News

'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

ECLAC proposes climate-changed based debt alleviation strategy for Caribbean

ECLAC has called for the creation of a Caribbean Resilience Fund as part of a debt alleviation strategy based on a climate change swap proposal.

“The swap will involve the use of pledged climate funds to write down the public debt of Caribbean countries and create the financing necessary to fund climate change adaptation and mitigation initiatives and investment in green economies, which in turn will be administered through a Caribbean Resilience Fund,” Alicia Bárcena, ECLAC’s Executive Secretary, during the recent meeting of the Caribbean Development Roundtable (CDR), in St. Kitts.

The proposal stems from the recognition that while Caribbean countries are among the most highly indebted countries in the world, the high debt dilemma was linked to external shocks, compounded by the inherent structural weaknesses and vulnerabilities confronting Caribbean SIDS with limited capacity to respond. Many Caribbean countries belong to the middle income category, which constraints their access to concessionary funding.

Addressing government officials and representatives of numerous regional and international organizations during the opening of the CDR, the most senior authority of the Economic Commission for Latin America and the Caribbean (ECLAC) presented a proposal on debt for climate adaptation swaps, which detailed a strategy for the growth and economic transformation of Caribbean economies, in light of the heavy debt burden being faced in the subregion.

Bárcena explained that resources from the Green Climate Fund (GCF) could be used to write down Caribbean public debt from multilateral and bilateral lenders, and to buy back debt from private creditors at a steep discount. With the newly found fiscal space, Caribbean governments would then make payments into the Caribbean Resilience Fund, which would in turn be used to finance resilience capacity building in climate change mitigation and adaptation, and invest in green economies.

ECLAC’s debt for climate adaptation swaps proposal calls for donors to use pledged resources from the (GCF) to finance a gradual write-down of 100 per cent of the Caribbean Small Island Developing States’ (SIDS) multilateral debt stock held at various multilateral institutions as well as the bilateral debt stock of Member States.

Responding to Bárcena’s presentation, Acting Prime Minister Vance Amory contended that “one cannot downplay the potential negative impact of climate change on our fragile economies and our ability to provide future economic growth”.

In that regard, he said, “we have to put together a cohesive approach so that we can have the desired response to the need to pay our debt”.

Discussions during the CDR also focused on prospects for pursuing the achievement of the Sustainable Development Goals (SDGs) in the Caribbean.

Bárcena emphasized that the current debt overhang and environment of fiscal constraint makes it almost impossible for Caribbean governments to make the desired public sector investment in green industries, which would stimulate growth and promote economic transformation in the Caribbean. The debt for climate swap proposal is intended as a strategy to create the fiscal space for such public investment.

Participants in the Roundtable highlighted a number of critical issues that increased the vulnerability of Caribbean SIDS, notably climate change and a range of social challenges, including population ageing, non-communicable diseases (NCDs) the persistence of poverty and inequality, high youth unemployment, the loss of skills through emigration, and low technological capacity. They said those concerns would have to be addressed through SDG implementation.

Courtesy: Caribbean 360

Major regional climate change meeting to take place in St Lucia this week

CASTRIES, St Lucia -- The Regional Coordinating Committee on Climate Change (RCCCC), under the chairmanship of Saint Lucia’s minister for public service, sustainable development, energy, science and technology, Dr James Fletcher, will meet in Saint Lucia on Wednesday and Thursday of this week to review the progress made in the implementation of the region’s climate change plan and to agree on the way forward after the signing of the Paris Agreement on Climate Change by a record 175 countries at UN Headquarters in New York last week Friday, Earth Day 2016.

The ‘Regional Framework for Achieving Development Resilient to a Changing Climate’ was approved by the Caribbean Community (CARICOM) heads of government in July 2009, and three years later, in 2012, CARICOM heads of government approved an implementation plan (IP) for the regional framework, which defines the regional strategy for coping with climate change and developing greater resilience to the impacts of climate change over the period 2011-2021.

The Regional Framework and the Implementation Plan were prepared by the Caribbean Community Climate Change Centre (CCCCC), which is headquartered in Belize. The 5Cs serves as the secretariat for the Regional Coordinating Committee and provides technical support for its work.

The Regional Coordinating Committee on Climate Change (RCCCC) is chaired by Fletcher and comprises representatives from a wide range of regional organisations.

Courtesy: Caribbean News Now

Antigua-Barbuda calls on region to speak out on issues relating to financial services

GEORGETOWN, Guyana -- Antigua and Barbuda will continue to speak out against the false allegations against the region as “high risk” for financial services and the label of “tax havens”, said the country’s minister of trade, E.P. Chet Greene at a Caribbean Community (CARICOM) trade ministers meeting in Guyana.

In addressing the issue of correspondent banking relationships, Greene said that, without correspondent banks, the region’s capacity to trade would be so constrained as to make any legal trade virtually impossible.

“If the present trend continues in which our banks lose correspondent relations in the United States, which is our biggest trading partner, we will witness an upsurge in illegality,” he said.

Greene called on his colleagues to immediately declare at the end of the meeting, among other things that the CARICOM region is a non-secrecy area for financial services; CARICOM countries are compliant with international standards set by the Financial Action Task Force (FATF) and the OECD Global Forum, and CARICOM countries have tax information exchange agreements with every major nations and are implementing the US Foreign Account Tax Compliance Act (FATCA).

Courtesy: Caribbean News Now

Help us get geothermal project going, Dominica PM tells private sector

Prime Minister Roosevelt Skerrit is pleading with private sector organizations to invest in Dominica’s geothermal project which he considers critical to the island’s development.

He made the call as he pointed out that as a small island state, Dominica is often placed in a difficult position of having to choose between renewable energy investment and other major developments, because of a lack of resources.

“We should never have a situation where our country should have to make a determination on whether we advance our renewable energy initiatives or divert the resources to other areas,” Skerrit said.

“The sustainable use of our natural resources are too critical to our survival for us to be forced to make a determination on whether we invest in geothermal energy or we reconstruct our roads. I believe that we should have sufficient access to the resources to allow us to do both simultaneously.”

The Prime Minister restated his government’s commitment to the geothermal project.

“The project will be pursued by the government whether it is with a loan or with a partner, I am saying that that project will be pursued by the people and Government of Dominica. I believe it is an opportunity for the private sector…to be part owners by putting equity into this project and having a joint project between the Government and yourself,” Skerrit said.

Swedish Ambassador to Dominica Claes Hammer has given a commitment to support Dominica’s efforts in geothermal energy.

Courtesy: Caribbean 360

Joint Statement from the Second Meeting of the CARIFORUM-EU Consultative Committee

Joint Statement from the Second Meeting of the CARIFORUM-EU Consultative Committee

1. The Second Meeting of the CARIFORUM-EU Consultative Committee (CC) took place on 18 and 19 April, 2016 in Brussels, co-chaired from the EU side by Brenda King (European Economic and Social Committee) and from the CARIFORUM side by Renwick Rose (Caribbean Policy Development Centre). According to the Economic Partnership Agreement (EPA) between the Cariforum States and the European Union, the task of the CC is to assist the Joint CARIFORUM-EU Council in promoting dialogue and cooperation between representatives of organisations of civil society. The agreement also recognises the role of the CC in monitoring the implementation of all economic, social and environmental aspects of the EPA and in strengthening dialogue between representatives of civil society.

2. The CC acknowledged that its primary role is: (1) to support the implementation of the relevant sustainable development aspects of the EPA; (2) to identify issues relevant to the implementation of the Agreement; and (3) to engage actively in the monitoring and evaluation of the impact of the Agreement on civil society stakeholders in the respective regions.

3. The CC agreed that both the first and second meetings of the CC were productive. However, there remain challenges which affect the efficient operation of the CC and the hosting of annual meetings.

4. The CC reiterated its statement made during the first meeting on 13-14 November 2014 which identified some of the prerequisites needed for the EPA to generate tangible results such as:

i. raising awareness of the opportunities and benefits of the CARIFORUM-EU EPA in the CARIFORUM countries, and in particular amongst SMEs;
ii. building more capacity to deal with Technical Barriers to Trade (TBT) and Sanitary and Phyto-Sanitary (SPS) requirements that prevent actual market access;
iii. promoting the EU Export Helpdesk database and enlarging it by including also trade in services;
iv. setting up and promoting a website listing EPA-related support and activities for companies and other civil society organisations;
v. fully developing provisions on services and intellectual property rights

5. The CC was briefed by the European Commission and the CARIFORUM Directorate about latest developments on the implementation of the EPA, its five-year review and the Monitoring & Evaluation mechanism. Following a debate on the the role of the Consultative Committee on the Monitoring and Evaluation of the EPA, gaps were identified for which several recommendations were made (see Recommendations below).

6. The CC expressed appreciation for the information provided by the European Commission on the projects under the 11th European Development Fund (EDF) Programme which are related to the implementation of the EPA. It also reviewed ongoing projects related to civil society capacity building and agreed that such projects should be duly taken into consideration and assessed in the framework of the monitoring and evaluation of the EPA.
7. The CC also raised other issues beyond the strict implementation of the EPA that can seriously affect or undermine the achievement of its objectives of trade and competitiveness, such as the lack of visa facilitation for trade in services.

8. The CC also discussed the Future of EU-ACP Relations, expressing concern about the possible impact that the expiry of the Cotonou Partnership Agreement (CPA) might have on the EPA (as the EPA makes explicit reference to the CPA). The CC also recommended a post-Cotonou Framework aiming at:

a) achieving a modern and effective "partnership of equals" beyond a donor-recipient relationship, recognising the universality of challenges such as inclusiveness, income inequality, youth unemployment, climate change, migration, security, attainment of SDGs, and developing also South-South and triangular frameworks of cooperation.

b) guaranteeing the involvement and financial support of civil society organisations from the conception, inception through the monitoring and impact assessment on the sustainable development of the Parties.

RECOMMENDATIONS ON EPA IMPLEMENTATION, MONITORING AND EVALUATION:

i. The CC appreciates the efforts of the Parties to analyse the past 5-year review and to set up a monitoring and evaluation mechanism in preparation for future reviews. Further, it asks the Parties to involve the CC in the setting up of this monitoring and evaluation mechanism in their respective regions.

ii. The CC calls on the EPA bodies to ensure the collection and availability of sufficient statistical evidence and to share and provide access to relevant documents to be discussed at their meetings. This is essential for an effective monitoring and evaluation. Moreover, the CC needs to be included in their ongoing discussions on monitoring indicators for EPAs in order to build on and identify those indicators that allow for synergies with Sustainable Development Goals (SDG) monitoring processes.

iii. In order to play an active role in the EPA monitoring and evaluation and to participate in ongoing discussions about the results and impacts of the CARIFORUM-EU EPA implementation, the CC or its EU or Cariforum side should take part in the evaluation of the information collected, compiled and reported by the relevant regional and/or national monitoring mechanisms. The CC should also play a role in the presentation and dissemination of the information.

RECOMMENDATIONS ON NECESSARY RESOURCES FOR THE CC FUNCTIONING:

iv. The CC urges the Parties to allocate and disburse the necessary budget for its functioning. This budget should be linked to an agreed work plan and vested in the respective rotating secretariats. The CC is currently developing its work plan for the future.

OTHER RECOMMENDATIONS:

v. The CC reminds that European Union Member States should honour commitments made to provide financial support for the EPA implementation.

Finally, the CC warmly acknowledged the contribution and support of the secretariat and the Parties and expressed anticipation of a continued, fruitful and productive relationship. The CC expects a timely renewal of mandate and is keen to hold its next meeting in the Caribbean before the expiry of the current one.

COTED convenes Thursday : CSME, Correspondent Banking in focus

Matters that impact on the economic health of the Caribbean Community (CARICOM) come under focus in Georgetown, Guyana, when the Council for Trade and Economic Development (COTED) meets on Thursday and Friday.

Regional ministers with responsibility for trade will hold discussions on a range of matters including the CARICOM Single Market and Economy (CSME), and treatment of nationals travelling in the region.

There will also be an assessment of the progress that has been made with respect to a draft policy on micro, small and medium enterprises (MSME). The MSME sector is considered a critical pillar of economic development of CARICOM as it contributes more than 70 percent of GDP in some member states and often employs more people than large businesses across the region.

Ministers will also discuss the threat to the region’s correspondent banking relations (CBR). A correspondent bank is a financial institution that provides services on behalf of another financial institution. Correspondent banks are used by banks in one country to conduct business in a foreign country.

Heads of government at their intersessional meeting in February established a high level advocacy group, led by Antigua and Barbuda Prime Minister Gaston Browne. Browne’s mission is to represent the Community’s interest at all levels, including with the United Nations, the World Trade Organisation (WTO), and the United States Congress to tackle the threat of the removal of CBR between foreign banks and Regional banks.

He recently headed a delegation to Jamaica for consultations titled Caribbean Public Private Dialogue on CBR.

Deliberations will also be held on matters related to the Community’s External Economic and Trade Relations, including developments in the World Trade Organisation (WTO), and the finalisation of negotiations for the expansion of preferential treatment under the CARICOM-Cuba Trade and Economic Cooperation Agreement.

Transportation, and trade in agriculture are among the items to be discussed.

On Friday afternoon, a special Meeting of the COTED on trade and energy will be held. That meeting will consider, among other matters, intra-regional trade in petroleum products; regional cooperation on energy; and the selection of an independent representative on the steering committee of the Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE).

Technical officers met at the CARICOM Secretariat on Monday and Tuesday to prepare for the ministerial session.

Courtesy: Caribbean News Now

OECS tourism ministers to meet in Antigua-Barbuda

ST JOHN’S, Antigua -- The third Organisation of Eastern Caribbean States (OECS) Council of Ministers meeting on tourism matters will be convened under the theme: OECS Economic Union: Tourism, driving Growth and Development.

Some key aspects to be discussed at this meeting include ease of travel within the OECS, joint promotion of the OECS region, the OECS Eastern Caribbean Institute of Tourism as well as the World Bank regional tourism competitiveness project.

Antigua and Barbuda’s minister for tourism Asot Michael will chair the meeting.

A regional approach to addressing the zika virus and its implications for the vital tourism sector is also part of the agenda for the meeting.

In addition to representatives from OECS member states, the minister for tourism from St Martin, Jeanne Rogers-Vanterpool, the secretary general of the Caribbean Tourism Organisation Hugh Riley and Frank Comito, the CEO and director general of the Caribbean Hotel and Tourism Association will be observers at the meeting.

Courtesy: Caribbean News Now

CARICOM reparations baton moves off from Barbados

A reparations baton has started its regional journey, as part of a wider effort to spread the reparations message around the Caribbean, through public education and other initiatives focused on the youth.

The baton was passed by chairman of Barbados’ Task Force on Reparations, Professor Dr. Pedro Welch, to Acting Consul General of Guyana to Barbados, Monique Jackman, over the weekend. She will pass it to the Guyana Reparations Commission, which is planning to hold a reparations youth rally next month.

The relay is an initiative of the CARICOM Reparations Commission (CRC).

“Barbados has recommitted itself to the call for reparations on this occasion as a mark of respect for our ancestors who struggled for reparatory justice,” said Barbados’ Prime Minister Freundel Stuart, who is also Chairman of the CARICOM Sub-Committee on Reparations. “To mark this event, Barbados has the distinct honour of leading off the symbolic passing of the reparations baton to Guyana as a show of CARICOM solidarity for the cause of reparations.”

The CRC was formed by CARICOM Heads of Government in 2013. It is headed by Chairman Sir Hilary Beckles, and there are now several national reparations committees throughout the region.

A reparations baton and torch will be presented to national reparations commissions across the Caribbean at youth rallies organized under the banner ‘Roots, Rock, Reggae, Reparations’ which will celebrate the principles and programmes of the Caribbean and global reparatory justice movements.

The relay will culminate in Jamaica later this year where the Emancipation Rebellion led by Sam Sharpe will be remembered and celebrated.

The Barbados launch of the reparations relay coincided with the bicentennial commemoration of the death of General Bussa, the inspirational leader of the Barbados slave rebellion of 1816.

At a historical ceremony entitled ‘From Bussa to Barrow and Beyond’, at the site where Bussa was killed, Professor Welch said the passing of the baton from Barbados to Guyana represented an historic moment that “symbolized the maturing of the reparations initiative in the CARICOM countries.”

He said that it linked the struggle in Barbados with a wider Caribbean and global movement.

“From the very inception of the Task Force on Reparations in Barbados, it was felt that while there was a Barbadian component to the initiative, there was a wider sphere of operations that would require a Caribbean-wide collaboration. It is in its fraternal association with the regional body that the celebration of the 200th anniversary of the Bussa rebellion of 1816 provided an opportunity to initiate the symbolic passing of a reparations baton, sequentially, to other CARICOM countries,” Professor Welch said.

“Quite apart from the regional focus, the local events in Barbados also provided an opportunity to see how the issue of commemorating a special moment in the historical narrative, namely a slave rebellion, ties this local event into the larger global struggle.”

In an address last Friday at a ceremony where a number of Barbadian nationals were recipients of awards for the invaluable contributions they have made to the island, Prime Minister Stuart urged the audience to keep the issue of reparatory justice at the forefront within the region.

“We must sensitize our people to the ingredients of this debate and of course to the need to be part of this struggle to ensure that a lot of the damage that has been done as a result of our slave and colonial experience can be repaired not only by our own efforts, which of course we cannot forsake or ignore, but repaired by those who caused the damage in the first place,” the Barbadian leader said.

Courtesy: Caribbean 360

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