The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet Minister yesterday said he was looking to protect the Bahamian manufacturing sector with “a full package” of reforms, warning that protectionist tariffs did not “guarantee survival”.

Ryan Pinder, minister of financial services, told Tribune Business that rather that simply ‘protect’ industry through the imposition of high tariffs on rival imports, he was looking at “a holistic approach” designed to make the sector more competitive.

This, he said, involved the passing of anti-dumping legislation and creation of a Standards Bureau to prevent inferior products being imported to the Bahamas, plus a focus on lowering the cost of doing business.

Pointing to the impact a 20 per cent reduction in electricity costs would have for Bahamian manufacturers, Mr Pinder said strengthening the industry was “not as simple” as merely increasing import tariffs on foreign rivals.

Pointing out that the Bahamas Trade Commission’s Manufacturing Sub-Committee report had effectively called for the same strategy, Mr Pinder told Tribune Business: “Everyone wants protective tariffs, but protective tariffs don’t necessarily guarantee survival.

“Water producers have a 75 per cent tariff, but they have a situation where it’s very difficult to compete against Nestle and other foreign brands.

“Protective tariffs don’t necessarily protect you and guarantee survival. We certainly respect industry’s need for protective tariffs, but it’s a full complement. It’s not a one shot deal, and that’s where we see huge growth.”

Mr Pinder said the Government was “right now modernising” its Standards Bureau-related legislation, and was looking to have the agency set up by end-2014, having identified a potential site for it.

“It’s a full package,” Mr Pinder reiterated. “We are trying to ensure the protection and strengthening of industry. Protective tariffs don’t do it.

“We have studies showing protective tariffs are a disincentive to achieving certain efficiencies. High protective tariffs give a sense of comfort where there’s a fall-off in the efficiencies of doing business, and we don’t want that to happen, as we will become uncompetitive.

“The holistic approach is best approach.”

Mr Pinder was commenting after Tribune Business revealed the Bahamas Trade Commission’s Manufacturing Sub-Committee report, which disclosed that the sector cannot survive” in the Bahamas without protective tariffs as high as 200 per cent.

The document, attached to the Trade Commission’s 2013 annual report, illustrates why many Bahamian manufacturers are unable to compete with lower-priced imports without tariff protection, noting that electricity rates as high as $60,000-$100,000 per month are “killing” the sector.

And it calls for the Bahamas to enact “critical” anti-dumping legislation as means to protect both local manufacturers and consumers from foreign rivals exporting inferior, unsafe products to this nation.

The sub-committee, chaired by Andrew Rogers, head of Bahamas Aluminium Manufacturing and Nassau Glass Company, had sought input from manufacturers on their key concerns over the Bahamas’ accession to full membership in the World Trade Organisation (WTO).

“Taking everything into consideration, by far and large the most important concern to all local manufacturers is the implementation of protective tariffs with all foreign trade agreements,” the sub-committee’s report said.

“It was unanimously agreed that without proper protective tariffs, the manufacturing sector in our country cannot survive.”

Asked what tariff rates should be set for their protection, industry responses varied from uniforms and chicken products except leg quarters (50 per cent) to ice (200 per cent). Drinking water companies sought tariff rates on imported rivals ranging from 72 per cent to 150 per cent, while food processors, bedding manufacturers, concrete block makers, sail and awning manufacturers, and automotive and marine battery manufacturers all wanted 100 per cent tariffs.

Other sectors seeking high tariff rates were makers of rubbing alcohol, cleaners and auto coolant (150 per cent), with cleaning chemicals and pipe manufacturers also wanting import duties as high as this.