The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas has prevented its $147 million export business to Canada suffering a “catastrophic” loss of competitiveness, reaching an ‘agreement in principle’ to preserve duty-free market access until a new regional trade agreement is concluded.

Ryan Pinder, minister of financial services, told Tribune Business that a loss of preferential access to the Canadian market would have been “destructive to all industries” involved in the export business - chiefly BORCO, Polymers International, Morton Salt and the fisheries industries.

Without the agreement, which was reached with Canada’s High Commissioner for the Caribbean last month, Mr Pinder said all Bahamian exports ultimately faced being hit with a 35 per cent duty rate “across the board”.

“I personally reached out and spoke to the High Commissioner for Canada, and spoke to the position of the Bahamas,” Mr Pinder told Tribune Business yesterday.

“We were able to get an agreement to hold duty-free access to Canada as is, pending completion of negotiations to replace the CARIBCAN agreement.”

The Bahamas’ potential loss of duty-free access to Canada had stemmed from the CARICOM region’s efforts to negotiate a new trade agreement that would replace the existing CARIBCAN arrangement.

The Bahamas and other Caribbean nations have long enjoyed the benefits of this latter agreement, which sees all trade preferences flow one way - in favour of the Caribbean.

But such ‘one-way’ trade preferences agreements have now been effectively outlawed by the World Trade Organisation (WTO), which is pressing for their elimination and replacement by ‘two-way’ preference agreements, as has happened with the Economic Partnership Agreement (EPA) with the European Union.

As a result, Canada and CARICOM have been negotiating a CARIBCAN replacement for several years. But the talks have yet to conclude, and Canada has yet to obtain a new waiver from the WTO to allow the existing trade deal to continue until the new one is ready.

The previous WTO waiver for CARIBCAN expired at year-end 2013, and Mr Pinder yesterday confirmed that the Bahamas was effectively the ‘odd man out’ among its Caribbean counterparts as the only regional nation not yet a full WTO member.

This, he added, left the Bahamas and its export industries at a major potential disadvantage relating to the CARIBCAN waiver.

While all other Caribbean nations would be given Most Favoured Nation (MFN) status, meaning they would be treated no less favourably than any of Canada’s trading partners, until the waiver was reinstated, the same option was not available to the Bahamas as a non-WTO member.

This nation faced being placed on to Canada’s general preferences rate for 2014, and thereafter being dropped to the general applicable rate - a 35 per cent tariff “across the board” on all Bahamian exports to Canada.

Mr Pinder yesterday told Tribune Business he informed his Caribbean counterparts, during a meeting at the WTO’s ninth ministerial summit in Bali last month, that the Bahamas would engage Canada on a bilateral basis to deal with the situation.

“We had to preserve duty-free access to keep our products competitive, he added. “Because of the proactive steps we took, we were able to preserve the duty-free access and preferences on a continued basis for our industries.”

Describing the agreement with Canada as “very, very significant”, Mr Pinder said that even being placed on the lower general preferences rate would have created negative consequences for Bahamian exporters.

Pointing to the Bahamian crawfish industry as an example, Mr Pinder said the duty rates facing its exports to Canada would have gone from 0 per cent to 5 per cent.

Yet Haiti, the second largest crawfish exporter to Canada and this nation’s “chief competitor”, would have retained its duty-free access preferences.

As a result, Mr Pinder said Haiti would have enjoyed a “price advantage over anything coming out of the Bahamas”.

“We would potentially have lost a significant amount of our crawfish exports to Canada,” the Minister told Tribune Business. “In such a competitive market, a 5 per cent differential is very significant.

“To be able to preserve duty-free access to Canada is very important, especially in the middle of crawfish season.”

Mr Pinder added: “We had prepared our industries for a worst case scenario, and they were happy to know we had preserved duty-free access.

“Certainly, we would have been at a significant competitive disadvantage to all countries in the region who are WTO members.”

This would have negatively impacted one of the Bahamas’ few sources of export-generated foreign currency, impacting capital flows and the balance of payments.

And the companies and industries that would have been impacted are among the Bahamas’ largest employers.

Data produced by the Canadian government’s Statistics Canada showed the Bahamas exported $146.56 million worth of goods to Canada in 2012, and imported some $504.282 million.