Transcript The Saint Lucia Case Study

ORGANISATION OF EASTERN CARIBBEAN STATES
Doing Business in Proximity Markets:
“Trade and Partnership opportunities between OECS
Francophone and Anglophone member states”
By : Ms. Yvonne Agard
Executive Director of SLCSI
Presentation Outline
1.
2.
3.
4.
5.
6.
7.
8.
9.
Introduction of the OECS Coalitions
Brief historic overview on the Trade Agreements
OECS embraces Martinique
Plan of Action
Market Overview
Ease of doing business in the OECS
Challenge/Barriers to trade
Recommendations
Question and Answer segment
INTRODUCTION
The Caribbean Network of Coalition of Services (CNSC) is an informal network of
independent national coalitions of service industries, who work in partnership to support
and drive the development of the region’s services sectors. The region has worked
functionally and strategically together to ensure positive developments at both the
national and regional levels.
The objectives of the CNSC are as follows:
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To raise awareness of the importance of the services sector at national/regional level;
To develop export promotion programmes;
To lobby for the development of the sector;
To support institutional strengthening for the services sector (associations and
coalitions)
Below are the logos of the relative coalitions for the OECS countries:
From COTONOU To CARIFORUM-EPA
Historic Overview
Over the years the concept of International trade has gained immense importance
because of its significant role in small economies such as those in the FCORS and
OECS. Subsequently, the following were the 3 main agreements that paved the
way for the EPA agreement.
ACP-EU(1963)
Lome Convention(1975)
Cotonou Agreement(2000)
The main objectives in the Cotonou Agreement were: 1) poverty reduction 2)
Sustainable development 3) Integration of the ACP countries into the global
economy.
Cotonou Agreement(2000)
EPA
The motivation for establishing the EPA was based on the criticism that the nonreciprocal and discriminating treatment in the previous agreements were WTO
incompatible .
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The EPA’s main principle is RECIPROCITY and its NON-DISCRIMINATORY nature.
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It was designed to bring an intersection of the objectives of the Cotonou
Agreement and the obligations under the WTO
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One of the key elements under the EPA is Article 1 paragraph D
This speaks to “promoting regional integration, economic cooperation and good
governance thus establishing and implementing an effective, predictable and
transparent regulatory framework for trade and investment between their parties
and the CARIFORUM”
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The EPA also seeks to: Liberalize trade in the Services sector to promote growth
and investment. This can be done through the 4 modes of supply:
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Mode 1-Cross border supply
Mode 2-Consumption abroad
Mode 3-Commercial presence
Move 4-Temporary movement of Natural persons
The OECS Embraces Martinique
On February 4, 2015 Martinique acceded as a Associate membership of the OECS but
recently a decision was made to by France to formally hand over the rights for
Martinique to move from status of Associate member of the OECS, to now having full
membership. (April, 2016)
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This decision should facilitate an easier and more efficient way of doing business
between the OECS and Martinique.
According to:
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Article 239 of the EPA-“Taking account of the geographical proximity of the
outermost regions of the European Community and the CARIFORUM States and in
order to reinforce economic and social links between these regions and the
CARIFORUM States, the Parties shall endeavour to specifically facilitate
cooperation in all areas covered by the present Agreement as well as facilitate
trade in goods and services, promote investment and encourage transport and
communication links between them”.
Objectives of the Plan of Action
 What does this expansion mean? Martinique is now committed to fulfil their
obligations as highlighted under the EPA.
 In addition, the OECS drafted a Plan of Action for deepening Trade among OECS
member countries (including Martinique)
1. Strengthen Private Sector Ties and Pursue Joint Ventures
2. Address Market Access Issues and Market Intelligence Matters to enhance trade in
goods
1. Enhance Trade in Services
Elements of the Plan of Action
Establish a
“Doing
Business with
the OECS”
Brand
Strengthen
Private Sector
Ties and
Pursue Joint
Ventures
Develop a Doing
Business with the
OECS Guide and
Promotional/Mar
keting Plan
Achieve
compliance with
EU technical
requirements
(Food Safety,
Hygiene, Health,
SPS)
Negotiate
possible
moratorium on
some technical
requirements for
OECS exports,
particularly SPS
measures
Establish Business
Facilitation
Mechanisms to
increase export
Elements of the Plan of Action
Address Market
Access Issues and
Market Intelligence
Matters to enhance
trade in goods
Formalise OECS
Coalition of
Services Industries
Elements of the Plan of Action
Create an enhanced
Tourism Product
through joint OECS
promotion (including
Martinique)
Address Visa and Non
Visa Regulations for
travel of OECS citizens to
Martinique to increase
attractiveness and ease
of travel
Expand Ferry Service
Operations to facilitate
coverage across the
entire OECS belt
Enhance
Trade in
Services
Market Overview
Saint Lucia and Martinique share a rich colonial history which began from as early as
the sixteen century. With a population of approx. 386,486, Martinique is situated
north of Saint Lucia with a distance of less than 90 kilometres.
The two countries have been established many positive diplomatic, cultural,
educational ties with the main objective to benefit both economies.
Statistics
Saint Lucia
Martinique
Currency
$ EC
Euro
GDP
US 2.1 billion
US 9.61 billion
Contribution to
Services
79.5%
83%
Unemployment
rate
23.3%
27.2%
Going Beyond Market Access
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The Government of Saint Lucia and the region of Martinique has signed the first
ever Cooperation Agreement
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Due to their historic ties and very close proximity, establishing a Cooperation
Agreement is essential for increasing trade in services between the OECS and
FCORS.
- The agreement overs 6 major themes: 1.Tourism
2. Renewable Energies
3.Trade facilitation
4. Health
5. Creative and Cultural Industries
6. Climate change and Disaster Management
This will formalize and preserve the existing bilateral relations between the
neighboring islands and deepen the integration amoung the region.
For all of the OECS and their neighbouring countries: the Services sector accounts for
more than 60% of GDP and is one of the biggest contributors to employment.
For example:
Saint Lucia
Martinique
Where are we now?
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Plan of Action shared and initial discussions held with the Cooperation Officer of
the Territorial Authority of Martinique
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Plans of Private Sector Trade in Services Mission to Martinique in train
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Plans to facilitate trade by reducing non-tariff barriers and to find easier ways of
doing business.
The following diagram is depicting how easy it is do business in the OECS in
comparison to the rest of the world (195 countries).
Ease of Business Indicators OECS
Countries
Source: World Bank Report (2015)
Country Ranking
Doing Business
Starting A Business
Trade Across Borders
Saint Lucia
77
67
72
Dominica
91
63
61
Anguilla and Barbuda
104
107
114
St. Vincent & Grenadines
111
77
68
St. Kitts & Nevis
124
90
70
Grenada
135
76
138
* No data was available for
Martinique
Doing Business in the OECS
According to the Economic Freedom index (2016) most of the OECS countries are
ranked as having “moderately free” trade environments. Therefore, starting a
business in the OECS is relatively easy in comparison to the French counterparts.
The Saint Lucia Case Study:
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Out of the OECS, Saint Lucia is ranked as “mostly free” with a GDP of $2.1 billion.
Starting a Business
Step
Step
Step
Step
1: Prepare the incorporation documents
2: Register with the Commercial Registry
3:Apply for a tax payer ID number
4: Register as an employer with a social security institute
Saint Lucia Case Study
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All foreign individuals/companies with ownership of more than 49% of the
company's shares are required to have a Trade Licenses
Fiscal incentives:
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Tax holidays up to 15 years
Exemption from income tax for tourism investment operations
Tax relief on export earnings
Unrestricted repatriation of all profits and capital
Lower corporate taxes for investors in special development areas
Types of Businesses:
• Incorporated
• Partnership
• Branch
• Sole Trade
Martinique Case Study
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Martinique GDP is US 9.61 billion and has an unemployment rate of 25.2%
Corporate and income tax at 33.3%
Local business tax:
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Fort-de-France- 14.23%
Lamentin- 12.57%
Schoelcher- 10.68%
Fiscal incentives:
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Corporate tax waived up to 10 years
No restriction on the repatriation of profits, service fees and royalties
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Though, the French and by extension the FCORs economies are not very
restrictive. There are still fundamental issues that prevent the successful
penetration of markets, in order to obtain real and effective market access.
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These obstacles are mostly in the form of Non-Tarrif Barriers (NTBs)
Barriers to Trade
Challenges:
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Language Barrier- most OECS countries predominantly speak English
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Entry requirement- The OECS countries requires a Visa as well as a return ticket,
medical insurance and confirmed accommodation to enter Martinique.
-Saint Lucia: citizens are allowed to stay 15 days without a visa.
- Antigua & Barbuda: Visa requirement were removed in January, 2010
but all other requirements remains.
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Finance and banking- The financial system is not conducive to business as no
French banks operates in the wider OECS or OECS based banks in the French
territories. Therefore, payments are slow and complex.
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Cultural differences- insufficient Knowledge of French regulations and Bureaucracy
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The high duties and taxes in Martinique can be a deterrent for interested service
providers
Barriers To Trade
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Travel and logistics- insufficient and high transport cost
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Lack of information- the trade statistics and information portals need to be
frequently up dated
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Unable to comply and meet with European standards- e.g. SPS measures
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Difficulties in obtaining disaggregated data for trade purposes.
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Labelling and market requirements- products/services offered must be clearly
written in French.
Enhancing Trade in Services
What are some of the ways to overcome these barriers?
Recommendations
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Government-Government partnership and joint ventures. Establishing stronger
trade links and strategic alliances.
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Establish an agency in the FCORS that could liaise with representatives from the
OECS in order to foster more trade, provide market intelligence and knowledge
transfer.
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Frequently update the portals on FCORS with current information and export
opportunities.
Recommendations:
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Recognize that the services sector is very important to the growth of the
economy. Therefore, more emphasis should be placed on how to educate/
strengthen the Service sectors in both the FCORs and the OECS.
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Develop a language exchange program were qualified persons can teach French
and English to the respective countries.
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Media- the use of cross border information channels (Radio/TV) which can be
streamed over the internet. This could not only blend cultures but showcase
opportunities in trade
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Implement a joint venture programme where the FCORs like Martinique can host
seminars on how OECS countries can effectively penetrate the EU markets. E.g.
provide market intelligence, how to meet labelling standards etc.
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Find ways to reduce the cost of intra-regional travel..
Let’s Work Together!
Let’s Partner…Let’s Strengthen… Let’s Expand
Let’s Build a Stronger Eastern Caribbean Services Economy
Questions?