Economic Union Timing Questioned

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Economy

Wednesday, 19 December 2012 02:30

By caribarena news

Antigua St. John's - Facilitating regional decision-making to manage the regional economic space and removing the costly administrative bottlenecks that hamper intra-OECS trade and investment, is the purpose of the OECS Economic Union that Antigua & Barbuda will embrace in its entirety come March 2013, with the further liberation of the Customs Department.

This is according to Finance Minister Harold Lovell, as he delivered the 2013 Budgetary Estimates on Monday. But Opposition MP and former Finance Minister Molwyn Joseph is already questioning Lovell’s ambitions in this regard.

Through this program, Lovell says Antigua & Barbuda will benefit especially from the aspect that allows for the free circulation of goods, “where all internal barriers to trade between OECS members will be removed and a full Customs Union established.”
He said the implementation of this “ambitious project” comes to life in June 2013, after which goods will circulate freely between member states with limited Customs intervention or payment of duties.

Lovell told the House of Assembly on Monday that this would require Antigua & Barbuda, along with other ECCU member states, to realign its Revenue Recovery Charge (RRC) to create harmonized tariffs at an agreed Economic Union rate.

Also, the islands would be looking at the creation of similar or identical rates across the Economic Union for VAT and excise taxes, along with import duties. These will all be capped with the Universal Application of Derogations under Article 164 of the Revised Treaty of Chaguaramas.

“Allied with these reforms are measures to facilitate business expansion in the Economic Union, including removing restrictions to the establishment of businesses by OECS nationals, especially small service suppliers,” Lovell said.

The Finance Minister noted further that preparatory work is already being undertaken by the OECS Secretariat to establish a system of single registration of pan-OECS companies. The initial work, he stated, involves consulting with relevant stakeholders to significantly reduce the administrative hurdles to establishing companies in multiple OECS countries.

“At its heart, OECS Economic Union involves reforming a number of administrative and business processes. The Electronic Government Regional Integration Project (EGRIP) is designed to enhance the efficiency, quality and transparency of public services by delivering regionally integrated e-government solutions that take advantage of economies of scale,” the Minister said.

He added that the EGRIP project is already being implemented here in Antigua & Barbuda, with the initiative poised to participate in sub-components that include legal and regulatory framework implementation, automated registries, multiple-purpose ID systems, and automated processes to support public financial management and tax administration, along with customs, and other sectors that are healthy and socially productive. This includes software for a regional health information system.

While the Minister’s expectations of the program are upbeat, opposition MP and former finance minister Molwyn Joseph brings to light two issues of concern to him. These include trade within the OECS sub-region and trade external to it especially with the US, Europe and others.

Joseph is concerned about whether or not Antigua & Barbuda, and by extension the rest of the region, would be able to reach the June 2013 date earmarked for implementation.

“I consider this to be both ambitious and unrealistic,” Joseph said, “and I don’t see the OECS Secretariat and its technicians being able to meet that target of June 2013.”

He pointed out that it would certainly take some time for governments of the union to organize tax and other relevant structures so that they harmonize as required.

The former finance minister highlighted the fact that goods coming into the OECS would become a bit more complex because if someone were to import furniture and it lands in St. Kitts but ends up in Antigua & Barbuda, the question would be who benefits from the necessary tax collection.

“For all intents and purposes, if you are going to follow the treaty that imports would have landed within the single OECS space, and if you are going to move those from St. Kitts to Antigua, how would the customs officer know that those goods originated from the United States or wherever, and that the appropriate taxes and tariffs would have been assessed?” Joseph questioned.

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What is means, he added, is that Antigua & Barbuda – where the goods would ultimately be sent – would have to have similar tariff arrangements as St. Kitts where the goods landed initially in order for Antigua to benefit from the tariff and get the revenue.

“It is complicated. Is it going to be a revenue sharing scheme? Who will get the revenue from the goods that have been imported? These are things that have to be worked out and I don’t see, unless they have done a considerable amount of work already, how they could achieve this in a matter of six months,” Joseph noted.

He said he has no issue per se with the ambition, as he believes it is something that must be done, but feels sufficient time needs to be allotted for the move to be effective as envisioned.

According to Joseph, he and MP Gaston Browne raised the issue of goods importation at a conference in St Lucia earlier this year. This was before Antigua & Barbuda hosted the inaugural OECS Assembly in August.

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