(CARICOM Secretariat, Turkeyen, Greater Georgetown, Guyana) Joint actions and strategies as well as the operation of joint and common institutions provided the most effective means of developing and strengthening the Region’s financial services sector, His Excellency Edwin Carrington Secretary-General of the Caribbean Forum of African Caribbean and Pacific States (CARIFORUM) said Friday.

Speaking at the opening of a two-day CARIFORUM/European Union Conference on Financial Services in Antigua and Barbuda, the Secretary-General said that such actions would also constitute the most viable mechanism for dealing with some global developments, including the negative perceptions which some may have of the industry on the Caribbean.

Mr. Carrington made the remarks against the background of the “continuous struggle” in which the Region was engaged to secure a level playing field on developments related to international financial services. That struggle is led by the Caribbean Association of Regulators of International Business followed by the International Tax and Investment Organisation.

With encouragement from the International Financial Institutions (IFIS) to promote international financial services as a mechanism for economic diversification, income and employment generation and growth, some Caribbean countries had become successful in implementing that policy initiative, the Secretary-General pointed out. But that success had attracted negative attention from some institutions including the Organisation of Economic Cooperation and Development (OECD).

“In this case, success seems to have attracted more punishment than reward,” Mr. Carrington said, and recalled that Caribbean countries had been described as “tax havens”, and had to subscribe to the OECD Model Tax Convention that required amendments to their legislation and practices in relation to international financial and banking activities. They also had to strengthen their network of double taxation treaties. In addition, Caribbean countries were also required to show a certain degree of compliance by signing at least 12 Tax Information Exchange Agreements (TIEA) with major capital suppliers, “all this at the height of the global financial and economic crisis,’ the Secretary-General pointed out.

Despite those attempts, Caribbean jurisdictions were still treated less favourably than, for example, certain European jurisdictions for identical circumstances, the Secretary-General said. He added that the OECD countries continued to put pressure on corporations in their jurisdictions with subsidiaries in International Financial Centres.

“In this regard, Caribbean jurisdictions will find themselves coming under increasing scrutiny.

“All of these developments continue to have negative implications for the Caribbean. Entities which might have been licensed, incorporated or registered in the Caribbean are taking their business elsewhere. Some others already located in the Caribbean are departing. The in-depth and comprehensive monitoring and peer review, decided by the September 2009 Global Forum Meeting in Mexico, will create further problems for Caribbean jurisdictions. Unless that negative trend can be reversed, Caribbean economies will face tougher challenges to maintain jobs, earn income and generate foreign exchange from the sector,” Mr. Carrington said.

The conference, he acknowledged, came at an opportune time for the Region since it would review the current status of its Financial Services Sector, describe the challenges faced and assess the demands which would be made on the regulatory environment in the Region. It would also provide the chance to explore how the Caribbean could convert the existing challenges into opportunities, not least in the continuing efforts at economic diversification in the Region, he said.

He expressed appreciation to the Hon. Baldwin Spencer, Prime Minister of Antigua and Barbuda and Lead Head of Government with responsibility for Services in the CARICOM Quasi Cabinet who was at the conference, and to the European Union, international and regional financial institutions, the University of the West Indies, CARTAC and the Financial Action Task Force for supporting the forum.

CONTACT: piu@caricom.org