The Jamaica-based Sandals Resort International (SRI) says it is disappointed at the “stalled progress of the Beaches project in Barbados’ but remains fully committed to working with all stakeholders for the future growth and development of the island.Continue reading
The government of Antigua and Barbuda has described as “productive and constructive” talks with officials of the Miami-based Carnival Cruise Line regarding the ongoing impasse between them that had led to the company cancelling several scheduled calls to the island.Continue reading
Grenada Prime Minister Dr. Keith Mitchell has welcomed the report from the Caribbean Development Bank (CDB) that Grenada remains the fastest growing economy in the Caribbean.Continue reading
Grenada’s Prime Minister Dr. Keith Mitchell said his country would do its own analysis before shelling out US$487,000 to cash strapped Caribbean airline LIAT.
His announcement comes as Grenada is among eleven Caribbean shareholding countries that have until Friday March 15 to respond to the airline’s minimal revenue guarantee (MRG) proposals.Continue reading
- Caroline Freund and Robert Koopman
Caroline Freund, a former senior fellow at the Peterson Institute for International Economics, is Director of Trade, Regional Integration and Investment Climate at the World Bank. Robert Koopman is Chief Economist and Director of the Economic Research and Statistics Division of the World Trade Organization.
WASHINGTON, DC – Just when poverty-reduction efforts around the world were already slowing, recent forecasts indicate that the global economy is heading into a period of deepening uncertainty. That makes measures to boost growth and expand economic opportunity all the more urgent – which is why revitalizing trade must be high on the global policy agenda. The evidence is clear: as an engine of economic growth and a critical tool for combating poverty, trade works.
With today’s trade tensions, it is easy to lose sight of the progress the world has made over the past few decades of economic integration. Since 1990, more than one billion people have lifted themselves out of poverty, owing to growth that was underpinned by trade. And today, countries are trading more and deepening economic ties even faster than in past decades. There are currently more than 280 trade agreements in place around the world, compared to just 50 in 1990. Back then, trade as a share of global GDP was around 38%; in 2017, it had reached 71%.
Open trade is particularly beneficial to the poor, because it reduces the cost of what they buy and raises the price of what they sell. As new research from the World Bank and the World Trade Organization makes clear, farmers and manufacturing workers earn more income when their products can reach overseas markets.
In Vietnam, for example, a series of trade reforms in the 1980s and 1990s helped transform the country into an export powerhouse, sharply reducing poverty there. Today, Vietnam’s exports generate 30% of its enterprise-sector employment; and its trade-to-GDP ratio – a key indicator of an open economy – is approximately 200%, the highest among all middle-income countries.
Likewise, a separate study of manufacturing in 47 African countries found that employees at export-oriented firms earned 16% more than workers at non-exporting firms. And while men and women working at trading firms received similar wages, men at non-trading firms earned more than women.
Evidence like this demonstrates the promise of open trade. But the poor do not benefit from trade automatically. In fact, our research points to serious challenges. For example, some groups of workers may lose income as a result of increased import competition. And others will encounter “behind the border” barriers – such as limited competition in transportation and distribution, weak infrastructure, or lack of information about new opportunities – that can negate the benefits of trade.
Finally, our research shows that trade can have an uneven impact on the poor, depending on specific circumstances such as one’s access to trade-supporting infrastructure, one’s gender, or whether one lives in a rural or urban area. Such dynamics are clearly discernible in India, where goods produced in rural households face a tariff rate in international markets that is 11 percentage points higher than that for goods produced in urban households.
Similarly, on the border of Laos and Cambodia, women pay higher taxes to customs officials, and their goods are more likely to be quarantined than those that are traded by men. In Uganda, where 70% of the population is employed in agriculture, the low quality and high cost of transportation prevents most producers from getting their products into the hands of foreign customers.
With appropriate trade reforms, governments can loosen such constraints, while also lowering transaction costs, promoting competition, and setting clear rules for cross-border commerce. We know that open trade can drive development. But passively counting on exports to boost economic growth and reduce poverty is not enough. We need to push harder for reforms to lower tariff barriers and remove trade-distorting regulatory measures. And more must be done to facilitate investment in infrastructure such as roads, shipping routes, and e-commerce systems that connect people to markets.
Unfortunately, recent WTO forecasts show that the growth of global trade is slowing, imperiling prospects for faster economic growth and poverty reduction. We urgently need to address the roots of global trade tensions, strengthen the rules-based trading system, and pursue further trade liberalization. Experience shows that this is the most effective way to drive inclusive and sustainable economic growth, create new opportunities, and bring us closer to our shared goal of finally ending extreme poverty.
Caroline Freund, a former senior fellow at the Peterson Institute for International Economics, is Director of Trade, Regional Integration and Investment Climate at the World Bank.
Robert Koopman is Chief Economist and Director of the Economic Research and Statistics Division of the World Trade Organization.
Copyright: Project Syndicate, 2019.
Trinidad and Tobago is among seven Caribbean countries named on the revised financial blacklist of the European Union (EU).
The updated list follows an assessment of 92 countries by the Commission of Finance Minister of the EU based on three criteria: tax transparency, good governance and real economic activity, as well as one indicator, the existence of a zero corporate tax rate.
The report published on March 12 states that Trinidad and Tobago continues to be recognized as a non-cooperative jurisdiction concerning taxation because it “has a “Non-Compliant” rating by the Global Forum on Transparency and Exchange of Information for Tax Purposes for Exchange of Information on Request”.
It added that the country’s “commitment to comply with criteria 1.1, 1.2, 1.3 and 2.1 by the end of 2019 will be monitored.
Barbados, which was on the grey list, had now been put back onto the blacklist, after failing to give a commitment to amend or abolish what the EU described as a “harmful preferential tax regime”. The EU report stated Barbados had replaced one “preferential tax regime by a measure of similar effect and did not commit to amend or abolish it by the end of 2019”.
The report said Aruba and Belize had not yet amended or abolished one harmful preferential tax regime; but the Commission will monitor Belize’s commitment to amend or abolish its newly identified harmful preferential tax regime by the end of 2019.
It said Bermuda “facilitates offshore structures and arrangements aimed at attracting profits without real economic substance and has not yet resolved this issue” and “Dominica does not apply any automatic exchange of financial information, has not signed and ratified the OECD Multilateral Convention on Mutual Administrative Assistance as amended, and has not yet resolved these issues”.
“US Virgin Islands does not apply any automatic exchange of financial information, has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended, has harmful preferential tax regimes, did not commit to apply the BEPS minimum standards and did not commit to addressing these issues.”
Antigua and Barbuda, St. Kitts and Nevis and St. Lucia are jurisdictions “committed to amend or abolish harmful tax regimes by end 2019,” the EU report said.
The Bahamas, British Virgin Islands and Cayman Islands meanwhile are described as jurisdictions “committed to addressing the concerns relating to economic substance in the area of collective investment funds, have engaged in a positive dialogue with the Group [EU Commission] and have remained cooperative, but require further technical guidance, were granted until end 20192 to adapt their legislation”.
In a statement, the Commission has described the act of blacklisting countries, which started in 2017, as a “true success with many countries having changed their laws and tax systems to comply with international standards”.
It said that Tuesday’s “update shows that this clear, transparent and credible process delivered a real change: 60 countries took action on the Commission’s concerns and over 100 harmful regimes were eliminated.
“The list has also had a positive influence on internationally agreed tax good governance standards,” the release from the EU said.
“The EU tax havens list is a true European success. It has had a resounding effect on tax transparency and fairness worldwide”, said Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs.
“Thanks to the listing process, dozens of countries have abolished harmful tax regimes and have come into line with international standards on transparency and fair taxation. The countries that did not comply have been blacklisted, and will have to face the consequences that this brings. We are raising the bar of tax good governance globally and cutting out the opportunities for tax abuse.”
The UE said the next steps include sending letters to blacklisted jurisdictions explaining the decision and how they can be de-listed; continue monitoring jurisdictions that have compliance deadlines; and continue to provide technical support and clarifications whenever needed and to discuss any tax matters of mutual concern.
Finance Minister Dr. Nigel Clarke presented a J$803bilion budget to the parliament on Thursday announcing a J$385.6 recurrent expenditure allocation for the Ministry of Finance and Public Service. This represents over to 58 per cent of the total budget.
The next biggest allocation of J$109.4b representing 16 per cent, went to the Ministry of Education, Youth and Information which also received a capital expenditure budget of J$5.7b.
National Security received J$72.4b recurrent and J$20.2b which represents the largest portion of the capital expenditure budget (34%).
Clarke said the budgetary allocation for national security reflects the level of priority government places on improving security for the citizens of Jamaica.
“Mr. Speaker the dedication of significant resources to national security arises out of the Government’s conviction that the high incidence of violent crime is a significant source of inequity in Jamaica.
“Jamaicans, who live in areas subject to consistent violence, or under the control of organized crime, are denied an equal chance at life. Due to the restricting nature of pervasive violent crime, they are victims of unequal access to services and unequal opportunities in the work place.
“If we care about equity and justice we must care about national security not for some, but for all,” the Finance Minister said.
In what was his maiden presentation Clarke told legislators that though Jamaica was one of the most indebted countries of the world, it is now has a positive fiscal trajectory and has become “a shining example to the world of what can be achieved when there is unity of purpose.”
He said when the current fiscal year ends on March 31, Jamaica’s debt-to-GDP ratio will be near 96 per cent, the lowest debt level for Jamaica, in nearly two decades; and it will be the first time below the 100 per cent for the same period.
Clarke boasted of the country being close to completing its engagements with the International Monetary Fund (IMF) after entering into a precautionary arrangement with the fund almost three years ago.
“What started as an IMF programme became Jamaica’s programme with IMF support,” Clarke told legislators.
“The Andrew Holness Government terminated the US$930m Extended Fund Facility (EFF) with the IMF, six months into office which was also six months before the maturity of the EFF.
“With the EFF, Jamaica borrowed money from the IMF. In its place Jamaica entered into a larger US$1.6 billion Precautionary Standby Arrangement.
“We are now 2 and a half years into this Precautionary Standby Facility, with 6 months to go and Mr. Speaker, I am proud to say that…so far….Jamaica has had no need to draw down on and borrow funds from the IMF.”
The Finance Minister also reported that the country has had low, stable inflation for four years with domestic interest rates at levels that never before seen in the country.
“The Central Bank has lowered the policy rate four times this fiscal year to a record low of 1.5 per cent in February 2019.
Market interest rates for individuals and businesses have never been lower. Many individuals and businesses are now able to access single digit interest rates on Jamaican dollar loans, something that would have been deemed unattainable, unthinkable a few years ago,” Clarke told legislators.
In his presentation titled “Growth with Equity” Clarke also outlined plans to remove some taxes and a reduction on others.
The minimum business tax of J$60,00 dollars will be abolished as of April 1, while taxes on property transfers, student loans and stamp duties will see a significant reduction.
Opposition Spokesperson on Finance, Mark Golding, will respond to the budget presentation on Tuesday, March 12, while leader of the Opposition, Dr. Peter Phillips, will make his contribution to the debate on Thursday, March 14.
Prime Minister, Andrew Holness, will speak in the Budget Debate on Tuesday, March 19, and the Finance Minister will close the Debate on Wednesday, March 20.