By Andrea Ewart
In a recent speech by the Guyanese acting foreign minister celebrating the 238th independence anniversary of the USA, Priya Manickchand also made some observations with respect to the country’s relations with the United States. The minister stated:
“… even though we are an independent nation and not a colony of any state, laws made in the United States of America apply in our countries, and we are advised that if we do not comply we will be sanctioned
.” (reported in July 4, 2014, issue of Caribbean News Now
Andrea Ewart is a Jamaican national and US-trained customs and international trade attorney with her own firm, DevelopTradeLaw, LLC, which works with businesses, governments, and individuals to facilitate the successful movement of goods and services across national borders. Ms Ewart also consults for Caribbean businesses and governments on World Trade Organization (WTO), CARICOM Single Market and Economy (CSME), US-Caribbean trade relations, trade negotiations, and other trade issues.
Ms Manickchand’s statements referred to the Foreign Account Tax Compliance Act (FATCA). This US law aims to combat tax evasion by US citizens who hold investments in overseas financial institutions and requires that these institutions report these holdings to the US Internal Revenue Service (IRS). A non-compliant financial institution is subjected to a 30% withholding tax on its US-based holdings. This new reporting requirement will undoubtedly tax the resources of the Caribbean-based banks while reducing their ability to attract US-based account holders.
Alluding to the American war of independence, the minister continued:
“. . . of course, we don’t have the strength or the power [the Americans] had in those days to fight against King George, so we have to comply with what big brother wants regardless of how difficult those impositions are for our fledging private sector, lest the big stick is used against us
These, and similar remarks made recently by the prime minister of The Bahamas
, highlight the need for a reframing of US-Caribbean trade and economic relations.
Undoubtedly, a strong friendship continues to exist between the countries of the Caribbean and the United States. At the same time, the words of the Guyanese minister capture sentiments that can probably be expressed, to one degree or another, by the countries of the region. Some of these issues are longstanding while others are more recent. Some impact a few countries while others are regional in scope. While there are no guarantees, the most likely path to successful resolution on these issues is through regional and sustained engagement with the United States to achieve a reframing of US-Caribbean trade policy.
Unity and Purpose
To correct the minister’s reference to the American War of Independence, the strength to overcome the might of the British Empire came from the unity of the thirteen American colonies, precursors to the United States of America. Had the twelve other colonies not joined Massachusetts in its rebellion against British imperial rule, epitomized by the hated tax on tea, we can question whether the USA would have been created in 1776, at a much later date, or at all.
In fact, the odds against victory by the “American rebels” were extremely high. At the start of the War of Independence the British militia in the American colonies numbered about 7,000; in the first battle 700 British army regulars faced off against 500 volunteer rebel soldiers. For most of the war, the American patriots were at a disadvantage with respect to their numbers, military expertise, and available supplies. A second factor that favoured victory by the rebellious American colonies was British underestimation of their sense of purpose and determination.
To be clear, we are not advocating that the Caribbean region launch hostilities, cold or hot, against the United States. Rather, the point is to emphasize the necessity and the advantages of having a united mission, purpose, and plan of action among countries facing a common set of challenges.
Challenges in US-Caribbean Trade Relations
These challenges to US-Caribbean trade relations include concerns around such products as rum, conch, ackee; financial and tourism services; cable transmissions and other intellectual property issues, and US policies that negatively impact them in one way or the other. Too often, the pattern that seems to predominate is one where the United States acts and the countries in the region react, too late and with very limited, if any, results. The WTO decision in favour of Antigua and Barbuda in the gambling issue has still not been implemented.
Left unchecked, these tensions at the bilateral level act as an irritant in this important relationship. Even more importantly, at the core of these tensions are issues of integral importance to the development of the region’s small economies.
Furthermore, a broader conversation needs to be conducted with respect to recognizing that trade in services now plays a much larger role in the regional economy than does trade in goods. This reality is not adequately taken into account within the existing framework for US trade policy in the region – the Caribbean Basin Economic Recovery Act (CBERA).
Time for Regional Engagement Is Now!
To get this conversation rolling, there is no time like the present. As its “third border”, the United States is always very cognizant of the region’s role in ensuring its own stability and security. And while it can be challenging to get the attention of the US government on other issues that are important to the Caribbean, there are current indications of a renewed US willingness to engage the region. The Office of the Vice President has been charged with this agenda. In 2013, President Biden’s visit to the region and the signing of the US-CARICOM Trade and Investment Framework Agreement (TIFA) signaled this renewed focus. In another example, at the invitation of the respective US Embassies, this author recently conducted workshops aimed at addressing the low utilization rates of the existing CBERA trade preference benefits.
All of these developments signal an opening on which the region can both capitalize, and simultaneously put in place a plan for sustained engagement. Not known for its long attention span, the US will remain engaged only so long as it sees a partner that is, in turn, active and engaged.
The challenge for the Caribbean is to achieve this engagement as a region. Bilateral relations are an effective tool for advancing policy that has already been established. As small economies, the way to reframe US policy and to find mutually-beneficial solutions to the long-standing and ongoing problems in US-Caribbean trade relations is through engagement at the regional level.
No one would have expected thirteen small American colonies to achieve military victory against the British Empire. Nor should the region pre-suppose the outcome of a purposeful, united, and consistent engagement with the United States.
© Copyright to this article is held by Andrea Ewart of DevelopTradeLaw, LLC. Its reproduction or republication by any media or transmission by radio or television without her prior written permission is an infringement of the law. This article may be republished with permission and attribution.