MTI Column | |
THE CARICOM AGREEMENT ON INVESTMENTBringing the region one step closer to Economic UnionTHE PROPOSED CARICOM AGREEMENT ON INVESTMENT (CAI) seeks to realise the region's dream of having the free movement of factors of production, namely Labour, Capital and Finance. It can be considered one of the cornerstones upon which the foundation of the CARICOM Single Market and Economy is being built. The CAI is essential to fulfilling CARICOM's desire to bring about the free movement of factors production. It is one of several harmonised pieces of legislation facilitating the free flow of capital, including agreements on investment incentives, taxation issues, stock market integration, the relaxation of exchange controls, and creating a monetary union and instituting a single currency. In signing the revised Treaty of Chaguaramas establishing the Caribbean Community (including the CARICOM Single Market & Economy), Member States agreed to the establishment of a Community Investment Policy. Article 68 of the revised Treaty stipulates that this Policy:
The CAI is intended to spur the development of the region by removing impediments to intra-CARICOM investments. In other words, create a more conducive and investor-friendly climate in the region. Regional investors would find it much easier to do business, because the rules and regulations that govern investing in host countries would be clearer and more predictable. The investor-friendly climate the proposed CAI hopes to create would mean a reduction in costly bureaucratic delays, and a more efficient allocation of the region's resources. Structure of the CAI At present, Caribbean states are reviewing a Draft Agreement on Investment, and should have their comments in to the CARICOM Secretariat by the end of March 2005. Once submitted, these comments and amendments would be added to a revised version of the proposed Agreement. This would then be the subject of national consultations in each CARICOM Member State. The proposed CAI consists of thirty-seven substantive Articles covering five key areas: general coverage; core protection provisions; economic and social development obligations; facilitation and promotion; and dispute settlement and administration and award practices. CARICOM Member States are taking a Negative List Approach in formulating the CAI. This means that everything is assumed to be open and anything that is contrary to this is specifically stated as "reservations" in the relevant annexes to the Agreement. These reservations will be based on the following:
The primary focus of the proposed CAI is securing the developmental objectives of the region. If it is to achieve this goal, it must be the most liberal agreement in all its dimensions, when compared to the other investment agreements in which the respective Member States are involved. Incorporating the principle of "pre-establishment", which is covered in most bilateral investment treaties today, the proposed CAI seeks to offer an unfettered right of admission and establishment in host countries, to investments from other Member States. In other words, all CARICOM investors will be accorded national treatment prior to and during the investment process. The proposed Agreement intends to adopt an asset-based definition of investment - the most liberal of definitions - and includes phrases such as "every kind of assets". This type of definition usually incorporates an illustrative list of what may not be included in the definition, and provides Member States with the option of setting limits on what may be considered an investment. For example, Member States may want to discourage speculative activities, and therefore, would not want to include such activities under this particular definition. Elements of the Proposed CAI: A Focus on Development The CAI will cover investments for the provision of both Goods and Services. This is different from the Trade Related Investment Measures (TRIMS) Agreement of the World Trade Organisation (WTO), and possibly any agreement on investment that may result from the Free Trade Area of the Americas, because at these fora, investments in Goods and Services are addressed separately. For Caribbean countries, the issue of Services is critical, because this economic sector -in addition to being the fastest growing sector in world trade - provides most Member States with a comparative advantage, and as such, is crucial to sustainable development in the region. In keeping with the issue of development, the CAI calls for technology transfer, and stipulates that investor companies and their Home Countries assume a certain degree of responsibility in this regard. Article 22, which focuses on the issue of technology transfer, looks at several key issues, such as: the need to train the human resources in the region; and the cross border linking of consultancy firms and research and development facilities. Article 26 of the proposed Agreement requires Home Countries to institute policies to guarantee that their investors "behave in a responsible and accountable manner", and that they "take cognisance of the needs and development objectives" of the Host States. The protection of the consumer is also addressed in the CAI, specifically in Articles 21 and 23. In Article 21, investors are mandated to desist from adopting any "restrictive and anti-competitive business practices", while Article 23 asks Member States to "promote the interest of consumers", as stated in Articles 184 -186 in the Revised Treaty of Chaguaramas. The CAI also deals with the free movement of skilled personnel within the region. In Article 10.2, Member States are mandated to expand the existing five categories of Skilled People, to allow other "classes of persons" the same degree of freedom to work in any CARICOM country. In like manner, Article 11.2 recommends several categories of people exempt from work permits in any Member State:
In Article 27 of the proposed CAI, differences in size and levels of development are clearly addressed. These are issues CARICOM countries always seek to bring to the international agenda, at every negotiating theatre in which they are involved. In many ways, the proposed CAI is different from other investment agreements to which CARICOM Member States may be signatory. At its heart, it addresses directly all those issues that are pertinent to the region's development, in the best interest of the peoples of the Caribbean. ? PUBLISHED IN MARCH 2005 SERVICES SECTOR PLAYERS TO COME UNDER ONE UMBRELLA BODY Trinidad & Tobago Coalition of Services Industries to launch in 2005A NATIONAL UMBRELLA BODY that proposes to bring together all services sector providers - organizations, associations and professionals - will be officially launched by year-end 2005. Once fully operational, the Trinidad & Tobago Coalition of Services Industries (TTCSI) would be an independent entity, and serve as the private sector institution responsible for highlighting and dealing with Services Sector interests, particularly sector development. Services trade interests would be better coordinated - within a national context - for the respective bilateral, regional and multilateral negotiations. Services trade has become increasingly important over the past few years, at the national, regional and international level, hence the necessity to create the national coalition. Services: a new engine of economic growth Along with Manufacturing, the Services Industry is being seen as the new engine of economic growth and sustainable development, given the rapid increase in the global trade in services. The Services Sector is the largest contributor to economic activity in Trinidad & Tobago, accounting for 65 per cent of Gross Domestic Product. It is the largest employer in the economy, with over 60 per cent of the labour force in the Distribution, Transport, Storage and Communications sub-sectors. It provides core support for the development of other sectors of the economy, and includes the following areas of economic activity: construction; transport and communication; infrastructural activity such as water and electricity supply; distribution of goods; financial and insurance services; real estate; tourism and travel related services; government, business and professional services. Moving towards a Regional CSI As part of the Regional Development Plan for the Services Sector, the Caribbean Community (CARICOM) Secretariat, in collaboration with the governments of CARICOM Member States, has been working on strengthening the services component of the Private Sector. In 2001, CARICOM's Council for Trade and Economic Development (COTED) agreed that each Member State should form their own National Coalition of Services industries, and these would be linked and combined into a Regional Coalition of Service Industries (RCSI). Ideally, the proposed RCSI would review and make recommendations on issues pertaining to the development, facilitation and promotion of services trade, within the context of global services developments. It would also link all the regional professional associations and the national coalitions together to promote the common interests of service suppliers. The process has been moving at a somewhat slower pace than originally intended, however. Trinidad & Tobago's Ministry of Trade and Industry took the initiative to help establish this country's Coalition of Service Industries, a move endorsed by COTED in March 2004, which encouraged Member States to provide the necessary support for establishing the national coalitions. Since then, the CARICOM Secretariat, the Caribbean Association of Industry and Commerce (CAIC) and CARIBBEAN Export have stepped up efforts to make the RCSI a reality. To date, only Barbados and St. Lucia have launched their national coalitions - the Barbados Coalition of Services Industries (BCSI) in 2002, and the St. Lucia Coalition of Services Industries (SCSI) in March 2005. Other CARICOM countries are at varying stages of launching their coalitions, with Trinidad & Tobago poised to launch in June of this year. What will the TTCSI do, exactly? Among other things, the umbrella TTCSI would disseminate vital information to prepare services stakeholders for the challenges and opportunities of the Services Regimes of the CARICOM Single Market and Economy (CSME), the Free Trade Area of the Americas (FTAA) and the World Trade Organisation (WTO). It would also encourage an increase of Services exports within the CSME itself, between CSME and FTAA Member Countries, and between CSME and WTO Member Countries. The TTCSI would also partner with the public sector in the overall development of the region's Services Sector. Step by step… Establishing the TTCSI is a three-stage process: the initial Assessment Phase, a Logistics Phase, and finally, the actual Launch. During the Assessment Phase, stakeholders who were surveyed indicated their willingness to form the national coalition. Following on this encouraging result, the Ministry of Trade and Industry hosted a Consultation with Services Sector Providers in September 2004. One of the key outcomes was an agreement to establish a Task Force, which would be responsible for undertaking activities leading to the creation of the National Coalition. In early March 2005, the Task Force held a Strategic Planning Retreat to review the constitution of the TTCSI, as well as to develop a Strategic Business Plan for its sustainability. A second consultative forum with stakeholders is scheduled to take place in May 2005. At that time, the Task Force will present its recommendations for the establishment of the TTCSI. The benefits (whether you're big or small). The experience of other countries has shown that Services Providers do benefit significantly from being members of such umbrella bodies.
For Trinidad & Tobago Services Providers, the TTCSI is the ideal mechanism to bring to government's attention critical services trade issues, and to ensure that these are addressed, in a timely manner. This is especially important in the context of negotiating trade agreements, such as the WTO; FTAA; the Economic Partnership Agreement with the European Union; the CARICOM Single Market and Economy, etc. On the one hand, it is an entity like the TTCSI, which will ensure that a government has a strong negotiating position in Services Industries issues, at the various international trade negotiations fora. On the other hand, coalition members would benefit from having access to information on the negotiated trading agreements and arrangements, and would be alerted to prospective opportunities and possible threats to their growth and development. Many of the Services Providers in this country are small in size and need a strong lobby on their behalf. Only through a national coalition such as the TTCSI, would their special interests be adequately represented, in the context of trade negotiations and services liberalisation. An umbrella body such as the TTCSI provides the small Services Providers with real hope for some measure of special and differential treatment at the trade negotiations. The bottom line: the TTCSI will ensure that the interests of its members - Services Providers large and small in the Services Sector - are considered and met by government, when policies are being formulated to facilitate the sustainable development of the Sector. ? | |
For further information, contact: Corporate Communications Specialist Ministry of Trade & Industry |
