Commentary
Globalisation - An Asset orLiability?
Michael Alberga, Attorney-at-Law
Local attorney-at-law, Michael Alberga ofthe firm, Myers and Alberga, in a presentation at the Miami Conferenceon the Caribbean and Latin America, held on December 5, at theHotel Intercontinental in Miami, examined the effects of globalisationon the Caribbean and Latin America and criticised the OECD's initiativeson harmful tax competition.
Reporting on the conference, the Miami Herald,in its 7th December edition quoted Mr. Alberga in its articletitled, 'Caribbean Leaders Slam Financial Reform Efforts'.
The article read in part: "Leadersof Caribbean tax havens blasted the United States and other industrialisedcountries...saying their efforts to force financial reforms onthe region are nothing more than an attempt by rich countriesto keep capital out of countries that need it."
"'We find ourselves effectively recolonized,'said Michael Alberga, an attorney in the Cayman Islands, one ofthe leading offshore financial centres."
The full text of Mr. Alberga's speech ispresented below:
Continued technological advances coupledwith the growing movement to relax or remove protectionist policiesto trade and the ensuring free movement of capital has createdan opportunity for economic expansion in Latin American and Caribbeancountries.
The ability to expand GDP (Gross DomesticProduct), provided sound free-market economic policies are pursued,has been enthusiastically embraced in our region which, unfortunately,has been unable to achieve sustained economic development forany protracted period, for various reasons.
The growing ability of the G-7 and otherindustrialised nations to produce has necessitated their acknowledgementthat expansion is limited only by the capability of potentialmarkets to absorb their goods and services and that the more vibrantthe cross-border exchange of goods and commodities, the more likelythat their economies will be able to produce further wealth, enhancingthe well-being of their respective nations.
Our region has an opportunity to break awayfrom the last 300 years of the colonial era and to reap the benefitsfrom this important engine of growth known as globalisation ifwe are given an opportunity to play the game on a level playingfield.
Globalisation should be regarded as thebeginning of an economic revolution with very different playersand with very few rules.
The G-7 and developed countries see thisrevolution as an opportunity to expand their markets not onlyin goods and other tangible commodities, but also to expand theirexpertise and dominance in financial services and other tangibles.The lesser developed countries regard the revolution as providingan opportunity for increased capital inflow to expand their economies,enhancing their ability to produce goods and services at a moreattractive cost than the developed nations, thus providing a lesstitled field for them to compete with industrial giants.
Every player in the game sees this forceas leading to the goal of wealth enhancement and improvement ofthe lives of their nationals. For these competing expectationsto be balanced it is essential that a set of rules and standardswhich are acceptable to all players be created sooner rather thanlater. If we fail in this effort the possibility of lasting economicexpansion which has escaped the Latin American and Caribbean regionmay be lost.
Unfortunately, developments over the lastfew years have begun to demonstrate that certain of the more developednations view globalisation as an opportunity for them to competein other countries' markets. As soon as competition from outsideforces show signs of being able to impact on their nationals bycreating a more attractive environment for capital to be moreproductively deployed, competition becomes unfair. Economic mightis brought to bear to reverse the forward move of the lesser developedregions who dare to compete within areas regarded as the domainof the developed nations.
An example of this type of behaviour isevident in the increasing dictatorial and terrorist-like behaviourof non-governmental organisations (NGOs) controlled by some ofthe most powerful developed nations. These organisations whichare increasingly being run by bureaucrats appointed from moredeveloped countries, propose courses of action against countrieswhich dare to offer alternatives and are able to compete effectively.These initiatives which are designed to destroy competition withthem, are inconsistent with the free market movement which hasbeen embraced by the more developed nations.
These disturbing developments, such as theOECD's initiative on Harmful Tax Competition, the main aim ofwhich is to prohibit capital flow from high tax nations to lowtax or no tax countries, abrogate the rule of law, disregard therule of national sovereignty, and put in place procedures to removethe right to privacy, are being put forward with threats to usetheir economic might to bring to heel all of those who do notagree. This behaviour endangers the very foundation of the forcewhich we all seek to harness.
The OECD's initiatives have carefully avoidedany reference to a number of regimes in their own member countrieswhich provide similar benefits to third country nationals as thosecomplained of with the exception that they provide them on a muchlarger scale. This raises the question as to whether 300 yearsof history will repeat itself. Will we have a newer, more gentlerand sophisticated type of invader who will control our telecommunications,financial service, high tech and other industrial endeavours.Can we look forward to rules being made under which we will operate,which, instead of taking our raw material to build an industrialisedsociety, seek to remove the profits from our economies by extraterritorial taxation, thus supporting economies and citizens ofthe more industrialised nations while we remain economically dependantinstead of independent.
The OECD is not alone in this thought process;it has many cousins and relatives who are marching towards thesame goal through different paths. This type of disguised protectionismshould be resisted. It is likely to be applied in other countriesin different forms whose industries or potential growth pose athreat to the current dominance of the OECD member nations.
It is in the interest of all the industrialised,the lesser developed and smaller nations to begin the processwith the view to creating rules and standards which are not dictatedby the powerful and economically advantaged but which have regardto the sovereign needs, the rights to privacy, the cultural differencesof individuals and the rule of law. We should not expect thatall will benefit equally but demand that all will have a levelplaying field . An equal opportunity for our region to participatein global markets and consequently raise the standard of livingof the citizens in our individual countries, large and small,is not too much to request.
Globalisation envisages democracy in a largersense. Like any strong democratic society to be successful, thevoices of all nations must be heard and the votes of all the nationsshould be counted. The denial of these basic rights in the formulationof the rules for a global market-place by the world's powerfuland economic advantaged and the enforcement of their will on othersoutside their national borders under threat of punitive sanctionsis a troubling development.
Unless globalisation encompasses our rightto encourage development and the movement of capital into areaswhere it believes it can be best deployed for productive purposeswithout arbitrary rules made by others designed to extract thefruits of our labour being profits, by extra-territorial taxationthus depriving us of the capital reinvest, we will have embraceda liability greater than our current debt problems and we willfind ourselves economically re-colonised.
Should we, in the light of what is now evident,continue to enthusiastically embrace the liberating force of globalisationwithout adequately providing for its path, we risk the economicenslavement of our future generations. History will record a generationwhich allowed a valuable asset to be converted into a long-termliability.
The organisers of this great event, theCaribbean Latin American Forum, are well placed to provide a vehiclefrom which dialogue may begin and in which the world's leadingindustrialised nation and our neighbour who regularly comes toour aid in times of need and to whom we look towards for guidance,the United States of America, should now be playing a leadingrole.