1st July 2019

Increased advocacy on blacklisting necessary

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By OPM

PRESS RELEASE - As CARICOM Member States continue to take steps in conformity with international financial requirements, the Community has intensified its advocacy efforts against the European Union’s publication of lists of uncooperative jurisdictions for tax purposes.

The Community is aiming to craft a credible process that is sensitive to the challenges that the small, highly vulnerable states of the Caribbean face, and to deflect the far-reaching negative impacts of blacklisting on its members that are characterised as being deficient in their anti-money laundering and terrorism financing frameworks, and labelled ‘tax havens’.

The EU uses blacklisting as a strategy to end the offshore financial services sector which it believes enables tax avoidance, and to reform tax systems of third countries. It, however, poses significant threat to countries in the regional integration bloc which depend heavily on their financial services sector.

Belize and Trinidad and Tobago remain blacklisted, despite Belize’s commitment to take corrective action by December 2019, and the fact that the government of Trinidad and Tobago lacks the parliamentary majority under the country’s Constitution to undertake the required legislative reforms.

Antigua and Barbuda, Barbados, Dominica, Saint Lucia, St. Kitts and Nevis, The Bahamas - and Associate Members, Bermuda, the British Virgin Islands, and Cayman Islands, are on a grey list, a monitoring watch list. Dominica, which was devastated by two major natural disasters in 2015 and 2017, was the latest to be grey-listed on 6 June.

The intensified lobbying comes in the face of what Community leaders describe as shifting goalposts, infringement on sovereignty, borderline anti-competitive behaviour, and the paucity of opportunities for dialogue. The Region is contending that there is uncertainty over the legislative changes that are required for the regimes to become tax compliant with the EU conditions, as well as lack of capacity in some countries to undertake the necessary steps. The Community is also questioning the criteria set out by the EU which go beyond what is set by the Organisation for Economic Cooperation and Development (OECD) – the international body that determines matters of tax and good governance.

From Bucharest to Brussels, the Community has been reaching out to the EU members and to friendly governments to support and intercede on its behalf to halt the negative impacts of blacklisting which include reputational damage and an assault on the economies of Member States, which are focused on resilience-building.

The Bucharest visit on 18 February was made at the invitation of Romania’s Minister of Public Finance for a dialogue with CARICOM Ministers of Finance. Romania held the Chairmanship of the EU and its financial council until the end of June 2019. The Community fielded a mission to Brussels the following day.

The advocacy continues via discourse with Ambassadors of the European Union member countries as well as other envoys accredited to CARICOM. Given its importance, the EU stance on blacklisting is a staple of key interventions by Heads of Government and the CARICOM Secretary-General.

Blacklisting is one of the major matters that will be discussed at the Fortieth Meeting of the Conference of Heads of Government of CARICOM which will be held in Castries, Saint Lucia, 3-5 July. The EU stance was an agenda item in February when the Heads of Government held their Intersessional Meeting in Basseterre, St. Kitts and Nevis, and was discussed with the met special guest at the Summit, President of Estonia, Kersti Kaljulaid.

The Heads of Government agreed then, that a unified response built on a solid case was necessary.

“We will through our lobbying efforts and outreach attempt to reach reasonable minds in the EU community and to ask them to share solidarity in doing the right thing, and to find a process that could stand the test of time, that is credible, and which is sensitive to our own challenges at this particular moment in time,” said Dr. the Hon Timothy Harris, Prime Minister of St Kitts and Nevis and CARICOM Chairman back in February.

Earlier in June, at the conclusion of Assembly and Authority Meetings of the Organisation of Eastern Caribbean States (OECS), Prime Minister of Antigua and Barbuda, the Hon. Gaston Browne, spoke of the unintended consequences for the Caribbean that are created from actions such as blacklisting and de-risking, and reiterated the need for increased advocacy.

He said that the label of uncooperative jurisdictions was erroneous, and added that even the idea of “us being tax havens” was inaccurate. He added that he was in the process of getting empirical evidence to confirm that the sub-region did not have a significant amount of European deposits in their banks.

“We have to step up the level of advocacy. We also have to do the necessary research so that we can speak with empirical evidence. …We have started the process here and it would help if other countries can do similar research also and share the information so that we can say to them… without any fear of contradiction that they are looking at the wrong region; we don’t have their money,” PM Browne said.

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