Wed | Aug 23, 2017

Editorial | Can’t be passive on remittance bill

Published:Sunday | April 30, 2017 | 4:00 AM

Last December, after a bill he co-sponsored was approved by the United States legislature, New York Democratic Congressman Elliot L. Engel declared that America's partnership with the Caribbean would be prioritised "for many years to come". This newspaper was sceptical.

Donald Trump was soon to be inaugurated as US president. And as we observed at the time: "Except for his bombast against undocumented immigrants and his promise to build a wall of exclusion along America's southern border with Mexico, Donald Trump has talked little of, and has shown even less interest in, US foreign policy for the Western Hemisphere. Nor does his emerging foreign-policy team suggest a significant focus by a Trump administration of the region, much less its Caribbean component."

Mr Trump has occupied the White House for a mere 100 days, but already, the gathering clouds warn of the likely danger for that special relationship that Congressman Engel and his colleague, Ileana Ros-Lehtinen, hoped to foster between the US and the Caribbean, and especially Jamaica. The impact may not be from Mr Trump himself but is the result of the ethos he has brought to Washington.

Mr Trump has been finding it difficult to get Congress to fund his wall, but last week, one of his supporters, Alabama House member Mike D. Rogers, offered a workaround. He tabled a bill, primarily targeted at Mexico - but including more than 40 other countries - that would levy a two per cent tax on remittances leaving the United States. On the cash heading to Mexico alone, the estimated return would be US$480 million.

 

Profound consequences

 

But the scheme as configured would also have profound consequences for Jamaica, which, too, is ensnared in Congressman Rogers' net. Jamaica receives around US$2.2 billion a year in remittances, which is roughly equivalent to its gross earnings from tourism. Looked at another way, two years ago, remittances, in US-dollar terms, were approximately 16 per cent of the value of goods and services produced in the country.

The bulk of this inflow is from the United States and is an important source of income for many Jamaicans, especially among the 20 per cent of the population that live below the poverty line. In any way, it might be viewed as the return on the investment in the education, including near 80 per cent of university graduates who head abroad.

The effect of Mr Rogers' levy, if all things remained constant, would be to snip about US$40 million annually from the remittance inflows into Jamaica. That is peanuts to America, but translates to more than J$5.2 billion, which would pay for a lot of school uniforms and tuition fees and basic necessities of life. And while the shortfall would derail the Government's fiscal programme, there would be additional pressure on the national accounts.

While we appreciate that Mr Rogers' bill could falter in committees, Jamaica has a responsibility to lead the Caribbean Community to robustly push back the bill. Passive monitoring won't do. Engel and Ros-Lehtinen must be made to bear witness to the stresses being placed on their Caribbean Strategic Engagement Act to help in galvanising a fightback to its first real test.