The Tribune

The Bahamas needs to better understand the costs and benefits associated with becoming a full World Trade Organisation (WTO) member, the Chamber of Commerce’s chairman yesterday warning it could not compromise its $8 billion economy to protect one industry.

Gowon Bowe reiterated the private sector’s concerns about the WTO accession processing “being rushed” by the Government, and called for it to become more involved in the process via the Bahamas Chamber of Commerce and Employers Confederation (BCCEC).

“We need a better appreciation of the costs and benefits associated with ascending to the WTO,” Mr Bowe told Tribune Business.

“Right now we’ve been told we could lose access to certain markets, such as fisheries and crawfish, which is a $100 million per year industry. Does that compensate for an $8 billion business [the Bahamian economy] being opened to competition and a new tax structure?”

“Not only can we hold the flag and be a WTO member,” Mr Bowe added, “but does it benefit the country? Does it give us access to new markets, and open up new opportunities?

“There are a number of costs associated with it [acceding to the WTO]. A Standards Bureau needs to be in place. Certain elements need to be in place prior to the accession.

“There certainly needs to be greater dialogue in the country about the benefits, the costs incurred and the realistic timelines to achieve what is needed to accede, and how it fits into the Budget reform process.

“That feeds into the VAT rates, and if and how much they will go up.”

Mr Bowe’s comments are likely to touch a nerve with many in the private sector, and Bahamians in general, who feel the rationale for this nation becoming a full member of the WTO and its rules-based trading regime needs to be better defined and explained.

Accession supporters will argue that WTO membership will guarantee the ‘rules’ surrounding market access for Bahamian exports, opening up further opportunities overseas and driving this economy’s modernisation and further integration with the world - a process that is already occurring, and deepening.

Yet given that the Bahamas is not a major commodities exporter, opponents argue that there is no need for this nation to become a full WTO member, given that there are few benefits to be derived.

They believe the costs will far outweigh the advantages, given that numerous sectors of the Bahamian economy will likely be opened to foreign competition, and that changes in the ‘rules of doing business’ will work against locals.

Hope Strachan, minister of financial services, has said she intends to pick up where her predecessor, Ryan Pinder, left off when it comes to the Bahamas’ accession to full WTO membership.

Her ministry is currently working on drafting the Bahamas’ third offer to the WTO, but Mr Bowe confirmed that there had been little to no input into this process to-date by the private sector as a whole.

“This is not one where I’d say there was private sector input,” he told Tribune Business. “There was no input by the private sector formally through the Chamber of Commerce.

“What we are trying to encourage the Government to see is, if you recognise a private sector body like the Chamber, it at least has the ability to collate responses from the private sector.”

To-date, the Government’s consultations over the WTO appear to have largely consisted of informing the private sector about what it is doing on its behalf.

This approach is viewed by trade specialists as dangerous, as it does not allow the private sector and specific industry groups to tell the Government what is in their best interests, and advise its negotiators on how to craft an offer/position that safeguards these.

Mr Bowe told Tribune Business it was likely that the Government had consulted specific industries over the WTO, such as the hotels and agriculture/fisheries, but it had not obtained a comprehensive private sector position via the Chamber of Commerce.

“When you don’t have a concerted effort from a private sector response that reaches out to all industry groups and stakeholders, it sometimes gets disjointed and you don’t get the overall picture,” Mr Bowe said.

He added that the business community did not feel involved in the WTO accession process, even though the Government has been submitting offers on the Bahamas’ behalf, and the likely changes/reductions in import duty rates that flow from membership were “not very clear”.

“It’s been indicated that duty rates would likely come down to 5 per cent. That’s welcomed by the private sector,” Mr Bowe told Tribune Business.

“But the private sector has expressed concern if we we’re rushing the WTO accession to get certain things in place.

“We’d like to slow things down, so the shift from duty to a VAT system works, and the shift to a new tax system is well thought-through.”