Caribbean Trade Law and Development

Tag: trade

  • IMF: Trade tensions could derail global growth prematurely

    IMF: Trade tensions could derail global growth prematurely

    Alicia Nicholls

    Currently strong global growth could be derailed by escalating trade tensions and retaliation. That is the word from the International Monetary Fund (IMF) in its latest World Economic Outlook (April 2018) entitled “Cyclical Upswing, Structural Change”. The lending agency has forecast global growth of 3.9% both for this year and the next, up from 3.8% in 2017, which was the most robust since 2011. Increased trade and investment has been a major propeller of this growth, according to IMF economists, which makes the current trade tensions between the United States and China a cause for concern.

    GDP growth for Latin America and the Caribbean (LAC) is projected to be 2.0% in 2018 and 2.8% in 2019, up from 1.3% in 2017, but still below the projected global average. The IMF projects positive growth for all LAC countries (to varying degrees), with the exceptions of Dominica (-16.3%) which was ravaged by Hurricane Maria last year and Venezuela (-15%), which is currently in the throes of a deep economic crisis.

    Longer-term prospects not as bright

    However, it was not all positive news. While near-term global growth prospects remain positive, the IMF projects a slowing of growth in the medium-term. It was noted that ageing populations, lower rates of labor force participation and low productivity growth all made it unlikely that advanced economies would return to their pre-crisis per capita growth rates any time soon.

    According to the IMF, some emerging and developing economies are likely to achieve longer-term growth rates comparable to their pre-crisis rates, but the outlook for commodities exporters was not as positive even though the outlook for commodities prices had improved somewhat. The IMF emphasised that economic resilience of these economies would be contingent on their diversification.

    The IMF has also again sounded alarm about the rise in global private and public debt levels and the prospect of repayment difficulties due to monetary policy normalisation. This is an issue which is of particular relevance to the region, as some Caribbean countries are among the most indebted in the world.

    Trade tensions could undermine current growth trajectory

    During the press conference launching the report, IMF Economic Counsellor and Director of the Research Department, Mr. Maurice Obstfeld cautioned that while a slowing of growth is predicted in the longer term, “the prospect of trade restrictions and counter-restrictions threatened to undermine confidence and derail growth prematurely”.

    Acknowledging the political imperatives driving the protectionist turn taken by some countries, namely public skepticism about the benefits of free trade and economic integration, Mr. Obstfeld noted that technology as opposed to trade was to blame. He further warned that fights over trade distracted from, rather than advanced the agenda of promoting growth whose benefits were more broad-based.

    Multilateral system  in danger of being torn apart

    In the report, the IMF warned that the multilateral system was in danger of being torn apart. Making the case against unilateral action, the IMF Economic Counsellor argued that inequitable trade practices were best coped with through “dependable and fair dispute resolution within a strong rules-based multilateral framework”.

    He acknowledged that there was room to strengthen the current trading system and that plurilaleral agreements could be used as a “springboard” to more open trade. He also noted that multilateral cooperation was essential “to address a range of challenges in addition to the governance of world trade.”

    The full press conference may be viewed here and the report may be downloaded here.

    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.

  • US House of Representatives passes GSP Renewal Bill; on to Senate

    US House of Representatives passes GSP Renewal Bill; on to Senate

    Alicia Nicholls

    The first hurdle in the renewal of the United States’ Generalised System of Preferences (GSP) was overcome last week Tuesday when the US House of Representatives passed  H.R.4979 – To extend the Generalized System of Preferences and to make technical changes to the competitive need limitations provision of the program. This is welcomed news for the 120 countries and territories which benefit under the GSP, but just the first step towards the programme’s renewal.

    The US GSP lapsed on December 31, 2017. This Bill provides a three year extension through to December 31, 2020. H.R. 4979 requires there be an annual report on the enforcement of eligibility criteria to ensure that countries designated as beneficiary developing countries are meeting the eligibility criteria.

    Exporters would also be refunded for the duties collected during the lapse period. This is not the first time the GSP has expired, a fact which has created some uncertainty for exporters from GSP beneficiary countries seeking to make use of the programme. Other sources of uncertainty are that the President may graduate any country, remove products from GSP eligibility and remove products for an individual country which has exceeded competitive need limitations (CNLs). There are also a number of criteria for GSP eligibility which reflect the geopolitical  and other objectives underpinning the programme, for example, the ineligibility of communist countries.

    The US GSP was instituted by the Trade Act of 1974 and it is one of several US government trade preference programmes which allow designated goods from certain disadvantaged countries to enter the US market at preferential rates of duty. According to the Office of the United States Trade Representative (USTR) fact sheet on the GSP, some 5,057 8‐digit U.S. tariff lines are eligible for duty‐free entry under the GSP, of which 1,519 are eligible for Least Developed Countries (LDCs) only.

    The fact sheet further notes that in 2016, total US imports under the GSP was $18.7 billion, with the top five GSP beneficiary countries being 1. India ($4.7 billion), 2. Thailand ($3.9 billion), 3. Brazil ($2.2 billion), 4. Indonesia ($1.8 billion) and 5. Philippines ($1.5 billion).

    As of March 2017, the GSP-eligible countries in the Caribbean include: Belize, Dominica, Grenada, Guyana, Haiti, St. Lucia, St. Vincent and the Grenadines, while the following non-independent Caribbean territories are eligible: Anguilla, the British Virgin Islands (BVI) and Montserrat.

    Caribbean countries do not feature among top US GSP countries and there is a good reason for this. Most Caribbean countries are beneficiaries of the Caribbean Basin Initiative (CBI), while Haiti is a beneficiary of the HOPE Acts. As such, according to the 2015 Report on the Operation of the Caribbean Basin Economic Recovery Act (CBERA), in 2014, US imports under the GSP from CBI beneficiaries were just 0.02% of the total imports from those countries. As such, CBI countries’ exports under the GSP are quite small, though some countries like Belize, Jamaica and Dominica make more use of the GSP than others.

    The GSP renewal Bill received bipartisan support in the House and is now before the Senate. For HR 4979 to become law, the identical bill would have to be passed in the US Senate. Failing this, there must be reconciliation of the bills passed in both houses before being signed into law by President Trump.

    The text of the House Bill may be viewed here.

    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.

     

     

  • Golding Report on CARICOM-Jamaica Relations Tabled in Jamaican Parliament

    Golding Report on CARICOM-Jamaica Relations Tabled in Jamaican Parliament

    Alicia Nicholls

    The long-awaited report of the CARICOM Review Commission chaired by former Jamaican Prime Minister, Bruce Golding, has been tabled in the Jamaica Parliament by Prime Minister, the Most Excellent Andrew Holness, O.N. The CARICOM Review Commission, which was commissioned by Mr. Holness in July 2016 to review Jamaica’s relations within the Caribbean Community (CARICOM) and CARIFORUM (CARICOM plus the Dominican Republic) frameworks,  submitted its report in April 2017.

    For those who may have feared that the Review was intended to pave the way towards a Jamxit (Jamaica exit from CARICOM), these have been allayed to some extent. In giving its support for regional integration, the Golding Commission noted that “the value of regional integration…is as relevant and useful and perhaps, even more urgent today than it was at [CARICOM’s] inception”. However, it lamented the limited progress on many of the commitments signed on to by CARICOM Member States.

    In this vein, the Commission made thirty-three timely, pertinent and wide-ranging proposals aimed at addressing the structural and organisational deficiencies in CARICOM. Many of the Commission’s recommendations include things which most CARICOM Member States have already committed to under the CARICOM Single Market and Economy but have yet to be fully realised, while others are reminiscent of those made by the Ramphal Commission in its A Time For Action Report in 1992.  Other recommendations were more novel and include instituting sanctions for wilful non-compliance with commitments made, as well as the establishment of a Central Dispute Settlement Body similar to that of the World Trade Organisation (WTO) which would offer non-judicial options for settlement of disputes.

    The Commission also recommended that Jamaica establish closer ties with Northern Caribbean countries, namely the Dominican Republic and Cuba, including in the negotiation of trade agreements with third States.

    To address CARICOM’s implementation deficit, the Golding Commission has called for time-bound commitments and public progress reports on  Member States’ advancement towards meeting the various commitments. It also called for greater engagement of the private sector and the people of CARICOM.

    Failing commitment by Member States to make the commitments outlined in the report, the Commission recommended that Jamaica should withdraw from the CSME, but remain a member of CARICOM.

    The full report may be viewed here.

    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.

     

     

  • ACP Trade Ministers demand ‘concrete outcomes’ at upcoming WTO MC11

    ACP Trade Ministers demand ‘concrete outcomes’ at upcoming WTO MC11

    Alicia Nicholls

    Trade ministers and other representatives from the 79-member Africa, Caribbean and Pacific (ACP) countries added their voices to demands for ‘concrete outcomes’ at the upcoming World Trade Organisation’s Eleventh Ministerial Conference (WTO MC11). Preparations for the upcoming WTO MC11 was one of several topics discussed by ACP trade representatives at their 20th ACP Ministerial Trade Committee meeting held in Brussels on 18-19 October last week.

    According to the press release from the meeting, the ACP representatives  reiterated the need for a development-friendly and robust MC11 work programme which recognized differences between developed, developing and least developed countries and whose outcomes were aligned with the Sustainable Development Goals (SDGs).

    Reaffirming their commitment to the multilateral trading system, they also called for “inclusiveness, consensus and transparency in all WTO decision-making processes, as well as careful framing of any reform evaluation of the WTO to ensure that the interests of all countries are protected”. Guyana was chosen to be the spokesperson for the ACP Group at the Ministerial which will take place in Buenos Aires December 10-13, 2017.

    In a speech delivered at the ACP meeting, the WTO’s Director General, Roberto Azevedo, acknowledged the important role ACP countries have played in shaping the WTO’s work.

    Mr. Azevedo gave a brief status report on the WTO’s preparatory work for the upcoming Ministerial Conference, lauding the ACP countries for being at the “forefront” of these discussions. He noted that although there were some positive signs, the many gaps to bridge meant that there was still much work ahead with respect to the negotiations.  He further reiterated that in order to achieve concrete results in Buenos Aires, “more focused engagement and negotiation will be required to quickly identify areas of convergence”.

    In the meeting which was chaired by the Hon. Carl Greenidge, Vice President and Minister of Foreign Affairs of the Cooperative Republic of Guyana, ACP trade representatives also focused on several  other topics of importance to ACP countries’ trade, including enhancing trade among ACP countries and trade issues with the European Union (EU).

    The ACP press release also notes that ACP representatives have committed to “increased integration, unity and solidarity” among ACP countries, including taking more “joint ACP approaches to trade and development”.

    The press release from the ACP can be read here.

    The WTO Director-General’s full speech can be read 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.