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Jun 17, 2003

The Overseas Collectivity of St. Barthélemy

Background:

Ever since the Franco-Swedish Treaty of August 10, 1877 whereby St. Barthélemy was ceded to the French, the unique nature of the historical treatment of the island of Saint Barthélemy as a result of its specific social, geographical and economic realities is something that, although never completely ignored by the French Government, has never been legislated upon to date. The legislation applicable to the other French communes, departments and other islands have never been applied in St. Barthélemy and the island, after many years of efforts by various island administrations, is in the process of obtaining political and legislative clarification. St. Barthélemy has been afforded the opportunity to present a project whereby the social, economic and geo-political realities of the island of would be entitled to legislative recognition.

Article 73 or 74?

St. Barthélemy is currently at its historical crossroads with the approval earlier this year by the Senate and National Assembly of a constitutional reform permitting the creation of Overseas Collectivities (COM") pursuant to Articles 72,73 and 74 of the Constitution. Essentially, Article 72 allows for the existence of a category of overseas collectivities consisting of a single unity, and Articles 73 and 74 offer two methods by which to obtain such a result: - Article 73 provides for the continuation of the existing political and economic ties to the Department of Guadeloupe, of which St. Barthélemy is a Commune, along with Saint Martin and the other Communes of the island of Guadeloupe. Although Article 73 permits a certain leniency and negotiation in order to take into consideration the unique nature of the Collectivity, the same has not appeared to be the ideal solution in light of the important social and economic differences between the island of Guadeloupe and its other Communes and Saint Barthélemy, which is in fact 230 Km from the island of Guadeloupe, currently the Administrative organism to which the island is attached. - Article 74 of the Constitution, as modified by the law N’ 2003-276 of March 28, 2003 allows for a specific adaptation of certain aspects of National Law so as to better reflect the social, economic and functional realities of the island. It permits for the transfer of certain legal and legislative powers to the island, as seen below, and permits the management by the island of its development, resources and financial needs. In no manner does Article 73 or 74 modify issues of nationality, civil rights, public liberties, the competency and capacity of persons, organization of justice, criminal law and procedure, foreign policy and relations, public order and security, currency, electoral laws or other matters of State. The same provides for the transfer to the island of certain legislative, economic and social powers all while respecting the French Constitution and subject to the respect of the same. On April 30, 2003, the Municipal Council unanimously voted the approval of the Proposed Statute of the Overseas Collectivity of Saint Barthélemy pursuant to Article 74 of the constitution as amended as opposed to Article 73 and granted the necessary power to the Mayor of the island, Bruno Magras, to undertake the necessary steps to have the same approved by the French Government. The Statute providing for the Overseas Collectivity of Saint Barthélemy consists of the following:

Local Government:

The island's governing body becomes the Island Council, consisting of 23 members elected for the period of 5 years and chosen from a list of 28 candidates. The Island Council elects its President, Vice-Presidents and Executive Committee for a 5-year period. The Executive Committee acts as does the Adjoints to the Mayor, the Vice- Presidents, and the various commissions and members of the General Counsel and the Regional Counsel The specifics regarding the term, duration, method of notice of meetings, etc are as set forth in the General Code of Territorial Collectivities applicable to Communes and Departments. A Economic, Social and Cultural Committee shall be created and shall act in an advisory manner to the Island Council regarding the matters of its competence, and although the same must be consulted regarding certain issues, it may also interject it opinion as appropriate and as requested by the President of the Island Council. Its role is specifically to propose all measures in light of the preservation and development of the island's cultural heritage and to provide opinions in matters related to the same. The Committee's reports and opinions are public. The President of the Island Council may request a local referendum regarding matters concerning the Regulation of the Collectivity after authorization by the Island Council.

The Legal Authority/Competence:

The administrative competence of the Overseas Collectivity of Saint Barthélemy shall include those matters currently assumed by the Commune of St. Barthélemy, the Department of Guadeloupe, the region and certain authority currently exercised by the French State. Of particular importance is the fact that the National French Taxes shall not be applicable to the resident of the island of St. Barthélemy, the local government being empowered to levy its own taxes and customs duties, within the framework of European Union and the Organization of Cooperation and Economic Development.

Powers Of the New Collectivity:

In particular the powers granted to the Collectivity of Saint Barthélemy include a broad scope of authority, to wit: -Creation, application and collection of duties and taxes- the tax structure of the Collectivity replacing the National rules currently applicable relating to the same. -Regulation regarding prices market regulations and the repression of fraud; -Issues of zoning, building, management of public property, all subject to the provisions of the Code of Urbanism. -Traffic Circulation, transportation and regulations applicable to vehicle rental companies; -Management of public roads and registration of vehicles along with the management of the airport and port infrastructures; -Organization and management of schools and school transportation; -Water, energy and garbage; -Postal and Telephone organization and setting of rates; -Definition of policy relating to tourism; -Environmental Protection and matters of public domain as to property belonging to persons and to the Collectivity and with the approval of France, authorizations of occupancy of property belonging to the State; -Customs regulation-Tobacco sales; -Management of Sportive and Cultural matters of territorial and regional interest; -Employment regulations regarding foreign workers; -Registration of boats, airline connections with other islands and places, with the exception of the air traffic between St. Barthélemy and St. Martin; -Operational Plans regarding natural catastrophes and civil security; -The delivery of Long Term Visas in the Collectivity of St. Barthélemy; and -The management of social security, retirement and other labor issues. The budget of the Collectivity shall be determined based on a fiscal year between January 1 to December 31, and shall include receipts, expenses and investments. Although much of the political, fiscal and operational authority to which St. Barthélemy is currently subject shall be within the competency of the Collectivity, it is important to remember that certain indirect financial assistance may be effected alone by the Collectivity or together with the State. Likewise, the Island Council may propose modification of current legislation or regulation through the Overseas Minister to the extent the same concerns the economic, social or cultural development of St. Barthélemy.

Taxation:

The management and operation of the island requires substantial revenues and receipts for the collectivity of St.Barthélemy so as to enable it to meet inherent in the role it chooses to assume. Where will these monies come from? The Collectivity proposes the following taxes, some of which already exist and some of which will in fact be new: -Port Duty on incoming merchandise, product and items in the amount of 5% (currently at 4%, but previously voted to 5%) -Port and Airport Tax; -Garbage removal fee -Permit Tax -Real Estate Transfer Taxes -Gas Tax -Alcohol Tax -Electricity Tax -Tax on Hotels and Seasonal Rental properties The same in no manner excludes the possibility of the creation of an income tax conditional upon the same being affected to the Collectivity of the island of Saint Barthélemy.

Residency:

Although the proposed Statute for the Collectivity of St. Barthélemy provides for the creation of certain rules regarding the notion of residency, the same fails to specify what those requirements will be. The issue of residency requirements shall be the subject of a fiscal agreement between the Collectivity and France. It must be noted, however, that regardless of what the requirements may be, the current International Treaties between France and the United States must be respected. Although it would appear reasonable to permit those Americans and other non- residents in St. Barthélemy with actual residency to maintain the same without the necessity of enduring once again the timely procedure commencing at the French Consulate, required to obtain residency, these questions are at this time, although important, unclear. Although the exact time frame of the submission of the current proposal regarding the Collectivity of Saint Barthelemy is currently not definitively set,

Conclusion:

As to the effect of the Collectivity and the new statute of St. Barthélemy on tourism, it must be recalled that St. Barthélemy has always enjoyed very close ties to the United States and its citizens. It is cognizant of the fact that American tourism represents a substantial interest for the island culturally, socially and economically. The current proposal seeks to better address the needs of the tourism of the island by permitting the local authorities with the power to implement actions designed to better protect the cultural heritage of the island and to better manage its infrastructure so as to meet the needs and expectations of the tourist community in general.

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