Question

2. a. List the types of regional trade agreements. (1 mark)

b. In your own words, describe any two (2) types of regional arrangements. 5.

c. What are some of the concerns raised over the invitation and establishment of OFCs in the Caribbean?

d. Based on your reading and critical analysis, do you think these reasons are valid? State why.

e. Suggest one way in which regional governments should address some of the issues identified in 5(a).

Answer 1

a) mainly five types of regional trading agreement they are

preferential trade agreement ( PTA)

free trade area ( FTA)

customs Union ( CU)

common market ( CM)

and economic Union (EU)

b) * Preferential trade area

It is an agreement in which two or more countries produce or abolish tariffs on a limited number of products. This level of economic integration is referred to as a preferential trade agreement between two countries. An example of preferential trade agreement is US- Canadian agreement on trade in automobile and parts.

b) Free trade area

The second common integration scheme is the free trade area in which all the members of the group remove that is on each other's products while at the same time each member retains is independence in establishing trading policies with non members. An example of this stage of integration is the North American free trade agreement consisting of Canada ,Mexico and the United States. The United State also has free trade agreements with Israel and Chile.

c) First of all OFC's are places that facilitate international financial flows than facilitating them. The risks posed by OFC's are as follows.

* jurisdictions hosting OFC's may have incentives to lower their operating quotes by reducing their financial regulatory and supervisory standard, with the result of their rising competitiveness vis-a-vis is onshore Financial Institutions.

* with growing global financial integration, weakly supervised entities in OFC's could easily generate adverse spillover effect onshore, compounded by the lack of that a provision on OFC activities.

* carribbean OFC's are vulnerable to international threats. To build an Of takes time.And it can be threatened very easily as the business is of essence quite easy to move.

* There is widespread abuse of Financial services offered by OFC's

d) The reasons are indeeed valid to a greater extent.

*First of all lets talk about international threats.

OFC's have been wrestling with the alphabet soup of international initiatives for sometime. Acronym it like BIS( bank for international settlements) EUSD (European Union savings directives )financial action task force ( FATF) financial stability board (FSB) International Association of insurance supervisors ( IAIS) International Monetary Fund ( lMF) role of the tongue .Despite these, or because of them as some would claim , many but not all the faces have thrived . The initiatives continue a apace particularly with respect to cross border assistance ,principally exchange of information in an over broadening range of areas including tax.

*The abuse of financial services provided by the OFC's have led to major issue of outright tax evasion and money laundering.

* Financial services industry is critical to the economic well being of small International Financial Service Centres such as Bahamas, Bermuda, the British virgin islands , the Cayman Islands, the channel islands Gibraltar and the Isle of man, it is the major driver of the high per capita GDP figures . Some of these jurisdiction have driving tourism industries also but these while welcome tend for the most part to provide and unskilled and low paying jobs.

e) first OFC's must ensure that their regimes meet currently accepted and applied International standards and are effectively implemented. In particular must become more transparent and better at a prompt and effective enforcement of their laws and currently, they shoot themselves in the foot by defending outdated regimes and by encouraging Luddite attitudes in certain professional circles and loss high quality business for reputational reasons.OFC's should learn which battles to fight. It may seem counterintuitive not to object to a financial service tax . But if everyone were to implement one,such a tax at a competitive rate would be a very useful additional source of revenue for OFC's.

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