EU CARIFORUM Services Workshop

July 23-24, 2008

Crowne Plaza, Trinidad

Final Report

Prepared by CAIC

Table of Contents

Background/Introductions

Workshop Demographics

Workshop Structure

Workshop Day 1

The European Union Marketplace- Exporting Services to the UK- What you need to know- Mr. John Garvin

Overview of the UK Economy:

Overview of the EPA and Services - Ramesh Chaitoo

Panel Discussion: Business Perspective and Case Studies- ICT

Workshop Discussion

Panel Discussion: Business Perspective and Case Studies- Creative Industries -Film & Video

Workshop Discussion:

Workshop Day 2

Panel Discussion: ICT & Creative Industries- Supply Strengths & Weaknesses

Group Discussions: Challenges to entering the EU and possible Solutions

Workgroup 1- Business Service Organisations (BSOs)

Workgroup 2- ICT Professionals

Workgroup 3- Creative Industry Professionals

Background/Introductions

The Caribbean Export Development Agency, with the support of the EU and in collaboration with the Caribbean Association of Industry and Commerce (CAIC) and the Caribbean Regional Negotiation Machinery (CRNM) has been able to gather 60 participants from 7 Member States of CARIFORUM to the first major event on exporting services to Europe. A focus on Europe is particularly timely given the expected signing of the EPA by most, if not all, CARIFORUM States in the near future.

There is a significant range of service products on offer from the region and of export opportunities available, now heightened by provisions within the European Partnership Agreement (EPA) with the Caribbean region. Unfortunately, the region’s service exports are not keeping pace with global growth. In many cases, significant export opportunities are still to be developed and in other areas, the region has only tapped into small niche markets. The most frequently identified opportunities are in the following six areas of Professional Services:

  • Health and Wellness
  • Education
  • Business Development services
  • ICT
  • Construction-related services
  • Production Services for the Entertainment Industry

Workshop Demographics

61% male 39% Female

27% media24% ICT & ICT Services24% Consulting, Legal 24% Other.

41% TT 21% Jamaica 21% Barbados 11% DR 6% St Kitts

Workshop Structure

The 2 day workshop consisted of featured speakers, panel discussions, and participant sessions to discuss issues:

Day 1 / Day 2
Featured Speakers / John Gavin – UK/EU Markets
Ramesh Chaitoo – EPA components
Panel Discussions / Caribbean ICT / Supply Strengths & Weaknesses
Creative Industries / Business Service Organisations
Workshop Activity / Proposal Development (J.Gavin)
Challenges and Solutions
Plenary / Wrap up Sessions/Way Forward

Workshop Day 1

The European Union Marketplace- Exporting Services to the UK- What you need to know- Mr. John Garvin

Overview of the UK Economy:

The market in the UK is extremely crowded with dozens of new products/services with similar functionality hitting the market each month. In order to gain a buyers air time a company really has to stand out. There also exists a buying cycle culture which is different from anywhere else (each country in Europe has its own characteristics). In order to ensure success the product must play to key market drivers and /or map on to business issues.

The main market characteristic of the UK economy include:

- Numerous businesses compacted into a small area.

- Diversity

- Persons unconcerned about where you’re from

What Caribbean companies must do to enter these markets?

Companies need to stand out for e. g blend of services, the way services are presented, access & support. The mind set of the Caribbean Region needs to be on that produces products and services from the clients’ point of view.

ICT

There are huge amounts of public investment in ICT Software, Systems & Service. However, outdated technology is becoming an impediment. Opportunities exist for upgrading old software, and services to customers.

Small Business & Health Care:-

Health Care area is going through change, looking for innovation from Small Business on how to do it with big enterprising companies, and at partnering with key providers.

Communications/Media Opportunities:

  • Music
  • Film
  • Fashion
  • Architecture Design

Financial Services Opportunities

  • Retail Banking
  • Brokerage Systems- Oil Market
  • Insurance
  • Commodities
  • Financial Trading
  • Retail & Logistics
  • E-Government- Central vs. Local Government Opportunity for Media

Knowledge of the Caribbean by the UK business community (and government) can be categorized as

  • Superficial – little knowledge of the Caribbean
  • Partially Informed – some knowledge of Caribbean business; and
  • The Informed – experience/knowledge of operating in the Caribbean

Challenges faced by the Regional Firms/Preparedness

Regulatory Issues & Market Protectionism may “appear” to be hindrances to entering the EU market, but the Caribbean region needs tools and techniques for market entry.

In order to be well prepared to do business in the UK firms from the Caribbean, firms need to:

  • Appoint and empower a team.
  • Decide upon your market entry strategy (direct v indirect etc)
  • Prepare a budgeted Market Entry Feasibility Plan.
  • Review and document your business proposition.
  • Look at collaborating with local partners.
  • Review your support arrangements. (time differences communication etc)
  • Appoint and empower a team.
  • Decide upon your market entry strategy (direct v indirect etc)
  • Prepare a budgeted Market Entry Feasibility Plan.
  • Review and document your business proposition.
  • Look at collaborating with local partners.
  • Review your support arrangements. (time differences communication etc)
  • Establish a presence through branches, offices, work permits, banking, tax, company registration, acquisition, partner channel, local sourcing, and investment which is also key.

It is all about building relationships.

Overview of the EPA and Services - Ramesh Chaitoo

Services and Investment in the CARIFORUM-EC Economic Partnership Agreement (EPA). As a services negotiator for the EPA, it was crucial to know and fully understand what CARIFORUM firms needed where doing business with the EU is concerned. That was difficult obtaining this information since these firms were unsure of what type of business they wanted to do in the EU markets.

The majority of trade taking place between this Caribbean region (including the Dominican Republic) and Europe consists of mainly British Caribbean Trade. Other findings with regards to EU CARIFORUM Trade revealed:

  • UK accounted for an average of 33% of services exports to CARIFORUM between 1999-2003
  • UK accounted for an average of 59% of services imports from CARIFORUM between 1999-2003

A major proportion of this was due to UK residents traveling to CARIFORUM countries, especially Barbados and Jamaica

Change can come about in the EU CARIFORUM trade relationship via EPA provisions, e.g.

  • Rules or disciplines on Services & Investment
  • Market access commitments (Schedules)
  • Protocol on Cultural cooperation (negotiated particularly for the Caribbean)
  • Link with other parts of EPA (competition, dispute settlement, etc)

The CRNM decided they would not negotiate any deals with the Europeans unless there was special treatment for two sectors; cultural industries and the entertainment sector. From the EPA some areas of note include:

  • Rules on Commercial Presence or Investment include
  • Market access
  • National Treatment and MFN
  • Excludes - nuclear materials; arms; audiovisual; cabotage; air traffic rights
  • Forbids corruption by investors
  • Parties must maintain core labour standards
  • Parties must safeguard the environment
  • Forbids lowering of environmental, labour or occupational health & safety standards to attract investment

Market Access for investment

  • EU - commitments are very broad and deep except for a few sectors such as energy, health, education
  • EU - limitations on landholding, and other restrictions in mainly new Members
  • CARIFORUM - commitments in manufacturing, mining, etc., but limitations exist re landholding, type of corporate entity, SMEs, etc.
  • CARIFORUM - Reservations in agriculture, forestry, fishing, mining, food & beverage, furniture, in some states; Only Dominican Republic liberalized electricity & gas

Rules on Services

  • Only open what you schedule
  • National Treatment, MFN
  • Similar exclusions of sectors as investment chapter
  • Mutual recognition of qualifications
  • Special categories of natural persons for temporary entry:
  • Key personnel (managers, specialists) & graduate trainees
  • Business services sellers
  • Contractual services suppliers
  • Independent professionals
  • Short term visitors for business purposes

Services Market Access Granted

  • CARIFORUM - Positive list for services commitments like GATS template; aimed for sectoral coverage to 65-75% of services sectors but fell far short. (Dom Rep is higher). Some opening in the future. Very limited Mode 4 commitments.
  • EU - Different structure of schedule but positive list

Panel Discussion: Business Perspective and Case Studies- ICT

Several ICT industry players in the Caribbean gave some perspectives on the industry and challenges in venturing into the EU.

Kurt Lange – Guardian Holdings Limited

In expanding your operations the question that needs to be asked is are products & services ready for the foreign market? The following needs to be done by the Caribbean Region to be ready for or to enter the EU markets:-

  • Understand Potential Clients and their markets
  • Determine how market entry will be achieved – onshore or off shore
  • Have a clear understanding of the economic feasibility of the venture
  • Understand the Regulatory Environment e.g. the tax implications in terms of providing services to EU clients. Privacy & Confidentiality issues need consideration
  • Funding is always as issue as market entry requires investment e.g. venture capital,
  • Service Level Agreement & Contracts – can obligations be met? Can we meet the necessary standards required.

The Caribbean Industries need to seek opportunities as they present themselves by partnering with others and in reviewing the text of the EPA vis-à-vis rights and privileges

Mr. Steven Williams – Sun Isle Technology - Barbados

Software Development:- ICT can do a lot for the Creative Industry. The Caribbean has the best opportunity for software development however the region has not moved much beyond basic software support.

Education:- The University of the West Indies is producing IT Professionals, but there are limited opportunities post graduation for innovation. The Caribbean ICT Industry is one of enablers and not drivers making us less competitive.

E Commerce:- There is a common platform across the Caribbean but this has proven to be problematic. The Caribbean is still dependent on Canadian & US companies for consistent income in this area.

Opportunity:- due to Political Stability and related IT cost there is a need to solidify the number of Pan Caribbean ICT companies in the region to create a competitive critical mass. Also, with the large tourism industry in the Caribbean there is opportunity for application development to support this industry.

Dr. Phyllis A. Green – Carisbrook Business Services - Jamaica

In Jamaica and some other islands the trend has been for the set up of Call Centres due to the Tax benefits which are being offered e.g. Duty Free Equipment in addition to repatriation of funds, and in the case of Jamaica the provision of training by HEART for Call Centre Workers at no additional Cost to the Providers.

There is an interest in the EU market due to better opportunities and the cultural affinities which makes us a natural partner to the EU.

Challenges: Doing business with the US is the norm and as a result these standards govern our relationship with others. However, given the Caribbean’s European history EU and the UK can be natural partners.

Mr. John Francis – Caribbean Downloads – St. Kitts-Nevis

For music the export potential in the Caribbean encompass the management of artistes, concert tours, music sales and the promotion of young musicians. However, there are challenges

  • Failure to develop and Sustain the production of CDs
  • Piracy/ Copyright Infringement
  • Taxation & Duty
  • High Cost of Shipping & Manufacturing
  • Unwillingness of People to pay for music

There is a new era for Caribbean Music and there is a need and an opportunity for people to exploit the technologies especially within the OECS.

Mr. Nicholas Galt – TSL Group - Trinidad

Two main issues faced in the Caribbean ICT industry

1) Problems within the CSME :-

a) Limited financial & human resources

b) Free Movement with People – not being realised

c) Accreditation Council

2) The Corporate Model that has been adopted in which there is no diversification of skills as we seek to develop services

A Way Forward:

- Establish a Venture Capital Company

- Generate a need for Joint Ventures

- Technology Transfer e.g. Caribbean Companies have an opportunity in this area as it pertains to Nigeria.

- Need to explore Markets in Brazil & Africa

Workshop Discussion

The workshop discussions cantered on:-

1) How do we get the content Industry effectively supported by Caribbean Corporations? Corporate support is primarily artist sponsorship and not industry investment. Artists/content industry need to present practical business proposals if the corporate Caribbean is to consider significant investment.

2) Informed Decision Making by the Public Sector is required. We need to educate our civil service more in order for them to develop and support opportunities for the creative industries. In terms of ICT only the larger islands of Trinidad, Jamaica and Barbados have defined ICT strategies to help boost the ICT industry, but some of the initiatives are still being implemented and the regional industry still needs to fully take advantage of programmes available. Nevertheless there are pockets of development.

3) There is a need to marry Ideas and Project with Technology. The region still suffers from the issue of scale. Some opportunities are available but the region’s small population, by global standards, does not lend itself to the interest of global players e.g. Sony Ericsson. The region also has the ICT talent, but it needs to be harnessed to focus on the opportunities present.

4) Transport Mechanism in the absence of Broadband, High-Speed internet etc. Despite some deregulation our telecommunications providers still do not provide low cost services that can further bolster the uptake of ICT initiatives especially with the content industries.

5) Despite the challenges, some players are able to expand beyond the Caribbean by being bold.

Panel Discussion: Business Perspective and Case Studies- Creative Industries -Film & Video

Several creative industry players in the Caribbean gave some perspectives on the industry and challenges in venturing into the EU and these comments are summarised below.

Technology has driven changes in the Creative Industry but majority of income still earned from touring and live music performances. Music Performance is competing with other forms of media. The income stream needs to be improved as 97% of artists’ earnings are coming from live tours.

Alternative Music Distribution Forms e.g. Downloads, TV Series, ads; tap into alternative distribution channels. We need to devise a central repository of Caribbean Styled music to be marketed.

The money is not the issue. There is an issue of self loathing in the Caribbean. Therefore we can’t make films to sustain such an industry. The region has all necessary personnel. The problem is to consolidate them and get islanders to stop outsourcing resources. Regional co-operation is necessary, and can be done by cultivating a habit of working together to bridge the communication gap. Experts need to communicate with Administration to make sure they are negotiating on the behalf of the Creative Industry.

There is a lack of proactive activity that is creating its own models for doing things and not competing with existing models e.g. Reggae in Jamaica.

Challenges to Exporting Products:-

- Technology & Funding

- Marketing & Distribution

- Standards need to enter the market require funding

- Educate individuals for encouragement of industry

- Local Industry needs to have skills

- Lack of skills, human resources

- Improve training institutions stand of education

- Lacking experience & Skills

- Equipment lacking Improved Local Infrastructure.

- Gov’t Implementation of Protectionist Measures

- Need to have tax write offs etc.

- Long Shelf life for productions should be encouraged rather than short term competitions.

Marketing & Incentives

Where are the markets for Caribbean products e.g. Japan- we must explore new inexpensive media for marketing. Technology cost is decreasing thus allowing us to do higher end International Productions.

Quality of Industry suffering due to inexperienced individuals who may have equipment, but there is a lack of Corporate Sponsors and a lack of faith in their quality.

There is a perception that the Creative Industry does not take the funding process seriously.

Workshop Discussion:

“Quality is crucial to gaining access to external markets particularly those with very high quality products. Cost of film equipment are continuously becoming cheaper, leading to an increase in the number of film producers entering the market. Persons with no film experience are suddenly becoming film producers leading to a perception outside of the Caribbean that the film industry of the region is plagued by poor quality work. As such, the quality of the entire industry is being questioned. Hence, corporate sponsors tend to not take the industry seriously. Unless this problem is resolved the industry would never receive the proper funding.” Lisa Wickham

“Technology and funding is not all that is required to assist the industry. Training is necessary to improve the quality of productions in the region.” Danielle Dieffenthaller

“It is important that film makers have experience and knowledge that would lead them to know exactly what potential clients are looking for. Also local productions within CARIFORUM can benefit from clusters particularly when they can take advantage of economies of scale. There is also a need for a set of standards in the industry which can be developed through centers of education. The government can also assist first by realizing that the film industry helps to create jobs and is therefore crucial to economies. On this note they need to invest in the creative industry and represent them in international arenas. Also they can offer tax incentives to big companies such as Digicel that can commit to investment opportunities for the industry. For example if they invest in feature films locally these organizations can receive tax write offs..” Damali Kai Little-White

“The provisions in the cultural cooperation aspect of the EPA may prove beneficial to the Creative Industry of the region. The EPA provides opportunities for firms in the audio visual sector to interface with EU counterparts thereby benefiting from the facilities already existing that they have access to. The region needs to take note that market access for film in the EPA was not granted, and that audio visual is also excluded from the agreement. Governments do not open audio visual markets in trade agreements because of political and competitive sensitivities. It was also noted that a development component may be added to the EPA which would target mainly audio visual work since there are no provisions for it in the agreement. Companies present have to ask themselves if they would benefit from interfacing with EU counterparts and if they would how? In this way a focus on what actually needs to be done can be ideal to turning the industry around for the better.” Ramesh Chaitoo