Antigua & Barbuda Uses Trade Policy to help prevent Zika

Alicia Nicholls

Antigua & Barbuda is using its trade policy arsenal to help prevent the entry of the Zika virus into that twin-island Caribbean State. According to a news report published by the Antiguan Observer, the Cabinet of Antigua & Barbuda has permitted the removal of import duties on several “mosquito defense systems”, such as mosquito nets, screens and coils, to make them more affordable for the local population there.

The current Zika virus outbreak is one of the most serious public health threats spreading across the Americas, with cases also being reported in the Pacific and Asia. Though the virus was first identified in Uganda in 1947 and previous Zika outbreaks have happened in the past, this current incarnation appears to be one of the most globally widespread. Based on the advice of the first meeting of the International Health Regulations (2005) Emergency Committee, the WHO Director General declared the Zika outbreak a Public Health Emergency of International Concern on 1 February 2016.

The Zika virus, colloquially known as Zik-V, is spread by the Aedes Aegypti mosquito, the vector which also transmits dengue fever, yellow fever and the Chikungunya virus. According to the Pan-American Health Organisation, the symptoms of Zika include “a mild fever, skin rash (exanthema), and conjunctivitis”.

Worryingly, after an increased incidence of infants being born with microcephaly in Brazil, the country worst affected by the current Zika outbreak, it is widely suspected that in pregnant women, the Zika virus could result in the foetus being born with this rare neurological condition which results in the child’s head having a circumference which is small for its age and size.  However, the WHO Emergency Committee  agreed that while a causal relationship between the Zika infection during pregnancy and microcephaly is strongly suspected, it is not yet scientifically proven. Currently, no vaccine or treatment exists for Zika.

According to the US Centers for Disease Control and Prevention (CDC), the first reported case of local transmission of the Zika virus in the Caribbean was in December 2015. While Antigua & Barbuda has not had any reported or suspected cases of the Zika virus to date, the recent PAHO situation report outlines a total of 33 countries across the Caribbean, Central America and Latin America which have reported cases of the autochthonous transmission of the Zika virus between 2014-2016. In the United States, the Governor of Florida has declared a state of emergency in counties where the Zika virus has appeared.

For the countries of the Caribbean, the economic implications are high as the virus has made its appearance during the height of the Region’s tourist season. Several countries have issued travel warnings to Zika infected countries and the Caribbean Tourism Organisation is monitoring the situation closely.

It is instructive to note that in its recommendations included in its situation report, the PAHO/WHO stated that the emergency committee “found no justification for restrictions on travel or trade”. It also stops short of advising pregnant women to not travel to infected areas, by stating “[p]regnant women considering travel to affected areas may wish to consult their health care provider prior to travel and after return”.

Caribbean countries, through their public health and other authorities, have been employing various Zika preventative and mitigation strategies, such as instituting fogging programmes, launching public awareness campaigns and advising women to delay becoming pregnant for up to two years. The Future Centre Trust, a non-governmental organisation in Barbados, is raising awareness among the general public on the need to reduce opportunities for mosquitoes to breed by eliminating littering and illegal dumping and by mapping illegal dump sites. An article which the Trust authored on the topic may be viewed here.

At the regional level, the Caribbean Regional Public Health Authority (CARPHA) has published Zika guidelines for travellers and hotels and guesthouses and will brief the CARICOM Heads of Governments on the Zika situation at the Heads of Governments’ Inter-sessional Meeting slated to take place February 16-17. The Caribbean Tourism Organisation has an information page entitled “FAQs on Zika and Caribbean travel” on its website.

Among the measures recommended by PAHO in its situation report are the use of repellant, physical barriers like mosquito screens and sleeping under mosquito nets. Therefore, the move by Antigua & Barbuda to remove import duties on these mosquito defense systems is a pro-active one, and combined with their use and awareness by the general public, it should help to prevent the spread of the virus there.

For further information on Zika, please see the PAHO website and the recent PAHO Situation Report of February 5, 2015.

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 read more of her commentaries and follow her on Twitter @LicyLaw.

Written History: The Classic Tale of the CCJ and Caribbean Jurisprudence

javierspencer

Javier Spencer

The 19th meeting of the Conference of Heads of Government of the Caribbean Community (CARICOM) agreed that a Caribbean court of appeal should be established to replace the Judicial Committee of the Privy Council (JCPC) – commonly known as The Privy Council- as the final appellate court for the Region. The overall goal of this decision was to increase access to justice that is applicable and unique to the socio-cultural environment of the People of the Region. In many instances, judgements passed down from the Privy Council have not been contextualized in the Caribbean reality. To this end, there has been an evident need for a court of appeal that considers the intricacies of the Region’s culture and reality. This article will briefly retell the tale of how the Court has improved the Region’s jurisprudence on decided cases in its appellate jurisdiction.

Purpose and Structure

The Caribbean Court of Justice (CCJ) has been described, by many, as a unique experiment with two courts in one. But its existence is one that is critical for bringing about independence, integration, and development for an indigenous jurisprudence in the region. Having regard to the aim of strengthening the Region’s economic integration, the Court’s remit is to hear and determine cases in its original and appellate jurisdictions. In its Original Jurisdiction, the CCJ interprets and applies the Revised Treaty of Chaguaramas (RTC) with compulsory and exclusive jurisdiction. On the other hand, its Appellate Jurisdiction hears appeals as the court of last resort in both civil and criminal matters. Since its inception in 2005, the Court has heard and determined complex cases which have contributed to the shaping and moulding of a Caribbean jurisprudence.

The Cases and Legal Principles

The Law of Human Rights

In 2006, the CCJ had the privilege of shaping the Region’s understanding of the law of human rights and further shaped its jurisprudence in this respect. For example, the exercise of the prerogative of mercy was brought to the fore in the case of Attorney General v. Joseph, [2006] CCJ 1 (AJ). The prerogative of Mercy was introduced in the Region when the Privy Council ruled against an execution delay in excess of 5 years. In such cases, all death sentences under this rule should be commuted to only life imprisonment. The Court’s judgement in the Joseph and Boyce refuted this principle upheld by the Privy Council, especially where the death sentence was mandatory in Barbados.

The prominent concern was whether the state (Barbados) should await the decision from the Inter-American Commission on Human Rights. The Court had to closely analyse precedent set out by the Privy Council and having regard to due process, the condemned has right to await the decision of the International Tribunal. However, the discrepancy existed where International Law differed from Constitutional Law of Barbados, and the onus was on the Court to strike a balance between the rights stipulated by the international body to that of the national law of Barbados. In its deliberation, the Court opined that it was unacceptable for the state to wait indefinitely for the completion of a foreign process over which it had no control. The undue delay in this process did not consider an extension of the 5 year time limit or by excluding it in computing that period. At this turning point, the Court had to duly interpret and apply the doctrine of legitimate expectation. However, if the decision-making of the Inter-American Commission on Human Rights was in excess of 18 months, within a 5 year period, the state should not be required to wait beyond a reasonable time.

Standard of Proof & Admissibility of Evidence

Standard of Proof became another jurisprudential subject in effectively shaping the legal system in the Region. The admissibility of evidence was challenged on the basis that sample evidence could not be proven since it came from the accused. In this regard, the Court’s interpretation of the Evidence Act Statute of Barbados determined that there had to be stricter standard of proof relevant to the proceedings. By way of the Evidence Act, oral admission by the accused lacked authenticity and reliability as illuminated in the case of Grazette v The Queen, [2009] CCJ 2 (AJ). In its interpretation of the Evidence Act Statute of Barbados, the Court had to jostle with the effective application of the Act since it was modelled from the Australian Law Commission.

Land Law

Jurisprudence throughout the Caribbean continues to have international influence as evidenced in Guyana’s land law. The legislation comprised of a hybrid between Roman-Dutch Law and the English Common Law; and to this end, peculiar interpretation was needed in respect of adverse possession (change of ownership). Espoused in Toolsie Persaud Ltd. v. James Investments, [2008] CCJ 5 (AJ), the Court had to determine whether there could have been a change in ownership when the title documents were declared invalid. Additionally, determining specific performance involving the sale of land in Guyana was captured in Ramkishun ad item Sukhree v. Fung-Kee-Fung, [2010] CCJ 2 (AJ) where the owner agreed to sell the land to the purchaser and died before conveyance. The owner’s administrator transferred it to the owner’s heir instead of the purchaser. Under the principles of English Common Law, the transaction would have been granted but the purchaser would have acquired an equitable interest. Differently, using the principles of Roman-Dutch Law, the system on equitable interest would have granted the transaction. The Court’s amalgamation of the two legal systems had formulated the Law of Immovable in Guyana, refusing specific performance. In this instance, the CCJ has demonstrated its capacity to devise appropriate and effective solutions regarding the land law principle in Guyana (Byron, 2011).

Right to a Fair Trial

The Court continued along its trajectory to contribute to the development of the Region’s jurisprudence by establishing the meaning of fairness concerning the constitutional right to a fair trial as exhibited in Gibson v. Attorney General, [2010] CCJ 3 (AJ). After Gibson pleaded not guilty to charge brought against him, he sought after expert evidence which was costly. In this regard, the Court was faced with the decision as to whether Gibson should have access to expert facilities funded by the state. The inequality of arms was so serious that denying access to expert advice could adversely affect the fairness of the trail. Therefore, Gibson was granted access to expert facilities. This case solidified and set precedent in respect of legal rights in the Region.

Accountability and Good Governance

Can a State bring an action in tort for misfeasance in public office? Florencio Marin v. Attorney General of Belize, [2011] CCJ 9 (AJ) highlighted that two former ministers were alleged to have transferred land to a company owned by one of them for something of sufficient value in return (consideration). Remedies include dismissal from office, disciplinary actions, prosecution, and the imposition of legislation for a breach of trust and integrity.

Access to Justice

Along with the development of a sui generis jurisprudence for the Region, one of the main tenets of the Court is to significantly improve access to justice in order to promote social stability and economic development. For instance, appeals at the Court have been heard in forma pauperis so as to facilitate the Court’s use by ordinary citizens of Member States. Ross v. Sinclair, [2009] CCJ 11 (AJ) allowed two very underprivileged ladies from Guyana to bring civil appeals to be determined by the Court. In support of the main aim of ordinary citizens to derive the benefits from the Court, Bar Associations in the Region have had Attorneys provide pro bono services so that important matters could be ventilated for persons who could not afford to have their own legal representation (Byron, 2011).

Access to justice at the Court is enhanced through the use of technology. Lawyers can make submissions and receive judgments electronically. The Court, to date, has been hearing interlocutory matters via audio video which are available on the Court’s website, at a minimal cost. Having regard to the effective use of technology, the Court is saving the Region large sums of money by providing quality access to justice (Gibson, 2012).

 
The Modern Day Conversation/ Conclusion

To date, many CARICOM Member States are debating whether the Court should be the final Court of Appeal in the Region to replace the Privy Council. The modern day debate stems from grounded criticism of political intrusion in the Court’s decision-making process and sustainable financing of its operations. The argument of political intrusion came about in respect of the selection of Judges for the Court. Originally, it was the Heads of Government to directly appoint Judges and in response, to mitigate the risk of political intrusion, the Regional Legal Services Commission (the Commission) was established in February 2001. The remit of the Commission is to appoint Judges, from the legal profession, through open applications received from throughout the Region. One possible downfall to this, however, is that the selection of the Judges for the Court is conducted by regional entities which are creatures of political influence. Therefore, is the Court truly insulated from political influence?

Out of the 15 Member States, Barbados, Belize, Dominica, and Guyana utilize the Court as the final court of appeal. Considerations to accede are being discussed in other Member States such as Antigua and Barbuda, St. Lucia, and Jamaica. However, to fully accept the Court as a replacement of the old colonial relic remains a daunting process and discourse continues throughout the Region. Some arguments in favour of the CCJ as the final court of appeal in the region are: 1) it is cost effective access to justice, 2) judgements will take into consideration the Caribbean reality, 3) it is a regional court that will implement specific rules and laws, which will augur well for good governance in the Region, 4) judgements on cases will be delivered faster, and 5) it will bode well for the Region as one that is independent and confident to determine its own fate.

This historic tale has proven the Court’s ability to replace the Privy Council. In this regard, there should not be any doubt lurking amongst our Member States about the Court’s rightful place as the final court of appeal. In closing, one should cogitate on this question asked by Dr. Kenny Anthony,

Why on earth should we compel the British to maintain the Privy Council, when the British have said to us time and time again to take your bundle and go?”

Javier Spencer, B.Sc., M.Sc., is an International Business & Trade Professional with a B.Sc. in International Business and a M.Sc. in International Trade Policy. His professional interests include Regional Integration, International Business, Global Diplomacy and International Trade & Development. He may be contacted at javier.spencer at gmail.com.

IMF’s 2010 Reforms finally come into effect

Alicia Nicholls

After five long years of waiting, the 2010 reforms of the International Monetary Fund (IMF), which aim to modernise and democratise the IMF’s quota and governance system by giving greater voice to emerging economies, have finally come into effect on January 27, 2016.

The voting rights, access to financing and subscriptions of the 188 country members of the IMF, one of the guardians of the international monetary system, are largely based on their quotas which are in term based on their wealth. Therefore, while a small IMF member country like Barbados has only 1,442 votes (or 0.06% of total voting power), the largest IMF member, the United States of America, has 421,991 votes (or 16.11 of total voting power).

The IMF’s Board of Governors, its highest decision-making body, periodically conducts a general review of members’ quotas. However, since the IMF’s creation in 1945 as part of the Brettons Woods system, its quota and governance system have been stuck in time; the alignment of quotas and governance structure were reflective of the historic economic might of the US, advanced European economies and Japan, and does not take into account emerging economies’ growing share of the global economy in the last two decades. Take for example the fact that the United Kingdom had more voting rights than China!

In recognition of their under-representation in the quota allocations, emerging economies have been pushing for years for reform of the IMF’s governance and quota system to take into account their importance in the shifting global economy landscape. Following the 14th General Quota Review in 2010, the IMF’s membership agreed to a sweeping and historic reform package aimed at giving a greater voice and say to emerging economies. A major hurdle to implementation was the delay in US ratification of the reforms.

Last year the G20 in its communique echoed India’s disappointment with the delay in the implementation of the reforms. Additionally, in the IMF’s Executive Board’s report to the Board of Governors adopted on January 29, 2016, the Board noted that it had been unable to complete its work on the scheduled Fifteenth Review by the deadline of December 15, 2015 due to the delay in the implementation of the 2010 reforms. Frustration by the BRICs with the delays and their desire for closer cooperation amongst themselves led them to create an alternative multilateral development bank, the New Development Bank, in 2014 with its headquarters in Shanghai

Finally, at long last the 2010 reforms are  in effect. Building on reforms undertaken in 2008 and entered into effect in 2011, the major highlights from the 2010 reform package are the shift of 6 percent of quota shares from developed to dynamic emerging market and developing countries (leading to increased voting rights for emerging economies), a re-alignment of the quota shares which will result in China becoming the third largest IMF member and Brazil, Russia and India being included among the top 10 members.

A landmark change as well is the reform of the IMF’s 24-member Executive Board to make it an entirely elected body. Previously, a portion of the directors was elected and five were appointed by the members with the five largest quotas.

The reforms also double members’ quotas which will increase the IMF’s funding, but preserves the quota and voting shares of the poorest members.

Outside of these reforms but still of interest, in December 2015 the renminbi became the fifth currency to be included in the IMF’s Special Drawing rights basket. The four other currencies are the U.S. dollar, the Euro, the Japanese yen, and the British pound.

The 2010 reforms are a praiseworthy start in a thrust towards a modernised, and what we would hope will one day be, a more democratic IMF. It is hoped that the reform work which is expected to continue under the Fifteenth Review will build on these reforms and will not face a similarly long delay in implementation once agreed.

The full press release from the IMF on the 2010 reforms may be accessed 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 read more of her commentaries and follow her on Twitter @LicyLaw.

 

Caribbean Region Most Affected by Loss in Correspondent Banking Relationships, according to World Bank Survey

Alicia Nicholls

The withdrawal by international banks of correspondent banking relationships with Caribbean-based banks and money transfer businesses has once again been making headlines in the Caribbean. This week Antigua & Barbuda’s Prime Minister raised the issue at the Fourth Summit of the Community of Latin American and Caribbean States (CELAC), terming it a “clear and present danger”. Last year mere weeks after Prime Minister Barrow of Belize raised the issue in his address at the Summit of the Americas in Panama, the Bank of America severed ties with Belize Bank, the largest bank in Belize.

Correspondent banking relationships are Caribbean countries’ umbilical cord to the international financial system. They allow for the conduct of international trade and investment by facilitating crossborder payments, as well as the receipt and sending of remittances through international wire transfers. At the microlevel these relationships help local exporters to receive payments for their goods and services, local businesses to pay for imports, and poor families to receive remittances for their day to day survival. As I mentioned in an earlier article, the loss of correspondent banking relationships could spell disaster for the small, open economies of the region which are highly dependent on trade and investment flows, with implications for poverty reduction and eradication.

World Bank Survey

The Caribbean’s fears are not unfounded. According to the findings of a survey published by the World Bank in its report “Withdrawal from Correspondent Baking: Where, Why, and What to do About it” in November last year, the World Bank found that “small jurisdictions with significant offshore banking activities are particularly affected by the decline of CBRs”. More ominously, according to the Report, the Caribbean Region seems to be the most affected by a decline in correspondent banking relationships.

It also noted that United States banks have been most frequently identified as withdrawing their correspondent banking services. According to the Report, the services which respondents mentioned as being the most affected by the loss of correspondent banking are “cheque clearing and settlement, cash management services, international wire transfers”, while banking authorities and local/regional banks identified trade finance.

While the report noted that the majority of respondent banks have been able to find alternative banking relationships, in some cases the time and cost of finding new relationships are significant and not always on comparable terms and conditions as with the previous correspondent bank.

The survey highlighted several reasons identified by international banks for withdrawing their correspondent banking services and noted that for large international banks, the main reasons were AML/CFT (anti-money laundering and counter-terrorism financing) and CDD/KYC (customer due diligence and know your customer) related concerns.

In concluding, the Report provided a number of recommendations for both respondent banks and correspondent banks. One of the recommendations was for correspondent banks to consider the respondent bank’s business when making their decision to end a relationship, including by outlining the reasons for withdrawal, considering giving longer notice periods and considering the use of restrictions as opposed to outright termination.

Caribbean seen as “Risky business”

For the Caribbean, the loss of correspondent banking relationships, mainly as a result of banks’ de-risking practices, is intertwined with the fight against the arbitrary blacklists the region’s offshore financial jurisdictions are constantly called on to defend themselves against. Last year, both the EU and the District of Columbia (US) published blacklists which included Caribbean countries, causing regional governments to spend consider time advocating for their removal. Either way, the net result of these arbitrary actions would appear to do little to mitigate international banks’ perception of the Caribbean as literally a “risky” place to do business. The Financial Action Task Force (FATF) has reiterated the risk-based approach to AMT/CTF on a case-by-case basis as opposed to the wholesale de-risking which many banks are doing.

The way forward

The World Bank’s report is welcomed as it has provided some empirical evidence to support the concerns of Caribbean countries and in so doing helps to place a global spotlight on this issue. The Financial Stability Board (FSB) Report to the G-20 on actions taken to assess and address the decline in correspondent banking referenced the World Bank Report. The FSB has partnered with several organisations, including the World Bank, IMF among others, to address this issue through a four-point action plan which it has articulated in its report to the G-20.

The E15 Initiative Report entitled “Strengthening the Global Trade and Investment System in the 21st Century” which was launched at World Economic Forum’s Annual Meeting at Davos this year noted that while data was scarce it would appear that developing countries are most affected by limited correspondent banking relationships and has offered some very timely proposals.

Given the potential threat this issue poses to the region’s economies, it is incumbent on Caribbean banks to continue to observe the highest regulatory standards, including on AML/CTF and CDD/KYC. The Caribbean Association of Banks (CAB) has commendably been at the forefront of advocacy in regards to the issue of correspondent banking and their continued advocacy will be important.

Former Prime Minister of Barbados and economist, Owen Arthur, at a Roundtable discussion on Correspondent Banking held in Kingston, Jamaica earlier this month has called on regional leaders to adopt coordinated regional measures to address the issue. Caribbean leaders must continue to raise the issue at the diplomatic and multilateral levels at every opportunity, and join forces with other similarly affected countries in advocating for an immediate global solution to the problem, including action on some of the proposals highlighted in the World Bank’s and E15 Initiative’s reports.

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. The Author is not affiliated with the World Bank, the Caribbean Association of Banks or any bank. You can read more of her commentaries and follow her on Twitter @LicyLaw.

Cuba: US eases restrictions on trade financing

Alicia Nicholls

The United States’ Office of Foreign Assets Control (OFAC) and the Department of Commerce have announced today several further amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR). These amendments further implement the new direction toward Cuba that President Obama outlined in December 2014.

Key among these amendments is that US banks will now be allowed to provide financing for most types of exports and re-exports to Cuba, with agriculture commodities and items being the major exception.

Summary of amendments 

In summary, the amendments include:

  • Removing financing restrictions for most types of authorized exports and re-exports to Cuba.
  • Additional amendments to increase support for the Cuban people and facilitate authorized exports e.g: news gathering, telecommunications, agriculture
  • Additional amendment to facilitate carrier service by air and with Cuban airlines.
  • Expanding authorizations within existing travel categories to facilitate travel to Cuba for additional purposes e.g: information and informational materials, professional meetings and public performances

For more information, please see this press release from the Department of Commerce.

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 read more of her commentaries and follow her on Twitter @LicyLaw.

Davos 2016: Proposals for Strengthening the Global Trade and Investment System

Alicia Nicholls

A new report by the E15 Initiative entitled “Strengthening the Global Trade and Investment System in the 21st Century” was launched at the World Economic Forum’s Annual Meeting 2016 held January 20-23 in Davos, Switzerland. The new report proposes a set of reforms with the aim of strengthening the global trade and investment system in the 21st century. Small vulnerable economies (SVEs) like those in the Caribbean stand to benefit from many of the proposals if endorsed by the international community.

According to details on the website of the E15 Initiative, the E15 Initiative report is a product of the E15 Initiative  jointly undertaken by the International Centre for Trade and Sustainable Development (ICTSD) and the World Economic Forum, in conjunction with 16 partnering institutions and 375 international experts over the past two years.

The E15 Initiative report is timely as it comes at a time of slowing global trade. Global trade is now growing at less than the rate of global GDP, which is not the norm, and last year the WTO revised downward its global trade growth projections for this year. The report also comes on the heels of the failure of WTO members at the 10th WTO Ministerial Conference in Nairobi, Kenya in December to agree on the continuation of the Doha Development Agenda, as well as in the midst of an ever-growing “spaghetti bowl” of regional trade agreements, which includes the recently concluded Trans-Pacific Partnership (TPP) and several other mega-regional trade agreements currently under negotiation.

The E15 Initiative report has 16 chapters of practical recommendations organised in thematic groups. The reforms proposed are not limited to the WTO’s architecture but include proposals on wider global trade and investment cooperation. As an example, in light of the concerns about fragmentation, one of the proposals is for the establishment of a Regional Trade Agreement Exchange. The report is accompanied by a Synthesis Report which “summarizes and interprets the significance of the proposals for progress on many of the international community’s most important shared imperatives”.

Proposals of Interest to the Caribbean SVEs

The report’s recommendations touch on several issues which are of particular concern to SVEs, including the availability of correspondent-banking relationships. The loss of correspondent banking due to de-risking practices by banks in metropolitan countries is an issue of significant import to Caribbean SVEs as it has implications for remittances sending/receiving and the transaction of business with the rest of the world.

Another recommendation which benefits services-based economies of the region is the proposed development of a comprehensive WTO Framework for Trade Facilitation in Services, while the proposed establishment of an Agreement on Access to Basic Science and Technology is also noteworthy. Other proposals touch on food security, fisheries subsidies and illegal unreported and unregulated (IUU) fishing, trade solutions to climate change, proposals on ensuring trade rules are equitable and predictable and on modernising the coherence of the investment agreements framework.

For further information on the report, please see the website of the E15 Initiative. The full E15 Initiative report may be accessed 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. The Author is in no way affiliated with the ICTSD, WEF, the E15 Initiative or the report mentioned. You can read more of her commentaries and follow her on Twitter @LicyLaw.

WTO Director General Visits Barbados

Alicia Nicholls

Director General of the World Trade Organisation, Roberto Azevedo, paid an official visit to Barbados this week. The Director General’s visit to Barbados comes as part of his official visit to the Caribbean. Earlier this week the Director General visited Jamaica where he met with Prime Minister Portia Simpson Miller and other senior government representatives, and gave a speech at the University of the West Indies’ Mona Campus.

According to Barbados’ Government Information Service, Mr. Azevedo met with Barbados’ Prime Minister, the Rt. Hon Freundel Stuart and Minister of Foreign Affairs and Foreign Trade, the Hon Senator Maxine McClean.

Barbados has been a strong and vocal supporter of the multilateral trade process. Barbados was a founding member of the WTO and has been a party to the GATT since 1967. The chairperson’s statement on Barbados’ trade policy review in January last year noted, inter alia, that members “praised Barbados’ strong support for the multilateral trading system and the role it has played in the DDA negotiations” and its open and liberal investment and trade regime.  Barbados has played a leading role in advocating for the interests of Small Vulnerable Economies (SVEs) and currently chairs the Africa, Caribbean & Pacific (ACP) group  in the WTO.

According to a report by Barbados’ Nation News, Minister McClean and Director General Azevedo held a joint press conference at the headquarters of her ministry. During this press conference, Minister McClean is reported to have emphasised the challenges faced by small states like Barbados in the multilateral trading system and reiterated the need for a successful conclusion of the Doha Development Round.

The future of the Doha Round has been left undecided at the WTO’s 10th Ministerial Conference in Nairobi, Kenya last December. In the Nairobi Declaration, WTO members unprecedentedly stated their disagreement on whether Doha should be ended or continued.

Details on Director General Azevedo’s official visit to Barbados may be obtained from the official website of the Barbados Government Information Service 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.

 

Petrocaribe: Triad of Issues Puts Future of Existing Arrangement in Doubt

Alicia Nicholls

On June 29th 2005, fourteen of the Caribbean countries which met with the late President Hugo Chavez Frias in the beautiful northern Venezuelan port city of Puerto La Cruz signed an energy cooperation agreement which would seek to be a beacon of south-south cooperation and solidarity. Nearly eleven years after the ink has dried on the Agreement, a triad of developments has added fuel to the growing fire of concerns about the sustainability and viability of the Petrocaribe Agreement which provides beneficiary countries in the Caribbean and Central America with Venezuelan oil on very generous terms.

First, oil prices this month have continued their months-long slide, dropping to twelve year lows. In light of current geopolitical realities, a recovery in prices is unlikely any time soon. Secondly, in December last year the United Socialist Party of Venezuela (PSUV), the party of the late President Chavez and his successor President Nicolas Maduro, lost its majority in the Venezuelan National Assembly. The newly elected Opposition majority is calling for a review of Venezuela’s oil agreements. Thirdly, Venezuela’s continued economic turmoils have prompted President Nicolas Maduro to decree a 60-day economic state of emergency. This decree is currently being debated by the National Assembly, Venezuela’s unicameral legislature.

This article argues that despite Petrocaribe’s popularity in the region and President Maduro’s pledge of continued support for the initiative, the triad of developments above will eventually force a revision of the terms of the arrangement. Beneficiary countries in the Caribbean should prepare themselves for this eventuality.

“Petrocaribe, towards a new Order in our America”

This was the title of President Chavez’s speech at the opening session of the Fourth Petrocaribe Heads of Government Meeting in Cuba in 2007 and sums up the philosophic underpinning of the arrangement. The Petrocaribe Energy Cooperation Agreement was the brainchild of President Chavez as part of his thrust towards creating an alternative, development-friendly model of integration based on the principles of solidarity and development as opposed to exploitation and neo-imperialism.

The stated goals of the Petrocaribe Initiative are to guarantee energy security, promote social and economic development and promote the integration of Caribbean countries “through the sovereign use of energy resources, sustained by the guiding principles of the Bolivarian Alternative for the Americas (ALBA)”, which President Chavez offered as an alternative to the US-initiated and now shelved Free Trade Area of the Americas (FTAA). Petrocaribe has been continued under his successor, President Nicolas Maduro, after President Chavez’s death from cancer in March 2013.

Petrocaribe has largely benefited the Region

Seventeen countries of the Caribbean and Central America, plus Venezuela, are signatories to Petrocaribe. This includes Cuba and the Dominican Republic and all countries of the Caribbean Community (CARICOM), except for Barbados and oil-exporter Trinidad & Tobago. Barbados and Trinidad & Tobago had declined to join, stating it would prejudice their other arrangements.

Venezuela’s state-owned oil company Petroleos de Venezuela (PDVSA) provides Petrocaribe beneficiary countries with oil on extremely generous terms in keeping with Petrocaribe’s aim of facilitating development and not profit. Beneficiary countries pay only a percentage of the price of the oil up front (within 30-90 days) and are given grace periods of between one-two years, and up to twenty-five years to repay the remainder of the loan at interest rates of one percent if oil prices are above $US40 per barrel and two percent if they are below. The higher the price of oil per barrel the higher the percentage of the loan which may be repaid long term. The loan may be repaid in cash or in services and goods. Cuba has used medical and educational services as a way of repaying its loan, while until recently Guyana had a rice for oil arrangement with Venezuela.

These generous terms have made Petrocaribe extremely attractive, particularly to the small island developing States of the Caribbean which are highly dependent on imported fossil fuels (with the exception of Trinidad & Tobago). Fuel imports comprise a large portion of Caribbean countries’ import bills and high electricity costs have an impact on business competitiveness. Petrocaribe’s financing terms make oil much cheaper.

In a context where Caribbean countries are finding it increasingly difficult to access concessional financing, Petrocaribe has been an alternative source of financing. In the countries of the Organisation of Eastern Caribbean States (OECS), Venezuelan support under ALBA has provided investments in social programmes, including the provision of eye care treatment services by Cuban and Venezuelan doctors under Mission Miracle. In Jamaica, the Government established the  Petrocaribe Development Fund which uses inflows accruing to Jamaica under Petrocaribe to finance critical development projects.

However, while the Petrocaribe arrangement allows cash-trapped governments more leeway to spend money on social and development programmes, the accumulation of Petrocaribe debt has added to beneficiary countries’ already high debt burdens. Critics also argue that despite its stated goal of improving Caribbean countries’ energy security, the cheap oil provided by Petrocaribe has arguably lessened Caribbean islands’ impetus towards transitioning to alternative energy sources.

…But Petrocaribe makes little financial sense to Venezuela

While largely economically beneficial to the Caribbean and rooted in a development-oriented philosophy, Petrocaribe’s generous terms have made little financial sense for Venezuela. The main benefit of the Agreement to Caracas is the diplomatic support it has been able to secure from Caribbean countries on hemispheric and international issues. The CARICOM bloc is an important voting bloc in the Organisation of American States and Caracas has benefited from CARICOM countries’ support. Petrocaribe has also expanded Venezuela’s sphere of influence in a region historically regarded as the United States’ backyard.

Although Venezuela has the largest proven reserves of crude oil in the world and oil accounts for about 95% of its exports, economic stresses have plagued the country for some time now and have only deteriorated as oil prices continue their plunge. At the time of Petrocaribe’s signature in 2005, oil prices hovered around $50 a barrel. As at the time of writing this article, the price of brent crude oil is $28 a barrel. In its October 2015 forecast, the IMF forecasted Venezuela’s economy to contract in 2015 and 2016 by 10% and 6% respectively.

Venezuela’s oil exports and international reserves are down and the country has been reliant on loans from China. According to El Universal, President Maduro has called for an emergency meeting of OPEC before the next meeting scheduled for June this year and has decreed a state of economic emergency.

Petrocaribe’s Terms will likely be revised

Petrocaribe’s generous terms were steeped in Chavez’s philosophy for an alternative integration model which was based on development and solidarity as opposed to profit and exploitation. Without doubt Petrocaribe has brought social and economic benefits to beneficiary countries, a fact recognised by Caribbean leaders who continue to speak  favourably of the Agreement and by President Maduro who has sought to reassure Caribbean countries of Venezuela’s continued support for Petrocaribe. In the midst of an escalation of Venezuela’s border dispute with Guyana, President Maduro undertook a Petrocaribe tour in October last year where he reiterated Venezuela’s commitment to the region.

However, as economic pressures continue to mount in Venezuela so has the internal opposition to the generous terms of the Petrocaribe deal. Back in 2013 Opposition Leader Alfonso Marquina had called on the Venezuelan Government to modify the terms of the Petrocaribe agreement as it was “seriously hurting Venezuela”. More recently in December last year, the newly elected Opposition majority in the Venezuelan National Assembly  announced its intention to  review Venezuela’s oil agreements, including Petrocaribe.

In light of the diplomatic and geostrategic importance of the Caribbean to Venezuela, it is likely the Petrocaribe Agreement will not be discontinued but modified in the short term. Modification of the Agreement’s terms could take various forms, including increasing the percentage of the loan which must be paid in the short term, raising the interest rate, reducing the repayment term, among mechanisms.

To some extent Petrocaribe’s numbered days have been recognised by some beneficiaries. Last year the Dominican Republic used money raised on bond markets to redeem a large portion of its outstanding debt to Venezuela under Petrocaribe, while Jamaica did a debt buy-back. Caribbean countries must also place renewed importance on reducing their dependence on fossil fuels and developing renewable energy options. Low oil prices at the moment should not be a reason for complacency. The plan by St. Vincent & the Grenadines for a geothermal plant by early 2018 is therefore encouraging.

Petrocaribe beneficiaries will have to brace themselves for the inevitability of its revision and for the eventual loss of this concessional financing.

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.

WTO Nairobi Ministerial leaves Caribbean Small Vulnerable Economies Empty Handed

Alicia Nicholls

The ‘Nairobi Package’ has been hailed as having secured “an historic agreement on a series of trade initiatives”. Without doubt, the delegates of the WTO’s Tenth Ministerial held in December last year in Nairobi, Kenya sought to draw inspiration from the historic conclusion of the Paris Agreement on climate change at COP21 and to capitalise on the euphoria of the first WTO Ministerial on African soil to achieve consensus in the few areas where it was deemed to be possible. However, while there were a few mostly modest achievements, particularly for Least Developed Countries (LDCs), most Caribbean countries would be justified in opining that they came away from Nairobi with very little to show for their efforts.

Issues for Caribbean SVEs

Caribbean countries have been strong supporters of the multilateral trading system and of the Doha Development Round. As stated  by Senator Arnold J. Nicholson of Jamaica on behalf of the Caribbean Community (CARICOM) at the Ministerial’s Opening Plenary session, some of the key issues of importance to CARICOM going into Nairobi were:

  • Adoption of decisions relating to the G-90 proposals on Special and Differential treatment provisions including those related to small, vulnerable economies and least developed countries
  • Agricultural issues, including the Special Safeguard Mechanism, which was proposed by the G-33 in November, 2015
  • Fisheries Subsidies
  • Work Programme on Small Economies
  • Special measures for least developed countries

So what did the Nairobi Ministerial achieve?

Export Competition in Agriculture: Developed countries have committed to immediately eliminating their remaining scheduled farm export subsidies with some exceptions. It is the first major agricultural agreement to be concluded since the WTO came into being at the conclusion of the Uruguay Round two decades ago. Developing countries have been given until 2018 to eliminate their farm export subsidies and up to 2022 for certain products and groups of products. Least developed countries (LDCs) and the net food importing developing countries have a longer period. Additionally, the decision also includes disciplines on export policies to prevent their use as subsidies in disguise.

LDC Package: Of benefit to Haiti as the only LDC within the Caribbean, the ‘LDC Package’ includes enhanced preferential rules of origin which build on those in the Bali package and a fifteen year extension of the waiver for preferential treatment of LDC service providers. Developed and developing country Members which have declared themselves in a position to do so have agreed to grant duty-free and quota-free market access for LDC cotton from January 1, 2016, to the extent provided for in their respective preferential trade arrangements. Developing country Members which have declared themselves not in a position to grant duty-free and quota-free market access for cotton produced and exported by LDCs are to consider the possibilities for increased import opportunities for LDC cotton from January 1, 2016. Developed countries are to immediately eliminate export subsidies on cotton, while developing countries have until January 1, 2017 to do so.

Information Technology Agreement (ITA-II): In the biggest IT trade deal since the Information Technology Agreement was agreed to in 1996, 53 WTO members representing a mix of developed and developing countries (including Mauritius) agreed to eliminate tariffs on 201 information technology goods which account for a reported $1.3 trillion in trade.Tariffs on an estimated 65% of tariff lines will be fully eliminated by July 1 of this year, with the majority of the remaining tariff lines to be gradually phased out in four stages within three years. As the ITA-II was agreed on a Most Favoured Nation (MFN) basis, all WTO members will enjoy duty-free access for those covered goods to the markets of countries which have signed the Agreement.

WTO Members also adopted the reaffirmed Work Programme on Small Economies. Additionally, two LDC countries, Liberia and Afghanistan, completed their accession negotiations. This shows that despite the stalemate in the multilateral negotiations states still view the WTO as having value.

Unresolved Issues

Despite these modest results, the Nairobi Declaration does leave many  issues unresolved and it would not be unfair to say that the Caribbean SVEs left the Ministerial largely empty handed. To date the services negotiations, a key area for the services-dependent economies of the Caribbean, remain deadlocked. No decision was made at Nairobi on the G-90 proposals on special and differential treatment.

Fisheries Subsidies and IUU: Disappointingly, no agreement was reached on the pressing issue of fisheries subsidies which have led to over-fishing, or on the issue of illegal, unreported and unregulated fishing (IUU). These practices, which serve to shrink already rapidly depleting fish stocks, pose serious threats to coastal states’ food security, employment, income generation and the stability of their rural communities. By extension, they will have consequences for SVEs achievement of the Sustainable Development Goals (SDGs) and their targets.

SSM & Public Stockholding: Even where decisions were taken, they remain subject to further negotiation. It was agreed that developing countries have the right to an SSM by which they will temporarily be able to increase tariffs in response to import surges. However, the actual details of this mechanism remain to be determined in subsequent negotiations. On the issue of public stockholding, WTO members are no closer to a permanent solution.

SVEs have also expressed their disillusion with the lack of consideration given to many of their proposals, including the proposal for a development package for Nairobi which had been tabled by the ACP countries.

Uncertain Future for Doha 

Critically and most telling, WTO members have been unable to reach any consensus on the future of the Doha Round. This lack of agreement was unprecedentedly mentioned in the Nairobi Ministerial Declaration.

After fourteen years of negotiations and limited progress to show outside of the Trade Facilitation Agreement concluded at Bali, developed countries have called for Doha to be euthanised.  In a letter penned in the Financial Times , the United States Trade Representative, Michael Froman, strongly stated that “Doha was designed in a different era, for a different era, and much has changed since’. He further asserted that “[f]reeing ourselves from the strictures of Doha would also allow us to explore emerging trade issues”.

On the contrary, most developing countries, including Caribbean countries, have been vocal in their opposition to any attempt to jettison the Doha Round. Barbados’ representative, the Hon Senator Maxine McClean, in her statement on behalf of the ACP at the Opening Plenary summed up the importance of the Doha Round to Barbados as follows:

“Barbados places great store in the Doha Development Agenda, as it recognises that need to narrow inequalities in the share of trade between developed countries and in particular the small and the vulnerable economies.”

While WTO members have committed in the Nairobi Declaration to continuing negotiations on the remaining issues under the Doha Round, the future for the Doha mandate does not look bright, especially since the USTR has already pronounced the Round dead.

The Question of Emerging Issues

Another unresolved issue relates to expanding the sphere of negotiations to include emerging trade issues in light of the changing contours of global trade. There is some merit to this view put forward by developed countries. Trade disciplines which were negotiated twenty years ago cannot adequately regulate all of the newer complexities of twenty-first century global trade. Some of the new areas proposed include the long mooted “Singapore issues” of investment, competition policy and transparency in government procurement, as well as newer areas like e-commerce, global value chains, environment and labour.

This suggestion has been forcefully resisted by developing countries which argue that their limited capacity to engage in negotiations on these new areas puts them at an inherent disadvantage, and instead favour the conclusion of the Doha Round before any new issues are added. Paragraph 34 of the Nairobi Declaration takes this disagreement into account by mandating that any agreement to launch negotiations on new issues must be agreed to by all.

What next?

As negotiators resume their work in Geneva on the remaining Doha issues, WTO members will have to decide on the future of the Doha Round. Progress will likely continue on the plurilateral agreements, such as the Environmental Goods Agreement and Government Procurement Agreements. In regards to the issue of regional trade agreements, WTO members have committed to making the provisional Transparency Mechanism a permanent one as was decided by the General Council in 2006. Progress on more contentious issues such as non-agricultural market access (NAMA), anti-dumping, domestic support measures and services will likely to be slower.

Two points must be noted. Firstly, whether members decide to jettison the Doha Round or adopt a new mandate, the development element must be central to all negotiations. Secondly, the polarisation between developed countries and the majority of developing countries, coupled with the increased heterogeneity of the WTO’s membership, continue to be impediments to any substantive progress. The only way for the stalemate to be broken will be by serious compromise but without jeopardising the development prospects and interests of developing countries.

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.

Cuba and North Korea Sign Trade and Technology Agreements

Alicia Nicholls

Cuba and the Democratic People’s Republic of Korea (North Korea) have added two additional protocols to a growing list of cooperation deals between the two countries.

Prensa Latina reports that two protocols, one on trade and the other on science and technological development, were signed by the Cuban Minister of Foreign Trade and Foreign Investment, Rodrigo Malmierca and North Korean Ambassador to Cuba, Pak Chang Yul at the Ministry of Foreign Trade and Foreign Investment in Havana, Cuba this week.

The trade protocol is an interesting one as it will be based on bartering, that is, payment for goods and services via other goods and services, as opposed to cash. The exchange of goods is expected to help Cuba obtain inputs for its sugar industry and railway system.

Cuba and North Korea have enjoyed strong relations since 1960 (the height of the Cold War) and both countries are subject to heavy US economic sanctions. According to Diario de Cuba, Cuba and North Korea already have cooperation agreements in a number of sectors, including education, oil, agriculture and trade.

 

 

For further information, please see the full news report from Prensa Latina (In Spanish).

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. The Author is not affiliated with the World Bank, the Caribbean Association of Banks or any bank. You can read more of her commentaries and follow her on Twitter @LicyLaw.