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Honourable Mr. Lester B. Bird

 Address
 by
 Honourable Mr Lester B Bird
 Prime Minister of Antigua and Barbuda
 to
 A Special International Breakfast Meeting
of
 
The Caribbean American Chamber of Commerce and Industry
On
 Friday, 29th June 2001
 at
 
The New York County Lawyers Association
 in New York

Mr Chairman, Members of the Caribbean American Chamber of Commerce and Industry, Distinguished Guests.

When I heard the introduction of myself, I couldn't help feeling that politics is not such a bad profession.

I get to hear such great praise about myself and as a bonus I get a free breakfast!

As former President Ronald Reagan observed, "If you succeed in politics, there are many rewards.  If you disgrace yourself, you can always write a book"!

And, aren't we all dying for Bill Clinton's book to be issued.

Think about what we could learn about the use of cigars!

My friends, let me thank you for doing me the great honour of inviting me to speak to this special international breakfast meeting.

I am proud and privileged to address so distinguished an audience in so hallowed a venue as the New York County Lawyers Association. 

But, I am mindful of the hour, and the fact that some of you might have had to rise early to be here.

I will try my best not to put you back to sleep.

And in doing so, let me recall the words of another former US President, Gerald Ford, and try to be faithful to them.  He said, "I am a Ford not a Lincoln.  My addresses will never be as eloquent as Lincoln's. But I will do my best to equal his brevity and plain speaking".

In the vein of plain speaking, let me say that the Caribbean is now experiencing a period of great economic uncertainty.  And, that uncertainty is manifesting itself in a certain disquiet in our societies as governments, political parties and civil groups try to find solutions to our problems.

I have to admit that I am a supreme optimist about the Caribbean and the Caribbean people.  We have survived too many trials and passed too many tests for me to believe that anything is beyond the ingenuity of our minds or the strength of our spirit to overcome.

Slavery, indenture, exploited labour, vicious hurricanes, sweeping disease - all have been visited upon the Caribbean, and the Caribbean people have emerged stronger and more resilient than before.

Therefore, I see our current uncertainties and disquiet as another staircase to climb in our continuous efforts to advance ourselves and our nations.

Let me spend a few minutes locating the Caribbean in the milieu of today's international affairs.

Our countries are facing marginalisation because of their small size and relative unimportance in high international politics.

To the United States today the Caribbean is important for only two reasons: drug trafficking and money laundering, and the flow of immigrants into US inner cities.

Drug trafficking through the Caribbean and money laundering are also the only strategic concerns that the Caribbean now poses to Europe.

Consequently, there is little interest in addressing our development problems and needs.  

During the cold war, when the countries of the West regarded the then Soviet Union as the enemy, the Caribbean was a focus of great attention. 

Their attention was focussed because of our strategic importance.  Oil supplies to the United States to maintain its industry and social life passed through Caribbean waters.  It was important to keep the Caribbean out of Soviet influence.

Our region was also the area through which the US military had to carry supplies to Europe in the event of a confrontation between the Soviets and Western European countries in the North Atlantic Treaty Organisation.

At the end of the cold war, when the Soviet Union disintegrated, the strategic importance of the Caribbean to the West collapsed with it.

In very short order, we witnessed a sharp decline in official development assistance from the United States.  So much so that when, for instance, Antigua and Barbuda was devastated by a brutal Hurricane in 1995 and we lost three years of our nation's hard-earned gross domestic product in thirty-six short hours, the United States offered us assistance of US$20,000.

Aid was diverted from the traditional allies of the US to the former satellite states of the Soviet Union.  Urged on by the desire to promote and consolidate capitalism in Eastern Europe, US aid and investment were diverted from Caribbean countries such as mine that had stood up with the United States for generations and sent, instead, to its former enemies.

In terms of trade, Ronald Reagan had introduced the Caribbean Basin Initiative (CBI), prior to the collapse of the Soviet Union.   The CBI was never wholly acceptable.  First of all, the US did not negotiate it, it imposed it.  The CBI was a "take it or leave it" affair. It gave duty fee access to the US market for goods, ninety percent of which were not crucial to Caribbean production.  The products that were crucial to us were in the ten per cent that the US did not allow us duty-free access. Among those products were sugar, rice, rum, bauxite and electronic and electrical equipment.

Nonetheless, for some Caribbean countries, the CBI provided an opportunity for creating employment particularly for women in the garment industry. These women are unemployed today.

The creation of the North American Free Trade Area (NAFTA), which gave Mexico completely free entry for its goods in to the US market, wiped out even the limited advantages that the CBI had created.

In addition, Mexico's close proximity to the borders of the United States, makes the transportation of goods cheaper than from the Caribbean.

Our countries simply could not compete against the advantages accorded to Mexico.

In trade, therefore, we also suffered in the post cold war era as the United States showed less concern about the prospects for the countries of the Caribbean which had long been its most reliable allies.

The Caribbean's relationship with Europe was no better.  Again with the disintegration of the Soviet Union and the decline in the strategic importance of the Caribbean, Europe revised its aid and trade relationship with us.

We lost preferential markets in the European Union for our traditional agricultural products, particularly bananas.  Both our sugar and rum exports to Europe now have only a limited life span before they will be subjected to the fiercest competition.

Sadly, it is the United States primarily that caused Caribbean countries to lose their preferential access for bananas in the markets of the European Union.  One US multi-national company, which was a significant election campaign contributor to both main political parties in the US, owns banana estates in Central America. That Company caused the US to successfully challenge the Caribbean's preferential access in the World Trade Organisation (the WTO). Thus, the livelihood of thousands of small Caribbean farmers was sacrificed for the enlarged profits of a US multinational company with quite devastating effects on employment, the standard of living and the economies of some Caribbean states.

Fortunately for my own country, Antigua and Barbuda, we  made the decision in the 1970s to abandon sugar cane production as our major source of income.  In its place we developed the service industries, tourism and banking in particular, and so were less hard-hit by the loss of markets than many others.

But, even the service industries have not been immune from the international marginalisation of the Caribbean region.

We have witnessed this particularly in the area of financial services where several countries of the Caribbean, Antigua and Barbuda included, developed the capacity to compete successfully against the most industrialised countries of the world.

Two years ago, the Organisation for Economic Cooperation and Development (the OECD) dreamed-up what it calls a "Harmful Tax Competition Initiative".

This scheme poses an immediate and detrimental threat to several jurisdictions in the Caribbean, including the US Virgin Islands.  It found great support from the previous US administration and especially from former Treasury Secretary, Lawrence Summers.

Basically, the scheme claims that competition in taxation is harmful.  In making this claim, the scheme shows itself in favour of the heavy hand of government.  For, the OECD is the champion of competition in every other field - in trade, in telecommunications, in ideas - but not in taxation.

The Scheme reminds me of the story that when the Europeans discovered the Americas, the native Americans were running things - no taxes, no debt, no bureaucrats, no income tax forms.  And, the Europeans thought they could improve on that system!

The OECD scheme has its genesis in the left-wing ideologies of certain European Treasury Departments that believe in the notion of high taxation. These ideologues have caused the European member nations of the OECD to be the highest taxed nations of the world.

Unable to tax their populations any further without running the risk of not being re-elected, they have decided to set upon companies and persons whose investments attract either low tax or no tax from foreign jurisdictions.

The purpose is to force elected governments and legislatures to fix tax rates within a framework dictated by the OECD for the benefit of some OECD members.

I say "some" OECD  members because at least two of the thirty OECD member states are openly antagonistic to the scheme.   Other OECD members are also known to be sceptical about it, but are less publicly vocal in their opposition.

By the criteria set by the OECD, the United States is itself now guilty of practising harmful tax competition. One case in point is that Banks in the US are the depositories for hundreds of billions of dollars from non-residents whose interest income is not taxed. Resident interest income, as you know, is taxed at 30%.  This "no tax" policy of the US has kept this large sum of money in the banking system since 1921. 

If the OECD scheme is fully implemented, the US will have to change its "no tax" policy and it is most unlikely that this huge sum of money would remain in the US.

In part, it is because the ideologues in the OECD recognised that the US Congress would never abide changing this "no tax" policy on non-resident deposits in US banks, that they started off their harmful tax competition scheme by focussing first on what they call "geographically mobile services" such as offshore banking units, captive insurance regimes, and international shipping.  

Conveniently, by concentrating on these areas first, the OECD was also able to focus on what appears to them to be 41 small, weak and powerless jurisdictions.  So far, they have been able to coerce eight of them into signing letters committing to the elimination of so-called harmful tax practices in their jurisdictions.

Up to three weeks ago, the OECD was threatening that its thirty member states, including the United States, would impose sanctions on 31st July this year against any jurisdiction that does not sign the commitment letters demanded by the OECD.

However, the present US Administration appears to be less enthusiastic about the OECD scheme in its present form than its predecessor.  Current Treasury Secretary, Paul O'Neill, has indicated that he would like to see what he calls "a refocused OECD initiative". As a result of the US Government's position, I understand that the OECD has decided to withhold its threat of sanctions on 31st July while its member governments reconsider the scope of the harmful tax competition initiative.

 I will not labour over the process by which the OECD arrived at the 41 jurisdictions that it has publicly named as tax havens and threatened with sanctions.  Suffice to say that the OECD has itself admitted that the process was flawed. It was unilateral and arbitrary and its objectives fly in the face of international law and internationally accepted norms and practices.

We have to hope that any "refocused" initiative takes account of the need for equity, justice and fair play - something that has been sadly missing from the international scene in relation to the treatment of small and poor states by large and powerful ones.

Incidentally, this issue of harmful tax competition has nothing whatsoever to do with money laundering and other financial crime.  That matter is being handled by another G7 organisation, the Financial Action Task Force (FATF). All the Caribbean countries have been working closely with the FATF to ensure that we are all fully cooperative in the fight against money laundering. My own country, Antigua and Barbuda, was judged in June last year by the FATF to be fully cooperative.

Five Caribbean countries were blacklisted by the FATF last year, but just last week on 22nd June, two of them - The Bahamas and The Cayman Islands - were de-listed on the basis of the extensive changes that they have made to their laws and enforcement machinery. Only three Caribbean countries remain on the list, and it is our expectation that they will be de-listed in September when the FATF conducts another review.

Incidentally, in the same report published last week, the FATF found that of the 40 criteria that it has created for judging the cooperation of a jurisdiction against money laundering, the United States is in compliance with only 17, Canada with only 16 and Mexico with only 12.

This shows you how well Caribbean countries have done in not being listed by the FATF or, having been listed, getting themselves off the list through full compliance.

You should be aware that our countries went into financial services because we were urged by international financial institutions and some member countries of the OECD to reduce our dependency on aid by going into financial services to diversify our economies. Having done so, we are now being penalised for becoming too good at it.

We recognise that we cannot compete well in everything.  We have accepted that we will be the losers in trade in most agricultural and manufactured goods. But, we do believe that we can compete in services, and by doing so, free others of the burden of having to provide for us.  We believe that we can stem the trickle of refugees from our region and ensure that it never becomes a tide; we believe that we can curtail support for drug trafficking and give our people an alternative income; we believe that we can make our economies give to the world and not have to take from it.

Schemes such as the OECD's harmful tax competition will halt us in our tracks.

But, we will resist them, using as our anthem the words of Maya Angelou:

"Did you want to see me broken?
Bowed heads and lowered eyes?
Shoulders falling down like teardrops,
weakened by my soulful cries?

You may shoot me with your words,
you may cut me with your eyes,
you may kill me with your hatefulness,
but still, like air, I'll rise."

Already there is a strong body of opposition among US Congressmen and Senators to this iniquitous OECD scheme.  Remarkably the opposition has come from both sides of the political divide.

I want to urge you this morning to join this crusade to ensure that the US administration does not capitulate to OECD pressure to enforce this wickedness called, "Harmful Tax Competition".

I also want to pay public tribute to the Centre for Freedom and Prosperity in Washington and to Dan Mitchell and Andrew Quinlan in particular for working extremely hard to sensitise the US Congress to the perils of the OECD Scheme.  I call on you to give them your support.  Their efforts are helping to ensure that freedom and democracy can continue to grow and flourish for the benefit of all peoples.

We in the Caribbean are willing to negotiate a sensible and mutually beneficial approach to the OECD's so called 'harmful tax competition initiative'.  In the words of John F Kennedy, "We will never negotiate out of fear, but we have no fear of negotiating".

 My friends, I know I promised at the beginning to be brief. But, you must recall that I am a politician. And, as Nikita Kruschev observed, "Politicians are the same everywhere.  They promise to build a bridge even where there is no river"!

But, I hope that I compensated for my failure to be brief in my fidelity to plain speaking.  Among friends, I can tell it no other way.

I turn now to the two trends in international relations, "Globalization" and "Liberalization", and to the Caribbean's response to them.

We in the Caribbean have been the objects of globalization and liberalization from time immemorial.

Apart from a brief period in two Caribbean counties, our economies have been wide open to all forms of trade and to all kinds of goods and services.  

What is wrong with globalization and liberalization is the manner in which the powerful and rich nations are manipulating and applying them to serve their sole interests.

 The truth is that globalization and liberalization are not new developments.  The world has been globalized since the 19th Century in the sense that conditions have crossed borders creating change wherever they were introduced.

The difference today is that improved communications, especially jet plane travel, and high speed telecommunications, particularly by satellite and Internet, have increased the change effect of globalization.  Change effects are now virtually immediate and often unchallengeable.

Liberalisation is adored primarily by transnational corporations who see it as an unguarded doorway through which they can enter into the markets of the world to sell their goods and services without let or hindrance, thereby multiplying their profits.

Some trade unions and small businessman throughout the world fear trade liberalisation.  They believe that competition will lead to job losses and the collapse of small businesses. Remarkably, this fear is shared in both the developed and the developing world.

The demonstrations that filled television screens in Seattle last year, and again in Quebec City this year, were about people and organisations in North America who fear that they will lose jobs and businesses through their inability to compete with the lower wage structure and the cheaper productive capacity of developing countries.

Yet, in Barbados a great debate is now taking place over the possibility that K-Mart could establish business in competition with traditional Barbadian suppliers.

It is the same argument  we witnessed in Seattle and Quebec City.  Except this time, it is in reverse.

What is driving the Barbados debate is the fear by some traditional Barbados suppliers that their businesses will fail because they cannot compete with K-Mart.

Yet, neither Barbados nor any other country in the world can long resist the entry into so-called "domestic" markets of so-called "foreign" companies.

In a world based on free trade with binding rules devised in, and applied by, the World Trade Organisation, no country can welcome foreign investment in some sectors of its domestic economy and reject it in others.

Like it or not, the increased effect of globalization is part of today's world reality.  We could no more reverse it than we could reverse jetplane travel or tourism. We could no more limit it than we could limit the spread of advanced telecommunications and the Internet. 

What should constructively concern us, is how to manage globalization so that its consequential changes do not subjugate the world solely to the interests of those with the greatest power.

My own view is that the Caribbean's contribution to the process of globalization must be intellectual.  Given our valued traditions of democratic governance and our history of fidelity to democratic principles, we are well qualified to take the lead in presenting to the international community a vision of human governance, with celebration of humanity's diversity, promotion of democratic processes, social and economic justice and respect for human rights.

In Quebec City last April, at the Summit of The Americas, I told my colleague Heads of Government, including President George W Bush, that our goal should not be to seek an advantage for one group over the other;  our objective ought not to be to create prosperity for some by impoverishing others. 

I argued that our purpose must be to provide a framework in which all could benefit; in which inequities could be addressed; and in which all our people can prosper.

I told them what I tell you now. The last eight years have seen a growing disparity and inequality among nations of the hemisphere in prosperity and distribution of income.

If the Free Trade of the Americas Association is to be meaningful to the peoples of the smallest countries that have the greatest need, then small, developing countries must be seen to reap benefits from the arrangement.

I argued for machinery that would address more fully the need for capacity building, technical assistance and special provisions to meet the needs of smaller economies. 

In the Caribbean we can, and want to, participate fully in a globalized world of free trade, but we need time and practical assistance to compensate us for blows that our economies will undoubtedly suffer because of their smallness and inadequacy of resources.

The proof of the pudding is in the eating, and we will have to await the practical response of the larger countries in the Hemisphere before we in the Caribbean can decide whether other leaders heard our words with their hearts or simply listened with their ears.

I have been encouraged by President George W Bush's declaration that he wants the Caribbean and Latin America to be the "third frontier" of the United States.

He is also reported to have told 70 Hispanic community leaders in Miami at the beginning of this month that Latin America and Canada are his number one foreign policy priority.

I gather by these statements that he means to focus more attention on the region as a whole, and I hope that the Caribbean will get its fair share of that interest.

I urge you to help us ensure that President Bush is able to make good on that pledge.  For I fear there will be many who will try to turn his gaze elsewhere.

I have also been encouraged by the interest that you, the members of the Caribbean American Chamber of Commerce and Industry, have shown in getting New York more involved in the Caribbean.

There is, of course, a natural nexus between New York and our region.  For there are hundreds of thousands of Caribbean people living and working in New York at all levels of its economic activity. New York is also one of the favoured cities in all the world for tourism from the Caribbean.

This intermix of people is a sound basis for economic cooperation between your City and our region.  Already it has led to the sale of a wide range of goods and services from New York in the Caribbean that has benefited the economy of this State.

Now, we should build upon this solid foundation by encouraging investment from New York into the Caribbean in ways that would be mutually beneficial.

You will find that we will welcome US investors in our region. We always have. 

There is no limit to the activities in which you can become involved.  In my own country, we have a highly literate population with considerable skills in computer science and practical knowledge of linking the computer to satellite communications. The opportunities for data processing and other forms of electronic commerce are wide open.  

  My friends, the Caribbean is in the backyard or front garden of the United States. Whichever way you look at it, we are on your border.

As President Bush puts it, we are your third frontier.

What happens with your neighbour affects you.  If he has a fire, it's in your interest to help extinguish it. If he enhances the value of his property, he lifts the worth of yours. The Caribbean should, therefore, be your natural concern.  You should want to ensure that it is safe, secure and prosperous.

I encourage you to do so.

We, in the Caribbean, are inspired daily by the words of that great American, Frederick Douglass:

"If there is no struggle, there is no progress".

We have struggled and we have progressed.

Let not our progress now be derailed and our struggle be in vain.

Together, we can help to promote and strengthen those ties of cooperation and friendship that have always characterised the relationship between the United States and the Caribbean.

In the process that "third frontier" will become not a barrier but a bridge to our joint prosperity.

Thank you.

 

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