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    Country profile: Organisation of Eastern Caribbean States

    (OECS - Antigua and Barbuda, Dominica, Grenada, St Kitts and Nevis, St Lucia and St Vincent and the Grenadines)


    Note: This text provides brief details of the conditions foreign business will encounter in trade with countries of the Organisation of Eastern Caribbean States (OECS). It is based on a WTO Trade Policy Review for the Organisation of Eastern Caribbean States (OECS), issued mid-September 2007. Readers wishing for deeper analysis should turn to the original Trade Policy Review available on the WTO website.

    Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which member countries' trade and related policies are examined and evaluated at regular intervals. Significant developments that may have an impact on the global trading system are also monitored.
     

    WTO has issued a series of reports on the trade policies and practices, the WTO Trade Policy Review (TPR), of the six East Caribbean island nations that comprise the Organisation of Eastern Caribbean States (OECS). Four are founding members of the WTO, while St. Kitts & Nevis and Grenada acceded in 1996. All are members of the Eastern Caribbean Currency Union (ECCU), with their common currency, the Eastern Caribbean dollar (XCD), pegged to the US dollar at around USD 1= XCD 2.70.

    OECS is in the process of economic union, but already operates joint institutions as well as mechanisms for joint regulation in a number of fields including banking and securities, telecommunications and civil aviation, It is also a member of the Caribbean Community and Common Market (CARICOM), and its Single Market and Economy (CSME), operational since 2006, with a timeline of 2015 set for the implementation of the single economy.

    OECS countries are currently, through CARIFORUM (CARICOM and the Dominican Republic), negotiating an Economic Partnership Agreement (EPA) with the EU. CARICOM also operates several bilateral agreements, notably with Columbia, Costa Rica, Cuba, and the Dominican Republic and Costa Rica and has decided to begin FTA talks with Central America. OECS countries also enjoy duty-free access to the US under the Caribbean Basin Trade Partnership Act (CBTPA) and non-reciprocal preferential access to the Canadian market for most commodities under the Caribbean-Canada Free Trade Agreement.

    Agriculture's contribution to Gross Domestic Product (5.5% in 2005) is in decline, due largely to changes in preferential access to the EU market of traditional commodities such as bananas and sugar. However, banana production surged by 6.4% in 2006, compared to a 25.7% decline in 2005, due to, among other things, to higher prices paid to farmers under the Fair Trade label. Other traditional crops mainly cocoa, nutmeg and mace also showed some signs of recovery in the wake of hurricane damage in Grenada. Expansion of manufacturing, which grew by 3.4% in 2006 due to increased demand for manufactured and processed products, is expected to continue.

    OECS countries apply CARICOM Common External Tariff (CET) and grant at least Most Favoured Nation (MFN) treatment to all trading partners (i.e. principle of non-discriminating between trading partners):

    Antigua:

    • Customs service charge (CSC): 10% applied on the c.i.f. (cost, insurance, freight) value of most imports (a lower rate of 5% is set for some products);

    • All tariff rates are ad valorem (tariff rate charged as percentage of price).

    • Simple average MFN tariff (2006): 10.7%, (20.7% with CSC);

    • Average MFN tariff for agricultural products (WTO definition): 16.2% (26.2% with CSC);

    • Average MFN tariff for non-agricultural products: 9.7% (19.7% with CSC).

    Dominica*:

    • CSC: 3%, applied on the c.i.f. value of most imports (some exemptions);

    • All tariff rates are ad valorem;

    • Simple average MFN tariff (2006): 12.2% (15.2% with CSC)

    • Average MFN tariff for agricultural products (WTO definition): 25.8% (28.8% with CSC);

    • Average MFN tariff non-agricultural goods: 9.5% (12.5% with CSC)

    Grenada:

    • CSC: 5%, applied on the c.i.f. value of all imports;

    • All tariff rates are ad valorem, except on two sugar products;

    • Simple average MFN tariff (2006): 11.2% (16.2% with CSC);

    • Average MFN tariff for agricultural products (WTO definition): 18.2% (23.2% with CSC);

    • Average MFN tariff on manufactured goods (ISIC definition): 10.5% (15.5% with CSC).

    St. Kitts and Nevis:

    • CSC: 6%, applied on the c.i.f. value of all imports;

    • The vast majority of tariff rates are ad valorem;

    • Simple average MFN tariff (2006): 10.3%, or 16.3% with CSC);

    • Average MFN tariffs for agricultural products (WTO definition): 14.6% (20.6% with CSC)

    • Average MFN tariffs for non-agricultural goods: 9.4% (15.4% with CSC).

    St Lucia*:

    • CSC: 5%, applied on the c.i.f. value of most imports (some exemptions);

    • Most tariffs are ad valorem;

    • Simple average MFN tariff (2006): 10% (15% with CSC);

    • Average applied MFN tariff on imports of agricultural products (2006 - WTO definition): 16.7% (21.7% with CSC)

    • Average MFN tariff on manufactured goods (2006 - ISIC definition): 9.3% (14.3% with CSC).

    St. Vincent and the Grenadines*:

    • CSC: 4%, applied on the c.i.f. value of all imports;

    • The vast majority of tariff rates are ad valorem;

    • Simple average MFN tariff (2006): 10.9% (14.9% with CSC);

    • Average MFN tariff for agricultural products (WTO definition): 20.5% (24.5% with CSC);

    • Average MFN tariff for non-agricultural goods: 9% (13% with CSC).

    (Note: WTO definition/ISIC definition: ISIC: the United Nations International Standard Industrial Classification of All Economic Activities provides a standard set of economic activities so that entities can be classified according to the activity they carry out. ISIC classifications are not identical to WTO definitions, which are used in trade negotiations).

    Goods included in the CARICOM List of Conditional Duty Exemptions to the CET may be imported at rates below the CET. The CARICOM List of Items Ineligible for Duty Exemption includes goods that may not be exempted in part or in whole from tariffs, nor imported at a reduced rate under incentives programmes. Goods on the list are generally produced in CARICOM countries in quantities considered adequate to justify the application of tariff protection.
    *Less Developed Countries of CARICOM may import all inputs duty free instead of at the CET rate of 5%.

    OECS countries provide tax incentives for investment, which has been instrumental in attracting foreign direct investment (FDI), generating both employment and growth. Services are the major contributor to their economies, with communication, wholesale and retail trade, transport and banks and insurance together accounting from some 46% of GDP in 2005. Tourism, a significant growth sector, is vulnerable to externalities, notably natural disasters such as hurricanes, but visitor arrivals are on the increase, and investment from the private sector has been significant.

    In telecommunications, the OESC states largely fix no limits on foreign ownership of companies. Generally, a single operator provides fixed line services, with two or more operators in Internet and mobile services. In most cases, banking requires establishment of a local company, subsidiary or branch, with place of business. Foreign insurance companies operate under similar terms to national providers. In transport, airports and ports are generally operated by a government mandated Authority, with some auxiliary services provided by the private sector.

    The OECS comprises nine member states including six independent states and three non-independent territories.
    CARICOM: Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Lucia, St. Kitts and Nevis, St. Vincent and the Grenadines, Suriname and Trinidad and Tobago.
     

     



    A note on OECS and trade disputes

    For trade disputes, countries of the OECS are involved in two high profile and ongoing WTO cases, one over online gambling, the other over EU preferences on banana imports. In the first case, OECS member Antigua and Barbuda initiated proceedings against the US over amended legislation prohibiting certain online gambling and betting services in the US, previously Antigua and Barbuda's largest market. Antigua and Barbuda won the case and, faced with US non-compliance with the ruling, has made an application for remedies to the WTO Dispute Settlement Body (DSB), estimating damages at USD 3.4 billion. The US, in a 22 September filing to the WTO, claimed that USD 500,000 was more accurate.

    In the WTO banana dispute, Dominica, St. Lucia and St. Vincent and the Grenadines maintain third-party status in the ongoing case between the EU and countries of Latin America. The TPR says the case is critical because "further erosion or loss of preferential treatment would have the effect of completely decimating the once vibrant and now struggling banana industry in the OECS". It says banana production across the Caribbean has fallen by more than two-thirds since 1999 and cites a recent IMF Study showing that a reduction in preferential market access for OECS banana producers could see them experiencing a permanent loss of between 1 and 2% of GDP.

    Related stories:

    Online gambling and betting:
    Antigua & Barbuda to seek over USD 3.4 billion compensation (World Trade Net Business Briefing, June (2) 2007).
    WTO panel rules against US in gambling dispute (World Trade Net Business Briefing, April (1) 2007).
    Banana dispute:
    US request panel to review EU's banana regime (World Trade Net Business Briefing, July (1) 2007).
    Bananas: Ecuador to request panel (World Trade Net Business Briefing, March (1) 2007).

    WTO Press Release: ORGANIZATION OF EASTERN CARIBBEAN STATES (OECS): Continued reform would expand the benefits of closer integration in the world economy