OECS To Remove Export Subsidies

by Amanda Banks, Tax-News.com, London

14 May 2010

Trade officials from members of the Organization of Eastern Caribbean States (OECS) concluded talks on May 11, 2010, on withdrawing government subsidies to the region’s exporters by the end of 2015, as part of an agreement concluded with the World Trade Organization (WTO).

While government subsidies for exports have been used to attract foreign investment to the region, creating thousands of jobs throughout the OECS, the agreement concluded with the WTO in 2007 obligates OECS member states to remove all export subsidies from their legislation from 2015.

Despite the pending restrictions, there is some flexibility where OECS member states can continue to use subsidies after 2015 as long as these subsidies are not based solely on exports. In addition, OECS member states can also continue to use subsidies to garner or maintain employment.

Natasha Edwin, Technical attaché at the OECS Secretariat’s Geneva Mission in Switzerland says her office will continue to assist OECS member states in ensuring that reformed legislation regarding government subsidies does not breach WTO rules. “In the discussions we acknowledged the importance of continuing to provide subsidies to attract investment [in a way that is compliant with WTO rules]. Member states can continue to provide subsidies to investors, as long as these subsidies are not contingent or based solely on exports.”

According to Alicia Stephen of the OECS Secretariat’s Trade Policy Unit, member states have already started the process towards cushioning the impact expected from the phasing out of export subsidies: “By the end of this year, one member state should have legislation in place that is compatible with the WTO agreement on subsidies and countervailing measures. Another member state is also reviewing new legislation enacted four years ago to ensure that there are no components of that legislation that grant export subsidies,” she said.

Edwin added that the remaining member states are to adopt revised OECS model legislation, to be inserted into the respective countries’ fiscal incentives legislation. She said that the OECS would work to create legislation to put in place “a regime that is even more attractive than what exists now.”

The OECS comprises of Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines. Anguilla and the British Virgin Islands are associate members.

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