News

Caribbean countries expanding share in US$130 billion global seafood market

BELIZE CITY, Belize (CRFM) -- Caribbean economies are poised to benefit from a region-wide initiative to expand seafood market share, through the implementation of food safety measures to enable countries to get a bigger piece of the global pie, worth an estimated US$130 billion annually.

Caribbean countries, including The Bahamas, Belize, Grenada, Guyana, Jamaica, Suriname, and Trinidad and Tobago, are now capitalizing on a coordinated approach to broaden the gateway to the growing market. CARIFORUM (CARICOM and the Dominican Republic) now exports about US$400 million worth of fish and seafood annually.

Belize and Jamaica are two Caribbean seafood exporters already tapping into markets controlled by the European Union (EU) -- a tough market to access because of stringent standards that require countries have systems in place to ensure that their exports are not only safe for consumption but also free from harmful pests and pathogens.

In the case of Belize, which has traditionally exported shrimp to the EU, it is moving to export conch to that market for the first time, according to Endhir Sosa, senior food safety inspector, Belize.

Sosa was among the 18 professionals from CARIFORUM who recently received management training on sanitary and phytosanitary measures (SPS) in Iceland. The training was offered under the capacity-building component of an EU-sponsored project to implement SPS Measures under the 10th European Development Fund (EDF) regime. The Inter-American Institute for Cooperation on Agriculture (IICA) and the Caribbean Regional Fisheries Mechanism (CRFM) are collaborating to implement the fisheries component of the project.

Demystifying SPS

Sosa broke down the meaning of this very technical term, which could just as well be the acronym for ‘safe and profitable seafood’.

“In a nutshell, it’s just a series of procedures, of guidelines, of requirements, that one needs to implement to basically prove that what they are producing is safe,” the food safety expert commented.

“Confidence is what is key! It is what everybody seeks when it comes to the purchase and consumption of food products,” he said, adding, “SPS is one of those routes where you can establish that confidence in your product.”

Sosa noted, “Once you have an established SPS system in place and it is vetted and it’s shown to be functional, that will open markets locally, regionally and internationally.”

This has been the case for Belize.

“When BAHA [the Belize Agricultural Health Authority] first started in 2000, you could count the number of countries we were exporting to on your hand. It wasn’t more than 5 to 7. Today, thanks to SPS, thanks to the confidence that our SPS program has put into our products, not only fish, the markets have increased almost three-fold. Now we have a little over 30 markets,” Sosa said.

Building SPS capacity

Chairman of the Caribbean Fisheries Forum, Denzil Roberts, who is also the chief fisheries officer in Guyana, noted: “The fisheries sector within the CARIFORUM region continues to play an important role in rural development, food and nutrition security, income generation and foreign exchange earnings. However, it must be recognized that there is a paucity of skilled personnel within the region to further develop the sector in keeping with the emerging challenges.”

The intensive two-week training course recently held in Iceland served to help fill this knowledge gap in the Caribbean.

Susan Singh-Renton, the CRFM’s deputy executive director, noted, “The CRFM/UNU-FTP SPS Management Course has been very successful in achieving its objective of exposing CARIFORUM Fisheries and Agricultural Health and Food Safety experts to the key lessons and best practices of the Icelandic fishing industry in producing safe and wholesome fishery products of an international standard.”

She added, “At the close of the course, participants reflected on and also documented how they would apply what they had learned to improve fisheries SPS management in their home countries.”

Jeannette Mateo, director of fisheries resources at the Dominican Council for Fisheries and Aquaculture (CODOPESCA) in the Dominican Republic, suggested that nationals in her country, such as biologists, inspectors, fisheries officers and consumer protection agents, should be trained in basic concepts of SPS.

For his part, Roberts hopes that the trainees will immediately begin to impart what they have learned to others in their national networks. Roberts furthermore hopes that trainees will implement internationally recognized safety standards for seafood, thereby safeguarding the health of the local population while ensuring market access to meet global market demands.

Singh-Renton said that the CRFM will also strive to do its part to provide follow-up regional support for improved SPS management for the region's fishing industries, including facilitating continued networking among the course participants.

Gatekeepers guard against food fraud

“One of the more frequent but often overlooked problems within the Caribbean is food fraud and mislabeling,” noted Dr Wintorph Marsden, senior veterinary officer in Jamaica’s ministry of industry, commerce, agriculture and fisheries.

Marsden said that Jamaica is considered a major transshipment hub for fish and fishery products to the wider Caribbean region, and so the burden is on Jamaica, as a first point of entry, to implement a system of verification of products entering its food chain.

To combat food fraud, it is an absolute necessity to introduce traceability, said Marsden. This can now be done electronically, with modern systems of recording, such as the use barcodes, radio-frequency identification (RFID) tags and other tracking media within the production chain.

In the Dominican Republic, Mateo’s job is to review all the supporting documentation for seafood imports and exports.

She observed, though, “Some of these documents might have statements to make the consumers believe that they are getting a high-quality product while they are actually getting products with less quality and deliberate mislabeling.”

An example, she said, is fish from the genus Pangasius, a catfish primarily sourced from the Asian market, which is being sold cheaply in the region and marketed at times as “grouper” -- not only at supermarkets but also at some restaurants.

“While in Iceland, I learned that deliberate mislabeling of food, the substitution of products with cheaper alternatives, and false statements about the origin of foods, are all food fraud,” Mateo said.

“This is relevant to the Dominican Republic and the Caribbean, where imported fish are in some cases marketed at lower prices than the local ones, not only due to the lower production cost of fish products such as tilapia and Pangasius (catfish – sold as ‘basa’ or ‘swai’) in comparison with those produced in the country, but also because of unfair practices in trade,” Mateo said.

She said that as a result of the Iceland training, the Dominican Republic is now in the final stage of building an improved national SPS system for fishery and aquaculture products which was initiated with the support of the government of Chile.

Safe and healthy food also vital at home

Whereas the move to implement SPS measures was originally focused on export trade, regional experts also indicate that they are vital to food safety and health even within the region.

“The Caribbean is known to be a huge importer of food products,” Sosa noted. “We have to look after our population, we have to look after the health of our people, we have to look after the health of our environment and our agricultural products; and thus SPS -- although at this point it is mostly the industrialized countries that are pushing it, that are requiring it—should be really and truly across the board.”

Science-based risk assessment and risk analysis of imports are also key in protecting vital agriculture and fisheries industries.

“We have been mandated with the task of being the gatekeepers when it comes to food safety and agricultural health and we take that responsibility very seriously. Sometimes the public will get angry with us, because they truly don’t understand why we are doing this. ‘Why can’t I bring this across the border?’ But the realization is that if a disease [is introduced], it could potentially destroy an entire industry -- whether it be, for example, bringing across poultry with avian influenza, or bringing in diseased shrimp—it could wipe out an entire multi-million-dollar industry,” Sosa warned.

Positioning small producers for export

Sosa noted that SPS measures were initially geared towards industrial markets but now they are encouraging small producers to position themselves for export by implementing SPS measures.

“They might not have the finance to construct an elaborate facility, but we can start with the basics,” said Sosa, pointing to “good manufacturing practices and the sanitation standard operating procedures,” which, he said, would build confidence in products from even small producers.

More importantly, he said, implementing SPS measures is the first step that producers will need to make to even think about trading on the world market.

Courtesy: Caribbean News Now

ICC welcomes new dialogue with WTO; highlights options for multilateral trade talks

The International Chamber of Commerce (ICC) has today welcomed the conclusion of the World Trade Organization’s (WTO) first ever dialogue with the business community as an important step towards strengthening the global trade agenda.

The dialogue was initiated off the back of the successful outcome of the WTO's ministerial conference in Nairobi last December, and in response to growing concern within the global business community about faltering global trade growth.

Addressing WTO members, ICC's First Vice-Chairman Sunil Bharti Mittal said: "To be clear: business wants predictable, modern and up-to-date multilateral trade rules, negotiated and agreed at the WTO… Trade is expected to grow by less than 3% for the fifth consecutive year in 2016. We should not accept this as the new normal and we are ready to work constructively with WTO members to restore trade as a central driver of global growth."

The first-of-its-kind event identified a broad range of possible WTO initiatives to help boost trade-led inclusive growth. These included:

SME growth
Business leaders encouraged the WTO to explore possible initiatives to make trade easier for small- and medium-sized enterprises (SMEs), going beyond trade facilitation reforms to identify where harmonized rules and end-to-end standards can help small businesses access global markets. Access to financing was also highlighted as a priority to support SME trade growth.

Investment
Many participants in the dialogue expressed an interest in a new WTO dialogue to explore the scope for global standards in the field of investment promotion, protection and facilitation.

Sectoral liberalisation
The dialogue highlighted an interest from a range of sectors in pursuing sector-specific talks as a complement to the ongoing Doha Round.

E-commerce
There was a strong call from business leaders for the WTO to play a central role in underpinning an open, reliable and secure global digital economy. Participants expressed particular interest in possible "e-commerce negotiations" which could encompass a broad range of issues such as customs duties, electronic signatures, data protection and localization requirements.

Addressing WTO members, ICC's First Vice-Chairman Sunil Bharti Mittal said: "To be clear: business wants predictable, modern and up-to-date multilateral trade rules, negotiated and agreed at the WTO."

Speaking on the systemic importance of an e-commerce initiative, Mr Mittal said: "The global nature of e-commerce means that the WTO has a vital role to play in the further development of rules and standards for this area. E-commerce has the potential to revolutionise global trade flows. Today, even the smallest of businesses can go global if they can access the internet."

At the conclusion of the dialogue, ICC has called on WTO members to maintain contacts with the business community in taking forward possible new trade talks and initiatives.

ICC Secretary General John Danilovich said: "We have seen a positive discussion today about how we can work together to maximise the contribution of trade and investment to achieving inclusive growth and sustainable development. We hope that today's initiative can be followed up with concrete steps including further meetings of this kind. ICC stands ready to support this dialogue in any way possible."

Business leaders call for WTO to address pressing business issues

Business leaders meeting today (30 May 2016) at the WTO headquarters outlined how the organization could address the current needs of the business community. In addition to the current negotiating agenda, they urged the WTO to look at a wide range of issues such as electronic commerce, rules to better facilitate services and investment flows, support for micro, small and medium-sized enterprises, action to provide trade finance, and many others.

The Trade Dialogues event brought together over 60 business leaders to discuss the challenges and opportunities they face in conducting trade operations and to discuss how the WTO can help in dealing with them. The attendees were from small and large enterprises, from developed and developing countries, and from a variety of sectors. The event was held at the request of the International Chamber of Commerce (ICC) and the B20 group of leading independent business associations from G20 economies, and facilitated by the WTO. The businesses that participated in the event are listed below.

This high-level event for the business community is the first of its kind to be held at the WTO. It is part of a series of ‘Trade dialogues’ that will provide a range of stakeholders with the possibility to discuss their concerns on trade-related matters.

Participants were welcomed by WTO Director-General Roberto Azevêdo. This opening session was followed by break-out sessions where participants engaged in a focused dialogue in small groups. These sessions were chaired by four ’discussion leaders’:

Sunil Mittal, Founder and Chairman of Bharti enterprises, and First Vice Chairman of the ICC
Frank Ning, Chairman of Sinochem and Chair of the B20 trade and investment taskforce
Carole Kariuki, CEO of KEPSA, the Kenya Private Sector Alliance, and
Kati Suominen, Founder and CEO of TradeUp.
The participants then reconvened and shared their conclusions in a direct exchange with the Director-General and the chairman of the WTO General Council, Ambassador Harald Neple. At a working lunch, the views of other important stakeholders, such as consumers, represented by Consumers International, and labour, represented by the International Trade Union Confederation, were also heard.

At the final session, the discussion leaders and other participants shared the outcome of their deliberations with the WTO membership through a dialogue with ambassadors and permanent representatives.

A summary of the issues raised at the meeting is available here.

DG Azevêdo said:

“After two successful WTO ministerial conferences, there has been a resurgence of private sector interest in the work of the organization. I have seen this at all of the major meetings I’ve attended, and in the many capitals I’ve visited around the world over the last six months. This growing engagement is very welcome. Trade negotiations do not occur in a vacuum, so I think it is important for WTO members to hear directly from business on the challenges they face in the real economy — as well as from consumers and workers, and other voices in civil society.

“So, when I was approached by the ICC and B20 earlier this year to facilitate a dialogue between business leaders and WTO members, I thought that it would be a great opportunity. We have had over 60 participants today, from six continents, and I’m pleased to say that the exchanges have been of a very high quality. We have heard some fascinating insights on the issues that businesses face in the trading system — particularly smaller enterprises — and ideas on how those issues might be tackled.”

Sunil Mittal, First Vice Chairman of the ICC, said:

“We must do the utmost to put into operation the Trade Facilitation Agreement, which has the potential to bring enormous benefits to the world economy. We must make sure that this agreement is ratified and implemented as soon as possible. The WTO needs to develop rules and standards to make sure that the efficient growth of e-commerce is secured, since it has the potential to revolutionize trade flows around the world.”

Frank Ning, Chair of the B20, said:

“The future accomplishments of the WTO will be critical in achieving a more efficient and friendly business environment, and a more inclusive and sustainable global economy.” ​

Carole Kariuki, of the Kenyan Private Sector Alliance, said:

“Trade is an integral part of the equation in generating growth and creating jobs and the WTO plays a vital role in ensuring that governments comply with the commitments they have made in making trade easier.”

Kati Suominen, of TradeUp, said:

“A World Trade Organization in the 21st century can only succeed if it engages those that trade across borders every day - businesses, small and big. As world trade changes and digitizes, WTO’s rulemaking, research, and capacity building functions need to be bolstered and adjusted to meet the needs of its private sector stakeholders. This can help unlock the power of trade, disruptive technologies, e-commerce, and FDI to drive inclusive growth, job creation and sustainable development.”

The companies and organisations represented at the event were:

Apex-Brasil
Bangladesh Garment Manufacturers and Exporters Association (BGMEA)
Bharti Enterprises Limited
Boehringer Ingelheim GmbH
Boniswa Corporate Solutions
BT Group
B20 China
Caribbean Association of Industry and Commerce (CAIC)
Corrs Chambers Westgarth
Coteminas
Deloitte Touche Tohmatsu Limited
DHL Express
DIAGEO
Dow Chemical Company
eBay
Embraer
Fonterra
International Chamber of Commerce (ICC)
Kenya Private Sector Alliance (KEPSA)
Maersk
MasterCard
National Petrochemical Industrial Company (NATPET)
Nestle Skin Health S.A.
Nestlé S.A.
Orascom Telecom
Oryspa Spa Solutions Inc.
Samsung Electronics Co., Ltd.
Silicor Materials
Singapore Business Federation
Sinochem Group
Syndicat des Industries de Madagascar
S&P Global
Tata Consultancy Services (TCS)
Teyseer Group of Companies
TradeUp Capital Fund
UBS
World Economic Forum (WEF)
World SME Forum
W.J. Towell & Co.

WTO

CARICOM-US discuss threat of lawsuit over queen conch

BELIZE CITY, Belize (CRFM) -- Officials from the Caribbean Community (CARICOM) and the United States advanced talks in Washington last week at the seventh annual meeting of the CARICOM-US Trade and Investment Council, on several key concerns affecting trade between the US and the region, chief among them being the threat of a lawsuit by US-based NGOs over the harvesting of queen conch for trade. The threat of the suit is of great concern to the region, which exports roughly US$185 million worth of conch meat a year.

In February 2016, WildEarth Guardians and Friends of Animals notified the Secretary of Commerce and the Administrator of NOAA of their intention to sue the Department of Commerce, the National Oceanographic and Atmospheric Administration, the National Marine Fisheries Service / NOAA Fisheries, and their officers and directors over the government’s decision back in 2014 not to list the queen conch as threatened or endangered under the Endangered Species Act (ESA).

The Caribbean Regional Fisheries Mechanism (CRFM), which was represented at the meeting by its executive director, Milton Haughton, maintained that the petition is unjustified, as it is based on outdated and erroneous information. A listing that the species is endangered would result in an outright ban, while a listing that it is threatened would lead to more stringent export regulations, among other measures.

The NGO that wants to challenge the decision of the US federal authorities is reputed to have a 77% success rate in lawsuits against the US government.

In studying the impact of litigation by the NGO, US researchers, Dr Ryan M. Yonk of the Department of Political Science and Criminal Justice at the Southern Utah University and Dr Randy T. Simmons of the Department of Economics and Finance at Utah State University, found that the litigation, which has mostly been over land issues in the US, could jeopardize industries representing over US$3 billion in local economies.

However, US authorities have indicated that they will defend their position on the queen conch. CARICOM states will, meanwhile, be monitoring this situation closely.

At the Washington meeting, the parties also discussed US measures to combat illegal, unreported and unregulated (IUU) fishing and their potential impact on the region. A presidential task force was established two years ago to develop recommendations for “a Comprehensive Framework to Combat Illegal, Unreported, and Unregulated Fishing and Seafood Fraud.”

CARICOM noted that the new measures being introduced to combat IUU fishing and seafood fraud could have significant negative consequences for the export of fish and seafood from CARICOM to the US market, since importers in the USA and by extension exporters from CARICOM countries targeting the US market, would be required to implement administrative systems to certify that fish and fishery products entering the US market are not from IUU sources.

However, the measures being implemented by the United States could also create opportunities for fish and fish products exported from the region, by reducing the occurrence of IUU fishing in the region by third states and unfair competition.

In the recent meeting, CARICOM officials laid out both their concerns and expectations to the US representatives, including the need for support for fish traders and government fisheries departments so that they could make the necessary reforms to comply with the new US requirements for international trade.

Courtesy: Caribbean News Now

Caribbean foreign ministers discussing Cuba, EU, and other issues in St. Vincent

KINGSTOWN, St Vincent, Monday May 9, 2016 – Caribbean Community (CARICOM) foreign ministers have convened in St Vincent for the 19th meeting of the Council for Foreign and Community Relations (COFCOR), amid the unfolding of a number of major geopolitical issues.

According to the Guyana-based CARICOM Secretariat, the two-day meeting will provide the ministers with the opportunity for a periodic review of a range of diplomatic matters involving CARICOM’s relations with international organisations and third countries.

“COFCOR will examine the implications for the Caribbean Community of several emerging issues including the reshaping of the United States relations with Cuba and the pending British referendum on European Union membership,” the statement said.

“As the Community seeks to reinforce relations with multilateral organisations, COFCOR will discuss matters regarding the United Nations, the Organisation of American States, The Community of Latin American and Caribbean States (CELAC), and the Association of Caribbean States (ACS).”

The statement added that the ministers will also seek to forge and strengthen ties with third states including Brazil, Japan, Sweden and The Netherlands on issues of mutual interests.

“Following on the heels of last week’s Ninth UK-Caribbean Forum in The Bahamas, CARICOM Foreign Ministers will devote part of their meeting to discussing the critical elements emanating from that engagement.

“The meeting will also discuss border issues, and a range of bilateral topics involving Mexico, Cuba and the Nordic States, and the Unites States,” the statement said.

Courtesy: Caribbean 360

CARICOM Human Resource Development Commission launches Thursday in Barbados

BRIDGETOWN, Barbados -- A commission charged with creating a human resource development strategy for the Caribbean Community (CARICOM) will be launched on Thursday in Barbados. The ceremony will be hosted at the Caribbean Development Bank (CDB).

hrd.jpg CARICOM heads of government took the decision to establish the commission at their twenty-fifth intersessional meeting in 2014. The commission has 17 specialists and other stakeholders in education and human resource development, and its work is supported by the CARICOM Secretariat, as coordinator, and CDB, which is financing the establishment of a gender-responsive and socially inclusive CARICOM strategy for harmonised education reform.

The Regional Education and Human Resource Development 2030 Strategy and Action Plan (the Regional HRD Strategy), which the commission will shape, is intended to form the basis for converged action by member states. It is expected that the commission will also develop policy recommendations for education reform in CARICOM member states.

The commission will also engage short-term expertise to collect and analyse data to inform the development of the strategy. It will also host two four-day regional education sector monitoring and evaluation meetings to promote ownership of, and build capacity in monitoring and evaluation at the national level.

Following the development of the strategy and action plan, the commission will be expected to operationalise the structure for coordinating, monitoring and reporting.

Speakers at next Thursday’s launch will include CARICOM assistant secretary-general, human and social development, Dr Douglas Slater, a representative from the CDB, a member of the HRD Commission and one of the two CARICOM Youth Ambassadors from Barbados. There will also be a question and answer session for the media to engage the commission on various aspects of its mandate.

Courtesy: Caribbean News Now

US-based Caribbean bank under consideration

By Caribbean News Now contributor

BASSETERRE, St Kitts -- The region is being urged to look into the feasibility of establishing a Caribbean bank in the United States to address the loss of correspondent banking services being experienced by banks in the Caribbean.

Deputy governor of the Eastern Caribbean Central Bank (ECCB) Trevor Brathwaite said that’s an option that can’t be ignored, WINN reported.

“In London there are a number of banks that are owned by foreign nationals from other countries and so it’s doable. The feasibility study ought to say once you look at the terms of reference for the feasibility study the modality for establishing a Caribbean bank let’s say in New York, it could be an outright purchase or maybe a second tier bank or the establishment of a bank by private interest collectively,” Brathwaite said.

ECCB governor Timothy Antoine said the option is not a far-fetched one.

Caribbean governments, indigenous banks and offshore banks located in the Caribbean are extremely concerned about the withdrawal of correspondent relations from Caribbean banks by banks in the US.

Their concern arises from the fact that, if all correspondent banking relations are withdrawn, the region will be isolated from the rest of the world and will be unable to carry out the most basic of bank transactions.

According to Antigua and Barbuda’s ambassador to the US, Sir Ronald Sanders, what has caused the withdrawal of correspondent relations to the Caribbean and the other regions identified above is the huge penalties that US banks would have to pay if any incidence of money laundering, terrorism financing, or tax evasion passed through them from their respondent banks.

Regulatory and enforcement agencies have dealt harshly with such incidents, creating a strong deterrent to taking risks. The simplest form of “de-risking” is to terminate correspondent banking relations.

“Establishing a Caribbean-owned agency in the US to provide correspondent relations for regional banks is not impossible, though it is difficult and will require investment in time, money and professional advice,” Sanders said earlier this year.

“But, there is no swift or easy solution to the present problem. If Caribbean banks believe that there is no risk to US banks in the provision of correspondent relations, then they should be prepared to take the risk themselves by setting up their own agency to facilitate their business,” he added.

Courtesy: Caribbean News Now

'Frank and cordial' talks at CARICOM-UK Forum

FREEPORT, Bahamas -- Foreign ministers of the Caribbean Community (CARICOM) and the British foreign secretary ended two sessions of “frank and cordial” talks in Freeport, The Bahamas at the Ninth Caribbean-UK Forum.

Co-chairs Fred Mitchell, foreign minister of The Bahamas, and Phillip Hammond, UK foreign secretary, both expressed their satisfaction at the discussions during a press conference on Saturday at the end of the biennial Forum.

Mitchell indicated that the range of issues that engaged the ministers included climate change, health, financial services, correspondent banking, security and border threats. He announced that there would be six-monthly follow-up meetings at the level of senior officials on both sides prior to the next Forum scheduled for the UK in 2018.

Hammond, who had announced assistance to the region for the fight against the zika virus at the opening ceremony on Friday night, stated the relations with CARICOM countries were important to the UK.

In reference to climate change, the foreign secretary said there was work still to be done despite the signing of the Paris Agreement on 22 April. He said the UK was committed to helping achieve the goal of limiting global warming to 1.5 degrees, a key element of the Community’s position on climate change.

The foreign secretary said he recognised the legitimacy of the financial services offered in the offshore financial sector. However, there were, he said, people who abused the services offered for illegitimate purposes. He added that it was important to ensure that these centres could not be accused of aiding and abetting such actions.

Mitchell pointed out that after the discussions on the issue there was a more complete understanding of the financial services sector in the region and everyone was clear there were no ”negative moral implications” about the sector.

Courtesy: Caribbean News Now

LIAT, taxes and tourism: Rebalancing the tax burden

by: Robert Maclellan

LIAT has been a vital factor in the commercial and tourism life blood of the Caribbean for decades. However, the company has now had three CEO’s and two Acting CEO’s in the last seven years, evidence of LIAT’s challenges.

Commentary on its unfathomable financial strategy, its lack of published accounts and its, arguably, unnecessary and hugely expensive fleet replacement is already well published. The perception over many years of poor operations management, ineffective marketing and gross over staffing has made the LIAT brand a liability, rather than an asset, in the international airline world. I will not add further here to the list of woes.

Given the ongoing expansion of three competitor airlines in the Eastern Caribbean, it is possible that LIAT will soon succumb to private sector competition or, maybe, a merger can save it. In any event, one significant challenge remains for LIAT and its competitor Caribbean based airlines.

To quote David Evans, LIAT’s newly departed CEO, “I can give you many examples of journeys around the region where the tax on the ticket is the same amount as the ticket.” Evans continued, “We will sell you a ticket for US$100 dollars in LIAT but you will actually pay US$200 for it because the other $100 will be tax. That’s an extreme example but by and large 40 to 50 per cent of all the tickets that we sell, that proportion is the amount of tax so that’s a major issue.”

The tax situation Evans refers to above is one of the more obvious examples of Caribbean governments targeting the “stay-over” visitor as part of their attempt to balance budgets in these continuing difficult economic circumstances. The various airline ticket taxes place a significant financial burden on business people travelling between the islands and on tourists from within and outside the region. The result is that the volume of Caribbean inter island air traffic has declined steeply over the last decade and the law of diminishing returns surely applies to the associated tax revenues.

A similar situation exists with Caribbean hotels, where several governments in the region have again increased hotel occupancy taxes, imposing a direct additional cost for those same “stay-over” visitors – business people and tourists. Hotel room taxes now average well over 10% across the Caribbean. Given the very high operating costs of hotels, particularly for smaller properties on the smaller islands, any additional occupancy tax cannot be absorbed within their room rates. The overall tax burden is part of the reason why there is a significant lack of re-investment in many Caribbean hotels with a consequent reduction in their level of competiveness in an ever tougher global market place.

Under financial pressure, many governments have reduced their tourism boards’ destination marketing budgets, which also most directly impacts the smaller hotels and the smaller islands. By contrast, Sandals remains successful because of its high budget direct consumer marketing and its economies of scale, although even that company has had to implement some cost reduction strategies over recent years.

At the same time, on most Caribbean islands, hotels represent the largest percentage of private sector employers and, consequently, drive the largest part of income tax revenue and national insurance contributions. The hotel sector is also a significant generator of government revenue from import duties, corporation tax, property taxes and VAT (where applicable). “Stay-over” visitors spend significant amounts of money on hotels and restaurants – revenue which is quickly and widely dispersed throughout an island economy. Many economists might argue that, as the largest earners of foreign currency in many islands, hotels should enjoy greater fiscal benefits as an “export” industry.

With justification, Caribbean governments will argue that they are under enormous pressure to balance budgets and need to increase tax revenues in order to provide an adequate standard of public sector services to their citizens. However, there is one obvious target where tax revenue could be increased from a sector of the tourism industry, other than the “milk cow” of the Caribbean’s hotels and airlines.

That sector is the cruise line industry, which currently makes a much lesser direct economic contribution in most islands than the local hotels and airlines.

Cruise lines have transformed their business model in recent years – larger, more cost efficient ships with more onboard facilities and lower ticket prices. These changes have resulted in 82% of the discretionary spend of a cruise ship passenger now being captured onboard. That change, combined with shorter stays in ports and lower budget passengers means that many cruise passengers avoid hiring a taxi ashore and they spend much less money in island shops, bars or restaurants. Over the last two decades cruise lines have increased their share of shore excursion prices from 10% to 50%, resulting in a further decrease in local island company revenue.

Through this transformation in their business model, cruise lines have become hugely more profitable, operating high occupancies on a year round basis – winter in the Caribbean’s high season, summer in Alaska or the Mediterranean. Cruise ships operate in a virtual no tax / low tax “offshore” financial environment with lower build costs and operating costs than an equivalent Caribbean resort. However, no Caribbean government in recent times has increased the level of port taxes on cruise ships.

The very low port taxes currently levied in the Caribbean total only 12 – 15% of the cruise ticket price and that percentage total is shared between the governments of all the islands visited on any particular cruise itinerary, say, 3% per port. Compare that low percentage with the 100% tax burden imposed on almost half of LIAT flight itineraries and the average 10%+ for hotel room taxes per night.

Three multi-billion dollar cruise line corporations own over 80% of the ships visiting Caribbean ports. They are tough negotiators and employ skilled public relations people. Every Caribbean government would need to come together, maybe through CARICOM, to negotiate higher port taxes but the cruise lines can afford to pay more. Ports in Alaska, New England, Canada and Bermuda have all negotiated higher rates in recent years. On New England / Canada cruise itineraries, port taxes can represent up to 33% of the cruise ticket price.

Today, around 60% of the world’s cruise ships spend the winter in the Caribbean. In spite of the cruise lines’ bluster, currently there is no alternative to the Caribbean for them – a winter cruising area with a high level of differentiated tourism infrastructure and port facilities, located close to North America and Western Europe, which are the major outbound cruise markets.

No sane person wants to see cruise ships leave the Caribbean but the cruise lines could, and should, make a greater contribution to Caribbean government tax revenues. A rebalancing of the tax burden would assist the Caribbean’s own airlines and hotels to improve, expand and achieve a greater level of economic sustainability.

Courtesy: Caribbean 360

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