriculture as this sector is likely to be filled with immigrant workers.

    Secondly, immigrants forge links to their home country in their destination country. Immigrants have family and friends in their home country that they send remittances and other products to. In turn, they import products from their home country that may not be otherwise available in their new home. This diasporic link contributes to businesses that specially target immigrants. Recognizing the contributions that immigrants make to both their home country and their resident country, any downturn in immigration can hinder the growth of these trade links.  

    Acceleration of technological trends

    Before the pandemic began, certain practices within the global economy were trending either upward or downward. One such practice that was trending upward was the reliance on technology. The worldwide spread of COVID has pushed a work from home initiative that has made technology more of a necessity in our lives. Many businesses and governments were forced to have more online presence and reshape their operations to have more technological focus. The benefits of this include more fluidity in logistics and operations as there would be less administrative overhead. This translates to better trade fluidity since efficiency would be increased. This is especially important for SOEs that heavily rely on trade. They must have a state of the art customs system that facilitates fluid importation and exportation that serve as the lifeline of the country.

    Conclusion

    While most persons are concerned with the side effects of the coronavirus on the body, the pandemic itself will prove to have variety of side effects on the global economy at large. It may have been obvious to the majority of persons that the world would have been forced to change as result of a pandemic that has pushed the boundaries of our systems and made reconsider things once considered impossible. However, some persons may not have considered the specific ways in which the world would be changed, especially international trade. In light of increasing scams related directly the pandemic, the current limits placed on tourism and immigration, and the acceleration of trends that were already in place, it is imperative that persons be ready for the stresses and permanent changes that are in place or will be put in place as we prepare to leave COVID behind once and for all and rebuild our society and economy.

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

    The views and opinions expressed herein are solely those of the guest author and are not necessarily representative of those of the Caribbean Trade Law & Development Blog.

    SOURCES

    FEDERAL TRADE COMMISSION WARNING – https://www.ftc.gov/news-events/blogs/business-blog/2021/01/business-owners-latest-covid-scam-directed-you

    NPR – https://www.npr.org/2020/10/28/928792199/billions-in-covid-19-relief-loans-may-have-been-handed-out-to-scammers-report-sa

    TOURISM DEFINITION – https://www.unwto.org/glossary-tourism-terms

    TOURISM AS TRADE – https://www.intracen.org/uploadedFiles/intracenorg/Content/Publications/Tourism_and_Trade__low%20res_2014-2015-335.pdf

    DO IMMIGRANTS STEAL JOBS? – https://www.brookings.edu/blog/brookings-now/2017/08/24/do-immigrants-steal-jobs-from-american-workers/

  • Communique issued at the conclusion of the Forty-First Meeting of the Conference of Heads of Government of the Caribbean Community, via Videoconference, 29 October 2020

    Communique issued at the conclusion of the Forty-First Meeting of the Conference of Heads of Government of the Caribbean Community, via Videoconference, 29 October 2020

    CARICOM Secretariat – The Forty-First Regular Meeting of the Conference of Heads of Government of the Caribbean Community (CARICOM) was held virtually on 29 October 2020.The Prime Minister of St. Vincent and the Grenadines, Dr. the Honourable Ralph Gonsalves, chaired the proceedings.

    Other Members of the Conference in attendance were: Prime Minister of Antigua and Barbuda, Honourable Gaston Browne; Prime Minister of The Bahamas, Honourable Dr. Hubert Minnis; Prime Minister of Barbados, Honourable Mia Amor Mottley, Q.C, MP; Prime Minister of Dominica, Honourable Roosevelt Skerrit; Prime Minister of Grenada, Dr. the Rt. Honourable Keith Mitchell; President of Guyana, His Excellency Dr. Mohamed Irfaan Ali; President of Haiti, His Excellency Jovenel Moise; Prime Minister of Jamaica, the Most Honourable Andrew Holness; Premier of Montserrat, Honourable Easton Taylor-Farrell; Prime Minister of St. Kitts and Nevis, Dr. the Honourable Timothy Harris; Prime Minister of Saint Lucia, Honourable Allen Chastanet; the President of Suriname, His Excellency Chandrikapersad Santokhi; and Prime Minister of Trinidad and Tobago, Dr. the Honourable Keith Rowley.

    Belize was represented by Attorney General, Honourable Michael Peyrefitte.

    Associate Members in attendance were: Bermuda represented by Premier, the Honourable David Burt; the British Virgin Islands represented by Premier,the Honourable Andrew Fahie; and the Turks and Caicos Islands, represented by Premier, the Honourable Sharlene Cartwright-Robinson.

    OPENING

    Chair of the Community, Dr. the Honourable Ralph Gonsalves, Prime Minister of St. Vincent and the Grenadines, and the Secretary-General of the Community, Ambassador Irwin LaRocque, made brief opening remarks.


    COVID-19 AND ITS IMPACT ON THE REGION

    Heads of Government acknowledged the relative success of the Community in its fight against the multi-faceted challenges posed by the COVID-19 pandemic which they attributed to the application of functional cooperation, one of the core principles of regional integration and which was adopted from the outbreak of the Novel Coronavirus.

    Heads of Government advocated continued vigilance and adherence to the regional public health approach being led by the Caribbean Public Health Agency (CARPHA). They commended CARPHA for its on-going leadership and technical support to Member States in responding to the COVID-19 pandemic. They also expressed appreciation for the assistance provided by International Development Partners.

    Heads of Government recognised the impact of COVID-19 on several sectors, including health, tourism, education, security and law enforcement, as well as the different phases of the pandemic which individual countries may be experiencing.

    Heads of Government also recognised that in the absence of a vaccine, COVID-19 will continue to be a grave public health, security and economic threat, and the regional approach must continue to be undertaken to manage these ongoing threats.

    In that regard, they further recognised that re-opening and recovery require a careful balance between reducing restrictive measures and ensuring adequate actions to reduce importation and spread of new cases.

    Heads of Government welcomed the COVAX Facility as an initiative to secure access to safe and effective COVID-19 vaccines that will afford countries the best opportunity to fast-track access to COVID-19 vaccines.

    They also welcomed the fact that six CARICOM Member States have been identified for Advance Market Commitment – a financing instrument to support the procurement of vaccines for low and middle-income economies. They noted that the remaining Member States have committed to the COVAX Facility as self-financing countries, but were concerned at the limited criteria used to determine how countries accessed financing.

    Heads of Government expressed deep concern that despite being in the midst of a global pandemic, the per capita income criterion was still being used to determine how countries accessed financing from the COVAX Facility. 

    Heads of Government expressed appreciation to the European Union, CARPHA and the Pan-American Health Organization (PAHO) for their support in facilitating the down payment for self-financing Member States.

    They mandated CARPHA to explore, in collaboration with the CARICOM Secretariat and PAHO, other financing options to cover additional costs for the vaccines.

    Heads of Government mandated CARPHA and the Chief Medical Officers of Member States to meet to refine the common technical standards for the CARICOM Travel Bubble and the entry of external arrivals, and report to the Secretariat within 48 hours.

    CARIBBEAN ECONOMIC RECOVERY AND TRANSFORMATION

    Heads of Government acknowledged that the COVID-19 pandemic exacerbated the development challenges already confronting the Community and that CARICOM States have been more deeply affected than other developing countries. Member States are now faced with a perfect storm of a public health crisis, an economic crisis and a deepening debt crisis.

    Heads of Government agreed on the need to protect lives, while restoring livelihoods through policies and measures for the gradual and safe return to economic activity.

    Heads of Government noted that the economic prospects for the Caribbean had worsened and cited a report by the International Monetary Fund that the Caribbean is the most affected globally by this pandemic, given that it is the most tourism and travel dependent Region in the world.

    Heads of Government noted that the pandemic would also exacerbate already high deficits and debt in many countries in the Region and building back better would have significant capital requirements which required a multi-faceted financing plan.

    In that regard, Heads of Government agreed to the concept of a Caribbean Economic Recovery and Transformation (CERT) Plan, which has been devised by a regional team of experts under the leadership of the Prime Minister of Barbados, Honourable Mia Amor Mottley.

    Heads of Government called for a new Special Drawing Rights (SDR) allocation by the International Monetary Fund’s (IMF) as well as the refinancing of COVID-related debt into long-term low interest instruments.They also urged the early development and use of a Universal Vulnerability Index to determine countries’ eligibility for development assistance.

    A JOINT TOURISM POLICY FOR CARICOM

    Heads of Government noted that over the past seven (7) months, CARICOM Member States had seen an unprecedented decline in tourist arrivals brought on by the global COVID-19 pandemic.

    Heads of Government further noted that several Member States were still recovering from the devastating hurricanes of 2017 and 2019, a situation further compounded by the effects of the pandemic.

    Heads of Government recognised that the resulting reduction in tourism-related tax revenues and the implementation of needed COVID-19 containment, economic and social support mechanisms had placed unparalleled financial demands on Governments across the Community.


    Heads of Government recognised the critical importance of rebuilding the tourism industry and, in that regard, welcomed a proposal by the Government of Saint Lucia for the preparation of a Joint Tourism Policy. They agreed to a Working Group to formulate the policy and report to the Conference by December 31, 2020.

    Given the urgency of the matter, Heads of Government also agreed that a Prime Ministerial Sub-Committee (PMSC) on Tourism be established to provide political oversight for the preparation of the Joint Tourism Policy and other related issues.  The Prime Minister of The Bahamas, as the Lead Head of Government for Tourism in the CARICOM Quasi Cabinet, will preside over the Sub-Committee which will include Antigua and Barbuda, Barbados, Jamaica and Saint Lucia.


    BLACKLISTING

    Heads of Government observed that the European Union, through the actions of the Council and the Commission, have stepped up the economic assault on Small States despite the prevailing global pandemic which has forced the protracted shutdown of economic activity amidst predictions of a slower recovery than envisaged.

    Heads of Government condemned in the strongest possible terms the continued blacklisting by the European Union of Members of the Community through unilaterally and arbitrarily determined standards, and in the absence of any meaningful prior consultation with the affected Members.

    Heads of Government noted that the European Union has steadfastly ignored that capacity constraints and other challenges at the national level continue to impact the speed and depth of reforms in tax administrations, and financial intelligence units in Member States.

    Heads of Government stated that this disproportionate treatment of CARICOM States is a breach of the rights of CARICOM citizens, and called upon the European Council and European Commission to desist from this egregious practice.

    CARICOM PRIVATE SECTOR ORGANISATION (CPSO)

    Heads of Government agreed to designate the CARICOM Private Sector Organisation (CPSO) as an Associate Institution of the Community.

    They also agreed to a Memorandum of Understanding between the Caribbean Community and the CPSO Inc. for cooperation towards the further implementation of the CARICOM Single Market and Economy (CSME).


    BORDER ISSUES

    Belize-Guatemala Relations

    Heads of Government received an update on the most recent developments on the Belize – Guatemala border issue. They noted the extension of the time limits for the submission of the Memorials and the Counter Memorials to the International Court of Justice by Belize and Guatemala, respectively. Heads of Government urged Belize, Guatemala and the OAS to continue implementing fully the Confidence Building Measures that have been in place since 2005, pending the resolution of Guatemala’s claim at the International Court of Justice (ICJ).

    Heads of Government noted that the undertaking by both countries and the Organisation of American States (OAS) to engage in the design and development of a mechanism of co-operation for the Sarstoon River is still outstanding, and called on both countries and the OAS to reinvigorate their efforts to this end.

    They also expressed support for the significant role of the OAS in the process aimed at resolving the dispute arising from Guatemala’s claims on Belize, and further called on the international community to continue supporting the OAS Office in the Adjacency Zone.

    Heads of Government re-emphasised their steadfast support for the sovereignty, territorial integrity and security of Belize.

    Guyana-Venezuela Border Controversy

    Heads of Government noted that the ICJ held an Oral Hearing on Jurisdiction by ‘virtual’ process in the Case of Guyana v. Venezuela on 30 June 2020. A decision is awaited. If the Court affirms its jurisdiction, Guyana will proceed to the next stage of its pleadings as to why the 1899 Arbitral Award is the valid demarcation of the boundary between Guyana and Venezuela, thus providing for a final resolution of the controversy between the two countries as determined by the Secretary General of the United Nations.

    Heads of Government reiterated their full support for this judicial process that is intended to bring a peaceful and definitive end to the long-standing controversy between Guyana and Venezuela.

    Heads of Government further reiterated their firm and unswerving support for the maintenance and preservation of the sovereignty, and territorial integrity of Guyana.


    EXCHANGE OF VIEWS WITH THE UN SECRETARY-GENERAL

    Heads of Government engaged with the UN Secretary-General as their Special Guest. They held an extensive and fruitful exchange of views on issues related to the devastating impact of the COVID-19 pandemic on the Region’s economy, which has exacerbated existing vulnerabilities, in particular, those related to high levels of debt and access to concessional financing. With regard to climate change, the Secretary-General commended the Community for its efforts to become the first climate-resilient Region.

    He also noted the similarity of views on climate change and recovery to the pandemic which were linked through their solutions. Recovery from the COVID-19 crisis, achieving the Sustainable Development Goals (SDGs) and securing climate action are not separate efforts, he stated. He affirmed the United Nations’ support for a multi-dimensional vulnerability index to help in determining access to concessional financing. 

    Heads of Government welcomed the Secretary General’s firm support for the need for urgent debt relief for middle-income developing countries, and for the importance of the recourse to the criterion of vulnerability as opposed to GDP in measuring development.  They recognised that the upcoming meeting of UNCTAD XV, to be held in Barbados in April 2021, would provide an opportunity to discuss a more equitable multilateral trading system.  

    DATE AND VENUE THIRTY-SECOND INTER-SESSIONAL MEETING OF THE CONFERENCE

    The Government of Trinidad and Tobago will host the Thirty-Second Intersessional Meeting of the Conference, to be held on 23-24 February 2021.

    The preceding was from the Caribbean Community.

  • Deeper Caribbean trade and tourism: An aspirin for the COVID-19 ‘heart attack’?

    Deeper Caribbean trade and tourism: An aspirin for the COVID-19 ‘heart attack’?

    Alicia Nicholls

    This week, two noted International Monetary Fund (IMF) economists in a blog post entitled “Pandemic Persistence Clouds Latin America and Caribbean Recovery” aptly likened the economic fall-out emanating from the novel coronavirus disease (COVID-19) outbreak to a ‘cardiac arrest’ in Caribbean economies. This IMF post is one of several analytical pieces published by international institutions over the past months examining the pernicious economic impact of the crisis on Caribbean countries, whose mainly tourism-dependent economies have been significantly hit.

    The COVID-19 pandemic reiterates yet again the exigency of reconsidering and reconfiguring Caribbean Community (CARICOM) Members States’ integration into the global trading system. Indeed, many structural issues have long clogged the arteries of Caribbean economies, serving as risk factors for repeated economic cardiac events. Our countries generally have high merchandise trade deficits, and while we enjoy services surpluses, that services trade is predominantly tourism. In addition to the highly concentrated nature of our exports, similar concentration can be observed in our trading partners. Most of our trade occurs with the United States (US), the European Union (EU), Canada, the United Kingdom (UK) and increasingly, China. However, as a World Bank study argued, there is untapped potential for greater trade with the wider Caribbean.

    This article suggests that deepening trade and tourism with the wider Caribbean could be an aspirin to help CARICOM countries deal with the COVID-19 ‘heart attack’.

    What is the wider Caribbean?

    The term ‘Caribbean’ means varying things to different people. For us in the English-speaking Caribbean, the term ‘Caribbean’ usually connotes those countries which comprise the 15-member Caribbean Community (CARICOM), which also includes two non-anglophone Member States – Haiti and Suriname. Nonetheless, for those outside the region, the term ‘Caribbean’ is all-encompassing to include those non-CARICOM independent countries and dependent territories, such as Cuba, the Dominican Republic, the Turks & Caicos to the north and as south as the ‘ABC’ islands – Aruba, Bonaire and Curacao. One can go wider still and refer to the Caribbean Basin – all countries with a coastline which touches the Caribbean Sea, such as Colombia, Venezuela and several Central American States.  

    Deepening relations with the wider Caribbean is not a new concept or aspiration. CARICOM itself has adopted an approach of ‘open regionalism’ as codified in the Revised Treaty of Chaguaramas at Article 3(2).  CARICOM has five Associate Members, all from the wider Caribbean, namely, Anguilla, Bermuda, the British Virgin Islands (BVI), Cayman Islands and Turks & Caicos. and observer members from the non-English speaking Caribbean. Besides the Dominican Republic-CARICOM FTA, CARICOM also has trade agreements (mainly partial scope agreements) with some Caribbean Basin countries, such as Venezuela, Costa Rica, Colombia, while some individual CARICOM Member States have their own partial scope agreements, such as Belize with Guatemala and Guyana with Brazil.

    In addition, the Jamaica government has indicated its intention to deepen its trade links with the Northern Caribbean, as seen in the Golding Report and a 2018 report prepared by ECLAC on this topic at the request of the Jamaican Government. Martinique and Guadeloupe are associate members of the Organisation of Eastern Caribbean States (OECS) and Martinique is one of St. Lucia’s main tourism source markets. It should also be remembered that CARICOM countries had been among the participants of the now defunct negotiations on a Free Trade Area of the Americas (FTAA), which would have created an FTA among all countries of the Americas, except for Cuba and Venezuela for political reasons.

    Barriers impacting wider Caribbean trade

    Intra-CARICOM trade only accounts for a small percentage of CARICOM’s total trade compared with trade with external partners. While it is unknown the exact percentage of CARICOM’s total trade with the wider Caribbean, it is also likely small.

    Several reasons account for why CARICOM’s trade with the wider Caribbean remains limited. One of them is historical factors which account for the linguistic heterogeneity within the countries and territories of the region. International business scholarship shows generally that firms trade more easily with those in countries with which they share linguistic and cultural affinity, often referred to in the literature as ‘psychic distance’. Therefore, while there may be geographic proximity within the Caribbean, there is notable ‘psychic distance’ due to linguistic and cultural differences. Such differences are not non-negligible as they often make firms’ task of conducting market research on potential markets more difficult.

    A second factor to consider, also linked to historical factors, is that while there are excellent transportation links between Caribbean countries and the more traditional markets (US, UK and Europe), intra-Caribbean transportation links often leave much to be desired. It is often easier to send a package to Miami than it is to send one from Barbados to Trinidad, or even more so, from Barbados to Belize. This lack of good intra-regional transportation makes trade more expensive. Moreover, travel within the Caribbean, such as from Barbados to the Bahamas, requires passing through Miami as the easiest route.  Again, this increases the costs of plane tickets and serves as a disincentive for intra-regional trade and travel.

    A third, but no less important factor to consider, is the lack of convertibility among the region’s currencies. To complete cross-border payments, US dollars must be used which means our regional banks must use correspondent banks in order to process payments across the region. This, naturally, incurs fees. One group, the Caribbean Settlement Network is trying to fix this problem by proposing the creation of a blockchain-enabled Caribbean settlement system.

    A fourth issue is that there remain non-tariff barriers to trade, as well as other administrative barriers which often differ among countries, making it difficult for the private sector to access markets, especially if another language is involved.

    Opportunities for trade with the wider Caribbean

    Without doubt, opportunities abound for promoting greater trade within the wider Caribbean. However, as it is often said or not always remembered, it is firms which trade, not States. As such, firms will need an enabling environment if they are to find the wider Caribbean an attractive market.

    On this note, however, it is worthwhile to highlight that the Caribbean Chamber of Commerce (CARICHAM) and the Caribbean Chamber of Commerce in Europe (CCCE) include members not just from the Anglophone Caribbean but non-anglophone countries as well. This shows that there is at least some pan-Caribbean private sector interest in not just sharing ideas and collaborating but also possibly increasing trade with the wider Caribbean.

    E-commerce presents a perfect opportunity to promote greater intra-regional trade, particularly services trade. Things such as telemedicine, management consulting and other professional services can be offered online. Educational services are a big opportunity, particularly the e-teaching of foreign languages since there is demand by those countries to learn English and for our countries to learn Spanish, French and Dutch, for example. Another related opportunity relates to translation and interpretation services which can be delivered online.

    An excuse often made is that Caribbean countries’ similar export profiles means there is not much which we could trade with each other. This argument is misguided. Instead of relying so heavily on extra-regional food imports, there are opportunities for greater sourcing of food products from the wider region, such as fresh fruits and vegetables which might not be available in all islands due to costs of production or climatic factors. Jamaica, for instance, grows oranges.

    Greater air connectivity will incentivize greater intra-regional trade. However, governments must create an enabling environment for intra-regional trade. This means seriously considering the removal of the high taxes, fees and other charges they impose, which significantly adds to the cost of purchasing tickets. There is little incentive for Caribbean persons to travel within the region for leisure, unless to visit family and friends, if the cost of a ticket to Miami is much cheaper than a ticket from Trinidad & Tobago to the Turks & Caicos.  

    According to the IMF blog post previously mentioned, “Caribbean countries are dependent on tourism for anywhere between 20 to 90 per cent of GDP and employment”. With the spike in COVID-19 cases in the US and Europe, now is the time that our tourist boards should be pushing more heavily towards promoting intra-regional tourism. CARICOM currently has a travel bubble whereby persons travelling within the bubble are treated as low risk and are exempt from COVID-19 tests and mandatory quarantine.

    Intra-regional travel could help shore up our economies which are struggling to cope with the precipitous drop in arrivals and tourist spend from our main source markets due to the COVID-19 epidemic. Whether it is the Bahamas’ famous Blue Hole, Barbados’ Harrison’s Cave, Jamaica’s Dunn’s River Falls , Martinique’s Mont Pelee or St. Lucia’s signature Pitons, each Caribbean island has its own unique marvels which make it attractive not just to extra-regional tourists, but those from the region as well who would prefer to travel closer to home and to a less risky jurisdiction. As such, deeper intra-regional tourism is an opportunity well-worth exploring.

    Negotiating trade agreements would help to eliminate the tariff and non-tariff barriers which currently exist as barriers to trade with non-CARICOM Caribbean countries. A World Bank study entitled “Trade Matters: New Opportunities for the Caribbean” found that implementation of a common market would lead to significant gains for the region, and that those countries such as St. Lucia and Barbados that already have a significant portion of their exports going intra-regionally stand to benefit the most. However, it found that greater trade integration with North America or Latin America would be even greater and could be achieved by joining the NAFTA (now the USMCA). A cautionary note is that CARICOM’s trade agreements remain under-utilised as a study by McClean for ECLAC in 2015 showed. As such, it should be determined whether there is sufficient private sector interest in wider Caribbean markets to justify spending limited negotiating capital on yet another trade agreement.

    Just like heart attack patients are counselled to change their lifestyles and adopt healthier eating habits, so too must CARICOM Member States address the risk factors which increase their susceptibility to economic cardiac events. Diversifying their trade and tourism source markets by deepening such links with the wider Caribbean would be one such ‘lifestyle change’.

    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.

  • Caribbean Tourism Organisation (CTO) and Airbnb sign partnership agreement

    Caribbean Tourism Organisation (CTO) and Airbnb sign partnership agreement

    Photo credit: Pixabay

    Alicia Nicholls

    The Caribbean Tourism Organisation (CTO) has today signed a partnership agreement with one of the most visible faces of the global sharing economy, Airbnb. This is according to a Press Release on CTO’s website posted today February 7, 2017. According to the release, the agreement, which establishes a basis for mutual cooperation, is “to develop a set of policy principles and recommendations on the sharing economy for Caribbean governments and other stakeholders.”

    The Agreement was signed by CTO’s Secretary General and Chief Executive Officer Hugh Riley and Airbnb’s Shawn Sullivan, public policy director for Central America, the Caribbean at the CTO’s Headquarters in Barbados.

    Airbnb is a peer-to-peer online accommodation platform which was founded in 2008 in San Francisco, California, USA and has over 2,000,000 short-term rental listings in over 191 countries worldwide. A cursory search on Airbnb reveals thousands of listings from across the Caribbean, ranging from modest studio apartments to luxurious villas. Airbnb is just one of several virtual spaces where persons list for rent, or rent, vacation accommodation. Some other similar platforms are Homeaway, VRBO and Owner Direct.

    Based on the information outlined in the CTO press release, the prospects for mutual cooperation covered by the CTO-Airbnb partnership agreement appear quite promising and include:

    • Sharing of data and studies with policy makers
    • Identifying ways to make the sharing economy more inclusive
    • Broadening the benefits of tourism to non-traditional actors
    • Attracting new stakeholders and focus on providing amazing and unique travel and cultural experiences to visitors
    • Providing to the CTO an economic analysis of Airbnb’s positive impact on local economies.
    • Based on this, briefing key stakeholders on the value of a peer-to-peer review mechanisms

    Why is this timely?

    This formalised mechanism for mutual cooperation  between Airbnb and the Caribbean’s regional tourism development agency is an important development and is timely for several reasons. Firstly, peer-to-peer platforms like Airbnb have become important players in the global accommodation sector. As millennials comprise an increasing share of global travel demand, there has been a shift towards a more authentic tourism experience, with a preference for self-catering accommodation (such as villas, apartments and condominiums) being part of that shift.

    Secondly, it can be argued that peer-to-peer accommodation platforms allow for a more inclusive tourism model as they allow anyone from a retired person who has an extra room to rent to an expat with a vacation home to rent it for only a very minimal cost.

    Thirdly, this demand shift toward self-catering accommodation has not gone unnoticed by the traditional hospitality sector (hotels) which have blamed the shift for weaker revenues and occupancy figures. These concerns are not unique to the Caribbean. A 2013 study (last updated in November 2016), which sought to estimate the impact of Airbnb on the Texas hotel industry found, inter alia, that the impact on hotel revenue was non-uniform, with lower priced hotels and non-business traveller catering hotels being the most affected. As far as I am aware, no similar study has yet been done for the Caribbean. The data sharing pursuant to the MOU could make such a study a possibility.

    Fourthly,  traditional accommodation players complain that online market places are competing on an unequal footing. For instance, whereas a hotel has to comply with regulations and pay taxes, depending on the country a person who lists a villa or guest house on Airbnb for rent is not yet captured under the tax net and there may not be regulations for those types of accommodation.

    Fifthly, as villas and some other non-hotel accommodation remain unregulated, there are concerns about potential reputational risk to a tourism destination should a guest have a bad experience in a villa or apartment rented through Airbnb or through any other means for that matter.

    Given the above, this cooperation agreement is a welcomed and forward-thinking step as it will lay the framework for greater data-sharing to allow policy makers to estimate the size and contribution of the tourism sharing economy and to use this data to make evidence-based policy decisions for supporting and regulating the non-traditional accommodation sector. It will also set the framework for joint collaboration for promoting the Caribbean, bearing in mind shifting consumer tastes towards a more authentic tourism experience, and ensuring that the region’s tourism industry is inclusive and redounds to the benefit of all stakeholders.

    For further information, please see the CTO’s official press release.

    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.