#BTEditorial – Let all rise with the tide

The environment in which small, developing states like Barbados are expected to survive and thrive is becoming more challenging by the day. Already burdened by our small size, level of development, and disaster vulnerability, our nations are forced to wade through a world that has become more inward looking and less tolerant of the special needs of our citizens.

What is even more complex for us is discerning who is friend or foe, who is acting on principled grounds and who is concerned only with what is expedient in the moment.

Often, those who tout their support for the improvement of the lives of developing countries’ citizens baffle us by decisions they make that not only worsen our current economic situation, but can set back many of our development strides.

Europe, for example, has had a checkered history in the Caribbean. Our slavery and colonial past has resulted in a very unequal relationship. Some European countries have argued that they have acknowledged their role in the exploitation and under-development of countries like ours and that the billions of dollars in development aid and assistance over the years represented a recognition of the unique relationship between the region and Europe.

A week ago, we witnessed the rapid pace and unified approach that developed countries are prepared to engage in, when they got Barbados to join some 132 other nations in signing a protocol that will see us surrender part of our sovereignty to set our corporate tax rates.

Keen observers would not have been surprised by the move. It is another example of industrialised countries using their size, trade power, and global influence to force the hands of nations in more vulnerable spaces.

The Organisation for Economic Cooperation and Development (OECD), from its Paris headquarters, announced that Barbados had agreed to what it described as “a fairer distribution of profits and taxing rights among countries”. One may justifiably ask: Fairer for whom?

It is all part of the dismantling process of the global financial business sector that small, developing states have found their niche. United States President Joe Biden made it part of his priority goals when he pushed the Group of Seven to introduce a minimum tax rate to which the rest of the world would have to agree or find themselves ostracized and blackballed.

After holding out, we accepted that it was a no-win situation. Ireland, Kenya, Nigeria, Sri Lanka, Hungary, and Estonia are the only countries not yet on board.

Barbados has been skipping over ropes and jumping through never-ending hoops in an effort to maintain our reputation as a worthy and compliant international financial services jurisdiction. But for every attempt to meet the evolving rules related to anti-money laundering, counter financing of terrorism, and proliferation of arms, the goalposts have shifted.

Now, we are learning of another effort that could result in further barriers to exports into the EU. It is in form of an import levy to be introduced by the Europeans that will be imposed on products that are heavy users of energy in the manufacturing process.

Proposed to come into effect in 2026, the levy will hit products such as fertilizers, aluminium, steel, iron, and cement. While we do not produce or export these products, our Caribbean Community (CARICOM) neighbours such Trinidad and Tobago export significant amounts of fertilizers to the EU and will be affected.

We need to follow this situation very closely because it has the potential to be expanded to many different products and services. It should be noted that European countries are exempted from the planned Carbon Border Adjustment Mechanism (CBAM) imposition.

The question must be asked: If the EU successfully implements this levy, what stops Canada, the United States, and others from introducing their own carbon-related barriers to trade?

Europeans have long championed global efforts to reduce carbon emissions and lessen the world’s dependence on fossil fuels. That cause to encourage a cleaner, greener world is most noble.

At the same time, efforts must be made to help developing countries like Barbados increase their capacity to respond, and reduce our greenhouse gas emissions, while not stunting our economic development.

Developed nations must see it as part of their role, not only to establish lofty targets and unilateral rules of engagement. They must seek to create an environment in which all countries rise with the tide and not feel as though they are being penalized for the industrial fallout from global conditions created in developed countries.