Letters & Opinion

CARICOM: A Collective Bargaining Unit For Rights

Image of Ronald Sanders

By Ronald Sanders

(The writer is an Antigua and Barbuda Ambassador and Senior Fellow at the Institute of Commonwealth Studies, London University and Massey College, Toronto University. He is also a candidate for the post of Commonwealth Secretary-General).

THE Caribbean regional integration project is often described and criticised almost entirely on the uneven benefits of trade to member countries. But, important as it is, there is more to the Caribbean Community and Common Market (CARICOM) than trade.

While the failure to progress the CARICOM Single Market and Economy (CSME) is a cause for considerable regret, there are other aspects of integration that have benefitted the 15 member states in the past and that should be vigorously pursued now to advance their prospects in the international community. One of them is joint bargaining. By joint bargaining I mean the pooling of the resources of all member states to negotiate with other countries or groups of countries on issues in which CARICOM states have a shared interest.

There are a multiplicity of such issues. In relation to the United States of America alone, CARICOM countries share great concerns about several matters. Among those matters is the cost to each country’s treasury of complying with the Foreign Account Tax Compliance Act (FATCA), a law passed in 2010 by the United States that has been imposed on Caribbean countries. Under the terms of that law, financial institutions in the Caribbean are required to provide information to the US Internal Revenue Service (IRS) about accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest. In a sense, financial institutions in the Caribbean have become agents of the IRS and have to spend money to satisfy the burden imposed upon them or risk being penalised in the US, including by the seizure of any assets that they may have there. By extension, Caribbean governments have also become IRS agents because they have to make sure that the regulatory, investigative and enforcement machinery is in place to monitor financial institutions within their jurisdictions to ensure compliance with FATCA. The cost of this machinery comes at a cost to CARICOM governments, many of which are already cash-strapped and resource-poor.

There is a case to be made to the US government for compensation for the financial burden that FATCA places on Caribbean governments to help the IRS collect U.S. taxes. While each CARIOM country would have a sound basis for engaging the U.S. government for compensation on this matter, all of them would be better placed to make their arguments with the US Government and Congress if they did so together.

Dealing with the harmful allegation made by the U.S. government that some countries of the Caribbean are involved in human trafficking also requires a joint CARICOM approach. What the allegation implies is that governments have knowledge of and are complicit in such human trafficking. It is an allegation lacking in substance and evidence. There may be rings of human trafficking in some CARICOM countries, organised by unscrupulous persons who take advantage of desperate persons to make money. But to infer government involvement at an institutional level is a stretch too far. In CARICOM countries, where governments have been provided with evidence of such human trafficking, they have acted to break them up. It is true that, in many CARICOM countries, legislation on human trafficking has to be strengthened and penalties for offenders have to be made tougher. There is also room for effective Police machinery to gather intelligence and deal with trafficking rings. But, CARICOM states, already buffeted by poor terms of trade, decreased aid, no access to concessional financing and myriad demands from large countries to expend scarce resources on curbing money laundering, tax evasion and drug trafficking need help. They also have to continue to provide education and health services, roads and other infrastructure, employment and pensions, and safety and security for their people. CARICOM governments need help with information, intelligence and technical assistance for law enforcement agencies to break-up the rings. Richer and more advanced countries, such as the U.S., should contribute to the solution and not just identify the problem. A joint approach to this would also be a positive benefit to being part of the Caribbean Community.

Then, there is the overarching problem of U.S. agencies labelling the Caribbean as an area of “high financial risk”. The Caribbean Association of Banks (CAB) has publicly stated that this “unfair” categorisation “is resulting in the disturbing threat of loss of correspondent banking relationships to banks in the region”. More tellingly, the CAB states that “correspondent banking relationships are critical in enabling key economic and financial transactions, such as, remittances, foreign direct investments and international trade in goods and services, which constitute some of the key drivers for sustaining the region’s growth and development. Consequently, the loss of these vital relationships can render our region unbankable and ultimately destabilize all sectors of our economies. The CAB considers this issue to be a threat to national security for the various islands in the region”.

This matter was raised with US President Barack Obama at the Summit of the Americas in Panama by Antigua and Barbuda Prime Minister, Gaston Browne, in Panama last April. The President promised to look into the issue. But, again, joint CARICOM action on a regular and sustained basis is necessary if this serious problem, shared by all member countries, is not to simply fade from the U.S. agenda to the detriment of the region.

CARICOM has been at its best in delivering benefits for its peoples when its member states have acted together purposefully and with sound arguments backed up by empirical evidence. When CARICOM has done so, it has demonstrated that the measure of the integration project’s success is not only intra-regional trade, but collective bargaining for economic justice as well.

The same approach is needed to rectify the non-delivery to the Caribbean of the Economic Partnership Agreement with the European Union, the protestations of its representatives notwithstanding.

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1 Comment

  1. I am sympathetic with your concerns on FATCA- i have some experience in this area from Europe. Unfortunately, you are wasting your time. The whole world has to dance to this tune. There are bigger countries who don’t like it, but have to comply. No crumbs will be dropped off the table, whether its collective begging or not.

    You are a career mandarin – you always take the view that integration is best. Look to the EU and see what integration for integration sake leads to. It is inherently anti democratic, and power moves upwards. You know full well that at CARICOM level, the CCJ, EPA deals are all good work for a strata of politicos.

    You cannot force a rigid set of standards on islands with disparate cultures, ecologies and needs.

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