The Tribune

By NEIL HARTNELL

Tribune Business Editor

THE Bahamas has already submitted its initial goods and services offers to the World Trade Organisation (WTO) secretariat in Geneva, this nation's lead negotiator told Tribune Business yesterday, arguing that it "had not suffered" from the absence of a dedicated, specialist trade unit within the Government.

Responding to an Inter-American Development Bank ((IDB) report that suggested negotiating the best terms for full WTO membership would be "extremely challenging" for the Bahamas without a dedicated government trade unit, Raymond Winder said this nation had already been able to draw on extensive expertise from foreign trade consultants, adding: "I don't think we could have moved much faster than we have."

Mr Winder, who is also Deloitte & Touche (Bahamas) managing partner, disclosed to Tribune Business that he and his team had already developed a draft law that would essentially convert the National Investment Policy from policy to statute.

This would ensure those areas of the economy supposedly reserved for 100 per cent Bahamian ownership were enshrined in law, as the Bahamas prepared for a second round of WTO-related meetings - including discussions with individual nations and trading partners - this summer.

But Mr Winder also warned that the Bahamas would "not be able to respond effectively" to the WTO or any other trade agreement it was part of, or negotiating, with its existing import duty-dependent tax regime.

Describing this as the "biggest challenge" facing the Government and the Bahamas, he said major tax reform was required to make this nation "more competitive, and more responsive, to trade".

When it came to reforming, and modernising, the Bahamas' legislative and regulatory framework in preparation for WTO, Mr Winder told Tribune Business: "We have basically been ahead of the curve in terms of preparing draft legislation."

Identifying areas such as Customs and intellectual property rights as sectors where such work had been done, he added: "We've done an initial draft for an investment law that will clearly remove from the policy regime, to the legislative regime, dedicated areas for Bahamians.

"We've drafted the appropriate legislation to respond to that, and that has to be reviewed by the Government so that they can give us feedback on what they agree with and don't agree with."

The Bahamas' National Investment Policy currently purports to reserve industries such as retail and wholesale for 100 per cent Bahamian ownership only, although exceptions to this are frequently made - something that is enabled by the fact it is policy, and subject to ministerial/government discretion, as opposed to statute law.

Trade agreements and ruled-based bodies such as the WTO frown on such things, hence the need to move from policy to statute.

When it came to the Bahamas' progress on accession to full WTO membership, Mr Winder said: "We've responded to all their questions, and we have provided the Secretariat in Switzerland with our initial goods offer and initial services offer, and we're hoping to have a [WTO] meeting this summer."

The Bahamas' lead negotiator said he was expecting to receive more questions from the WTO working group established to negotiate the terms of this nation's entry, and other interested countries, and aimed to provide replies before the proposed summer 2012 meeting.

Depending on the nature of the questions, and who submitted them, Mr Winder said the Bahamas was likely to hold "detailed discussions on our current regime and future trade regime" with individuals WTO country members.

"We're moving steadily along," he told Tribune Business. "I don't think we could have moved much faster that what we've moved." However, a recent IDB report said the absence of a government unit/department dedicated to trade matters was in danger of compromising this nation's World Trade Organisation (WTO) accession and negotiations over other trade agreements.

"The institutional platform for international trade, which has the exclusive responsibility for trade matters, is underdeveloped and understaffed, relying on other ministries and institutions to carry out its work, making the negotiation and implementation of trade agreements, including the accession to the WTO, extremely challenging," the IDB said.

Responding, Mr Winder said the IDB was likely talking about a time 5-15 years from now "when government clearly has to expand that unit. They're talking about a world where government has to respond to matters concerning all the trade agreements we are a part of.

"Today, because we're only a part of the Economic Partnership Agreement (EPA), there's not a justification for a unit. As time progresses, and as we seek to further expand our economy and to do things differently, when we move from the current taxation regime to another regime, that in itself is going to require a greater trade regime, as a lot of matters have to be taken into consideration as to whether concessions should continue and the impact on the trade regime.

"As we become more open, transparent and alive," Mr Winder added, "with the rest of the world in terms of trade regime and taxation system, it will require greater participation in terms of a trade unit.

"Sure, a dedicated trade unit will clearly reduce the burden and make life a lot easier, but I cannot say that we have suffered to date because we have not had one....."

Fingering tax reform as the Bahamas' greatest challenge, Mr Winder added: "We're not going to be able to respond effectively to the EPA, WTO, CaribCan with the current tax regime we have. That in itself is going to have to be a major change to make us more competitive and more responsive to trade.

"The current model is not trade friendly, and we need to change to enable us to respond to their demands on a medium and long-term basis. The biggest challenge for government is to ensure that within it they have a regime that can deal with and respond effectively to the change in that tax regime, and how we ensure we grow our revenue base.

"Right now, there is a gap between revenue and cost, and in order to close that gap we have to raise more revenue and control costs. The Government putting all revenue agencies under one roof is the right start in terms of managing the whole process."