Competition policy within the CARICOM Single Market and Economy (CSME), particularly the need for merger control regulation, was one of the major items discussed at the recently held Forty-Fourth Regular Meeting of the Conference of Heads of Government of the Caribbean Community (CARICOM) in the Bahamas last week (February 15-17, 2023).
The lengthy communique issued from the meeting revealed a packed agenda. Of interest to this author, of course, were the components dealing with continuing the consolidation of the CARICOM Single Market and Economy (CSME), especially because July this year will mark the regional grouping’s fiftieth anniversary.
Heads agreed that the Revised Treaty of Chaguaramas (RTC) would be amended to provide for the regulation of mergers and acquisitions in the CSME. This would be done on the basis of an approved Community Policy. They agreed that Member States should complete their internal consultations and approval processes on the Draft Policy on Mergers and Acquisitions in the CSME in time for the Council for Trade and Economic Development (COTED) to consider and approve the Policy in April 2023.
The CARICOM Competition Regime, as elaborated in Chapter 8 of the RTC, presently has three objectives (1) the promotion and maintenance of competition and enhancement of economic efficiency in production, trade and commerce, (2) the prohibition of anti-competitive business conduct which prevents, restricts or distorts competition or which constitutes the abuse of a dominant position in the market; and (3) the promotion of consumer welfare and protection of consumer interests. The Suriname-based CARICOM Competition Commission, along with the national commissions, is therefore a key institution for the functioning of a competitive CSME which is not harmed by anti-competitive conduct by businesses. However, currently, the CARICOM Competition Regime only regulates cross-border anti-competitive business conduct and the abuse of a dominant position. It does not deal with merger control regulation, which is the third aspect of competition policy. The Heads were also updated on the progress towards creating a dual role for the CARICOM Competition Commission (CCC) at the national and regional levels.
Asides from competition policy, the subject of progress towards completing the Draft Policy on a Regional Capital Market was also discussed. The Heads “called upon the Council for Finance and Planning (COFAP) and the Legal Affairs Committee to take the necessary action to ensure that the infrastructure for the regional capital market is largely in place within eighteen (18) months”.
They also supported COFAP’s decision to amend the Intra-CARICOM Double Taxation Agreement (ICDTA), through a Protocol on Treaty Shopping and Exchange of Information. Other topics discussed included advancing the CARICOM Agri-food systems agenda, the 50th anniversary celebrations, Afri-Exim Bank, the Bridgetown Initiative, Climate Change and Climate Finance, among others.
Alicia Nicholls, B.Sc., M.Sc., LL.B. is an international trade and development consultant and the founder of the Caribbean Trade Law and Development Blog http://www.caribbeantradelaw.com.
It is with profound sadness that my first blog post for the year 2023 is to express my condolences on the sudden passing of a pillar of the Caribbean trade and development community and a reader of this Blog, the late Ambassador Prof. Richard Bernal. To say that the Caribbean region has lost yet another a giant is an understatement. For me, it still has not completely sunk in.
Prof. Bernal’s incomparable achievements and contributions, both as an academic and practitioner in the trade and development economics arenas, are lengthy and will be rightfully ventillated in other spaces. Many who follow trade developments would undoubtedly best remember him for his role as a diplomat and trade negotiator, the director general of the then Caribbean Regional Negotiating Machinery (CRNM) and the lead negotiator of the CARIFORUM-European Union Economic Partnership Agreement. This was CARIFORUM countries’ first trade agreement with a developed country. Prof. Bernal’s book “Globalisation, Trade and Economic Development: The CARIFORUM-EU Economic Partnership Agreement” is compulsory 101 reading for an understanding of the EPA, the background behind its negotiation and the wider Caribbean economic development problematique. But there is much more to Prof. Bernal’s work than this. Others will no doubt write profusely on the many facets of his accomplished career and life as an economist, diplomat, educator, academic, negotiator over the next few days as we mourn his loss.
Prof Bernal was both an avid reader and writer. His writings were a quilt of measured, well-researched ideas woven expertly and drawn from his groundings in economics, trade, political economy, development policy and international affairs. At the heart of it all was a central trend, how can the Caribbean escape its current growth and development conundrum? His scholarship has undoubtedly informed, enthused and shaped my interests as a trade policy specialist from the time I was a fresh-faced student doing my Masters in International Trade Policy at The UWI Shridath Ramphal Centre for International Trade Policy & Services well over a decade ago. Even as recently as a few days ago I quoted Prof. Bernal in a journal article I am authoring. I continue to be inspired by and aspire towards his level of academic output. I was even happier when on one of his trips to Barbados, he kindly obliged my humble request to autograph my personal copies of two of his several books. I am an avid follower of his work and own copies of all his books.
While I did not know Prof. Bernal as well as others, I consider myself honoured to have made his acquaintance and privileged to have eventually met him in person. I have also enjoyed serving with him and many other regional luminaries as fellows in the Caribbean Policy Consortium. I deeply cherish the nuggets of wisdom and encouragement he shared with me in our correspondences.
His brilliant mind has physically left us. I however take some comfort in the fact that his voluminous publications list spanning books, journal articles, popular pieces and endless interviews, podcasts and webinars remain a rich repository of knowledge for future generations of trade and development practitioners, diplomats, specialists, scholars and students. These works contain his well-researched thinking and musings on key themes pervading the Caribbean development challenge – how do we achieve sustainable economic growth? How can trade assist this? How can we expand US-Caribbean relations for development? How can we make the growing Chinese-Caribbean relationship a mutually beneficial one? How has the Caribbean helped to shape international affairs even as small States?
I do hope that in recognition of his stellar contribution to the region’s corpus of research and literature on trade, international affairs and development issues, there will be some special library or unit established at The UWI where all his works could be accessed in a central place and/or a lecture series on the topics he held dear to his heart or a scholarship fund for students studying these issues established in his honour. I take this opportunity to express my deepest condolences to the late Ambassador Bernal’s family.
Walk good, Ambassador.
Alicia Nicholls, B.Sc., M.Sc., LL.B. is an international trade and development consultant and the founder of the Caribbean Trade Law and Development Blog http://www.caribbeantradelaw.com.
Africa-Caribbean relations are seeing some exciting times. Doubt me? Think about the fact that Nigerian Afrobeats superstar Burna Boy was the headline act at Tipsy, a major fete on the calendar of Crop Over, Barbados’ biggest festival which had been suspended for two years due to the COVID-19 pandemic. The Grammy Award winner’s performance in Barbados on July 17 was the first leg of his 2022 Love, Damini Summer Tour. From all reports the much-anticipated event attracted patrons not just from Barbados but across the Caribbean and beyond. But this is just the ‘tip’ of the iceberg in what has been a deepening of Africa-Caribbean engagement and not just at the political level.
As I explained in several previous articles on this subject, total volumes of Africa-Caribbean trade and foreign direct investment are quite small for now. While a few African and Caribbean countries have tax and investment treaties with each other and bilateral cooperation agreements in various areas, there are no free trade agreements (FTAs) between Caribbean countries and African countries. However, the low trade volumes could likely change. Though efforts to expand Africa-Caribbean economic relations predate the COVID-19 pandemic, the economic fall-out has accelerated our countries’ need to diversify our trading partners and tourism source markets as part of their post-COVID economic recovery. Amplifying trade and investment ties with African countries is at the forefront of many Caribbean countries’ diversification efforts.
Collaboration in the creative industries
Burna Boy’s headlining of Tipsy introduced the Barbadian audience to Afrobeats, a genre with which many Barbadians might not have been previously familiar. Of course, his headlining of Tipsy’s 2022 All White Party is not the first African-Caribbean ‘collaboration’ in the creative industries. For example, a couple years ago two of my favourite artistes, Trinidadian soca star Machel and Nigerian star Timaya collaborated on several soca songs and remixes, like “Shake ya bum bum” and “Better than them”.
Many musical genres in the Caribbean and the African continent share similar DNA. Given the current explosion of interest in each other’s cultures, one can only ponder the many future collaborations between Caribbean and African creatives. I am sure many of us would enjoy attending an Africa-Caribbean Music Festival of some sorts featuring popular and emerging acts from both regions. Indeed, as many Barbadians are Nollywood movie aficionados, an Africa-Caribbean Film Festival would also be an exciting prospect, featuring films from our countries and even the opportunity for African and Caribbean film makers to meet and discuss possible co-productions.
Other areas of collaboration
African Fintech companies are also taking an increased interest in the Caribbean. A Nigerian company has also expressed interest in purchasing the struggling Caribbean regional airline, LIAT. This proposal has elicited a mixed reaction but it is indicative of what anecdotally appears to be a burgeoning interest of African investors in the Caribbean market. The business interest has not been one-way either. For instance, Barbadian fintech company Bitt Inc was contracted by the Central Bank of Nigeria to develop the digital version of the Nigerian Naira, called the eNaira, which is Africa’s first Central Bank Digital Currency (CBDC).
There are also promising prospects for Africa-Caribbean trade in educational services, such as through increased student and faculty exchanges and joint course offerings. Scope also exists for continued and greater joint research between African and Caribbean academics and academic institutions on areas of mutual interests. Indeed, last year I had the pleasure and honour of co-convening with Dr. Ohio Omiunu, a well-respected legal scholar, a symposium on the AfronomicsLaw Blog on the topic “Prospects for Deepening Africa-Caribbean Economic Relations”. Recognising that Africa-Caribbean economic relations was an understudied area in the academic literature, the Blog Symposium featured essays authored by established African and Caribbean scholars and practitioners on deepening the African-Caribbean relationship from a variety of perspectives.
There is growing interest among Caribbean people of African ancestry in tracing their genealogy which means genealogy tourism could be a significant, though not the only driver, of Africa-Caribbean tourism in the future. I like many Barbadians was intrigued to learn that Barbados possesses the largest archive of slave records outside of the United Kingdom. The Government of Barbados announced it will be establishing a geneaology research centre at the historic Newton Slave Burial Ground where those records will be held. This could make Barbados a hub for researchers from the Caribbean, Africa and further afield.
Creating the enabling environment
Naturally, there are trade, cultural, linguistic and other barriers which need to be addressed. With some exceptions, most Caribbean countries lack direct air and sea links to the African continent despite the two continents being a hive of connectivity during the 300 years of the Trans-Atlantic Slave Trade. If those links could have existed during that barbaric period, surely we must make all efforts to build sea and air bridges for a more noble purpose, that of expanding understanding, connectivity and trade between our peoples. Thankfully, serious efforts are being made by Caribbean governments to establish scheduled direct air links with the continent, particularly with airlines from Ghana and Kenya and which would facilitate Africa-Caribbean travel for recreation and business.
Barbados has also been expanding its network of tax and investment treaties with African countries which would make the island an attractive hub for African investors to expand into other markets by leveraging Barbados’ treaty network. It was recently announced that an investment agreement was signed between Barbados and Rwanda and it is hoped that the text of this agreement will soon be made available.
Moreover, exporting is an expensive venture and access to finance is one of the major barriers firms face when seeking to export. Therefore, the agreement in principle by the African Export Import Bank to establish an Africa-Caribbean Trade and Investment Financing Facility with an initial injection of US $250 million is a commendable step in helping to create the enabling environment for enhanced Africa-Caribbean trade and investment by providing access to trade finance.
Future looks bright
To be sure, the prospects for deepening Africa-Caribbean trade are promising. I eagerly look forward to the upcoming inaugural AfriCaribbean Trade and Investment Forum which will be held in September in Barbados. For African and Caribbean firms and professionals, this forum should be the perfect opportunity for deepening and expanding relations and knowledge about the opportunities in each other’s markets. Without doubt, these are indeed exciting times for Africa-Caribbean trade relations. One cannot be anything but enthused for what the future holds!
Alicia Nicholls, B.Sc., M.Sc, LL.B. is an international trade specialist and founder of the Caribbean Trade Law and Development blog http://www.caribbeantradelaw.com.
The Covid-19 pandemic severely impacted/devasted the economies of countries that have been classified as ‘least developed’ by the international arena. It has prompted me to take a closer look at the ideation of resilience amid global shocks and market failures.
The aim of this brief article is to examine the role of trade in boosting economic growth of least developed countries (LDCs) such as Haiti, Liberia and Timor-Leste. Special attention will be diverted to the type of preferential treatment received and the trade policies needed to increase the growth prospects in a post-Covid period. We first need to highlight the current situation with regard to trade amongst LDC countries as underscored by the World Trade Organisation (WTO) and will posit possible solutions to facilitate an amelioration of trade.
According to (WTO 2022:5) “The top ten LDC exporters represented more than 80 per cent of LDC merchandise exports in 2011; this declined to 73 per cent in 2020. LDC exports continue to be concentrated in five major destination markets: China, the European Union, the United States, India and Thailand.”.
As early as the 1930’s, discussion around the benefits of lessening restrictions to international trade and investment was actively happening among countries. In 1948, an international agreement was established among countries to reduce barriers to trade. After eight rounds of meetings, a General Agreement on Tariffs and Trade (GATT) was formed, and in 1995, the World Trade Ogranisation (WTO) was established. The WTO is an international trade governing body that is tasked with monitoring, enforcing and liberalizing trade amongst countries (Suranovic 2010).
The key reasons why countries trade is summed up below.
Differences in technology (Ricardian theory of comparative advantage)
Differences in resource endowments (Pure exchange model of trade and Heckscher-Ohlin factor proportions model)
Differences in demand (Monopolistic model)
Existence of economies of scale in production (Increasing returns to scale)
Existence of government policies among countries
In the reality, trade takes place for many reasons. There is no single model or theory that captures all the reasons. For example, the Ricardian model, which focuses on the differences in technology among countries posits that everyone benefits from trade whereas on the other hand the Heckscher-Ohlin model suggests differences in endowments are the reason for trade and that there will be losers and winners. These traditional trade theories illustrate a myopic justification for trading as countries trade for a myriad of reasons. According to experts like Suranovic, most of these theories of trade are very simplistic in nature and generate unrealistic assumptions.
So let’s now discuss, especially in consideration of the quote below:
“Least developed countries (LDCs) have been recognized by the United Nations since 1971 as the category of the states, which are deemed highly disadvantaged in their development process, for structural, historical and also geographical reasons”(Białowąs and Budzyńska 2022:1).
As early as 1979, least developed countries have been receiving preferential treatment from advanced economies as part of the Tokyo round of the GATT. These preferences fall under what is coined the generalised system of preferences (GSP). As such, they have enjoyed exclusive schemes geared at entry into the markets of advanced economies by removing barriers such as tariffs and quotas from the early 2000s (Klasen et al. 2016).
According to the WTO, “the Istanbul Programme of Action for LDCs (IPoA) for the decade 2011 to 2020 identified trade as one of the eight priority areas of actions for the economic growth and sustainable development of least-developed countries”(WTO 2022:3).
Trade as a percentage of the Gross domestic Product (GDP) for LDC’s since the year 2000 is reflected below in figure 0.1.
The graph above illustrates that trade as a percentage of GDP for LDCs rose steadily from as early as 2003 up until the financial crisis in 2008. A downward pattern continued for another eight years until 2016, then there was improvement. However due to the Cocid-19 pandemic a downward movement has been evidenced since.
The graph below illustrates the latest statistics of the LDCs share of world exports.
Source (WTO 2022)
We can clearly see that there was steady expansion of exports between 2017-2019. After the pandemic, there was a sharp decline of .04%, falling way below the expected target set by IPoA. (WTO 2022) shows that LDCs have seen declines over the last ten years in merchandise exports in all areas except clothing. Although LDCs received preferential treatment, not all goods and services exported are covered (Antimiani and Cernat 2021).
So what does this all mean, and what’s the bottom line?
There is clear evidence supporting the WTO’s preferential treatment towards increasing the revenues and economic prosperity of LDCs (Antimiani and Cernat 2021). Notably, there is still room for further easing of trade barriers especially due to the shocks created by the pandemic. This is further underpinned by larger regional trade blocks emerging amongst developed countries undermining the efforts of the WTO (Palit 2015). A 2016 paper carried out by (Klasen et al. 2016:5) using econometric techniques highlighted that “only Canada’s, Australia’s and EU’s trade preference systems have a positive and significant impact on LDCs’ exports”. Therefore, the following recommendations are proffered in the interest of economic uptake and growth through trade for LDCs.
Establish regional trade agreements among LDCs to help increase their market share.
Provide concessions for value added goods from LDCs within the global value chain for finished products exported by WTO members
Increase the unilateral agreements enjoyed by LDCs especially duty and quota free access to world markets on a wider range of products
Increase the production and institutional capacity of LDCs by providing technical support to their industries
Improve the LDC service waiver allowing it to cover more areas within the service industries
These recommendations will allow LDCs to improve their trade practices, have more standardized procedures, facilate growth of local sectors which, in turn will increase the overall welfare of the economy and the people post covid.
Note: Multiple WTO reports, textbooks and journals from industry experts were utilized in the writing of this article.
Lucius S.J. Doxerie is an aspiring economist and co-founder and CEO of Stratagem Paradigms Inc. He is a Chevening Scholar currently enrolled at the University of Bradford completing a Master of Science in Economics and Finance for Development.
REFERENCES
Antimiani, A. and Cernat, L. (2021) Untapping the full development potential of trade along global supply chains: ‘gvcs for ldcs’ proposal. Journal of world trade 55 (5), 697-714.
Białowąs, T. and Budzyńska, A. (2022) The Importance of Global Value Chains in Developing Countries’ Agricultural Trade Development. Sustainability 14 (3), 1389.
Klasen, S., Martínez-Zarzoso, I., Nowak-Lehmann, F. and Bruckner, N. (2016) Trade preferences for least developed countries. Are they effective? Preliminary Econometric Evidence. Policy Review 4.
Palit, A. (2015) Mega-RTAs and LDCs: Trade is not for the poor. Geoforum 58, 23-26.
Suranovic, S. (2010) International trade: Theory and policy. The Saylor Foundation.
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