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As Cayman forages deeperinto the international arena of finance and business developmentit was recently discovered that there is ...
No Representation in EU
A recenttrip to the European Union in Brussels established a few shockingrealities for Cayman delegates. The Cayman Islands has no representationin the European Union (EU), has been denied participation in anyof the EU's programmes, and, in fact, is quite the mystery toEU officials.
Hon. McKeevaBush , Mrs. Jennifer Dilbert
In an effort to establish an ongoing relationshipwith the European Union, a delegation from the Cayman Governmentattended an eye-opening meeting last month in Brussels in whichthe Government officials were informed that, due to the CaymanIsland's economic status, the country does not have any representationbefore the EU and will not be allowed to participate in any programsoffered through the EU. And, according to the EU, the Caymans'failure to submit representation is the reason.
After an introduction to the workings ofthe EU by Fiona Murray of Athronan Associates, EU Consulting andCommunications, Honorable McKeeva Bush, Leader of Government Business,gave a brief overview of the country's economy and inquired aboutCayman's ability to partake in any of the EU programs offeredto Overseas Countries and Territories.
It came as quite a blow when Laurie Lee,the UK's representative to the EU, informed Mr. Bush, Dr. ChristopherRose, Executive Director of the Secretariat and Mrs. JenniferDilbert, the Cayman Islands Government Representative in the UKthat due to statistics obtained from the International MonetaryFund, the US Central Intelligence Agency and the UK, the CaymanIslands has a high GDP and therefore not only does the countrynot qualify for any of the programmes offered by the EU but alsoit doesn't even have representation before the union. By way ofexplanation, Lee stated that his involvement is strictly withcountries that qualify for the EU's financial aid programs.
Apparently, according to the EU representatives,the UK had made representation on behalf of Bermuda to have Bermudaexempted from the latest EC-OCT Decision last year. Had the CaymanIslands made representation in 1999 or by the deadline of August2001, the Cayman Islands could also have been exempted from thedecision.
However, the Cayman Islands failed to makesuch request in either year.
To resolve this problem, delegates planto meet with the Executive Council to discuss obtaining representationfor the Cayman Islands in Brussels and to establish an officewithin the Cayman Government to deal with European matters.
In addition, the delegates spent a substantialamount of time discussing competition issues as they relate tothe Cayman Islands, and Article 47 (competition policies) of theEC-OCT Decision.
The OCT Decision relates to competitionpolicies. It calls for "the introduction and implementationof effective and sound competition policies and rulesin orderto improve and secure an investment friendly climate, a sustainableindustrialization process and transparency in the access markets."
To ensure the elimination of distortionsto competition, the Decision requires the implementation of "local,national, or regional rules and policies and the prohibition ofagreements which have as their object or effect the prevention,restriction or distortion of competition." The OCT also broughtthe EU's Tax Savings Initiative to the forefront.
Based on this discussion, it was clear thatthe attending EU officials were unaware of the OCT Decision andits possible implications for the Cayman Islands. For instance,they could not answer questions related to the inclusion of particularcompetition related articles in the OCT Decision.
The EU savings directive would require automaticprovision of information on interest paid to EU citizens on savingsincome outside of their home state to their home state tax authorities,to enable such authorities to then apply the relevant level oftax to that income. In other words, Cayman residents will paytaxes to Great Britain for savings earned in the Cayman Islands.
The directive is currently in draft formand is due to be considered for formal adoption at the end ofthis year. What is clear is that the UK has agreed to activelypromote the adoption of the directive in their independent territories.
Great Britain's suggestion that the EU financeministers are automatically notified of every interest paymentmade to any EU citizen within the EU to their home revenue authorityhas ensured questionable effects not only on the privacy of accountholders in the Cayman Islands but also on the Island's statusas a tax-free business haven in general.
With no representation, this initiative,slated to be finalized by year-end, will be endorsed by EU membersand signed into law. At that point, there will be no negotiationsand a collective Cayman opposition will go unnoticed.
Prior to their departure, Bush met withthe EU's Principal Administrator in the Union for Tourism, OdoardoComo, to discuss the types of support programs, which might beavailable to the Cayman Islands. Here too, it appeared clear thatthe Cayman Islands would not be awarded participation in theseprograms either.
The next step for the Cayman Islands Governmentofficials is to meet with Members of the European Parliament.