TRADE: Caribbean Nations Protest ‘Tax Haven’ Label

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Jun 8 2001 (IPS) - The six members of the Organisation of Eastern Caribbean States (OECS) complained that a description by the world’s industrialised nations that characterised them as “tax havens” was an attack on their “national sovereignty.”

A declaration released by a group of OECS trade and foreign ministers in Geneva defended the region’s offshore banking sector, stating that it constituted “a credible and important instrument to facilitate national development” in small island states.

The Caribbean officials took part in a review of their countries’ trade policies this week at World Trade Organisation headquarters in Geneva.

Antigua and Barbuda, Dominica, Grenada, St. Kitts-Nevis, Saint Lucia and Saint Vincent, whose combined populations total just 425,000, are the six members of the OECS.

The ministers’ declaration on offshore banking centres came in response to a threat of sanctions by the Organisation for Economic Cooperation and Development (OECD), which links the world’s developed nations.

The OECD, known as the “rich nations’ club,” announced a year ago that in July 2001 it would take reprisals against 35 offshore financial centres, which it accused of encouraging tax evasion “through bank secrecy and confidentiality laws.”

The six Caribbean nations interpret the OECD’s announcement as placing them at risk of imminent economic sanctions, under the developed nations’ offensive against “harmful tax competition.”

Offshore centres arose as an alternative tool for “diversifying our economies” that was encouraged by the World Bank among others, recalled Elvin Nimrod, Grenada’s Minister of Foreign Affairs.

Nimrod termed the OECD allegations “hypocritical,” because “we in the region are engaged in the financial service sector in a very limited way comparable or relative to these same countries.

“We are sovereign states…and we should have the right to determine our own tax regimes,” added Nimrod, who expressed gratitude for the stance taken by the United States, which aligned itself with the Caribbean nations on the issue.

The six OECS members successfully passed the WTO assessment of their trade policies.

Participating in this week’s discussions, besides Nimrod, were trade ministers Hilroy Humphreys of Antigua and Barbuda, Osbourne Riviere of Dominica, and Conrad Sayers of Saint Vincent, as well as foreign ministers Sam Condor of St. Kitts-Nevis and Julian Hunte of Saint Lucia.

The rest of the WTO members recognised the efforts the island nations have made to open up their economies, said Finnish representative Pekka Huhtaniemi, chair of the WTO Trade Policy Review Body.

The Caribbean ministers demanded “special, differential treatment,” a regime that is reserved by the multilateral trade system for least developed countries.

“As ‘small island developing states’, we have a lot of difficulties,” stressed Nimrod. “We are susceptible to many natural disasters, including hurricanes, floods, earthquakes and volcanic eruptions.”

The OECS ministers conditioned their support for the launch of a new round of multilateral trade talks, for which the industrialised nations are pushing in the WTO.

Before the new negotiations get underway, said the declaration, the problems pending from the Uruguay Round (1986-94) must be settled, and other concerns raised by developing countries, in particular the special situation of small island states, must also be addressed.