Brian Major | July 03, 2016 8:00 PM ET
The Caribbean Could Pay A High Price for Brexit
Days later, discussion surrounding the U.K.’s stunning vote to “Brexit” the European Union has focused on the pound Sterling’s sliding value and the regulatory, trade and personal mobility issues the U.K. will need to re-negotiate with the remaining E.U. members as the withdrawal proceeds. However it’s likely no region will be as profoundly impacted by the U.K. departure as the Caribbean.
Unfortunately the impact may be largely detrimental. For starters, the U.K. is a leading visitor source for several Caribbean countries. According to Caribbean Tourism Organization (CTO) data, 1.1 million U.K. tourists visited Caribbean destinations in 2015. The U.K.’s economic health and the strength of its currency directly impact the fortunes of several tourism-dependent Caribbean countries.
The U.K.’s importance to the Caribbean was highlighted earlier this decade when tourism-dependent regional destinations struggled along with UK economies during the global financial crisis of 2008-2009. British demand for Caribbean travel also fell following increases in the U.K.’s Air Passenger Duty (APD) tax in 2011.
Now following the Brexit’s aftermath, U.K. travelers may be concerned about the cost of buying dollars for Caribbean vacations according to Nadine Rankin of AMG, a U.K. tourism marketing agency. U.K. travelers may also alter their travel plans as the pound’s decreased value makes overseas travel more expensive. And the Caribbean diaspora - Caribbean nationals living in the U.K. and other countries - may find visiting their “home” countries more costly.
A lower pound could also impact Caribbean destinations indirectly, as the U.S. dollar’s strength versus the pound might compel more U.S. residents to consider a U.K. vacation. Although the U.K. is a top visitor source for Caribbean destinations, the U.S. market is significantly larger. Thus a shift in Americans’ travel preferences will impact Caribbean tourism.
Moreover the Brexit will profoundly affect tourism-reliant Caribbean destinations’ economic relationship with the U.K. and the rest of the world. For example, Britain’s departure will leave the 12 English-speaking independent countries of the Caribbean Community (CARICOM) with no structured trade relationship with that country.
That’s because Britain ceded its authority to forge trade agreements to the EU when it joined what would become that body in 1973, said Sir Ronald Sanders, Antigua and Barbuda’s ambassador to the United States.
Indeed Britain will have no formal trade agreements with any country when the departure is complete. Thus its first task will be to negotiate trade terms with the remaining 27 EU members and the U.S., Sanders said.
“In any event, a trade agreement with the 12 small Caribbean countries will not be high on Britain’s list,” Sanders said.
“Faced with having to renegotiate its trading agreements globally, where the U.K. will prioritize the Caribbean is unclear,” added David Jessop, executive director of the Caribbean Council.
Sanders also pointed out that the Caribbean’s representation in Europe via the U.K.’s E.U. membership represents “the only such formal comprehensive arrangement Caribbean countries have with any other country or region of the world.”
Caribbean destinations will also “have to decide how [they] ensure relations with the rest of Europe remain strong,” said Jessop. U.K. officials served for many years as a voice for Caribbean destinations in E.U. meetings and the countries now face “an increasingly skeptical group of member states that for the most part have no relationship with the region,” Jessop said.
Indeed the Brexit’s arrival has introduced a few clouds of doubt into what had been a largely sunny 2016 forecast for Caribbean destinations. Going forward, the region’s relationship with the international community and its ability to forge effective global partnerships will be critical to its tourism success, which relies on goods, services and visitors from around the world.
For now, Caribbean tourism leaders are speaking in positive terms “As vulnerable and unpredictable as the tourism industry can be, it has a strong record of resilience,” said Hugh Riley, CTO’s secretary general.
“Ultimately consumers will exercise their right to travel and the Caribbean’s penchant for resourcefulness in times of crisis will no doubt continue to serve the region well in attracting its fair slice of the tourism pie.”
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