By Shermain Bique-Charles
Prime Minister Gaston Browne used his turn at the table during the recent Caricom meeting to chide the blacklisting of member states by the European Union (EU).
The EU has used its ‘tax good governance’ standard to label some Caribbean countries as non-cooperative tax jurisdictions, despite the fact that the countries in question are not designated as non-compliant by the relevant regulatory authorities, like the Financial Action Task Force and the OECD Global Forum.
This is not the first time Browne has spoken about how blacklisting is damaging to countries also facing existential challenges posed by climate change, resulting in catastrophic natural disasters across the region.
PM Browne argued that the process of de-risking, which has led to a withdrawal of relations by some US banks from Caribbean banks, posed a serious threat to the region’s welfare, including its capacity to import goods from the US.
He also received the nod by heads of government present with his claims that the EU’s actions constitute a blatant violation of the countries’ sovereignty.
Browne also reiterated the call for the creation of an appropriate intergovernmental tax body with the adequate means and powers to set standards and rules which support an equitable and universal approach to an international tax governance infrastructure.
Caricom member states fall into the category of Small Island Developing and Low-Lying States (SIDS).
Many of them are middle-income countries which cannot access concessional development financing.
But, according to the International Monetary Fund (IMF), the countries so categorised exhibit extreme versions of long-term low growth, high debt, significant vulnerabilities and limited resilience to shocks which set them apart from other middle-income states. Some have unsustainable debt levels.
The move to blacklist Caricom members is also seen as an incursion on their sovereignty and right to determine the economic and financial pathways to development based on their peculiar circumstances.
Member states have also placed on record their frustration with the “shifting goal posts”.
Even as Caribbean countries make adjustments to their tax regimes, the EU has signalled its intention to update the criteria from time to time.
About three months ago, Browne led a team that included Saint Lucia’s Prime Minister Allen Chastanet to meet representatives of the United States’ Financial Services Committee.
There was acknowledgement that the impact of withdrawal of correspondent banking relations was felt not only in financial terms, but in the critical role it plays in global trade, investment and other financial services.
Representatives of the US banks also expressed a keen interest in overcoming the challenges posed by a regulatory environment in which banks are conscious, in their decision-making, of the severe penalties for incidents of money laundering and terrorism financing.