Caribbean Trade Law and Development

Tag: trade

  • Caribbean Countries Looking East for Trade and Investment

    Caribbean Countries Looking East for Trade and Investment

    Alicia Nicholls

    This week the Barbados Chamber of Commerce & Industry (BCCI) signed a Memorandum of Understanding with the  Foreign Economic Relations Board of Turkey. Further north, Jamaica recently announced that it is appointing investment ambassadors to the Middle East and India and Europe to explore business opportunities for Jamaicans. A few weeks ago Antigua & Barbuda’s government announced plans to establish an embassy in Iraq. Caribbean countries are increasingly courting Asian and Middle Eastern countries, with the aim of unlocking business opportunities for Caribbean exporters and business persons in eastern markets.

    Why is the Caribbean looking East?

    Caribbean countries’ eastern turn has its genesis in three main factors: firstly, the need to diversify their trade partners in an effort to lessen their vulnerability to economic slowdowns in their traditional export partners (the United States, Canada and the European Union). Secondly, there is the desire to promote South-South economic and political cooperation as a conduit for development. Thirdly, there is the recognition of the growing shift in the global balance of power away from Western capitals towards the East. Asian economies are expected to account for two-thirds of the world’s population and half of global GDP by 2025, according to the United Nations.

    China has already solidified its position as a major investment and development partner in the region. Lamentably, Caribbean countries’ overtures towards the East have drawn criticism from some elements in Caribbean societies, with some expressing wariness about the timing given the political instability in the Middle East, the seemingly limited cultural affinity between Caribbean countries and the predominantly Muslim countries of the East, and the diplomatic fall-out some believe would occur if Caribbean countries engage too much with traditional western foes like Iran. However, many of these criticisms are both misguided and myopic.

    Firstly, Western countries themselves have recognised this shifting balance of power and have sought to expand their presence in eastern markets, with the Trans-Pacific Partnership Agreement being just one example. Secondly, Caribbean countries have had diplomatic relations with most Asian and Middle Eastern countries for years. What is new is there is now more meaningful efforts at deepening relations through the establishment of embassies and consulates, negotiating visa waiver agreements, open skies agreements and protocols for cooperation.

    Thirdly, contrary to popular belief, there are some cultural and historical links between the Caribbean and the East.  As a result of the indentured labour system during the colonial era and successive waves of immigration, East Indians comprise a plurality of the populations in Guyana, Suriname and Trinidad & Tobago and there are also sizable Chinese, Syrian and Lebanese diasporic communities in those countries, as well as a 70,000 person strong Javanese diaspora in Suriname. Jamaica, Barbados and Antigua & Barbuda have much smaller East Indian populations.

    Many of these diasporic communities, whether immigrant or native-born, still hold on to cultural relics of their ancestral homeland, including music, religion, cultural norms and in some cases, language. After all, one of highlights of visiting Trinidad & Tobago is eating local Indian-based delicacies like roti and doubles. Additionally, walk into an East Indian owned store in the region and you are sure to find products which were  imported in bulk from the Indian sub-continent.

    Another cultural link between the Caribbean and some Eastern countries is the love for cricket. Several West Indies players have played and/or are currently playing in the Indian Premier League (IPL). Some notable names include big names like Chris Gayle, Darren Sammy, Dwayne Bravo, Jason Holder, to name a few. It was also recently reported that seven Afghan players have been registered in the Caribbean Premier League draft. Bollywood star Shah Rukh Khan currently owns the Trinbago Knight Riders (formerly the Trinidad & Tobago Red Steel), Trinidad & Tobago’s franchise in the Caribbean Premier League.

    Caribbean students are increasingly benefiting from scholarships offered by the governments of China, Taiwan, Japan, Korea and Malaysia to study in those countries.

    Trade and Investment

    While the limited data available shows that trade between Caribbean and Asian/Middle Eastern countries is minimal, the bilateral trade and investment relationship between Trinidad & Tobago and India is a good example of the potential which exists.

    Data published by the Indian High Commission to Port of Spain (Trinidad & Tobago) shows that in 2014 India exported US $165.48m in goods to the twin island republic, and imported 68.42m. Examples of Indian FDI in Trinidad & Tobago include Bank of Baroda, the New India Assurance Co and Mittal Steel. Cultural industries trade also has huge potential. Trinidad & Tobago was one of the filming locations for the Bollywood film, Dulha Mil Gaya starring Shah Rukh Khan.

    Barbados has signed double taxation agreements with the United Arab Emirates (2014) and, the Kingdom of Bahrain (2012), which are currently not yet in force but could be used as vehicles for Middle Eastern investment in Latin America and the Caribbean

    Development Finance & Islamic Banking

    Earlier this month, Guyana became the 57th member of the Islamic Development Bank (IsDB), joining Suriname to be the only two countries in the western hemisphere to be members of this multilateral development finance institution. Membership of the IsDB  will provide Guyana another means of access to concessional financing, including grants and interest-free loans. Guyana and Suriname also have full membership of the Organisation of Islamic Cooperation (OIC), a prerequisite to joining the IsDB. At the recently held 13th OIC Heads of Government Summit in Istanbul, Turkey, Suriname reiterated its intention to become  the hub of Islamic banking and finance in the Americas.

    Tourism

    The rising middle class in Asian and Middle Eastern countries represent a large untapped tourist market for both mainstream and faith-based tourism.  Halal tourism, which provides tourism and services meeting the requirements of Muslim religious rules and practices, is a growing niche in global tourism, not dissimilar to Kosher tourism which caters to persons of the Jewish faith. Several countries, including the predominantly Christian Philippines, have been repositioning themselves to benefit from the global rise in Halal tourism. It may be something which countries like Guyana, Suriname and Trinidad & Tobago, could explore given their greater familiarity with Halal customs.

    Challenges

    Exporting goods and services and promoting travel trade in a new market has its complications, from the need to conduct adequate market research so as to understand and meet consumer preferences, to familiarisation of regional exporters with cultural and business norms,regulatory standards and border requirements in the target market, as well as linguistic barriers. It might be easier at first to foster links with countries like India, Malaysia and Singapore where English is widely spoken and where there are some  cultural affinities.

    Distance is also a major logistical factor in terms of both ocean freight and air travel. Open skies agreements would help promote greater travel and trade by freeing the air services framework from government interference. However, travel between the Caribbean and Eastern countries is currently time-consuming as it requires changing planes, and transiting through metropolitan hubs like London, Amsterdam or Miami. Nationals of some Asian and Middle Eastern countries require visas to transit through these hubs.  There is some hope, however. Air China commenced service from Beijing to Cuba via Montreal in Canada in December 2015. Although one still has to transit, there is only a three-hour stop over. As technological advancements improve the capacity and speed of long haul airliners, it is not unlikely that there could one day be direct non-stop flights between the Caribbean and Asian and Middle Eastern countries once there is sufficient demand, whether latent or effective.

    If one includes China and India, eastern markets include a population of over 3 billion people which is ripe for tapping. As the middle class in Asia and Middle Eastern countries continues to rise, there will be greater demand for travel, and also greater scope for trade and investment between these regions. I believe there are also opportunities for greater engagement, exchange and learning between the Caribbean and eastern countries, particularly in areas like culture, education, technology and sports. Critically, there will be the need to foster linkages between private sector associations and educational institutions in both regions. The countries of the Caribbean Community (CARICOM) would also need to consider the feasibility of negotiating formal agreements for facilitating trade and investment with individual eastern countries or trade blocs like the Association for South East Asian Nations (ASEAN).

    There is also the need for language training and cultural awareness between the peoples of the Caribbean and eastern countries. A good start is the Confucius Institutes at the University of the West Indies’ Mona, St. Augustine and Cave Hill Campuses which would assist in this process in so far as Chinese-Caribbean relations are concerned.

    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.

  • Global Trade and Socio-economic tides pushing Caribbean countries to the back of the shoal: Integrate or be left behind

    Alicia Nicholls

    A few days ago I had the pleasure of being on the Regional Integration panel at the 17th Annual SALISES Conference held this year in Barbados where I presented a paper co-authored with founder and president of the African, Caribbean and Pacific Young Professionals Network (ACP YPN), Miss Yentyl Williams. The consensus all the panelists had reached in our papers was that as small fish in a very large pond, Caribbean countries are facing a growing swell of global trade and other socio-economic tides which are deepening our marginalisation in the global economy.

    We argued that the region desperately needed to deepen and widen its integration process or face being further relegated to the back of the global shoal. Of course, what we were saying was not novel and indeed, has been one of the oldest and most compelling justifications for the regional integration project.

    The Good

    Caribbean countries have generally attained high levels of socio-economic and political development and high per capita incomes, which have put us “ahead of the pack” of other small island developing states (SIDS). An unfortunate side effect has been the graduation of several “high income” Caribbean countries like Barbados, the Bahamas and Trinidad & Tobago from accessing most concessional loans and grants, with a shift in aid focus towards Least Developed Countries (LDCs). We also have long traditions of stable democratic rule underpinned by respect for the rule of law which has been a source of comfort for investors seeking to do business in the region.

    The Bad

    Despite these very noteworthy accomplishments, Caribbean countries confront many challenges endemic to SIDS, including vulnerability to natural disasters and to international economic and financial shocks, open economies with a high dependence on imports and on a narrow base of exports and trade partners, a paucity of natural resources, unsustainably high levels of debt, low growth rates, wide fiscal and current account deficits, declining competitiveness, growing informal economies and unpredictable foreign direct investment (FDI) inflows.

    The potential shift in trade rule making from the multilateral level (Doha is practically dead post-Nairobi), to the regional and plurilateral levels means Caribbean countries will be subject to rule-taking on important trade issues such as services, competition policy, investment and government procurement, without having a seat at the negotiating table. Mega regional trade agreements like the recently concluded Trans-Pacific Partnership Agreement (TPP), the Trans-Atlantic Trade and Investment Partnership (TTIP) which is currently under negotiation and plurilaterals under negotiation like the Trade in Services Agreement (TISA), also have the potential to further erode the narrow margins of preference Caribbean countries’ exports enjoy in the US and EU markets respectively. Regional exports to these countries are not only below potential but remain heavily concentrated in commodities, namely, minerals and fuels and agricultural products,  and some textiles.

    Although low oil prices have benefited oil-importing countries of the region by lowering their fuel import bills, the region’s largest oil exporting economy, Trinidad & Tobago, has gone into recession.

    One bright spot is that Caribbean tourism appears to be on the rebound in the aftermath of the impact of the global recession. The latest Caribbean Tourism Organisation (CTO) State of the Industry Report indicates that in 2015, international arrivals to the Caribbean region grew 7%, outpacing global tourism growth of 4% in the same period. Tourist arrivals from within the Caribbean increased by 11.4%. Nonetheless, shocks like 9/11 and the global recession and possibly the current Zika outbreak, highlight the very sensitive nature of the industry, which has implications for countries like Barbados, the Bahamas and the Eastern Caribbean where tourism is a major foreign exchange earner and employer.

    The loss of correspondent banking relationships due to the de-risking practices of banks in metropolitan countries has the potential to undermine the region’s trade, investment and remittance flows, a lifeline for many communities within Caribbean countries. The view of the region as being a “risky” place to do business cannot be divorced from Caribbean countries’ constant need to fight their inclusion on arbitrary blacklists, with the EU being one of many latest examples. On the social front, there is rising unemployment and underemployment, which are particularly acute among young persons, as well as rising crime and security concerns.

    All of these challenges, many both national and regional in texture and scope, are injurious to regional development, including our progress towards achieving the 17 United Nations sustainable development goals (SDGs). These challenges necessitate harmonised national and regional responses. However, progress on the regional project remains lacklustre.

    Functional cooperation has been the pillar in which CARICOM has been most successful. There has also been some success on the foreign policy coordination front as exemplified by the Region’s cohesive position at the Paris Negotiations which led to the Paris Agreement. However, economic integration has been where the challenge lies. The implementation deficit, though spoken of ad infinitum, remains problematic given the long delays in domestic implementation of regional decisions and missed deadlines. The “E” of the Caribbean Single Market and Economy (CSME) is still in the realm of dreams as opposed to reality.

    CARICOM countries export the majority of their trade extra-regionally (mainly to the US, EU and Canada). Intra-regional trade remains low and under-exploited and dominated by CARICOM MDCs, particularly petroleum exports from Trinidad & Tobago.

    Without doubt, the lack of political will deserves a significant share of the blame for the current malaise. The fact that most CARICOM states have still not signed on to the appellate jurisdiction of the Caribbean Court of Justice is just but one example. At the same time, the slow process of integration in CARICOM can be juxtaposed to the deep level of integration among member states of the Organisation of Eastern Caribbean States, which have their own Eastern Caribbean Supreme Court, currency union, central bank and recently have granted Martinique, a French Caribbean Outermost Region, associate membership.

    Besides the lack of political will, other factors remain hindrances to regional integration as well, including human and financial capacity constraints at the national and regional levels, limited monitoring and evaluation of member states’ implementation of reforms and the inability of CARICOM to force compliance with regional imperatives due to its intergovernmental structure. Not to be overlooked are the fears, suspicions and nationalist sentiments we Caribbean people still harbour towards each other, as well as the very “inward looking” as opposed to “regional looking” approach by  many regional leaders.

    The options

    As the saying goes, Caribbean states are tiny fish in a very large pond but a shoal of fish is better than one if the region is to avoid being swept away by global tides and relegated to the back of the global shoal. Boosting intra-regional trade among Caribbean countries and trade with third states are priorities. For this, improving trade facilitation and ease of doing business in the region are a must.

    Caribbean countries have an average rank of ease of doing business of 104 out of 189 economies, according to the latest World Bank Doing Business Survey 2016. Though in ease of trading across borders, Caribbean countries had a average regional rank of 95 (higher than Latin America (108) and East Asia Pacific Islands (112), a lot more work needs to be done. Just compare our average to the comparable SIDS, Mauritius which topped Africa with a rank of 32 in 2016. The highest ranking Commonwealth Caribbean country was Jamaica (68).

    Doing business between Caribbean countries can be a frustrating exercise due to differing customs regulations and other regulatory standards, existing non-tariff barriers to trade (e.g: sanitary & phyto-sanitary standards and technical barriers to trade), foreign exchange controls, the high cost of regional transport and lack of access to timely information on documentary and other requirements. While the region has very liberal investment regimes, investors seeking to do business in multiple Caribbean countries have to navigate a complex web of different border and behind the border regulations. This increases the cost of doing business.

    A single economic and investment space as envisioned by the CSME, aided by fiscal, investment policy and regulatory harmonisation, would make intra-regional trade easier and also make the region a more attractive destination to extra-regional investors. To this effect, it is imperative that Caribbean countries follow through with the current reforms and the vision of the CARICOM Strategic Plan 2015-2019. Additionally, so far just a handful of Caribbean countries have ratified the World Trade Organisation’s Trade Facilitation Agreement, which while a global agreement, the reforms undertaken would also benefit intra-regional trade.

    What the  global financial and economic crisis has reinforced is the need for Caribbean countries to diversify their export profiles and trade partners. The latter is happening to some extent as both China and Venezuela have become major investors and development partners in the region, adding to the traditional partners of the US, EU and Canada. However, China’s economy has slowed as it transitions from export-led to more consumption-led growth. Venezuela faces significant socio-economic turmoils which call into question the sustainability of the Petrocaribe arrangement, under which most Caribbean countries receive oil from Venezuela on highly concessional terms. Some OECS countries are exploring deepening diplomatic and possibly economic relations with Middle Eastern countries. Antigua & Barbuda recently announced it was establishing an embassy in Iraq and lifted its ban on Iraqi nationals seeking to apply for its Citizenship by Investment programme.

    Like all trading economies Caribbean states have both offensive and defensive interests. There is the need to convert market access under existing trade agreements such as the CARIFORUM-EU Economic Partnership Agreement and preferential arrangements like the Caribbean Basin Initiative (CBI) and CARIBCAN into market presence. CARICOM should also explore the expansion of existing partial scope agreements the region has with the Dominican Republic (its CARIFORUM partner), Costa Rica, Cuba and  Colombia, as well as the possibility of concluding trade arrangements with other South and Central American countries.

    Additionally, there is the need to move into higher value products than just traditional commodities like cocoa, sugar and rice and also accelerate the development of possible growth sectors like the cultural industries, transshipment, ICTs and renewable energy (for domestic consumption and possible export). To this effect, the region needs to make optimum use of aid for trade initiatives.

    CARICOM countries must continue to speak with “one voice”, particularly on global trade, economic and social issues which have implications for the development of our economies and our peoples. This includes continued advocacy for the interests of small vulnerable economies (SVEs) in WTO negotiating groups and continuing to support the multilateral system to ensure its primacy, and not FTAs and plurilaterals, as the forum for trade rule making so that the Region has a say in the rules to which it is subjected.

    OECS countries have long seen the utility of maintaining joint representation in diplomatic capitals, such as the OECS Joint Mission in Brussels. It is time CARICOM consider the same.

    Any regional strategy requires continuity and continuity mandates engaging the future of the region – our young people. The region has to harness and unleash the energies of its young people, many of whom feel alienated from the regional integration process and from their societies in general. While the CARICOM Youth Ambassadors is a great step, I have always argued that CARICOM needs a Young Professionals Programme similar to the young professionals programmes of other organisations, where the region’s young people, many of whom have increasing difficulty finding jobs commensurate with their skills, can be systematically recruited into various regional institutions and inject new ideas and enthusiasm. As SIDS, our human resource has always been our greatest resource. It is time we exploit it to the fullest.

    In sum, the growing challenges facing the region means it cannot be business as usual. The time for talking is over. It is time for action. Countries with economies and populations larger than ours have seen the importance of deepening their integration. As small fish in a large pond, Caribbean countries need to do the same or face being left at the back of the global shoal.

    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.

  • Caribbean Weekly Trade & Development Digest – February 28 – March 5 2016

    These are some of the major trade and development headlines and analysis across the Caribbean region and the world for the week of February 28- March 5, 2016 :

    Regional

    Biofuel Manufacturer to invest US$95 million in Jamaica plant by 2017

    South Florida Caribbean News: As renewable energy demands increase globally, biofuel developer Benchmark Renewable Energy LLC has officially announced plans to develop a large scale bio-ethanol operation in Jamaica. Read more

    Barbados passport tops Caribbean passports in ease of visa-free travel

    Caribbean Trade Law & Development: Barbados has the best passport among Caribbean countries. This is according to Henley & Partners’ recently published Visa Restrictions Index 2016 in which Barbados has topped Caribbean countries in the ease of which its citizens/passport holders can cross international borders. Read more

    US airlines sign up for commercial flights to Cuba

    CNN Money: American Airlines, Alaska Airlines, Delta Air Lines, Southwest Airlines, United Airlines and JetBlue have all submitted applications to the U.S. government to fly commercial flights to Cuba. Read more

    T&T facing downgrade by Moody’s Investors

    Trinidad Express: For the second time in two years, Trinidad and Tobago is facing a downgrade by international credit ratings agency Moody’s Investors Service. Read more

    Strike hits Guyana’s sugar industry

    Caribbean360: A day after declaring that Guyana’s first crop sugar target was on track to be met, the Guyana Sugar Corporation (GuySuCo) has been hit by strike action. Read more

    Barbados & St. Lucia Negotiating Agreement

    CARICOM Today: The Governments of Barbados and St. Lucia have decided to proceed to the negotiation and conclusion of an agreement establishing the maritime boundary between the two States. Officials from the two States met in Barbados from March 1 to 4, 2016 and prepared the draft text of a maritime boundary delimitation agreement. Read more

    International

    India files dispute against the US over non-immigrant temporary working visas

    WTO: On 3 March 2016, India notified the WTO Secretariat that it has initiated a WTO dispute proceeding against the United States regarding measures imposing increased fees on certain applicants for two categories of non-immigrant temporary working visas into the US, and measures relating to numerical commitments for some visas.  Read more

    Commodity prices signal market bottom

    Financial Times: When news of the highest crude stocks since the Great Depression hit oil traders’ screens on Wednesday, those expecting another rush of sell orders were in for a surprise. Read more

    Paraguay becomes second South American nation to ratify the Trade Facilitation Agreement

    WTO: Paraguay has become the second South American nation to ratify the WTO’s new Trade Facilitation Agreement (TFA). Eladio Loizaga, Paraguay’s Minister of Foreign Affairs, presented his country’s instrument of acceptance to WTO Deputy Director-General Yi Xiaozhun on 1 March. Read more

    EU, Canada Revise Investment Protections in Trade Deal

    ICTSD: The EU and Canada announced on Monday that they have revised the investment protection terms in their bilateral trade pact, with the new version now including an investment court system that Brussels is hoping to pursue in other trade agreements – including with the US. Read more

    Barclays Africa ‘s trade finance future uncertain

    Global Trade Review: Barclays Africa’s trade and export finance future will be in the hands of the bank’s next majority shareholder after Barclays reduces its 62.3% stake to around 20% over the next two to three years. Read more

    US Imposes 266 percent tariffs on some Chinese steel imports

    Wall Street Journal: The Department of Commerce Tuesday imposed preliminary duties on imports of cold-rolled steel, used to make auto parts, appliances and shipping containers, from seven countries including China, whose steelmakers were slapped with a massive tariff. Read more

    Recent Articles: Caribbean Trade Law & Development Blog

    US President Obama’s Trade Agenda – 2016

    Barbados’ Passport Tops Caribbean Passports in Ease of Visa-free Travel

    For past issues, please visit 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.

  • Cuban and Virginian port authorities sign trade cooperation MOU

    Alicia Nicholls

    According to the website of the Office of the Virginia Governor, the port authorities of Cuba and the Commonwealth of Virginia in the United States have signed a Memorandum of Understanding to “evaluate commercial opportunities between the Port of Virginia and Cuba’s newly opened Port of Mariel Special Development Project”.

    The MOU is one of the outcomes of a three-day trade mission led by the Governor of Virginia, Terry Auliffe, to Cuba as part of a thrust towards strategically positioning Virginia to benefit from the normalisation of US-Cuba relations. According to the Governor’s website, the signed MOU “establishes a platform for cooperation and information sharing aimed at developing links between Cuba and Virginia to support waterborne trade and investment, improve customer service, enhance collaboration to achieve improved business practices, and increase the level of vessel services available between the two entities”.

    This latest move comes against the backdrop of a thawing of US-Cuba relations under the Obama administration, including the rescission of Cuba’s State Sponsor of Terrorism designation, the re-establishment of diplomatic ties, amendments to the Cuban Assets Control Regulations (CACR) and the Export Administration Regulations (EAR) and the signing of a commercial air services agreement for the eventual resumption of commercial aviation service between the two countries last year.

    Despite a growing groundswell of US companies chomping at the bit to enter the Cuban market, the US’ illegal embargo on Cuba remains. Late last year the US Government once again voted against a UN General Assembly resolution introduced at Cuba’s request condemning, and calling for the end of the embargo. The US embargo on Cuba which has been in place since 1960 has sought to economically and financially isolate Cuba by banning most American trade to and from the island, with stiff penalties for US companies and individuals who infringe these laws. US companies are also prohibited from selling goods to Cuba on credit. Although some agricultural trade currently exists between Cuba and Virginia, it has been recognised that full trade potential will not be realised until the economic, commercial and financial restrictions imposed by the US Federal Government are removed completely.

    The fourth US governor to visit Cuba since 2014, Governor Auliffe was one of the nine US governors who penned a bi-partisan letter dated October 9, 2015 to the US Congress advocating for an end to the restrictions impeding trade between the US and Cuba.

    Further information on this development may be obtained from the press release on the Governor of Virginia’s website.

    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.