Arthur calls for measures to deal with correspondent banking

KINGSTON – Former Barbados prime minister Owen Arthur Tuesday said Caribbean countries need to have in place mechanisms that can allow them to respond to issues on Correspondent Banking.

He said these measures must be “in a coherent and sustained manner, rather than in a spasmodic way, to the challenges which will continuously come our way from having to function as the world’s smallest and most vulnerable economy in a turbulent and unforgiving global economic arena”.

Arthur, addressing a round table discussion on “Correspondence Banking” said that the Caribbean countries now find themselves in a more vulnerable condition than they have ever been in their post-independent existence.

Arthur said regional countries were constantly having to make adjustments to accommodate far reaching changes in the environment within which their development takes place.

“This has placed on them the responsibility of having to manage more complex transitions and transformations than any other group of nations. They have had, and will continue to have to institute new arrangements by which to order their domestic affairs, central to which is the sustained and coherent implementation of fiscal consolidation programmes to restore order to their public finances.”

But Arthur, an economist, said the challenges for Caribbean countries surrounding the management of their fiscal consolidation programmes are modest relative to the difficult new circumstances that have, over the past two decades, affected their ability to successfully carry out cross border transactions.

“To begin with, all Caribbean societies have been significantly and adversely affected by changes in International Trade Law, which have stripped them of the means by which they have traditionally protected domestic enterprises, and have required them to enter new reciprocal trade arrangements even with developed economies. The toll taken on traditional industries in agriculture and manufacturing has been severe.”

He said in addition, the “sunrise industries” which have been designated to be the engines to generate a substantial part of the growth for the future have themselves had to operate in an atmosphere of uncertainty by having to respond to extra regional initiatives such as the OECD Harmful Tax Competition Initiative, and more recently, the provisions contained in the USA Foreign Account Tax Compliance Act, and the OECD Base Erosion and Profit Shifting Project.

Arthur said that a 2014 World Bank report revealed that in respect of every critical determinant of trade performance, the Caribbean reflects the worst indices of any region in the world.

“In addition, the region’s circumstances have not been assisted by the fact that in an era when so much of global economic activity is being driven by the provisions in bilateral trade pacts, the Caribbean had entered the fewest of any group of nations.”

He said that the region also stands, for the future, to be overwhelmed by new trade arrangements, such as the Trans Pacific Trade Pact, and new global supply and value chain arrangements by global enterprises that are bypassing the Caribbean. (CMC)