Canada & Barbados: the Next 100 Years

Can you imagine Barbados as the 11th province of Canada? Like Hawaii – the 50th state of the American union. How would life have been different had Barbados and the West Indies become politically joined with Canada? If this sounds too unbelievable, readers would be surprised to learn that three such proposals were presented and […]

By Tom Sears

November 13, 2013

Can you imagine Barbados as the 11th province of Canada? Like Hawaii – the 50th state of the American union. How would life have been different had Barbados and the West Indies become politically joined with Canada? If this sounds too unbelievable, readers would be surprised to learn that three such proposals were presented and debated by the Government of Canada in the 1900’s. Political union with Canada never occurred but these two countries are so close that this was given serious consideration, a few times! This might help explain why Canada and Barbados have so much going on together in business, trade, culture and society. Barbados is the third largest destination for Canadian direct foreign investment, after the United States and England. How did we get here?

Though commerce between these two countries has flourished over several centuries, in 2008 these two long-standing trading partners celebrated the 100th anniversary of Canada’s Trade Commission in Barbados. Canadian firms are today the largest foreign investor in Barbados creating thousands of direct and indirect jobs and helping to make international business one of the largest contributors to the economy of Barbados. But has this been good for Canada and Canadian citizens? And what lies ahead over the next 100 years for these partners?

Let’s examine this. But first let’s review the “official position” of both governments:

Barbados PM David Thompson visits Canada

In May of 2008 the “newly elected” Prime Minister of Barbados, the Honourable David Thompson visited Canada to lend his support to the Annual Barbados Gala Charity Ball [1] held each year in Toronto. In his remarks, Prime Minister Thompson referred to the 100th Anniversary of Canada’s Trade Commissioner in Barbados, and remarked: “This Trade Commission must have given the Canadian business sector some measure of confidence in the island, as financial institutions established themselves there shortly thereafter, beginning with the Royal Bank of Canada that opened a branch in Barbados in 1911,” creating the cornerstone of international business in Barbados. International business plays a crucial role in Barbados society, contributing 63% of corporate taxes paid (2006).

PM Thompson also highlighted the contribution that Barbadians have made to life in Canada. He said: “We’ve taught and learned a lot from Canada and Canada has taught and learned a lot from Barbados. A small island such as ours with limited resources has managed to do so much and has exceeded expectations.” He was referring to a long list of Barbadians who have contributed to life in Canada including: the noted author, Austin Clarke; the Honourable Anne Clare Cools (Canadian Senator); Kevin Weekes (NHL goalie, whose parents were born in Barbados); Patrick Husbands (jockey, 2003 Canadian Triple Crown winner) and Marita Payne (2 Olympic silver medals for Canada in 1984).

Canada’s PM Stephen Harper Encourages “expansion”

Canadian Prime Minister Stephen Harper lent his support to the relationship when he visited Barbados in July 2007. To an audience of international business and governmental leaders his message was clear. Mr. Harper celebrated the 100 years of partnership between Canada and Barbados and stressed that his Government is committed to “expanding Canadian political and economic engagement in the region.” “Barbados is a key partner in the region” for Canada he said, noting that “Canada and Barbados share objectives that include economic growth and security.”

100 Years of Investment in Barbados. Is this “good” for Canada?

Barbados has great “Natural Resources”[2] for international business and wonderful weather. But why do Canadian companies continue to invest in Barbados? Is Canada’s investment of capital and the jobs created in Barbados actually “good” for Canada?

To understand the answer to these questions we must first take a quick look at macroeconomics. Driven by nearly 2 decades of surplus budgets and sound economic management, Canada now finds itself with surpluses in fiscal budgets as well as balance of payments. Professor Walid Hejazi from the University of Toronto’s Rotman School of Management recently researched investment flows from Canada to Barbados and presented a crucial finding. Today Canada needs its companies to invest outside of Canada. Having reduced its debt has taken Canada into a very strong fiscal position as evidenced by the strength of the Canadian dollar. With these surpluses Canada needs to increase its focus outside of Canada for investment purposes.

According to Hejazi: “Canada has been transformed from an economy historically dominated by ‘foreign (direct) investors’ (FDIC) to an economy of significant direct investment abroad (CDIA). In 1970 (Figure 1) Canada had $4 of inbound foreign investment for every $1 being invested outside of Canada. In 1997, the investments in and out of Canada were equal.” From 1997 forward Canada continued to increase its investment OUTSIDE of Canada. “Over the period 1970 – 2007, the pace at which Canadian business has expanded abroad has far outpaced the rate at which foreign investors have expanded in Canada.” Canadian businesses have become increasingly important players in the global economy.

Figure 1 (Hejazi)

Canada Openness FDI

Figure 1

CDIA = Canadian Direct Investment Abroad

FDIC = Foreign Direct Investment in Canada

What’s Good for Canadian Business…

As Canadian leaders have explored global markets, business has discovered that using Barbados’ extensive array of “dual tax treaties” (DTAs) has allowed Canadian companies to “headquarter” their global investments in a single location and has enabled them to manage multiple investments on a single Barbados business platform. We see many examples of this today – capital does not stay in Barbados but is invested outside of Barbados especially accessing emerging markets in Eastern Europe, Latin America, Indonesia and Asia where Barbados has DTAs, resulting in Barbados becoming the most important Offshore Financial Centre for Canada. By using Barbados as a conduit, risk and the cost of capital are reduced, increasing financial performance and competitiveness. The Canadian tax treaty then provides Canadian firms with critical economic advantages. Together this formula has allowed Canadian firms to enter foreign jurisdictions, increase their competitiveness and be successful in new markets.

…is Good for Canada!

These new markets do represent higher risk and higher costs. But using Barbados as a conduit allows Canadian companies a lower cost of capital and greater opportunity for stable returns. Canada may be considered a smaller player on the global stage, but Canadian companies are proving to be successful global competitors. Over the past 10 years Canada has experienced increased economic success, increased business activity outside of Canada, increased “global jobs” inside of Canada, greater international activity within Canada and increased export of Canadian goods and services to these foreign markets. The role that Barbados has played in allowing Canada access and success in new markets has also driven new revenues for the Canadian economy. That translates into new and better jobs, higher corporate and personal income taxes, increased stock prices and a stronger dollar.  We can only conclude that this is indeed “good for Canada.”

What Canadian Businesses are Using Barbados?

Numerous Canadian companies and industries are operating in Barbados today including:

  • Financial Services (Banking, Insurance, Reinsurance, Mutual Funds, Fund Management)
  • Manufacturing
  • Pharmaceutical
  • Holding Companies
  • Family Offices (private banking, trust and investment management)
  • Joint ventures (technology, oil and gas, alternate energy)
  • Licensing entities (Intellectual Property)

These companies are particularly attracted to Barbados due to the extensive array of double taxation treaties Barbados has developed, including: Austria, Botswana, Canada, China, Cuba, Finland, Malta, Mauritius, Mexico, the Netherlands, Norway, Sweden, Switzerland, United Kingdom, United States of America, Venezuela, and the Caribbean Common Market (CARICOM). These treaties provide access to these markets, and incentives such as foreign currency tax credits, tax concessions and low tax rates.

To meet their needs international investors have several choices of operating structure: International Business Companies, regular business companies, trusts, local or offshore, banks, merchant banks, SRLs (societies with restricted liability), partnerships, and captive insurance companies (Qualified or Exempt Insurance Companies), mutual funds or any combination of these. As companies go global they work with legal and financial planners to meet the unique needs of the firm.

The Future – What’s Next for Canada in Barbados?

So what’s ahead in this 100-year relationship? To get a glimpse of the future let’s take some lessons from the past. If we travelled back 100 years to 1908, we would be reading that Barbados on July 17th of that year passed a law giving preferential treatment to the import of Canadian goods into Barbados “flour, cheese, cordage, butter, hay, oats, peas, fish, lumber, bacon, hams, iron, steel nails, etc. on condition that Canada gives preference for West Indian sugar as against sugar from foreign countries.”

Returning back 100 years to 2008, we now read that Canada announced the signing of a “Free Skies” Agreement with Barbados, to accommodate Canadian merchandise exports and imports and the 50,000 Canadians (2007) that travel to Barbados each year.

From cod, lumber, sugar and molasses to culture, financial services, manufacturing and “free skies” – who could have imagined these two countries with such diverse contrasts would form such a rich and on-going relationship as Canada and Barbados have for the last 100 years. The Agreements have changed, but the goal to work together to find “win-win” solutions for both countries remains as strong today as ever in the past 100 years.

When asked for his views, Minister of State for International Business the Honourable Donville Inniss was very clear on the future of International Business in Barbados. “Barbados is not a ‘brass plate’ international centre. We have a great reputation and want to work with serious international corporations to expand on that reputation. The government of Barbados is committed to International Business. We will continue to build on our competitive advantage of dual tax treaties. We will ensure that our services meet the needs of international investors. We want international business to come to Barbados to stay, and to grow with us. We will work with our chosen investors to ensure that their success accrues long term benefits to the investor, as well as the citizens and country of Barbados.” On the subject of dual tax treaties, Minister Inniss said: “We are targeting several new countries as well as South America and Asia. Also, our plans to open our Embassy in China are progressing well. These are the building blocks that will give our international investors even more capability to establish Barbados as their headquarters for investment in the Caribbean region and around the world.”

Canada’s High Commissioner, His Excellency David Marshall, endorsed the expansion of new DTAs and also added: “I also see opportunities for Canadian companies to work with Barbados in new products, such as medical tourism, as well as infrastructure and educational opportunities. We’ve had a great 100 years together and I see that continuing.” Jacques Desjardins, the Canadian High Commission’s Sr. Trade Commissioner added: “In addition to the recently signed ‘Free Skies Agreement,’ we are currently working on oil exploration off the coast of Barbados and alternative and renewable sources of energy – Canada has leading expertise and technologies to drive these opportunities forward for Barbados.”  He continued: “We are also focusing on Services and Capital Projects; Agriculture and Food; Environment; ICT; and Building Products and Construction. There are many areas of mutual opportunity.”

The Next 100 Years Look Bright!

The stars would seem to be aligning for Canadian Business that invests globally through Barbados. The governments of Canada and Barbados, and their leaders, are applauding the successes of the past. The infrastructure continues to strengthen and we have the benefit of much momentum in place. Most importantly at the core of this relationship is an intention to build “win-win” solutions and that has proven to be “good” for the people of Canada and Barbados.

New opportunities are coming forward every day. We can only say that the future is looking bright for the next 100th Anniversary Party! I hope to see you there!

So, is now the time to consider yet again making Barbados the 11th province of Canada?

For more information on the relationship between Canada and Barbados, please refer to “Passport to the Heart: Reflections on Canada – Caribbean Relations”[3] by celebrated Barbadian, Dr. Trevor Carmichael.



[1] The Barbados Gala Charity Annual Ball is attended each year by 1000 Barbadians and friends of Barbados to raise funds for scholarships and charities. This very popular event is run by the Barbados Consul General’s Office (416) 214-9021.

[2] Business Barbados 2008 – “International Business Discovers the Natural Resources of Barbados” – T. C. Sears – pp 30-32

[3] Carmichael – “Passport to the Heart – Reflections of Canada Caribbean Relations” – 2001 – IRP, Jamaica


This article was first published in the 2009 Edition of Business Barbados.

Tom Sears

Tom Sears, MBA (University of Toronto - Rotman), Ph.D. (St. Gallen University, Switzerland) is Chairman of BIBA - Canada. He is also the Managing Director at BarCan Solutions. Tom previously headed international subsidiaries for RBC for over 15 years. He is Past President of the Barbados International Business Association and works actively and has written extensively on matters of international business. He lectures at University of Toronto's Rotman School of Management.