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FINAL REPORT FOR CARIBBEAN EXPORT DEVELOPMENT AGENCY

Feasibility study on the establishment of a Technical Management Unit in the French Caribbean Outermost Regions (FCORs)

Presented by:

Smart Consulting (The Consultant)

FEBRUARY 2014 (ORIGINAL - 2nd version submitted)

Table of Contents #

TOPIC

PAGE

List of Acronyms

1.0

Executive Summary and Main Findings

4 – 12

1.1

Executive Summary

4–5

1.1.1

Objectives

1.1.2

Methodology

4–5

1.2

Main Findings

5 – 12

1.2.1

Trade and Investment climate between the FCORs and CARIFORUM

5–7

1.2.2

Trade and Investment promotion services available to exporters

7 – 10

1.2.3

Needs of Exporters to increase trade exchanges

11 – 12

2.0

Background

12 – 14

2.1

Background on FCORs

2.2

Background on CARIFORUM

2.3

Opportunities for Trade

14 – 15

3.0

Analysis of Scenarios/Models for the Technical Management Unit

16 – 33

3.1

Overview

3.2

Scope of work of the TMU

17 – 21

3.3

ICT Infused TMU- digital Platform

22 – 25

3.4

Option 1: Establishment of a Technical Management Unit in a FCOR with 26 – 29 its office located in an FCOR

3.5

Option 2: – Establishment of a Technical Management Unit supported by a 29 – 31 Digital Platform – with its office located in Barbados as an extension of CE

3.6

Option 3: – Establishment of a Technical Management Unit supported by a 32 – 35 digital platform – with a stand-alone office located in St Lucia reporting to CE

4.0

Recommendations

36 – 38

Appendices

39 – 53

List of Acronyms BSOs

Business Support Organization

Caribbean Export

Caribbean Export Development Agency

CARICOM

Caribbean Community

CARIFORUM

Caribbean Forum of ACP States

CEPLAC

Economic Commission for Latin America and the Caribbean

CCIM

La Chambre de Commerce et d’Industrie de la Martinique

Digital Platform

DFA

Département Français d’Amérique

EuroChamTT

European Business Chamber of Trinidad and Tobago

FCOR s

French Caribbean Outermost Regions

ICT

Information Communication Technology

OECS

Organization of Eastern Caribbean States

R-TIN

Regional Trade Information Network

SME

Small and Medium Enterprises

TBT

Technical Barriers to Trade

TMU

Technical Management Unit

V.I.E.

Volontariat International en Entreprise

1.0 EXECUTIVE SUMMARY AND MAIN FINDINGS 1.1 EXECUTIVE SUMMARY 1.1.1 Objectives The objectives of this study as outlined in the TOR are as follow: • Examine the current trade and investment climate between the FCORs and CARIFORUM; • Examine the current trade and investment promotion services available to exporters from CARIFORUM and the FCORs; • Examine of the needs of exporters and other stakeholders from CARIFORUM and the FCORs to increase trade between them; • Evaluate the possible options for meeting those needs and the provision of timely information to potential exporters as well as support for their projects; • Develop financial models to estimate the potential income and expenditure for each of the short proposed options; and • Make recommendations based on the evaluation of each proposed option. The recommendations are to focus on Caribbean Export’s long-term objective of increased and sustained CARIFORUM exports to the FCORs. 1.1.2 Methodology In order to achieve the above objectives, the Consultants were required to carry out secondary research as well as primary research. During the Secondary Research phase the Consultants examined:   

Previous studies that examined trade related issues within CARIFORUM and the FCORs Studies relating to the Economic Partnership Agreement The Consultants also gathered a list of regulatory authorities and all relevant stakeholders that would be interviewed in the primary research phase.

The methodology adopted for the primary research was to develop a questionnaire which was disseminated electronically. The population consisted of 65 companies and 30 BSOs. A minimum response rate was set at 45 responses to undertake the analysis. The survey instrument consisted of 6 - 9 questions (See Appendix A) which were inputted into survey monkey. The link to the survey was emailed to all targeted stakeholders in October 2013 with direct follow-up via phone calls and emails. The Survey to the private sector was also disseminated via social media. Due to the lack of responses from targeted stakeholders at the set deadline, Smart Consulting deployed the following strategies to ensure that the opinions of a wide range of stakeholders were taken into consideration for the Feasibility study to be conducted: 4

ď‚ˇ ď‚ˇ

Direct follow-up and live assistance to fill out the survey Assistance of the EuroChamTT to disseminate the survey to BSOs and Firms

This method proved to be efficient and effective and on Wednesday 13th November 2014 we achieved the target of 45 stakeholders consulted. (See Appendix C) CHART I: Answers received by sector of activities

Interviewees by Sectors

Chamber of Commerce Coalition of services Industries Private Firm Manufacturer Association Industry Association Governemental Agency

CHART II: Answers received by Country of Origins

Answers received by Country of Origin Barbados Belize Dominica Dominican Republic Grenada Jamaica St Lucia St Vincent and the Grenadines Trinidad and Tobago

1.2 Main Findings 1.2.1 Findings related to the current trade and investment climate between the FCORs and CARIFORUM The Economic Partnership Agreement (EPA) signed in 2008 signaled a new era of trade relations between the CARIFORUM private sector and the private sector of the FCORs. The EPA which applies to the French Caribbean Outermost Regions of the EU, namely, French Guiana, Martinique and Guadeloupe provides a comprehensive framework for trade and investment between the two regions. The CARIFORUM EPA takes into account the specific interests of the EU's outermost regions and includes a specific article which is aimed at fostering links with CARIFORUM countries by facilitating cooperation in all areas covered by the Agreement, such as innovation. Article 239 of the EPA takes into account the geographical proximity of the outermost regions of the European Community and the CARIFORUM States and of the necessity to facilitate regional integration in all sectors o ered t e A reement e r iso n d’ t re for article 239 lay on the need for the outermost regions to be integrated into their regional economy more efficiently. Since 2008, many studies have been conducted to identify the potential opportunities and challenges faced by FCORs and CARIFORUM trade. Building on these previous studies, the Smart Consulting team was able to analyze the movement of capital in ‘trade in goods and services’ and the technical barriers to trade and investment in the Region. The study commissioned by Caribbean Export In October 2010 on “opportunities for Doing Business with between CARIFORUM States and the FCORs" also provided detailed findings on the trade and investment climate between the FCORs and their Caribbean neighbors. Trade between the FCORs in the Caribbean region may be described in general terms as being ‘limited’ From 2007-2009 such trade represented only 7% of all exchanges (excluding intra-DFA exchanges). In 2008, the value of CARIFORUM exports to the FCORs totaled USD238, 145,616 whereas the FCORs exported USD16, 218,092 to the CARIFORUM States. Furthermore, CARIFORUM exports are concentrated in certain countries (depending on the sub zone considered, 1 to 5 countries are the focus of around 90% of trade) and relatively undiversified: energy products (especially with Trinidad and Tobago and Aruba), construction material (in particular cement from Venezuela) and including exports of products without the local added value (i.e. reshipment of imported products). The relationship between the FCORs and CARIFORUM is changing and amplifying with the numerous efforts that are occurring at all levels to increase trade and cultural relations. The Economic Partnership Agreement (EPA) has provided a historic opportunity for the FCORs to increase their regional integration. However, today great number of activities are being implemented at a ‘fe eris p e ’ relatively speaking, by various actors to 6

facilitate trade and investment in the Caribbean region. The Local Assemblies of the FCORs, (Regional Councils of Martinique, Guadeloupe and French Guiana), Embassies, Associations, Nongovernmental Organizations by their initiatives are changing the landscape of the relations between the FCORS and their neighbors while developing a new spirit of co-operation. Among the FCORs, on June 17th 2010, the Regional Union of the Antilles and Guyana was founded with the aim to promote stronger links and a platform of collaboration among Guadeloupe, French Guyana and Martinique, to work together for better integration in their respective geographical locations. Additionally, the growing demands in Martinique and Guadeloupe for developing closer ties with their Caribbean neighbours have taken a major leap in recent years. Not only have the FCORs’ population been voicing the need for deeper and stronger regional integration efforts in the Caribbean basin, but in the population has been “t lkin C ri e n”, in that, they have been identifying more with Caribbean culture than they have in the past; listening to the Caribbean Music (Soca, Reggae and Calypso). There has been a visibly increased desire for their children to learn English and increased inter-island ferry transportation and visiting the Caribbean has now become a cultural norm. Therefore, since 2010, Martinique and Guadeloupe have made some important strides toward further integration in their geographical environment. This was confirmed on July 11th 2012 when French Minister of Foreign Affairs Laurent Fabius confirmed the agreement and support of France for La Région Martinique and La Region Guadeloupe to join the OECS, CARICOM and the CEPALC as Associate Member States. This was indeed an important step forward in terms of FCOR territorial diplomacy and would contribute to the strengthening of the links with all islands of the Greater Caribbean. Concomitantly, the CARIFORUM private sector is well aware of the opportunities for global market expansion that can be derived from market access into the FCORs. The EPA awareness campaign which was implemented in the past years has highlighted on many occasions the various opportunities offered by the FCORs for wider access to the European Markets using the FCORs and ‘tr de rid es’. The economy of the FCORs and the majority of their trading activities take place with mainland France. On a weekly basis hundreds of containers arrive from France and return empty. These empty containers represent one ripe opportunity for CARIFORUM private sector to use the FCORs as a bridge to get access to mainland European markets. This access is tangible and probable if the CARIFORUM private sector is given the right support. However, a number of challenges faced by the CARIFORUM private sector need to be addressed to ensure that its members can be competitive in the FCORs’ markets. It is widely known that the CARIFORUM private sector is plagued by outdated equipment and production methods, challenges in 7

supply capacity and value chain management, limited access to affordable finance, lack of market knowledge, including awareness of trade agreements. In terms of the environment for doing business, the CARIFORUM private sector is generally not familiar with the policy regimes and regulatory frameworks that guide trade with the FCORs and therefore its members are unable to strategically position themselves in these markets. There is a need for better coordination and collaboration between all the relevant stakeholders including government, private sector, national and regional business support organizations, regional implementing agencies, and universities. Insufficient, irregular and costly air and sea transport and inadequate support related services, as well as unreliable and costly telecommunications services contribute to high production costs and limit the prospects for business growth and expansion between the FCORs and CARIFORUM. 1.2.2 Findings related to the current trade and promotion services available to exporters from CARIFORUM and the FCORS A number of Business Support Organizations have lead initiatives to assist the private sector in better understanding the FCORs markets thus facilitating market penetration. In July 2010, the Trinidad and Tobago Coalition of Service Industries (TTSCI) led a Services Trade Mission to Guadeloupe and Martinique, where more than 85 business-to-business meetings were arranged between the Trinidadian delegates and their French Caribbean counterparts. In November 2010, a 22-member contingent of Barbadian manufacturing and services companies and business support organizations participated in a trade mission to Guadeloupe and Martinique. The mission was spearheaded jointly by the Barbados Investment & Development Corporation (BIDC) and the Barbados Coalition of Services Industries (BCSI). In 2011, The St Lucia Coalition of Services Industries signed a Memorandum of Understanding with the Martinique Bureau dâ€™Export Culturelle (BEC) to deepen cultural exchanges. In early 2013 ExporTT, the Trinidad and Tobago National Trade Promotion Organization accompanied 10 companies in identifying their markets positioning and the requirements to penetrate the FCORs markets. These companies are now receiving direct assistance to help them in getting their products sold on the French Caribbean Markets. In mid-2013 a BSO called the EuroChamTT was created with membership and services initially offered to European Companies present in Trinidad and Tobago. Smart Consulting was invited to be a member and has benefitted tremendously in many ways with respect to providing services that facilitate CARIFORUM and FCOR trade. 8

In the last quarter of 2013 Martinique was visited by InvesTT where Trinidad and Tobago presented all the facilities, services and tax incentives offered to foreign business that sought to operate in Trinidad and Tobago. Many Regional BSOs have therefore poised themselves to lead their members and by extension the regional private sector in an increased penetration of the French Caribbean and by extension the European markets. The consultation conducted by the Smart Consulting Team revealed that one of the priorities set by these Business Development Organizations is the deepening of the understanding of the trade agreements that regulate trade between the FCORs and CARIFORUM. It should also be noted that a number of BSOs have been providing assistance at various levels to assist firms in addressing issues related to meeting Industry standards, certification and labeling regulations. This assistance is very often limited given the weak institutional capacity of business support organizations and the high cost related to laboratory testing required to obtain EU certification. Concomitantly, within the FCORs, on December 19th 2012, La Region Martinique engaged in a process to appoint agents of the Regional Council in diplomatic or French consular missions, in Latin America and the Caribbean. The Managers for regional collaboration will be posted in strategic locations to assist with the deepening of relations and the insertion of Martinique in its Regional environment. On October 9th 2013, a Memorandum of Understanding was signed between the Région Martinique and the French Embassy in St Lucia to host the agent appointed by the Regional council. In June 2012 La Chambre de Commerce et d’Industrie de la Martinique (CCIM) commissioned Edwin Boiton to complete a study on Martiniquan business and its foreign trade (Enquête sur les entreprises martiniquaises et le commerce extérieur). Boiton concluded that the Caribbean was the region that most of the firms that participated in the study wanted to trade with. 47% of the firms considered trade with the Caribbean, 26% of the firms were without preference and 12% of the firms chose USA. The other 15% of firms chose France, Europe and other countries/regions respectively. Boiton also found that 75% of companies positively welcome specific training in business development in the Caribbean area. Subsequently, On June 6th 2013, the CCIM signed with seven other parties, a convention on the organization of the tools to support the international development of Martiniquan businesses (Convention relative à l’or nis t ion du dispositive de soutien au developpement international des entreprises de Martinique).The other signatories to the convention include the State of France, Le Conseil Régional de Martinique and insurance, financing and other BSOs as well as a programme that supplies young educated manpower to the private sector by paying for half of the cost of the individual for a finite period of time (V.I.E.). The CCIM referred to this cooperation as the ‘Gui et 9

Uniqueâ€™, a portal by which local businesses can access most and if not all of the export tools available to help them penetrate foreign markets with the primary foreign market being the Caribbean. In Guadeloupe, the Institut de Cooperation Franco-Caraibe (ICFC) acts as the representative of the Regional Council in matters of cooperation and, more specifically, in matters of decentralized cooperation. Additionally, the Regional Council of Guadeloupe has also appointed this year dedicated staff to look into the insertion of Guadeloupe into its regional environment in six countries (Miami, Dominican Republic, St. Lucia, Panama, Venezuela and Trinidad and Tobago). It should be noted that these senior appointments by both the Regional Council of Guadeloupe and Martinique are different to the export promotion posts that were created five years ago that are now discontinued. This is key fact and observation, as these posts and their lack of success may be extrapolated as indicators of the future of a CARIFORUM TMU in the FCORs. Therefore, it is clear, that the FCORs are not remaining stagnant and are making every effort to export into the CARIFORUM states regardless of what barriers they may have to overcome. There exists a regional spirit of reciprocity that must be taken advantage of and Caribbean Export has stood as a pioneer in this development. The consultation conducted by Smart Consulting clearly highlights that many activities are undertaken at various levels to assist the private sector and build their institutional capacities to enhance trade. Over 50% of the BSOs surveyed for this feasibility study have indicated that they receive on a weekly basis market information request on the FCORs.

Do you provide business promotion services to firms to assist them in getting access to the FCORs? Answer Choices–

Responses–

YES

55.56%

44.44%

How often do you receive Market Intelligence information requests for the FCORs? Answer Choices–

Responses–

Daily

Weekly

Monthly

57.50%

Annually

13.50%

Never

30%

Did you provide the following services to firms in the past 3-5 years to facilitate market penetration to the FCORs? Answer Choices–

Responses–

Training programs/ seminars

20%

Foreign Trade Missions

60%

Trade Shows Participation

60%

Market Research

40%

Agents/ Distributors searches

80%

Foreign Company Background checks

20%

Product pricing / Analysis

20%

1.2.3 Findings related to the needs of exporters to increase trade exchanges Based on research and information obtained from the implementation of previous initiatives as well as from the consultation conducted to develop this feasibility study, the team of consultants has identified the challenges faced by the private sector to access the FCORs markets in order of importance as follow:                 

Lack of marketing Lack of professional networking opportunities Lack of business development resources Business environment Discriminatory product specifications Customs tariffs levels Customs procedures Tax problems Public procurement Movement of persons Other barriers and problems Intellectual property rights (IPR) Movement of capital Legal status of the enterprise Quantitative restrictions Competition conditions Anti-dumping and countervailing duties and safeguard measures

Additionally, the BSOs and Institutional bodies have expressed the need for greater assistance in obtaining market intelligence to assist with market penetration, particularly the identification of opportunities in the FCORS and of prospective buyers and distributors for their products. In this context direct financial assistance and/or co-financing is a critical component of the development program implemented for assisting private sector in accessing the FCORs markets. This type of financial support to firms is unfortunately very limited to a few CARIFORUM countries and does not in fact apply to the sectors that would have been identified as competitive for the FCORs markets. While CARIFORUM countries are continuing to support private sector competitiveness at national levels it is essential that some actions be carried out through a regional approach. This is especially valid for those actions addressing common needs such as labeling and certification requirements as well as the enhancement of the regional business environment and the promotion of specific sectors by encouraging the creation and/or strengthening of regional working groups and/or associations.

The consultation carried out by Smart Consulting also highlighted issues in relation to services, in particular cultural and creative industries, and confirmed the need for capacity building of the private sector. The consultation also emphasized the importance of support in the areas of Sanitary and Phytosanitary (SPS) measures, Rules of Origin (RoO) and Technical Barriers to Trade (TBT). 2.0 BACKGROUND 2.1 THE FCORs The French Caribbean Outermost Regions are geographically located in the Caribbean Basin while they belong to France, thus they are to the European Union, Outermost Regions. As far as Guadeloupe and Martinique are concerned, the latest trade data indicates a trade deficit fluctuating around 2 billion Euros. For both Martinique and Guadeloupe trade takes place almost exclusively with continental France (on average 57% of total imports, mostly consumer products, and approximately 33% of total exports), and to a lesser extent with the rest of the EU. It is estimated that less than 1% of M rtinique’s trade is with its neighboring Caribbean islands. Principal exports from Guadeloupe include bananas, sugar, and rum, while imports consist of foodstuff, fuels, vehicles, clothing and other consumer goods, and construction material. About 60% of exports are directed towards France, 18% to Martinique, and 4% to the United States. 63% of imports come from France, 4% from Germany, 3% from the United States, 2% from Japan, and 2% from the Netherlands Antilles. Martinique's exports are mostly refined petroleum products, bananas, and rum, while imports include petroleum products, crude oil, foodstuff, construction materials, vehicles, clothing, and other consumer goods. Around 45% of exports are directed towards France and 28% go to Guadeloupe. 62% of imports are from France, 6% from Venezuela, 4% from Germany, 4% from Italy, and 3% from the United States. French Guiana is the only FCOR located on the American Continents and shares land-borders with Suriname. The backbone of French Gui n ’s economy comprises mining and agricultural activities and the construction sector. Its economy is usually stimulated by new public infrastructure and construction projects. Fishing, rice cultivation, cattle-rearing, lumber harvesting, gold mining, tourism and the aerospace industry are the main industries in French Guiana. However, despite its location on the South American Continent and it enjoying a tradition of hosting trade shows, a similar trade deficit and dependence on trade with continental France as is the case with the other FCORs exists. In 2009, French Guiana registered imports of €993 million €s compared to exports of €115 million.

French Guiana mostly exports shrimp, timber, gold, rum, and rosewood essence, while imports consist of food (grains, processed meat), machinery and transport equipment, fuels, and chemicals. 52% of exports go to France, 14% to the United States, and 6% to Trinidad and Tobago. 62% of its imports come from mainland France, 7% from Switzerland, and 2% from the United States. 2.2 CARIFORUM The CARIFORUM Group comprises 14 CARICOM Countries (Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Jamaica, St. Christopher and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname and Trinidad and Tobago) and the Dominican Republic. These countries have been involved in a long standing regional integration process since 1973 however intra-regional trade is relatively small – current estimates are about 14% of total mem ers’ trade. In other words, most CARICOM countries export mainly to external markets and depend little on intra-regional trade. The United States ranks first as CARICOM trading partner, the EU and Latin America are growing as a major trade partners. Two smaller partners, Canada and Asia, have opposite trends, with export growth to Canada expanding slowly, compared to recent rapid growth to Asia, albeit from a very small base. Aggregate export data, however, can be misleading, skewed by the large portion of petroleum-related products from Trinidad and Tobago. If energy exports are subtracted, trends adjust downward showing much smaller growth in extra regional exports, particularly to the United States (see section on U.S. trade below.) The EU is CARIFORUM's second largest trading partner, after the US. In 2011, trade between the two regions came to over €8 billion. In 2011 CARIFORUM ran a trade deficit with the EU of some €2 2 billion. In other words, CARIFORUM countries exported €2 2 billion less in goods and services to the EU than they imported from the EU. The main exports from the Caribbean to the EU are in: fuel and mining products, notably petroleum gas and oil, bananas, sugar, rum, minerals, notably gold, corundum, aluminum oxide and hydroxide, iron ore products and fertilizers. The main imports into the Caribbean from the EU are in: boats and ships, cars, construction vehicles and engine parts, phone equipment, milk and cream and spirits.

2.3 BUSINESS OPPORTUNITIES In ‘ lue terms’, CARIFORUM goods exports to all three FCORs are dominated by mineral based products (petroleum and gas), metals and chemicals that are exported from Trinidad and Tobago. Mineral exports account for over 90% of the value of all CARIFORUM exports to the FCORs. Apart from these mineral exports which are dominated by large multinational companies the greatest export opportunities for CARIFORUM are to be found in agricultural and seafood products, agro-processing (sauces, spices, condiments, jams, jellies, etc.); and paper and paperboard products. The FCORs exports to CARIFORUM are largely dominated by mineral based products. Data shows that from 2007 onward, overall exports of goods from the FCORs to CARIFORUM have experienced a drastic decline from USD 339,208,213.00 in 2006 to USD 238,145,616.00 in 2008. The top five categories of products exported from the FCORs to CARIFORUM during 2006 - 2008 are: mineral products, machinery electrical, transportation, metals, chemicals and allied industries. (See Appendix F) The EPA brings opportunities for Trade in goods is as follows:  Removal of customs duties and non-tariff barriers  Rules of origin: preferential entry on the EU market for products made in CARIFORUM countries  EU Assistance to the CARIFORUM Countries to improve their capacities to trade. With respect to the trade of services through the EPA, 29 sub-sectors are opened to Caribbean professionals. The agreement also allows the possibility for CARIFORUM entrepreneurs/investors to establish new businesses or invest in existing firms in the EU. Additionally, the Special protocol on entertainment and culture offers possibility to supply entertainment services in the EU Countries except Belgium. Several studies and reports have been developed on trade and investment opportunities between the FCORs and their Caribbean neighbours. In 2007, Victor Vaugirard highlighted in a study the different kinds of technical barriers to trade and investment in the region and made some recommendations to improve trade exchanges between both sub-regions. Other studies conducted by Lydia Barfleur, Lucia Angelo and Murielle Lesales in 2008 and 2009, Keith Nurse, Larry Placide and Noel Watson in 2010 identified opportunities for trade and investment between the FCORs and CARIFORUM:    

Environmental Services Cultural Services ICT Services Maritime Services

• • • • • • • • •

Health and Wellness Services Management Consulting Services Professional Services Renewable Energy Education Services Tourism Food products Vegetable products Machinery Electrical

3.0 ANALYSIS OF MANAGEMENT UNIT

SCENARIOS/MODELS

FOR

THE

TECHNICAL

3.1 OVERVIEW The objective stated in the TOR under this consultancy is to examine the feasibility of establishing a Joint Technical Management Unit (the Unit) to assist exporters from CARIFORUM states that are interested in entering the French Caribbean Market (as well as to assist French Caribbean Exporters with market information on the CARIFORUM region). Additionally, the Unit can assist with the identification and implementation of projects between Caribbean Export and stakeholders from the FCORs. One of the biggest challenges for business support organizations in the region is guiding the private sector on how to trade with the FCORs. Expanding business internationally can be an expensive and risky enterprise. It requires local knowledge and contacts as well as knowledge relating to local regulations and the right contacts for the services required by the businesses. Therefore, Business Support Organizations require support to assist their mem ersâ€™ successful and sustained penetration of the French markets. Diagram I: Findings on Trade and Promotion Services offered by the BSOs

Training Programs/ Seminars

Foreign Trade Missions

Trade Show Participation

Agents/ Distributors searches

Market Research

Foreign Company Background Checks

Product pricing/ Analysis

3.2 SCOPE of WORK of the TMU The proposed TMU should aim to help BSOs and by extension firms compete successfully on the FCORs markets through the provision of dedicated market support including: 17

    

Advice/information services for initial market research professional help from export promoters who have widespread export experience Information on various methods of conducting business in the FCORs Help with meeting language and cultural requirements Assistance in bringing key contacts Helping firms market themselves on the FCORs markets.

Chart III: Findings on the needs of Exporters:

10 9 8 7 6 5 4 3 2 1 0

Services

Based on Diagram I and Chart III it is clear that the most important need of the CARIFORUM exporters is not being met, In that, the need for business facilitation services is not being met by the BSOs and without this crucial need being met, effective and sustainable penetration of the FCORs and by extension mainland Europe remains a most difficult task. The establishment of a Technical Management Unit to facilitate this need and strengthening the provision of other needs was therefore envisaged and thus the request for this consultancy emerged as an initial step in filling this gap. The scope of work that is to be covered by the Technical management Unit is as follows: 18



    



Assistance with the identification and implementation of EU supported projects that are targeted at improving trade and investment between CARIFORUM States and the French Caribbean Outermost Regions Provision of timely market information and business opportunities relating to the French Caribbean and CARIFORUM Markets. Coordination of trade fairs, trade missions, individual market visits and the arrangements of confirmed appointment (facilitation of buyer/seller contacts). Organization of seminars relating to “Doin business between CARIFORUM States and the French Caribbean Outermost Re ions” To collect, review and distribute customized primary and secondary data research including data analysis and the formulation of market entry or market expansion strategies. Engagement and necessary follow up with contacts in the French Caribbean and CARIFORUM States on behalf of clients of Caribbean Export and French Caribbean Business Support Organizations. Assistance with Trademark (and other forms of Intellectual Property) and health registration.

Diagram II: Scope of Work of the TMU

FCORS Markets

Market access information

Support to meet legal requirements

TMU

Project Implementation Support

Coordination of Trade fairs/ Trade Missions/ Business to Business Meetings

Business Facilitation

Trade support institutions are a good starting point when looking at the proposed scope of work for the TMU. Indeed, the consultation carried out by Smart Consulting has identified that a number of institutions are mandated to provide such services to private sector firms. However, it appears that there is a gap between the trade and promotion services provided by BSOs and the specific needs identified of exporters to gain access to the FCORs Markets. Therefore, it is essential to collaborate with existing trade support institutions and to ensure that there are the adequate linkages between the services to be provided by the TMU and the services that are provided by the BSOs. This will not only contribute to fulfilling the Caribbean Export wider mandate, that is, the strengthening of the regional BSO but it would also fill the gaps identified. It is evident that because of the particular nature of the FCORsâ€™ markets and also due to the historical and geographical relationships that exist between 20

the two parties, the business facilitation services required are different in nature to those required by other trading partners. Therefore, for the CARIFORUM private sector to be successful in penetrating the FCORs’ markets, the business facilitation services that are usually provided ought to be adapted accordingly, to the context in which firms operate. The consultation carried out by Caribbean Export shows that a number of actors are already engaged in the activities proposed by the Task Force for the Technical Management Unit. However, a major hurdle is the absence of coordination at all levels coupled with the lack of human and financial resources required. A quick look at the business facilitation services provided by BSOs and services providers compared to the findings listed previously with regard to the challenges faced by the private sector allow conclusions to be drawn on what is required to fill the gaps identified. The needs of the CARIFORUM firms to assist in the penetration of the FCORs’ markets can therefore be summarized as follows: Diagram III: Services to be provided by the TMU

Institutional and on the ground Support

•Assistance for participation at trade fairs •Business Facilitation Services (translation/ B2B meetings/logistics/ Legal requirements: licences-certificationcontracts) •Product literature center •Single Company Promotion •Export financing (grants/loan guarantee programs)

•Marketing campaign •Digital Platform (information on trade opportunities in FCORs / Exporters Databases)

Networking and Linkages

•Market access information seminar/webinar •Customised market research •Foreign Partner Search •Testing facilities •Market entry strategy development

Market Information

3.3 Information Communication and Technology (ICT) infused TMU – DIGITAL PLATFORM (DP) In this era of digital revolution; many of the services identified above should be provided utilizing the available IT tools and the Internet to ensure that they remain sustainable and relevant. In this regard, the Smart Consulting Team would like to suggest that a Digital Platform (DP) be set up through the proposed Technical Management Unit to reinforce and strengthen the activities currently being carried to assist the private sector and therefore meet the specific needs identified. The resources allocated through the Unit would be mandated to essentially guide firms in utilising the digital platform in the most efficient manner. In addition to the support offered by the use of the DP, the TMU would coordinate capacity building programs and provide trade support services as required by the firms. Under this scenario the TMU would be established as an innovative trade information tool utilising the technology available while ensuring that technical support is provided to the firms that are interested in deepening the trading relations between the FCORs and CARIFORUM. An online platform for trading/business activity as proposed would help entrepreneurs identify, source and establish contact potential partners customers. To comply with the needs for strategic trading information for the TMU, the DP of the proposed TMU would comprise three levels: a level of static business information, a level of static trading information, and a level of dynamic information (business and trading). Level 1 – static business information This level consists of two information sublevels and one processing sublevel. Level 1.1 FCOR and CARIFORUM exporters database This database seeks to serve the needs of CARIFORUM companies that are potential exporters to the FCORs. It consists of a static description module and a simple processing module. Static business description module – The static information of the database will consist of: name, address, postal code, country, coordinates (telephones, URL, emails, name of director or board of directors, name of contact), the number of employees (using brackets), main products, and historically targeted countries for export activities. In addition to the factual information, there will be a short description of the company, with no more than 5 lines in average, in free text, important for search purposes. Processing module – The processing module will consist of a simple search tool to query the database and simple filters (filter by company, by trademark, by activities, etc.). This static description would be easily exportable in word/excel/text files. 22

The access to this database will be free of subscription. To access the content of this database, registration will be mandatory to attract potential new members. FCOR firms registered and listed in this database would be required to pay a small annual fee at some point; not necessarily upon rollout and will provide access to the higher level services described below. Access fee: No. Registration fee: Yes Level 1.2 – CARIFORUM and FCORs business support/facilitation services providers This database will collect, information on business support services providers (including lawyers, accountants, projects, translation services, government agencies, business support organizations). Being registered in this special database will cost a moderate yearly fee but will create linkages between FCORs/CARIFORUM businesses that may require specific business facilitation services. Access fee: Yes. Level 1.4 – Visualization export tools Visualization tools will help to visualize the static information contained in the Level 1 database (classic / pie, charts/ geometric). Level 2 – static trading information This level consists of one information sublevel and one processing sublevel. Access fee: Yes (for the whole level 2). Level 2.1 – FCOR trading history information database This module will record the trading history of the database members. Each member will be able to create and manage links with FCOR businesses and organizations that will be used to record his/her trading history. Each recorded history will integrate the period, nature of business, amounts involved, and several indications of the trading quality between the business partners. Since it is targeted to FCOR regions, the information stored will be anonymous for what concerns the non-FCOR business member. Level 2.2 – Visualization export tools Visualization tools will help to visualize the links between exporters and FCOR businesses will summarize the quality of links with various filters, including the type of business, geographic location, etc. Level 3 – dynamic business and trading information Level 3 may be thought as strategic dynamic information that comes on top of level 1 information, to help devise and optimize o mp nies’ core business and export strategies to the FCORs Markets. It is dynamic, context-sensitive information consisting of three sub-levels. 23

Access fee: Yes (for the whole level 3). Level 3.1 â€“ Exterior trading information Exterior trading information consists of trade and economic statistics, reports and briefs, tariffs data, trade terms, codes, elements of laws, and links on other relevant information. It will be updated in a timely fashion. Level 3.2 â€“ Automatic processing tools Association rules are a simple and efficient tool used in strategic export business out of a trading history, currently being used in a number of private bodies focusing on trading strategies. These rules will be crafted, in a timely fashion, automatically from the Level 1 information. Both the association rules and report summarizing the main rules found will be available to the subscribers, in a timely fashion. Older reports will be kept available for the sake of comparisons. Automatic visualization tools can also be implemented, to list, represent and group the most relevant association rules. Level 3.3 â€“ E-Newsletter and social network connections An e-newsletter is sent, not too often, to specific targeted members with key information covering the last periods (including information stored in the databases, association rules found, tendencies, etc.) and opening on the near future (such as on lessons from the recent trading histories and rules learned). In addition to this newsletter, a group will be created in social media (e.g. Facebook) to help people converse with each other, create social networking. This group will have moderator(s) to help people share information, ask questions and get the relevant answers. Diagram IV: A summary of how the Digital Platform will function Static Business Information (FREE)

Digital Platform Dynamic Business and Trading Information

Static Trading Information (FEE)

(FEE)

Table I: 3.4 DETAILED ASSESSMENT OF THE BUSINESS SERVICES TO BE PROVIDED ACTIVITY

In coordination with

Execution Finderâ€™s fee fee

BSOs

Trade Servic es provide rs Market Access Information Seminar/ Webinar Business Facilitation Services (translation/ B2B meetings/logistics/ Legal requirements: licensescertification-contracts) Product literature center Single Company Promotion Export financing (grants/loan guarantee programs) Digital Platform (information on trade opportunities in FCORs/Databases/online marketing campaign) Assistance for participation at trade fairs Customized market research Foreign Partner Search Testing facilities Market entry strategy development

Via the DP

* *

DP related fee

* *

* * * *

* * *

* *

* * * *

The Smart Consulting team has analysed 3 options to organise and meet the needs of the TMU to ensure that once established the Unit meets the needs of its users and is also sustainable and effective. The proposed options will guide Caribbean Export in establishing a sustainable and innovative system to assist exporters from CARIFORUM States that are interested in entering the French Caribbean Market as well as to assist French Caribbean exporters with market information on the CARIFORUM Region.

3.4 Option 1 – Establishment of a Technical Management Unit supported by a Digital Platform – with an office located in an FCOR (Guadeloupe/Martinique) reporting to Caribbean Export The first option which was proposed by the Clovis Beauregard Task Force is the establishment of an office in a FCOR. The first essential step would be to lease the appropriate office space to establish the office. The Chamber of Commerce and Industrie as well as the Regional Council can assist with the legal registration of the TMU to ensure that all legal and tax requirements are met and that the necessary immigration authorization allowing the staff to legally operate in Guadeloupe/Martinique is obtained. The first major activity would be to contact the BSOs and the existing CARIFORUM exporters to the FCORs and inform them of the services offered by the TMU. Subsequently, strong marketing material is to be developed to make known that business facilitation services as well as other services are now offered by the Unit. A campaign reaching universities, entrepreneurs throughout the Caribbean is to be launched allowing for partnering with as many BSOs and private sector members as possible. This campaign should consider the use of targeted advertising and not only the traditional use of emailing, publishing in social media and online newsletters. In order to effectively perform the activities listed above Smart Consulting is of the view that the office should be staffed with a minimum of 5 persons and among them there should be at least one person with the ability to speak, read and write French, English and Spanish fluently. The initial staffing recommendation is as follows: (See Job Description Appendix I)     

1 Manager – To oversee and Manage the daily operations of the Unit and ensure that targets are met 3 Technical Experts – To provide the required trade technical support 1 Administrative Assistant – To coordinate the activities of the TMU 1 Part Time/Contracted IT Technician – To maintain the DP as required 1 Part Time/Contracted IT Moderator – To act as an interface and sees what everyone posts, organises and replies and points the users to relevant answers already in the database.

The table hereafter shows the estimated cost related to setting up the Technical Management Unit in Guadeloupe/Martinique: The following are the assumptions that support the estimation of the cost and thus funds required to implement and support the TMU for a period of 5 years:  Salaries o Manager has a monthly salary of €5,000 The Manager is to be very highly qualified speaking both French and English and must working knowledge of both the French and English legal, financial reporting and tax systems. If possible the Manager is 26



     

 

to have direct experience working in both private sectors and is to know of the barriers and challenges faced by firms on both sides. The Manager is to come from a CARIFORUM State as it is felt that a CARIFORUM national will better push and support CARIFORUM exports to the FCORs. o Each Technical Expert will be paid a monthly salary of €4,000 They are also required to be fluent in English at a business level and have basic fluency in French. One of them should be fluent at a business level in Spanish. Two of the Technical Officers are to be CARIFORUM Nationals coming from different States. One Technical Officer is to be a FCOR National. o The Administrative Assistant is to be paid monthly salary of €3,000 as he or she needs to be highly skilled. The Assistant should be a FCOR National and assist and provide support for the other members of the TMU and provide for example, assistance with respect to the filing and completing of French taxes and liaising with French immigration and other authorities to ensure that the CARIFORUM Nationals have completed and continue to complete all the required annual French immigration paper work and that for health insurance. 3 full time staff members are therefore to be relocated from CARIFORUM states at a cost of €10,000 each. This includes airfare for themselves and family members and a month of rent paid and shipping costs. The Part Time IT Technician and Moderator are to be sourced locally at €1,000 per month for an estimate of 10 days of work per month. Office Equipment is calculated at a cost of €3,000 per member of staff. Office Rental is calculated as €1,500 per month with one mont ’s rent as a security deposit. Office Overheads include, electricity, water, office supplies and cleaning and servicing staff with an estimation of an installation fees totaling €1,000 Travel is estimated at a budget of €2,000 euro a month for one short stay in a CARIFORUM State. Income is generated from annual membership fees and service base fees (see Diagram IV above – pg. 24). However, cash inflows generated from fee based income are immaterial in nature and a separate detailed study and/or business plan is required to project the volume of clients and the type of services they will require along with a projection for FCOR firms participation and thus income generation. (NB: CCIM charges 60€ for each BSB service provided regardless of time spent on service.) Since Caribbean Export is based in Barbados, the cost of capital is based on the Barbadian Prime Lending Rate. The TMU will be based in Guadeloupe/ Martinique and thus Euro currency is used. Since funding is required before expenditure is incurred the Annuity Due present value factor was utilized.

Table II: Net Present Value Calculation of Estimated Funds required to sustain a Technical Management Unit in Guadeloupe/Martinique for a period of 5 years Description

DP Equipment Initial Analysis Fee Platform Registration Fee e ni l De elopment Fees (6 mt s @ 4,000€/mt ) IP Development Fees (6 mths @ 3,500/mth) Maintenance of DP: - Equipment - Technician Fees (10 days a month) - Moderator Fees (10 days a month) Office Equipment/Furniture Rental Deposit and Security Relocation Cost of Staff Office Rental Salaries Office Overheads Travel TOTAL

€/Yr 0 €/month (Yrs 1 -5) €/year (Yrs 1 - 5) 10,000 5,000 2,000 24,000 21,000

15,000 1,500 30,000

1,000

109,500

1,500 1,000 1,000

18,000 12,000 12,000

1,500 20,000 3,000 2,000

18,000 240,000 36,000 24,000

30,000

360,000

Barbados Upper Prime Lending Rate in July 2013 (see Appendix B) = 8.70% Barbados Lower Prime Lending Rate in July 2013 (see Appendix B) = 7.65% Cost of Capital calculated at (8.70+7.65)/2 = Net Present Value Factor of an Annuity Due (see Appendix C) PV factor is calculated by interpolating factors of rates of 8% and 9% (see Appendix C) Period

Cost Total Year 0 109,500 Total Years 1 - 5 360,000 NPV of Guadeloupe/Martinique TMU for a period of 5 years

PV Factor 1.00000 3.97416

It is therefore concluded that the estimated raw cost of funding a TMU for 5 years in Guadeloupe/Martinique may cost as much as €1 54 million in tod ’s dollars. It is imprudent to take into account potential revenue as part of this valuation. Though the TMU has the potential to generate revenue it will most likely be a ‘ ost e ntre’ and thus should be viewed as one unless further thorough analysis demonstrates otherwise. It is also important to note that an 28

8.18%

3.97416 € 109,500 1430,697 1540,197

advertising campaign budget is to also allocated to this project and this campaign cost is not included in this estimation as it should be the same for all options and should be supported by a quotation from an advertising agency or various media and online houses or it should be limited to what is specifically carved out for it by Caribbean Export and/or any other stakeholders/BSOs. 3.5 Option 2 – Establishment of a Technical Management Unit supported by a Digital Platform – with its office located in Barbados within Caribbean Export’s offices The Second option proposed by Smart Consulting was suggested by Caribbean Export officials at the December 2013 Task Force meeting. In this case, the Unit would report directly to the Manager for Trade and Export Development at Caribbean Export and as such would tap into Caribbean Export existing resources. The start-up costs in this scenario would mainly relate to the development of the DP as proposed above. Similarly as within the first scenario the first activity in this option would be to develop a targeted marketing campaign on the services offered by the TMU to firms that have potential for export on the FCORS markets as well as the wider European Markets. The proposed DP would be the core element of TMU and would be managed and maintained through the utilization of existing human resources of Caribbean Export. It is proposed to staff the Unit as follows: 

2 Technical Experts – To provide trade technical support as required

The table hereafter shows the estimated cost related to development and maintenance of a Technical Management Unit in Barbados managed by Caribbean Export and thus expanding on what already exists. The following are the assumptions that support the estimation of the cost and thus funds required to implement and support the TMU for a period of 5 years:  



Cost of initial equipment required if no existing equipment exists €10,000 The salaries of the Technical Experts based in Barbados would be lower than those based in the FCOR’s given that the cost of living is higher in the FCORs and expatriation. The monthly salary to attract Technical Experts fluent in French and English with working knowledge of the laws and business practices of both sub-regions is estimated at USD5,000/month and using an exchange rate of 0.7416 (31/01/14) this equates to approximately €3,700/month. Caribbean Export has existing office space and therefore this costing is based on an assumption that there is no rental requirement. This 29

 



assumption was not debated upon the review of the Interim Final Report or raised at the Task Force Meeting and thus it stands. The maintenance of equipment is just a monthly estimate and includes purchases and updates. The cost is an estimate of an annual budget of €18,000 divided into 12 monthly increments. The monthly travel budget is €3,000 as the Technical Experts are expected to meet with CARIFORUM Exporters in the FCORs possible on a monthly basis. The travel component is therefore, higher than that in Option I. The estimated time to completely establish and rollout the database and platform will be 6 months. Since Caribbean Export is based in Barbados, the cost of capital is based on the Barbadian Prime Lending Rate. However for continuity and comparability to the cost of establishing a TMU in Guadeloupe /Martinique the Euro currency is used. Since funding is required before expenditure is incurred the Annuity Due present value factor was utilized. As stated in Option I, cash inflows generated from fee based income are immaterial in nature and a separate detailed study and/or business plan is required to project the volume of clients and the type of services they will require along with a projection for FCOR firms participation and thus the resulting income generated. As stated in Option I, the advertising campaign cost is not included as it is a cost that is to be incurred and should be standard for each option.

Table III: Net Present Value Calculation of Estimated Funds required to develop and maintain a Technical Management Unit in Barbados for a period of 5 years Description

€/Yr 0 €/month (Yrs 1 -5) €/year (Yrs 1 - 5) 10,000 5,000 2,000 24,000 21,000 1,500 18,000 7,400 88,800 3,000 36,000 62,000 11,900 142,800

DP Equipment Initial Analysis Fee Platform Registration Fee e ni l De elopment Fees (6 mt s @ 4,000€/mt ) IP Development Fees (6 mths @ 3,500/mth) Maintenance of DP: Equipment Salaries Travel TOTAL

8.18%

€

3.97416

62,000 567,510 629,510

It is therefore concluded that upon initial analysis the estimated raw cost of funding the development, creation and maintenance of a TMU in Barbados for 5 years under Caribbean Export is approximately €629,510 in tod ’s dollars prima facie. This is significantly lower than the establishment of a TMU in Guadeloupe/Martinique. It is approximately 41% of the cost of establishing a TMU in Guadeloupe/Martinique. Not only is this option less costly, but given its location its effectiveness and performance assessment is easier to ascertain compared to options I and III.

3.6 Option 3 – Establishment of a Technical Management Unit supported by a Digital Platform – with an office located in St. Lucia reporting to Caribbean Export During the task force meeting held on the 11th and 12th December 2013 in Martinique where Smart Consulting presented its initial findings, it was raised by the delegates that a third option of establishing a TMU with an office in St. Lucia is something to be considered given the proximity of St. Lucia to Guadeloupe/Martinique. St Lucia, due to its proximity to Martinique enjoys mutually beneficial trade relationships with the FCORs. On a daily basis passengers can travel between Martinique and St. Lucia via air (four flights daily) or via sea (4 ferries). This and longstanding favorable diplomatic relations have allowed the two islands to develop constant and regular exchanges over the years. The shared creole language also serves as basis upon which trade can be carried out more easily compared with the nonFrench uni-language islands lower and higher up in the archipelago. A TMU supported by a digital platform with an office in St Lucia would therefore benefit from the proximity and ease of exchanges while avoiding the high cost of living reported in a FCOR. The TMU in St Lucia would function with a similar type digital platform (three levels: a level of static business information, a level of static trading information, and a level of dynamic information (business and trading)) as in Options I and II. Additionally, office space would be required for this TMU, in a strategic location in St Lucia and it is recommended that the office would be staffed as follows:    

2 Technical Experts – To provide Trade Technical Support 1 Administrative Assistant – To coordinate the activities of the TMU 1 Part Time/Contracted IT Technician – To maintain the DP 1 Part Time/Contracted IT Moderator

The St. Lucian TMU Staff are to report directly to Caribbean Export and would tap into its existing resources and programs while responding to specific requests with regard to trade with the FCORs. Consequently, the St. Lucian TMU will have to coordinate with Caribbean Export for the promotion of the services it offers as well as to provide capacity building services and other trade development support as required similar to Options I and II. The table hereafter shows the estimated cost related to development and maintenance of a Technical Management Unit supported by a digital platform in St. Lucia managed by Caribbean Export.

The following are the assumptions that support the estimation of the cost and thus funds required to implement and support the St. Lucian TMU for a period of 5 years:   



  



Cost of initial equipment required if no existing equipment exists €10,000 as in Option II. Initial Analysis Fee includes travel to Barbados by the Platform Developer to meet with Caribbean Export Staff and conduct a Needs Assessment over the course of 4 days as in Option II. The salaries of the Technical Experts based in St. Lucia would be lower than those based in both Barbados and the FCORs. The monthly salary to attract Technical Experts fluent in French and English with working knowledge of the laws and business practices of both sub-regions is estimated at XCD9,000/month and using an exchange rate of 0.2747 (31/01/14) this equates to approximately €2,500/month. The Technician and Moderator may be sourced from St. Lucia. Full Time staff is not required for support and updating. The estimated monthly cost XCD3,000/month and using an exchange rate of 0.2747 (31/01/14) this equates to approximately €825/month per staff member. Office space is estimated to be rented at a cost of XCD5,500/month and using an exchange rate of 0.2747 (31/01/14) this equates to approximately €1,500/mont . This cost was obtained by interviewing a BSO in St. Lucia. Furniture is estimated to cost XCD8,000 and using an exchange rate of 0.2747 (31/01/14) this equates to approximately €2,200 1 The maintenance of equipment is just a monthly estimate and includes purchases and updates. The cost is an estimate of an annual budget of €18,000 divided into 12 monthly increments. The monthly travel budget is €1,500 as the Technical Experts are expected to meet with CARIFORUM Exporters in the FCORs possible on a monthly basis and give the proximity to Martinique and Guadeloupe the travel budget should be significantly lower than that of a support office based in Barbados. On many occasions the Technical Experts can head across to Martinique for the day. The estimated time to completely establish and rollout the database and platform will be 6 months. Income may be generated from two general sources from an annual membership and also based on individual searches conducted and other services offered. Since Caribbean Export is based in Barbados, the cost of capital is based on the Barbadian Prime Lending Rate. However for continuity and comparability to the cost of establishing a TMU in Guadeloupe /Martinique the Euro currency is used. Since funding is required before expenditure is incurred the Annuity Due present value factor was utilized.

http://www.commercialsuppliesinc.com/office-furniture

As stated in Option I, cash inflows generated from fee based income are immaterial in nature and a separate detailed study and/or business plan is required to project the volume of clients and the type of services they will require along with a projection for FCOR firms participation and thus the resulting income generated.  As stated in Option I, the advertising campaign cost is not included as it is a cost that is to be incurred and should be standard for each option. . Table IV: Net Present Value Calculation of Estimated Funds required to develop and maintain a Technical Management Unit in St. Lucia for a period of 5 years 

Description

Equipment Initial Analysis Fee Platform Registration Fee e ni l De elopment Fees (6 mt s @ 4,000€/mt ) IP Development Fees (6 mths @ 3,500/mth) Office Furniture Rental Deposit and Security Relocation of 1 Member of Staff Maintenance: - Equipment - Technician Fees (10 days a month) - Moderator Fees (10 days a month) Office Rental Salaries Travel TOTAL

€/Yr 0 €/month (Yrs 1 -5) €/year (Yrs 1 - 5) 10,000 5,000 2,000 24,000 21,000 2,200 1,400 7,400

73,000

1,500 825 825 1,500 6,700 1,500 12,850

18,000 9,900 9,900 18,000 80,400 18,000 154,200

8.18%

€

3.97416

73,000 612,815 685,815

It is therefore concluded upon initial analysis that the estimated raw cost of funding the development, creation and maintenance of the St Lucian TMU for 5 years is approximately â‚Ź685,815 in tod â€™s dollars prima facie. Like Option II, this is significantly lower than the establishment of a TMU in Guadeloupe/ Martinique. The cost of the St. Lucian TMU is approximately 44% of the cost of establishing a TMU in Guadeloupe/Martinique. The start-up costs and annual costs are higher when compared to the Barbadian TMU Option as more staff and the renting of office space exceeds the savings in travel and the lower cost of living in St. Lucia. This Option is approximately 10% more costly than the Barbados Option II with respect to the cost of the Barbados Option II. What is important to note is that both Option II and III are significantly less costly than Option I and both are easier to manage and assess than Option I with Barbados being the easiest to manage due to its location within Caribbean Export. Like the Guadeloupe/Martinique TMU and the Barbadian TMU, the St. Lucian TMU is also estimated to be a cost centre. However, like the Barbadian Option II has a higher chance to become a profit centre than the TMU in Option I given its significantly lower annual costs.

4.0 Recommendations In an effort to enhance the trade environment between the FCORs and the CARIFORUM private sector, there is a need to streamline all efforts undertaken at various levels as it appears as though many actors are working in isolation towards the same common goals. There is not, as exists within FCOR BSOs, enough institutional cooperation and the private sector is not able to maximize the benefits from all that is being done to develop it. The needs of the CARIFORUM private sector for greater access to the FCORs markets may be summarize as follow:            

Market access information Seminar/Webinar Assistance for participation at trade fairs Business Facilitation Services (translation/ B2B meetings/logistics/ legal requirements: licenses-certification-contracts) Products literature center Customized market research Foreign partner search Single company promotion Export Financing (Grants/ loan guarantee programs) Testing facilities to meet EU standards Digital Platform (Information portal on opportunities in FCORs/ Databases) Market Entry Strategy Development Licenses and Certifications

Caribbean Export through the Clovis Beauregard task is seeking to facilitate CARIFORUM-FCORs trade and can achieve this through the creation of linkages between BSOs, Institutions and exporters. Numerous business facilitation services providers (BSOs and Firms) have poised themselves to provide business support to firms that are interested in doing business with the FCORs. These services have been limited to a certain extent and have not effectively met the needs of the private sector due to the dearth of data and the absence of focal point for coordination and central information. A TMU with a DP will seek to connect business and organizations while providing the required ‘ u m n pit l’ for ‘personal’ support. It will act as a focal point for the development and strengthening of trade relations between CARIFORUM and FCORs firms. There will be adequate coordination and integration of services provided by specialized institutions to exporters via the TMU. The administration and structure of the TMU ought to have a private sector orientation while seeking structural links with other trade support network members. A greater emphasis will be placed on applied market research linked to the strengthening of trade information services using modern technology.

To increase the ability of CARIFORUM firms to export to the FCORs, export development programs undertaken by the TMU will emphasize the impact and focus on a wide range of export product sectors (e.g. single company promotion, literature center, testing f il ities…) The effectiveness of the Technical Management Unit is based on its ability to effectively provide the specific business facilitation services that are required for successful market penetration on the FCORs markets. As demonstrated there already exist numerous BSOs and services providers in the region that are providing these services. It is important therefore to avoid the duplication of efforts. The establishment of the TMU with an office in Guadeloupe/Martinique as initially envisaged by the task force would be more expensive, risky and harder to performance assess when compared to its establishment within Caribbean Export Head office in Barbados. In this era of digital interconnectivity it is essential that the regional private sector utilizes the ICT tools available for them to remain competitive. Considering that the services industries have been reported on in various studies as a potential catalyst to increase the volume of export from this region, the use of the internet and other IT tools will determine success in export via the 4 modes of export2. It is more costly to establish a TMU with a DP based on the assumptions provided in this report as more is invested in a ‘front-end’ approach with respect to intellectual property. However, the DP with skeleton staff to complement it would be more sustainable on a long term basis as compared to DP with fully staffed office located in an FCOR. Not only is it costly to relocate staff, maintain an office and assess performance, but there is no guarantee that the gap that is the lack of business facilitation services is being bridged effectively in the FCORs that do not have an onsite CARIFORUM exporter’s TMU. Smart Consulting therefore recommends that the most sustainable and cost effective way to achieve the objective of getting the business facilitation services to the CARIFORUM exporters as soon as possible in an effective manner would be to establish a TMU supported by a DP with a small complement of staff within the Caribbean Export head office in Barbados, that is, Option II. This would enable CARIFORUM exporters to easily access vital information and services via a DP, while offering specific trade development support and data/information directly to firms and BSOs. Smart Consulting further recommends that the establishment of such TMU be done in 2 phases. Phase I should see the rollout of the digital platform of the TMU with a dynamic and cutting-edge advertising campaign and within 6 months to 1 year after gathering information provided through the digital platform the establishment of the support office in Barbados should take place in Phase II as required.

Mode 1: Cross border supply - services provided across a country border. Mode 2: Consumption Abroad - services provided to a foreign visitor. Mode 3: Commercial Presence - service provided through setting up an establishment abroad. Mode 4: Movement of natural persons - services provided by traveling to a foreign country to deliver the service.

During phase I, the required resources would be allocated to gather the required information to populate the platform. These resources will act in collaboration with the developers of the proposed DP. This cost has been taken into consideration in the estimated budget for the development of the DP. It is important to note that all Options within this report are to be given funding to be executed as this is further BSO activity. Though income can be generated as mentioned at least during the first 5 years of operation it will not be significant enough to subsidize any material portion of the cost. It is further recommended by Smart Consulting that specific capacity building programs be developed and implemented to respond to the specific needs identified during the consultation. Additionally, the International Trade Centre (ICT) Trade Information training program (which was provided to CARIFORUM BSOs) should be made available to BSOs in the FCORS. After the TMU has been established and operating for at least 3 years, vital information would have been gathered via the DP that would assist in streamlining the role and structure of a TMU in a FCOR should it be financially feasible and should there be the demand for such a Unit at that time. It is further recommended that the DP should be linked to and aligned with the proposed Regional Trade Information Network. A TMU with a DP along with a comprehensive advertising and education campaign will therefore seek to provide a bridge to the existing gap in the most cost effective manner.

Appendix A FCOR Export Technical Management Unit Questionnaire â€“ BSOs Your feedback is IMPORTANT. Kindly complete this brief questionnaire. Caribbean Export has been providing assistance for the development of sustainable trade relationships between CARIFORUM States and the French Caribbean Overseas Regions (FCORs). The actions being implemented by Caribbean Export under the 10th European Development Fund Regional Private Sector Development Programme for the deepening of cooperation between the private sector of CARIFORUM States and FCORs include the exchange of information on laws and regulations that affect trade and investment, support to export initiatives that target the outermost regions and the hosting of the CARIFORUM/FCOR/OCT Task Force on Trade and Investment. At a meeting of The Clovis Beauregard CARIFORUM/FCOR/OCT Task on Trade and Investment which is being chaired by Caribbean Export, it was suggested to establish a Technical Management Unit in a FCOR in order to facilitate dialogue and develop projects that cover CARIFORUM States, the French Caribbean and the EU Overseas Countries and Territories. This questionnaire will assist Caribbean Export in developing a feasibility study for the establishment of the said Technical management Unit. QUESTIONS: Name of Organisation: Head of Organisation: Title: Name of contact person and title (if different from above) Office Address: Mailing Address: City: Postal code: Country: E-mail address: Website URL: Facebook page:

What is the legal status of your Organisation?

Statutory Private Public Co-operative Non-governmental

Define the scope of your Organisation? National Regional Extra-regional International

Which of the following best describes your Organisation? Chamber of commerce Product/service association Trade/export promotion Investment promotion Small business association Service association Exporter association M n uf tu rersâ€™ association Importersâ€™ association

1) How often do you receive Market Intelligence information requests for the FCORs? Daily Weekly Monthly Annually Never

2) Do you have access to Market Intelligence information to guide firms/ companies in accessing the FCORs markets? YES NO

3) Do you provide business promotion services to firms to assist them in getting access to the FCORs? YES

(If No at question 3 please go to question 5/If Yes please answer the following questions)

4a) Did you provide the following services to firms in the past 3-5 years to facilitate market penetration to the FCORs:(Check all that apply) Training programs/ seminars Foreign Trade Missions Trade Shows Participation Market Research Agents/ Distributors searches Foreign Company Background checks Product pricing / Analysis

4b) Which Service in 4a above is provided most frequently? 5) What do you consider to be the largest challenge for CARIFORUM firms to sell their products/services to the FCORs? (Please check all that apply)

Lack of marketing Lack of professional networking opportunities Lack of business development resources Discriminatory product specifications Customs tariffs levels Customs procedures Tax problems

Public procurement Movement of persons Other barriers and problems Intellectual property rights (IPR) Movement of capital Business environment Legal status of the enterprise Quantitative restrictions Competition conditions Anti-dumping and countervailing duties and safeguard measures

6) Which of the following services relating to export to the FCORS do you have the capacity to provide? Market access information Seminar/Webinar Assistance for participation at trade fairs Business Facilitation Services Products literature Centre Customized market research Foreign Company Profile Foreign partner search Single company promotion Market Entry Strategy Development Licenses Joint-ventures and Partnerships contracts

7) Please write any other concerns, comments or queries that you think important and relevant to exporting to the FCORs Thank you for taking the time to reply to this questionnaire.

Appendix B FCOR Export Technical Management Unit Questionnaire - FIRMS Your feedback is IMPORTANT. Kindly complete this brief questionnaire. Caribbean Export has been providing assistance for the development of sustainable trade relationships between CARIFORUM States and the French Caribbean Overseas Regions (FCORs) . The actions being implemented by Caribbean Export under the 10th European Development Fund Regional Private Sector Development Programme for the deepening of cooperation between the private sector of CARIFORUM States and FCORs include the exchange of information on laws and regulations that affect trade and investment, support to export initiatives that target the outermost regions and the hosting of the CARIFORUM/FCOR/OCT Task Force on Trade and Investment. At a meeting of The Clovis Beauregard CARIFORUM/FCOR/OCT Task on Trade and Investment which is being chaired by Caribbean Export, it was suggested to establish a Technical Management Unit in a FCOR in order to facilitate dialogue and develop projects that cover CARIFORUM States, the French Caribbean and the EU Overseas Countries and Territories. This questionnaire will assist Caribbean Export in developing a feasibility study for the establishment of the said Technical management Unit. QUESTIONS: Name of Company/Firm: Head of Company/Firm: Title: Name of contact person and title (if different from above) Office Address: Mailing Address: City: Postal code if applicable: Country: E-mail address: Website URL: Facebook page if applicable:

Number of Employees <10

11-50 51-250 251-500 >500

Gross Annual Income Year established 1)Which products/ services do you provide? 2)Do you have access to the Market Intelligence information you require to sell your products/ services on the FCORs markets? 3) Do you sell your products / services to the FCORS? YES

If no, kindly proceed to Question 5. If yes, how long have you been doing business with the FCORS? 4) What does your business consist of? (please specify) 5) What is the volume of your export to the FCORs? >100 000 € per year 200 000 - 300000 € per year <500000 € per year 5) What do you consider to be the largest challenge to overcome in order for you to sell your products/services to the FCORs? (Please check all that apply) Language barrier Lack of marketing Lack of professional networking opportunities Lack of business development resources Discriminatory product specifications Customs tariffs levels Customs procedures Tax problems

6) Which of the following services relating to export to the FCORS would you be willing to pay for? Market access information Seminar/Webinar Assistance for participation at trade fairs Business Facilitation Services Products literature centre Customized market research Foreign Company Profile Foreign partner search Single company promotion Market Entry Strategy Development Licenses Joint-ventures and Partnerships contracts Internet based, WWW based services 7) Please write any other concerns, comments or queries that you think important and relevant to exporting to the FCORs.

Thank you for taking the time to reply to this questionnaire.

Appendix C Table V: List of Institutions Interviewed: ABI Financial Group Antigua & Barbuda Bankers Association Antigua & Barbuda Chamber of Commerce & Industry Ltd. Antigua & Barbuda Institute of Architects Antigua & Barbuda Investment Authority - Investment Facilitation Department Antigua & Barbuda Investment Authority - Investment Promotions Antigua & Barbuda Investment Authority - Small Enterprise Development Antigua and Barbuda Coalition of Service Industries (ABCSI) Antigua Hotels and Tourist Association Bahamas Chamber of Commerce and Emplo ersâ€™ Confederation Bahamas Agricultural and Industrial Corporation (BAIC) Bahamas Hotel and Tourism Association Bahamas Investment Authority The Grand Bahama Chamber of Commerce Barbados Coalition of Service Industries (BCSI) Barbados Investment and Development Corporation (BIDC) Barbados Agricultural Development and Marketing Corporation (BADMC) Barbados Chamber of Commerce and Industry Barbados Hotel and Tourism Association (BHTA) Barbados Institute of Architects (BIA) Barbados International Business Association (BIBA) Barbados Manufacturers' Association (BMA) Barbados Private Sector Trade Team (PSTT) Barbados Small Business Association of Barbados (BSBA) Belize Chamber of Commerce and Industry (BCCI) Belize Coalition of Service Providers (BCSP) Belize Times Press Belize Trade and Investment Development Service (BELTRAIDE) Institute of Chartered Accountants of Belize Dominica Association of Industry and Commerce Dominica Coalition of Services Industries Dominica Export Import Agency (DEXIA) Dominica Hotel and Tourism Authority

Antigua & Barbuda Antigua & Barbuda Antigua & Barbuda Antigua & Barbuda Antiqua & Barbuda Antigua & Barbuda Antigua & Barbuda Antiqua & Barbuda Antiqua & Barbuda The Bahamas The Bahamas The Bahamas The Bahamas The Bahamas Barbados Barbados Barbados Barbados Barbados Barbados Barbados Barbados Barbados Barbados Belize Belize Belize Belize Belize Commonwealth of Dominica Commonwealth of Dominica Commonwealth of Dominica Commonwealth of Dominica

Invest Dominica Authority OECS Export Development Unit (OECS/EDU) Association of Bankers & Financial Institutions Institute of Chartered Accountants of the Eastern Caribbean – Dominica Branch Asociación Dominicana De Empresas de Inversión Extranjera (ASIEX) Asociación Dominicana de Exportadores Cámara de Comercio y Producción de Santiago Inc (Santiago Chamber of Commerce) Cámara de Comercio y Producción de Santo Domingo Caribbean Export Development Agency - Sub Regional Office Center for Export and Investment of the Dominican Republic (CEI-RD) Delegation of the European Union to the Dominican Republic National Autorising Officer National Autorising Officer Grenada Chamber of Industry & Commerce Grenada Coalition of Service Industries (GCSI) Grenada Exporters Association Association of Regional Chambers of Commerce Bartica Chamber of Commerce and Industry Berbice Chamber of Commerce & Development Georgetown Chamber of Commerce Guyana Coalition of Service Providers (GCSP) Guyana Institute of Architects Guyana Manufacturers and Services Association Guyana Office for Investment (GO-INVEST) Repununi Chamber of Commerce and Industry Upper Corentyne Chamber of Commerce and Industry West Berbice Chamber of Commerce and Industry West Demerara/East Bank Essequibo & Islands Chamber of Commerce and Industry Chambre de Commerce et d'Industrie d'Haiti (CCIH) Association des Industries d'Haiti (ADIH) Association Touristique d'Haïti Centre de Facilitation des Investissements en Haiti Chambre de Commerce et d'Industrie de l'Ouest (CCIO) Jamaica Agricultural Society (JAS) Jamaica Business Development Corporation (JBDC) Jamaica Chamber of Commerce Jamaica Coalition of Services Industries (JCSI) Jamaica Exporters’ Association (JEA)

Commonwealth of Dominica Commonwealth of Dominica Commonwealth of Dominica Commonwealth of Dominica Dominican Republic Dominican Republic Dominican Republic Dominican Republic Dominican Republic Dominican Republic Dominican Republic Dominican Republic Dominican Republic Grenada Grenada Grenada Guyana Guyana Guyana Guyana Guyana Guyana Guyana Guyana Guyana Guyana Guyana Guyana Haiti Haiti Haiti Haiti Haiti Jamaica Jamaica Jamaica Jamaica Jamaica

Jamaica Promotions Corporation (JAMPRO) Private Sector Organization of Jamaica St. Ann's Chamber of Commerce Montserrat Chamber of Commerce & Industry Montserrat Economic Development Unit Montserrat Development Corporation Saint Lucia Chamber of Commerce, Industry and Agriculture Saint Lucia Coalition of Services Industries (SLCSI) Caribbean Association of Indigenous Banks Caribbean Electric Utilities Services Corporation (CARILEC) St. Kitts and Nevis Hotel and Tourism Association St. Kitts Investment Promotion Agency (SKIPA) St. Kitts-Nevis Chamber of Commerce Suriname Chamber of Commerce & Industry-Kamer van Koophandel en Fabrieken (KKF) Manufacturers Association Suriname Trade and Industry Association (VSB) Evolving TecKnologies and Enterprise Development Company Ltd. (ETECK) American Chamber of Commerce of Trinidad and Tobago Association of Caribbean States (ACS) Caribbean Agribusiness Association (CABA) European Business Chamber in Trinidad and Tobago (EurochamTT) Export TT Ministry of Trade & Industry The Energy Chamber of Trinidad and Tobago The Trinidad & Tobago Institute of Architects Trinidad and Tobago Manufacturers' Association Trinidad and Tobago Coalition of Services Industries Limited

Jamaica Jamaica Jamaica Montserrat Montserrat Montserrat Saint Lucia Saint Lucia Saint Lucia Saint Lucia St. Kitts & Nevis St Kitts & Nevis St. Kitts & Nevis Suriname Suriname Suriname Trinidad & Tobago Trinidad & Tobago Trinidad & Tobago Trinidad & Tobago Trinidad & Tobago Trinidad & Tobago Trinidad & Tobago Trinidad & Tobago Trinidad & Tobago Trinidad & Tobago Trinidad & Tobago

NB: Many of the Firms interviewed wished to remain anonymous.

Appendix D Table VI: Commercial Bank Selected Interest rates Source: Central Bank of Barbados

COMMERCIAL BANKS: SELECTED INTEREST RATES (%age per annum) Period Ended

Prime Lending - Lower FILR_PL

Prime Lending - Upper FILR_PU

Weighted Average Loan - Fixed by CBB FILR_WACB

Jan 2012

7.65

8.70

0.00

9.05

8.19

Feb 2012

7.65

8.70

0.00

8.95

7.65

Mar 2012

7.65

8.70

0.00

8.99

7.45

Apr 2012 7.65

8.70

0.00

8.67

7.83

May 2012

7.65

8.70

0.00

8.65

7.83

Jun 2012

7.65

8.70

0.00

8.64

7.79

Jul 2012

7.65

8.70

0.00

8.45

7.96

Aug 2012

7.65

8.70

0.00

8.44

7.76

Sep 2012

7.65

8.70

0.00

8.45

7.74

Oct 2012 7.65

8.70

0.00

8.40

7.30

Nov 2012

7.65

8.70

0.00

8.37

7.33

Dec 2012

7.65

8.70

0.00

8.42

7.31

Jan 2013

7.65

8.70

0.00

8.49

7.46

Feb 2013

7.65

8.70

0.00

8.48

7.47

Mar 2013

7.65

8.70

0.00

8.47

7.46

Apr 2013 7.65

8.70

0.00

8.47

7.48

May 2013

7.65

8.70

0.00

8.48

7.50

Jun 2013

7.65

8.70

0.00

8.46

7.48

Jul 2013

7.65

8.70

0.00

8.09

7.52

Aug 2013

Weighted Average Total Loans FILR_WATL

Weighted Average Selected Loans FILR_WASL

Appendix E Table VII: The Present Value of an Annuity Due

Appendix F Table VIII: CARIFORUM Export to FCORS 2006-2008 (US $) Source: Jampro study on CARIFORUM exports to FCORS by Berletta Forrester Export Promotion Manager

Appendix G Table IX: CARIFORUM Exports to FCORs by Category - 2006 â€“ 2008 (US$) Source: Jampro study on CARIFORUM export to FCORs by Berletta Forrester Export Promotion Manager 2011 February 22

Appendix H Table X: Total exports from CARIFORUM to FCORs 2006 â€“ 2008 (US $) Source: Jampro study on CARIFORUM export to FCORs by Berletta Forrester Export Promotion Manager