1.    ECONOMIC AND TRADE POLICY ENVIRONMENT

Macro Economic Performance and Outlook

                        Antigua and Barbuda is a two-island state in the heart of the Caribbean.  The islands together measure approximately 170 square miles with a population of 83,000.[1]  The country exhibits all the characteristics of a small, island economy:  high level of imports, narrow production base and vulnerability to natural disasters.

                        In addition to membership in the WTO, Antigua and Barbuda is a member of the Caribbean Community (CARICOM) whose members are presently in the process of deepening this regional integration movement into a single market.  The proposed CARICOM Single Market and Economy (CSME) seeks to create one seamless economic space with no barriers to the establishment of business, the movement of capital or labour.  Antigua and Barbuda is also a member of the subgroup of smaller islands, the Organization of Eastern Caribbean States (OECS) with one currency and a common Monetary Policy administered by the Eastern Caribbean Central Bank.  The OECS is presently considering further integration into a full Economic Union.

Economic Performance

Structure and Output

                        Services, including construction, dominate the economy of Antigua and Barbuda contributing more than 90 per cent to the country’s GDP of EC$1.7 billion at constant prices in 2006.[2]  In the National Accounts, ‘Hotels and Restaurants’ serves as a proxy for Tourism and according to ECCB figures[3], apart from Government Services, this sector is, on average, the largest contributor to GDP.  Over the past few years, the construction sector has grown at record levels due to the implementation of a number of private and public sector projects.  In particular, growth in the economy was driven by the construction sector as it grew by 19.5 per cent in 2005 and by 35 per cent in 2006.

Balance of Payments

                        Over the period 2003 to 2006, Antigua and Barbuda maintained an overall surplus on the external accounts.  While there tends to be current account deficits on the Balance of Payments, these deficits are fully financed by surpluses on the capital and financial account.  For 2006, the current account deficit is estimated to increase twofold over 2005 reflecting a significant increase in imports of goods.  The deterioration in the current account in 2006 is consistent with the significant level of economic activity, particularly in the construction sector, as Antigua and Barbuda prepares for CWC 2007.

Fiscal Policy

                        Between 1998 and 2003, the Government’s fiscal operations experienced high and sustained current account and overall deficits that averaged about 6 per cent and 7 per cent of GDP respectively.  In addition, there was a significant increase in the debt figures which resulted in a debt to GDP ration of over 130 per cent by the end of 2003.  To correct these macroeconomic difficulties, the Government, in 2004, embarked on a comprehensive reform programme which was intended to, inter alia, foster improved fiscal management and debt sustainability.

                        Through a fiscal reform initiative that focuses both on the revenue and expenditure sides, the Government has managed to improve tax administration and revenue collection.  This was facilitated by the implementation of new tax measures, consolidation of existing tax measures, the removal of certain indirect taxes and the rationalization of tax collection agencies.  Specifically, the Personal Income Tax was reintroduced in April of 2005, the Antigua and Barbuda Sales Tax on goods and services was implemented early in January 2007, and a modernized property tax system was established in January 2007.  Further, the Government has sought to curtail the granting of discretionary tax concessions by establishing limits on the level of concessions granted and by revamping the application process.

                        Additionally, the Government enacted new legislation, the Finance Administration Act, in 2006 to modernise and enhance financial management procedures.  Specifically, the Finance Administration Act provides for the effective control and management of Public Finances and establishes rules and procedures for, inter alia, the authorisation of expenditures;  government borrowing;  management and control of the public debt.  The legislation also established new budgetary procedures and expenditure guidelines which are already in effect.  With the assistance of the Caribbean Regional Technical Assistance Centre (CARTAC), the Government has implemented a strengthened Public Sector Investment Programme (PSIP) which seeks to prioritise, coordinate and monitor capital expenditure.  Also, the Government has introduced a cash management system to ensure greater controls on spending by ministries and has also commenced the implementation of an e-financials system (FreeBalance) which is intended to ensure greater expenditure management.

                        Along with its efforts to correct the fiscal imbalances, this Government has paid particular attention to reducing the public debt stock.  Specific attention has been paid to the development of a debt strategy which has the overall objectives of achieving debt sustainability.  To date, the Government received debt relief of $550 million through bilateral negotiations with external creditors.  Further, the Government, with assistance from the Canadian International development Agency (CIDA), engaged the services of an international firm to develop and implement a debt management programme that will facilitate further reductions in the debt stock.

                        These various initiatives have already begun to impact the overall fiscal performance in Antigua and Barbuda.  In particular, revenue performance has improved while the rate of growth in the level of expenditure has slowed.  The current account deficit for 2006 was 3.6 per cent of GDP compared to the pre-reform average of about 6 percent of GDP.  Further, the debt to GDP ratio has fallen to about 109 per cent.

Inflation

                        Antigua and Barbuda has maintained a low and stable rate of inflation between 2001 and 2006.  According to Eastern Caribbean Central Bank figures[4], during this period, the Consumer Price Index has averaged 2 per cent.

Unemployment

                        Census figures for 2001 indicated an unemployment rate of approximately 8.5 per cent. However, in its draft report, the Antigua and Barbuda Poverty Assessment conducted late 2005/early 2006[5] has recorded a 4 per cent unemployment rate.

Public Sector Transformation

                        In addition to the fiscal reform and debt management initiatives, the Government has embarked on a Public Sector Transformation Programme (PSTP).  The focus of this programme is to streamline the public sector and to ensure the more efficient provision of government services.  A major component of the PSTP is the Voluntary Separation Early Retirement Package (VSEP) initiative, whereby public servants were given the opportunity to leave the public service or opt for early retirement.  The payment of separation/retirement packages commenced in 2006 and should be completed in 2007.  At the end of this process it is expected that annually, savings of about $20 million will be realized on the Government’s wage bill.

Economic Outlook

Real Sector

                        Economic activity is projected to expand in 2007, albeit at a reduced rate compared with the 12.2 per cent recorded in 2006.  Increased value added in the tourism industry and other related service sectors is expected to provide the impetus for growth in 2007.  These increases will be partly offset by a decline in construction activity attributable to the completion of certain public and private sector projects.

                        In 2008 the economy is projected to contract marginally as a result of a further waning of activity on the construction sector as well as a decline in the government services sector.  For the period 2009-2012 the growth in output is projected to converge to its long-run growth path of approximately 3.5 per cent per annum.  However, there may be a structural change in the long-run growth path resulting from significant investments in the quality and capacity of the country’s tourism plant in 2006 and 2007.

Fiscal

                        Further improvement in macroeconomic performance is expected as the government continues its fiscal reform activities.  In particular, the current account deficit of the central government is projected to decline to 2.6 per cent of GDP in 2007 from 3.6 per cent of GDP in 2006, as the growth in current revenue is likely to outstrip the expansion in current expenditure.  For the projection period 2008-2012 current revenue is expected to average 24.5 per cent of GDP which is 1.7 percentage points higher than the average level of current expenditure of 22.9 per cent of GDP.  This outturn results in a current account surplus of 0.3 per cent of GDP in 2008, which increases annually to 3.6 per cent of GDP by 2012.  The Overall deficit exhibits a similar type of trend over the period moving from 4.5 per cent of GDP in 2008 to 0.6 per cent of GDP in 2012.

Trade and Investment Policy

Investment

                        The Government recognizes the need for foreign and domestic, large and small enterprises to work together for sustained growth and development - small service trade creating a more attractive investment environment for large businesses.  The Government is therefore facilitating private sector development by creating an enabling environment through the establishment of appropriate legislation and institutions that encourage private sector development and investment.  The plan is to foster diversification by forming business clusters around Tourism and Financial Services. Of particular importance is the recent establishment of the Antigua and Barbuda Investment Authority (ABIA).  The relevant legislation to give effect to the ABIA was enacted in November 2006.  The Authority commenced operations in May 2007 and is mandated to[6]:

(a)        Simplify the process of investing and establishing a business in Antigua and Barbuda;

(b)        Level the playing field for all investors – domestic and foreign;

(c)        Remove the discretionary and discriminatory character from the process;

(d)        Provide a focused and inclusive “one-stop” mechanism for the promotion and       coordination of all investment proposals;

(e)        Advise on government’s investment policy;

(f)        Ensure greater transparency in the investment process;

(g)        Identify investment opportunities;

(h)        Provide information/data on the social, political and economic environment in the    country;

(i)         Explain incentive legislation and the benefits available to investors in the tourism and     hospitality sector;

(j)         Liaise with government departments and agencies;

(k)        Provide full protection and security to investors in accordance with international standards;

(l)         Monitor and facilitate investment to ease the passage of investors through the regulatory system;

(m)       Provide data collection, policy analysis, and policy advocacy from the investors’ point of view.

                        An investment code forms part of the Investment Authority legislation to provide guidance on the rights, privileges and responsibilities of investors.[7]

The Free Trade and Processing Zone

                        The Free Trade and Processing Zone functions as an office mandated to attract investment in priority areas.  As part of the Free Trade and Processing Zone Act of 1994, there are supervisory programmes and due diligence procedures for vetting and monitoring of companies desirous of operating in the Zone.  Site plans for the Zone are currently being revised to provide for business clusters by groups, as well as the infrastructure necessary to facilitate ICT development.  Antigua and Barbuda has fully embraced a shift towards ICT development, and it is intended that the FTPZ be transformed into an area designated to foster the advancement of ICT training and investment in the country.

                        Further, legislation pertaining to the Free Trade Zone is being reviewed to embrace CSME and WTO obligations.

Trade Policy

                        Antigua and Barbuda determines and implements trade policy within a multi-layered structure in which domestic, Organization of Eastern Caribbean States, Caribbean Community and multilateral considerations strive for harmony.

Tax Reform

                        Fiscal Policy instruments are the only levers available to the Government to influence economic activity in Antigua and Barbuda.  Tariffs have been traditionally levied not as protectionist measures but as the main source of Government Revenue - 56.8 per cent in 2005.

                        However, in an effort to reduce the country’s dependence on tariffs, as of 2005, the Government has instituted changes to the country’s tax structure.  Tax Reform Strategy initiatives include the implementation of new measures, consolidation of existing tax measures, the removal of certain indirect taxes and the improvement of tax administration.

                        Personal Income Tax was reintroduced in April of 2005.  Also, the Foreign Exchange levy and all foreign exchange controls were removed along with a number of low-yielding and nuisance taxes.

                        In January  2007, the Antigua and Barbuda Sales Tax (ABST) was implemented, thereby replacing certain taxes including the Consumption Tax, the Hotel Guest Tax, the Hotel Guest Levy, the Hotel (bed night) Tax, the Restaurant and Catering Services Tax and the Telecommunications Tax.  The ABST is levied on goods and services at the rate of 15 per cent.  For the hotel sector, the rate is 10.5 per cent which is a transitional rate, due for review in two years.  Items in a basket of essential items are zero-rated.

Government Procurement

                        Antigua and Barbuda is not a party to the WTO agreement on Government Procurement. However, the Government relies on competitive bidding processes for the procurement of goods and services.  Specifically, for amounts exceeding $20,000 the procurement process is managed by the Government’s Tenders Board according to the Tender’s Board Act.[8]

                        There are no local or regional set asides.  However, Human Resource Capacity, financial and other constraints limit the ability of the Board to manage an international bidding process.  The new Procurement and Contract Administration Act is presently being drafted for the “control and management of procurement and contract administration, to require competition and participation, to ensure integrity, fairness and transparency, to provide for increased economy and to maximize the purchasing value of government”.  In addition, the CARICOM Secretariat has conducted research work in its Member States to develop a protocol on Government Procurement, in relation to Article 239 of the Revised Treaty.

Standards and Technical Regulations

SPS

                        The Ministry of Agriculture, Lands, Marine Resources and Agro Industries is the enquiry point responsible for SPS matters.  Part of its mandate is the protection of national flora and fauna, and as such approves the issuance of licenses and phytosanitary certificates for the importation of fruits, vegetables, plants, flowers, meats, poultry and eggs.

                        In addition, meat and fish imports must also be inspected by the veterinary division at the port of entry before release to the importer.  These mechanisms are principally used to protect the health of the consumer and to guard against the importation and subsequent infestation of local plant and animal life by foreign pests and diseases.

TBT

                        The Antigua and Barbuda Bureau of Standards (ABBS) is the national standards body.  It is a statutory body established under the Standards Act (1987) Cap. 411.[9]  The ABBS, under the Ministry of Finance & Economy, has sole responsibility for the preparation and promulgation of standards, and for dealing with standards-related matters such as metrology, certification, conformity assessment and quality.[10]  In 2005 Antigua and Barbuda accepted Code of Good Practice for the Preparation, Adoption and Application of Standards.[11]

                        The ABBS is the enquiry point and national notification authority under the TBT Agreement.  The ABBS holds membership in Caribbean Regional Organisation for Standards and Quality (CROSQ), Codex Alimentarius (WHO/FAO) Commission (CODEX), the Inter-American Metrology System (SIM), subscriber member of the International Organization for Standardization (ISO), affiliate member of the International Electro-technical Commission (IEC).

Border Measures

Computerisation

                        In 2005, the Customs & Excise Division implemented the use of ASYCUDA 2.7, a useful tool for collection and storage of data, which has implications for policy formation and trade strategies.  Currently, the Government with the assistance of the Government of Jamaica and the OAS[12], is developing modified software, Customs Automated Services (CASE) which should be activated by November, 2007 and will among other features, provide for completion of warrants and payment of attendant charges online.  More efficient and faster procedures should result in increased Government revenue as well as reduced transaction costs for the business sector.

Import Licenses and Quantitative Restrictions

                        Antigua and Barbuda maintains an import licensing regime governed by the External Trade Act, under the revised laws of Antigua and Barbuda, 1992.[13]  The law requires that a license be obtained prior to the importation/arrival of certain items into the country.  License forms must be completed in triplicate with a cost of EC$0.10 per sheet.  These are issued by the Dept. of Industry & Commerce in the Ministry of Finance & Economy.

                        There are three licensing schedules that govern the import of selected items.  They are licenses for:

(i)         Goods which originate from countries which have not acceded to the WTO.

(ii)        Goods which are from any country not being a member State of OECS or CARICOM.

(iii)       Goods from any country not being a member of OECS.

                        The Ministries which recommend licenses are the Ministry of Agriculture, Lands, Marine and Agro Industries (fresh produce, meat, poultry, eggs, fish and honey), the Ministry of Public Works (satellite dishes and related equipment);  the Ministry of Health (medicinal drugs);  and the Commissioner of Police (firearms and ammunitions).  Applications are approved by the permanent secretary, Department of Industry and Commerce, Ministry of Finance and the Economy.

                        For goods such as refrigerators, motor vehicles, air conditioning units and other equipment which can operate using Ozone Depleting Substances (ODS), a Refrigerant Form must be completed in addition to the Import License Form.  These are obtained from the Dept. of Industry and Commerce, Ministry of Finance and the Economy.  This is required in order to meet Antigua and Barbuda’s obligation to the Montreal Protocol for the complete phasing out of the use of ODS by 2010.

                        Approved licenses are valid for one month and are not renewable.  However, new applications may be made.

                        Licenses for five agricultural products are regulated on a seasonal basis, depending on supply (sufficient to satisfy domestic needs).  Regulations are monitored by the Dept. of Industry and Commerce in consultation with the Central Marketing Corporation (CMC).

                        For commercial shipments of fruits, vegetables, plants, flowers, meat and fish, the importer must secure a valid import permit.

Export Measures

                        Antigua and Barbuda applies a charge of EC$0.10 per lb for the lobster and EC$0.05 per lb for the fish it exports.  These represent the only export tax levied.

                        While there are no limitations to exports, shipment documents are checked and logged by customs officials at the port of exit.

State Trading

                        The Central Marketing Corporation (CMC) is a Government owned statutory body.  In addition to limited purchases from local farmers, the CMC is one of the importers of vegetables such as broccoli, carrots and tomatoes and is a primary importer of rice, sugar and eggs.  CMC is also the major importer of agricultural inputs such as seeds, fertilisers, chemicals (pesticides, herbicides), irrigation products, shade cloths, and spray pumps.  The institution is not obligated to purchase produce brought in by farmers and does not subsidise agriculture in any form.

                        CMC is consulted by the Department of Industry and Commerce, on the issuance of licenses for certain agricultural commodities.

Information Communications Technology

                        Antigua and Barbuda seeks to develop a vibrant ICT industry in an effort to foster economic growth and increase employment.  It is recognised that availability and affordability of modern telecommunications infrastructure will aid in the development and expansion of local businesses, particularly SMEs.[14]

Safeguards

                        During the period under Review, Antigua and Barbuda did not impose any safeguard measure.  No safeguard legislation has been enacted and no authority has been established to undertake investigations in this regard.  Under certain stipulated conditions, the CARICOM Treaty permits the use of safeguard measures by the less developed countries, including Antigua and Barbuda.[15]  However, Antigua and Barbuda has not availed itself of these provisions nor of the safeguard provisions in the WTO Agreement on Agriculture and the Agreement on Textiles and Clothing.

Anti-dumping and Countervailing Measures

                        Antigua and Barbuda has not imposed any anti-dumping or countervailing measure and there is no body appointed to execute anti-dumping or countervailing laws.  The WTO Committee on Subsidies and Countervailing Measures has been notified that the country maintains no measures requiring notification.  The laws have not yet been amended to reflect agreements reached in the Uruguay Round.  A model CARICOM anti-dumping law is being considered.

Competition Policy

                        Chapter VIII of the CARICOM Treaty provides for the enactment of harmonized competition policy legislation in CARICOM members.  CARICOM has produced model competition law and a proposal that the OECS countries establish a sub-regional competition authority.  Once it enters into force, it is expected that Antigua and Barbuda will create a national competition authority to deal with domestic competition issues, while the CARICOM authority will deal with issues at the regional level.

Price Controls

                        Controls are maintained on the prices of certain essential items;  the mark-up percentage is fixed and not the price (generally 10% for wholesale and 15% or 20% for retail).  There are fixed prices for bread and petroleum products.

Transparency measures

                        The Government has pledged to maintain transparency and good governance.  In this regard, four Acts of parliament introduced in 2005 are the initial components of the Charter for Good Governance.  Consistent with Government policy, Laws relating to trade in Antigua and Barbuda may be viewed online.

2.         SECTORAL DEVELOPMENT

Services

                        In Antigua and Barbuda, over the past two decades, the services sector has continued to grow and create more employment than manufacturing and agriculture.

Tourism

                        Tourism is one of the key revenue earning sectors for Antigua and Barbuda and one of the most important areas driving foreign direct investment in the country.  The Ministry of Tourism estimates that the sector accounts for some 28 per cent of overall employment in the economy, 48 per cent of export earnings and 51 per cent of total investments in Antigua and Barbuda.

                        Currently, with the assistance of the Commonwealth secretariat, the Government is constructing the Antigua and Barbuda Tourism Master Plan which will provide a new vision and strategy, involving a partnership between all stakeholders – public and private.

                        Taking advantage of the rapidly changing technological environment, Antigua and Barbuda promotes the country through ‘Digimail’, which utilizes e-mail to deliver comprehensive information on the destination to a wide range of industry partners and consumers.

                        In 2005, total visitor arrivals (both stay over and cruise ship visitors) to Antigua and Barbuda totalled 744,803, representing a strong recovery from the fall in visitor arrivals experienced in 2001 and 2002, but down from 808,148 in 2004.[16]  Of these, 260,530 were stay over visitors, mainly from the United States and United Kingdom and arrivals from both of these key markets have risen since 2001.[17]  The number of cruise ship visitors was 466,851 in 2005.  According to the ECCB, the decline in visitor arrivals witnessed in 2005, both for stay over and cruise passengers, can be partly attributed to the closure of one hotel and the reduction in operations of another, as well as the reallocation of ships by one cruise line to the Pacific.[18]

                        The Government has developed facilities for cruise ships such as access to duty free shopping and entertainment.  In 2003, at a cost of approximately US$22 million, a Cruise Ship Complex was erected at the St. John’s Harbour and an additional pier was created to facilitate the docking of four mega ships.

                        The Antigua and Barbuda Hospitality Training Institute (ABHTI) governed by the Antigua and Barbuda Hospitality Training Institute Act of 2006 was created to satisfy the human resource needs of the sector and foster efficiency and productivity  Currently, the Institute offers Certificate and Diploma courses.  In September 2006, the Institute in partnership with the University of the West Indies commenced a Degree Programme in Tourism Management.

                        Legislation governing the provision of services and investment in the tourism sector includes the Hotels Aid Act CAP 204 of 1952, the Income Tax Act CAP 212 of 1957, the Income Tax Amendment Act, No. 4 of 2003.  The recently formed Antigua and Barbuda Investment Authority (ABIA) gives priority to the area of tourism development.  Investors’ applications for incentives and concessions are now processed through the ABIA.

                        As part of an initiative aimed to diversifying the tourism product, the Ministry of Tourism has re-organized the Sports Tourism Alliance with a view to positioning the country in sports tourism.  An Events Department in the Ministry is responsible for handling tourism related events associated with sports tourism.

International Financial Services

                        In 1982, Antigua and Barbuda’s international financial services sector began with the enactment of the IBC Act and the sector grew significantly until the 1990s.  During this period, the Government made every effort to develop a strong regulatory framework.  However in 1999, the United Kingdom and the United States issued advisories against the jurisdiction.  In an effort to position the country as a premiere financial services centre, a major restructuring of the regulatory framework was undertaken, which included the establishment of the Financial Services Regulatory Commission (FSRC) as the single regulatory and supervisory body.

                        The FSRC is responsible for the oversight of International Business Corporations, and it is the Government’s intention to constitute the FSRC as the regulator for all financial institutions both domestic and international.

                        Since 2001, evaluations by the FATF, IMF and CF.ATF have indicated that Antigua and Barbuda has made significant improvements in regulating the Financial Services sector.

                        At the same time, to expand the sector, the jurisdiction is preparing to increase the number of products offered by International Financial Institutions particularly foundations, and limited liability corporations.

                        The Government has identified this sector for economic diversification and job creation in the areas of banking, trust, insurance, internet gaming, international business corporations, foundations and limited liability corporations.

                        Expansion of the list of products to be offered by institutions in the jurisdiction along with establishment of an electronic registry at the FSRC for International Business Corporations will no doubt increase the number of IBCs registered in the jurisdiction and go a long way in meeting challenges faced by the sector, including increasing global competition.

Interactive Gaming and Wagering

                        Internet gaming companies are significant contributors to Antigua and Barbuda’s economy in terms of GDP and employment.  Antigua and Barbuda has enacted a considerable body of regulations that represent a comprehensive approach to the supervision of the remote gaming sector.  The oversight of all aspects of remote gaming is the responsibility of the Directorate of Gaming, which is a division of the FSRC.

                        Historically, the largest market for remote gaming services provided from Antigua and Barbuda has been the United States.  However, the United States has imposed trade restrictions to the provision of this service.  In 2003, Antigua and Barbuda initiated proceedings at the WTO against the United States.  This action has proved expensive and time consuming for Antigua and Barbuda.

                        The DSB ruled that the United States is in violation of the General Agreement on Trade in Services (GATS).  However, the Unites States has not complied with this ruling.  Instead, the United States has announced its intention to withdraw its commitment in internet gaming.  This seems to challenge the global trade system and determinations by the WTO.  Antigua and Barbuda has the right to compensation under Article XXI of the GATS.  However it has always been Antigua and Barbuda’s objective to engage the United States in a negotiated settlement that allows the continued provision of gaming services to consumers in the United States on a mutually acceptable basis.

                        In view of trade barriers imposed by the United States, prospects for expanding the gaming sector are mixed.  There is likely to be a protracted struggle for an acceptable settlement of the dispute at the WTO.  However, in the meanwhile, Antigua and Barbuda has submitted an application to the British Government for permission to allow licensees from Antigua and Barbuda to advertise in the United Kingdom.  A decision is expected by September 2007.

Professional Services

                        The Draft Professionals Bill which is being considered by Parliament seeks to govern licensing, make regulations and determine the qualifications of all professions in Antigua and Barbuda.

                        At present, professional services are regulated by the respective professional associations and the relevant laws[19];  of the 20 professional services in Antigua and Barbuda, one professional service is not regulated by law:  contractual services.  Non-nationals may become members of these associations, although there may be additional requirements such as residency and work permits which are governed by the labour laws of Antigua and Barbuda.  Academic degrees and professional qualifications awarded by foreign institutions must be authenticated by the Ministry of Foreign Affairs.  To date, none of the Professional Service Associations have established reciprocal or mutual recognition arrangements with foreign associations.

Legal Services

                        The Legal Profession Act, No. 2 of 2007 governs the legal profession with regards to qualification, enrolment, and discipline of its members.  Under this Act, only members holding a valid practising certificate are considered members of the Antigua and Barbuda Bar Association and can function as attorneys at law in Antigua and Barbuda.

Accountancy Services

                        Private and public accountancy are regulated by the same professional body under the Agreement Establishing the Institute of Chartered Accountants of the Eastern Caribbean (ICAEC);  in ratifying the ICAEC Agreement, Antigua and Barbuda created the ICAEC Antigua and Barbuda branch which is responsible for the day to day regulation of the accountancy profession

                        The ICAEC agreement provides qualification and performance requirements and there is no discrimination on the basis of qualifications.  The agreement restricts membership in the Institute and the right to engage in public and private practice to citizens and residents of OECS member states that have signed and ratified the agreement.  However, the ICAEC is in the process of obtaining a legal review on residency requirements for foreign accountants.

                        The ICAEC is a member of the Institute of Chartered Accountants of the Caribbean (ICAC) and discussions have occurred at the ICAC level regarding mutual recognition agreements amongst member institutes in the Caribbean Community (CARICOM).

Architectural Services

                        Architectural services are regulated by the Architects Registration Act, CAP 34 of 1986;  this Act provides for the registration and performance requirements of architects, and makes provision for the establishment of the Architects Registration Board.  In addition the Antigua and Barbuda Institute of Architects (ABIA) is the association of registered architects and persons of allied professions.

                        Registration with the Architects Registration Board is a requirement for all architectural service providers, whether local or foreign to provide architectural services in Antigua and Barbuda.  One requirement for registration by the Architects Registration Board is three years experience under the supervision of a registered architect in Antigua and Barbuda.

                        Qualifications of architects, both local and foreign are handled by the Architects Registration Board in accordance with the Architects Registration Act.

                        The ABIA is a member of ACSAC the Association of Commonwealth Societies of Architects in the Caribbean, the regional body for architects in the Anglophone Caribbean.  The various registration acts in the Anglophone Caribbean are similar in nature and scope.  The Architects Registration Act provides guidance on establishing mutual recognition agreements;  reciprocal arrangements must exist between the Engineers’ Registration Board of Antigua and Barbuda and that of the country seeking recognition.

Engineering Services

                        In Antigua and Barbuda, engineering services are regulated by the Engineers Registration Act, CAP 153 of 1987 and The Engineers (Registration) Amendment Act, No. 18 of 1993.  The Engineers Registration Act of 1987 covers the registration and performance requirements of both public and private engineers and makes provision for the establishment of the Government-appointed Engineers’ Registration Board.  In addition there exists the Antigua and Barbuda Engineers Association.

                        Registration by the Engineers’ Registration Board is a requirement[20] for local and foreign engineers to provide engineering services in Antigua and Barbuda.  One of the requirements for registration is four years experience;  at least one of which must be acquired in Antigua and Barbuda, or under the supervision of an engineer registered in Antigua and Barbuda.  Foreign engineering consulting specialists must be employed by an Antiguan for a period of time.

                        Qualifications of engineers, both local and foreign are handled by the Engineers’ Registration Board.

                        The Engineers’ Registration Act provides guidance for establishing mutual recognition agreements;  reciprocal arrangements must exist between the Engineers’ Registration Board of Antigua and Barbuda and that of the other country(s) seeking recognition.

Contractual Services

                        There is no domestic legislation that regulates the provision of contractual services.  The association which deals with contractual services is the Antigua and Barbuda Contractors’ Association.  A draft Contractors Registration Bill is currently being prepared ensuring compliance with our commitments under the GATS, CSME and the OECS.

                        At present, foreign contractors can provide services in Antigua and Barbuda without membership in the Contractors’ Association.  However, it is expected that under the law being drafted, the Antigua and Barbuda Contractors’ Association will be responsible for determining qualifications and performance requirements of all contractors in Antigua and Barbuda.

Medical and Dental Services

                        Medical practitioners can only practise in Antigua and Barbuda if they are registered by both the Medical Board and the Medical Registrar.[21]  In addition, the Antigua and Barbuda Medical Association operates as a trade union for all medical practitioners.

                        Foreign medical practitioners must demonstrate that their qualifications guarantee the possession of the requisite knowledge and skill for the efficient practice of their profession.

                        The Government recruits foreign physicians who must fulfil all the registration requirements of the Medical Board, and the Medical Association, They are exempt from requirements of residency but are required to hold a valid work permit.

                        Dentists must be registered under the Medical Act, CAP 268 of 1938.  In addition, foreign dentists must be able to demonstrate that the qualification obtained is sufficient to guarantee the possession of the requisite knowledge and skill for the efficient practice of dentistry.

                        There is no Association which would regulate performance requirements of dentists in Antigua and Barbuda.

                        Other professions which are regulated by law are Nurses, Midwives, Pharmacist and Land Surveyors.[22]

Telecommunications

                        Since 2001, the Telecommunications landscape in Antigua and Barbuda has seen the addition of new players in terms of data services.  However, the number of licensees in mobile services has remained the same i.e. three players.  Antigua and Barbuda has also been the first in the region to licence the WiMax band of the spectrum.

                        In the last 12 months, concrete changes have been made to the legal and regulatory framework that governs the Telecommunications Sector.  The Government has negotiated with the incumbent international provider of service, Cable and Wireless (C&W) to terminate their exclusive licence earlier than the contracted 2012 – new non-exclusive licences will be issued to C&W.  There are already several investors showing interest in obtaining international licences.

                        In addition, to negotiations with C&W the Government has drafted a new Telecommunications Bill that is currently being debated in Parliament.  It is expected that this Bill will become an Act by September of 2007.  Concurrently, secondary legislation (regulations) are due for implementation at about the same time including but not limited to regulations on interconnection and licensing.

                        The new Bill provides for creation of a new regulatory body that will govern the new paradigm of a liberalized sector.  This semi-autonomous body will be solely responsible for the determination of rates, administration of the spectrum, etc. but will not grant licences.

Fisheries

                        Although the fisheries sector contributes about 2% to the country’s GDP, Antigua and Barbuda considers the fisheries sector to be of importance.  The sector provides important supplement income to the rural poor, and acts as a cushion in times of economic dislocation in Antigua.  Further, this sector is a significant source of income to Barbuda, with many families having one or more persons employed in the sector.

                        Antigua and Barbuda’s intention is that the new rules being crafted on fisheries subsidies should not hinder the development of the small scale fisheries sectors in small and vulnerable coastal states.

Manufacturing

                        The contribution of Manufacturing to GDP has been historically small, at slightly over 2 per cent.  Locally manufactured products are mainly for sale in the domestic market;  garments, agro-processed goods, bakery products, handicraft items, soft drinks, beer, malt, rum and furniture.  In addition to local sales, paint, windows, doors and pepper sauce are exported.  Most manufacturing businesses are micro enterprises

                        There has been a steady and significant decline in the relative value of non-reciprocal preferences with Antigua and Barbuda’s main trading partners.  Moreover, Antigua and Barbuda has not been in a position to benefit in any significant way from these arrangements because of supply constraints.  A narrow resource base necessitating the importation of a high percentage of raw materials and high prices for transportation result in excessive operation costs.  The smallness of the domestic market means local manufacturers must depend heavily on exports if they are to harness economies of scale and scope.  However, small size makes it difficult to achieve the range of skills and diversity to be competitive in export markets.  Moreover, in general these enterprises do not possess the capacity to navigate the complexities of international trade arrangements.

3.         INSTITUTIONAL FRAMEWORK

                        The Ministry of Foreign Affairs and International Trade is responsible for trade policy formulation and implementation in consultation with a number of departments of the Ministry of Finance, including the Customs and Excise Division, the Budget Office, the Economic Policy and Planning Unit, Department of Industry and Commerce and a number of related agencies, including the Antigua and Barbuda Investment Authority and the Bureau of Standards.  In addition, the Ministry of Agriculture, Lands and Fisheries, the Ministry of Justice and Legal Affairs, and the Office of Patents, Copyrights and Intellectual Property, all play a part in influencing trade policy.  A working group made up of stakeholders from the main Ministries has also been formed to deal with trade issues.

4.         TRADING ARRANGEMENTS

Regional Integration

OECS Economic Union

                        Antigua and Barbuda is working with other OECS Member States to create a single economic space to facilitate the free movement of people, goods, services and capital in an effort to stimulate economic diversification and growth, greater export competitiveness, more employment and human resource development.  Provisions of the Economic Union are expected to include:

(a)        The free circulation of goods and trade in services within the OECS

(b)        Free movement of labour

(c)        Free movement of capital (via support of the money and capital market programme of the   Eastern Caribbean Central Bank)

(d)        A regional Assembly of Parliamentarians

(e)        A common external tariff

CSME

                        A CSME Unit has been estab1ishcd within the Industry and Commerce Division of the Ministry of Finance and the Economy to consult with and provide assistance to all stakeholders on the mechanisms embedded within the Treaty and to advise pub1ic sector entities on their obligations under the Revised Treaty.

Treaty Enactments

The following have been enacted into Antigua and Barbuda law:

(a)                The Revised Treaty of Chaguaramas establishing the Caribbean Community including the CARICOM Single Market and Economy (The Caribbean Community Act 2004 No. 9 of 2004).

(b)                The Caribbean Court of Justice, in its original jurisdiction, was enacted into Domestic Law (The Caribbean Court of Justice Act No. 10 of 2004 and "The Caribbean Court of Justice (Amendment) Act No. 10 of 2005).

The following are presently being processed:

(a)                The Accreditation Act 2006 No. 4 of 2006.

(b)                The Caribbean Community (Movement of Factors) Act No. 3 of 2006 which  addresses the Right of Establishment, the Right to Provide a Service, the Right to Move Capital and Safeguard Measures and amends discriminatory provisions in existing Acts.

(c)                Establishment of administrative arrangements for the Caribbean Community Skills National Act No. 3 of 1997 which facilitates the movement of skilled nationals as prescribed by Articles 45 and 46 of the Treaty.

                        Other initiatives include national consultations to develop a country position on Contingent Rights and the drafting of competition legislation.  Restrictions relating to ownership of property were not removed;  a position held by all OECS countries and application of the Environment Protection Levy was cleared by the 19th Counsel of Trade and Economic Development (COTED) as non-discriminatory.  Antigua and Barbuda commenced use of the CARICOM Passport in January of 2006.

                        Moving forward, Antigua and Barbuda implemented the fourth phase of the CET in 2001 and implementation of the revised structure of the CET based on 2007 HS is due for implementation during the last quarter of 2007.

                        It is expected that the Single Economy will be implemented in two phases.  The target for implementation of phase one is 2008/2009.  The main elements of this phase includes the extension of the categories of free movement of labour and streamlining of existing procedures, contingent rights;  and the establishment and commencement of operations of the Regional Development Fund.  All of which will be outlined in the regional development vision and strategy.

Multilateral

WTO - Doha Round

                        Antigua and Barbuda, like many other developing countries, is eager to see progress in the advancement of the Doha Round of negotiations and the Doha Development Agenda.

                        Antigua and Barbuda remains committed to the multilateral process and has been more involved in its participation since 2001.  One factor for this increased participation has been the launch of the joint OECS Technical Mission in Geneva that has given much valuable support in engaging WTO matters.

                        There are still some significant challenges that occur in implementing WTO obligations, especially as it relates to the creation of new institutions.  Given the small size of the economy and the population, there may not be enough critical mass to make it practical to create all the various recommended structures in order to fulfil WTO obligations.

                        In this light, Antigua and Barbuda welcomed the Aid for Trade initiative coming out of the Hong Kong Ministerial.

Preferential trading arrangements

CARICOM Bilateral Trade Arrangements

                        As a Member of the Caribbean Community (CARICOM), Antigua and Barbuda is party to five special trading arrangements that have been negotiated by the CARICOM as a bloc with third parties.  These are the:

·                     Agreement on Trade, Economic and Technical Cooperation between CARICOM and  Venezuela;

·                     Agreement on Trade, Economic and Technical Cooperation between CARICOM and Colombia;

·                     CARICOM - Dominican Republic Free Trade Agreement;

·                     Partial Scope Agreement between the Republic of Cuba and the Caribbean Community;  and

·                     CARICOM - Costa Rica Free Trade Agreement.

CARIBCAN

                        CARIBCAN which came into effect in June of 1986, is a unilateral preferential scheme between Canada and several Caribbean states including Antigua and Barbuda.

                        The objectives of CARIBCAN are to enhance Commonwealth Caribbean trade and export earnings, improve the trade and economic development prospects of the region, promote new investment opportunities, and encourage enhanced economic integration and co-operation.

                        The main feature of CARIBCAN is duty-free access to the Canadian market for most goods originating in Antigua and Barbuda.  Duty-free access, however, does not apply to textiles, clothing, footwear, luggage, handbags, methanol, lubricating oil and leather garments.

Cotonou/EPA

                        Antigua and Barbuda is a party to the Cotonou Partnership Agreement between members of the European Union, and the African, Caribbean, and Pacific States signed in Cotonou on 23 June 2000, usually referred to the Cotonou Agreement.

                        The overriding goals of the Agreement are to reduce poverty and promote sustainable development and ‘the integration of the African, Caribbean and Pacific (ACP) countries into the global economy’ which involves enhancing production, supply and trading capacity as well as increasing ACP capacity to attract investment, to formulate strong trade and investment policies, and to handle all issues related to trade.  Under Cotonou, Antigua and Barbuda has non-reciprocal access to the EU market for substantially all industrial goods and for a wide range of agricultural products meeting the rules of origin criteria.

                        Under the Cotonou Agreement, a reciprocal free trade agreement is being negotiated between the EC and the CARIFORUM Region (of which Antigua and Barbuda is a part) to replace the previous preferential trade regime.  This new Economic Partnership Agreement is to be compatible with WTO rules, development-oriented and build upon CARIFORUM regional integration initiatives.  The new regime is also expected to incorporate and improve on the Cotonou instruments regarding access to the EU market.

CBI

                        The Caribbean Basin Initiative (CBI) is the collective name given to the preferential trade arrangements granted by the United States to the Caribbean Region, and is a vital element of economic relations between CARICOM Member States and the United States.  Initially launched in 1983 through the Caribbean Basin Economic Recovery Act (CBERA), and substantially expanded in 2000 through the U.S.-Caribbean Basin Trade Partnership Act (CBTPA), the CBI currently provides the beneficiary countries with duty-free access to the U.S. market for most goods (except textiles and clothing, footwear, leather goods, canned tuna, and petroleum and petroleum products).  Antigua and Barbuda does not receive preferences under the CBTPA, but continues to enjoy access under the CBERA.

Generalized System of Preferences (GSP)

                        Antigua and Barbuda’s products are eligible for GSP treatment for a number of countries including, Australia, Bulgaria, Canada, the Czech Republic, the European Union, Hungary, Japan, New Zealand, Norway, the Russian Federation, the Slovak Republic, and Switzerland.

5.         TRADE DEVELOPMENT NEEDS ASSESSMENT

Vulnerabilities

                        According to internationally accepted standards, Antigua and Barbuda’s economy achieves a high rating – annual per capita GDP of approximately US$10,000 and Human Development Index ranking of 59 for 2006 which places the country in the high development category.  However, the Antigua and Barbuda Country Poverty Assessment 2005/2006 estimates poverty at 18 per cent which indicates a need for specific interventions and resources for poverty reduction.

                        In addition, the economy is highly dependent on government activity and in recent years, Antigua and Barbuda has become one of the most indebted nations in the world.  At the same time, the Government accounts for about 40 per cent of employment and more than half of government revenues go toward payment of salaries and wages.

                        As a small, open, developing country with a high trade to GDP ratio, and very small percentage of world trade, there are vulnerabilities to exogenous shocks.  The country’s dependence on Tourism makes the economy particularly vulnerable to events in the country’s main source markets such as the terrorist attacks in September 2001 and more recently, changes in Government passport policy which significantly impact tourist arrival figures from the United States, our main source market.

                        Furthermore, according to the Centre for Research on Epidemiology Disasters, Antigua and Barbuda is one of the countries in the world most highly exposed to natural disasters.  From 1970 through 2002, it ranked among the top four countries by land area and population (CRED EM-DAT).  During the 1990s the country suffered hits from four major hurricanes causing extensive damage to infrastructure and property.

Challenges

                        Antigua and Barbuda is presently engaged in simultaneous negotiations at the multilateral, hemispheric, regional and bilateral levels.  These negotiations are being conducted as part of an increasingly complex trade agenda that goes beyond the traditional area of border measures such as tariffs and non-tariff barriers, to include a growing number of issues, including trade in services, investment, trade-related intellectual property rights, government procurement, labour and environmental issues and outcomes from these negotiations can profoundly affect the economy.  There are serious problems of human and technical capacity to cover these complex negotiations, achieve an effective policy synthesis across sectors and between various sets of negotiations and effect and monitor implementation.

                        It is a major challenge for the government, already constrained by high debt and a tight fiscal position to appropriate the necessary funds needed to implement their trade policy commitments in particular to implement the WTO customs valuation, SPS and TRIPS agreements.  Even with longer transition periods to implement the various agreements mentioned above we are still unable to meet these deadlines due to a lack of the required resources.

                        An important component of the adjustment cost faced by the country consequent upon trade liberalization is the loss of government revenue.  Taxes on imports accounted for approximately fifty-six per cent of recurrent government revenue in 2006.  Tariffs at the Ports are easy to administer and less costly for the government.

                        Firms operating in Antigua and Barbuda are less competitive as a result of lack of economies of scale, high production cost, lack of efficiency and limited use of technology.  Trade liberalization will result in increased competition from bigger and more technologically advanced foreign firms, which can negatively affect the sales of domestic firms.  Given the fact that government’s use of import substitution policies to protect these firms are now limited, openness can lead to their demise.

                        Manufacturing activities continue to be challenged by an increasingly competitive market environment.  Even though tariffs in the developed countries on average are low, tariff peaks, tariff escalations and non-tariff barriers such as TBT and SPS measures affect manufactured exports in to developed markets.  Erosion of trade preferences is placing the country’s producers at a disadvantage.

                        Also, in the area of services where the country has some competitive advantage, there are a number of restrictions in the developed countries which preclude service providers from providing services.  Some of the impediments that exist are visa, residency requirements, discriminatory taxes and requirement that service providers establish in-state offices.

Statistics

                        The Statistical Data Base in Antigua and Barbuda is very weak, severely hampering analysis of economic performance and development so as to inform government policy decisions.  Statistics are not published by the National Statistics Division on a regular and comprehensive basis.  Figures must be sought from the Statistics Division, the relevant government Ministry or agency.  Collecting data is therefore difficult and time-consuming.

                        Trade negotiations are made more difficult by the absence of reliable statistical information on trade flows.  For example, there is little reliable statistical information on which to base impact assessment of offers for the current EPA negotiations.

                        Computerization of statistics at the Customs Department has started the process of improvement of recording systems for more timely and efficient collection and collation of trade data.  In addition, officials are now in the process of making forms available on line for electronic submission of documents.  However, statistical systems and data analysis need to be strengthened and the network of dissemination improved.

Trade Assistance Required

                        Antigua and Barbuda is of the opinion that trade should be a tool for promoting sustainable growth, development, and equitable poverty reduction.  In this regard, assistance is urgently needed in at least four areas:

(a)                Policy support for the mainstreaming of trade into domestic policies such that export in competitive areas can be enhanced;  formulating and implementing trade policy based on sound analysis supported by strong data collection and management systems, developing a long-term growth plan with appropriate sequencing, marketing and implementing tax reform measures in a way that is not deleterious to the real disposable income of the citizens and does not create disincentives to invest.

(b)                Infrastructural support including assistance for continued representation and participation in regional trade bodies, the WTO and UN trade-related bodies, international standards making bodies and international financial institutions;  technical and/or financial assistance in research and  implementation of energy saving policies and facilities, support for a regional (CARICOM) body for food and plant health standards (SPS);  disaster relief and mitigation support.

(c)                Trade Adjustment support aimed at cushioning the effects of shocks from trade liberalisation as well as providing mechanisms for gradual adjustment to a full economic growth path including training of stakeholders on changes in SPS and TBT requirements that could affect trade and reorienting land use to prevent environmental degradation.

(d)                Supply side support, including financial and technical assistance to firms and small industries to build the capacity to become globally competitive;  assistance to set up programmes that increase investment in research, education, and worker training, creating mechanisms to maximise the benefits of trade agreements, such that clear linkages could be found for SMEs in the export sector.  The aim is to help entrepreneurs to export their goods and services to international markets.

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