The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A former Cabinet Minister yesterday praised the Government for reversing the “unconscionable” tariff reduction on imported paints, arguing that ‘WTO’ could not be used to justify actions that undermined Bahamian manufacturers.

Leslie Miller, ex-trade and industry minister, told Tribune Business that the Government “should not be seen promoting foreign entities over Bahamian entities” after it decided to leave the duty rate on imported paints at 45 per cent.

Mr Miller, himself a paint manufacturer and supplier through Sunburst Paints, revealed he had told Dr Hubert Minnis that the Government was going against its campaign promises to assist Bahamian entrepreneurs after the Prime Minister called him.

“All of us [manufacturers] are struggling and that should never have taken place,” Mr Miller said of the planned paint tariff cut to 25 per cent. “I think he [Dr Minnis] agreed.

“I’m happy the Government took the course it took on behalf of all the manufacturers, including the juice drink manufacturers. We’re not greedy, but deserve an opportunity to live in our country, make a contribution and take care of our families.

“The Government should not be seen to promote foreign entities over Bahamian entities,” the former minister and MP continued. “It was wrong and unconscionable.

“I congratulate the Prime Minister, and thank God that he took a strong line against those wanting this..... I’m just happy that Dr Minnis is a man of the people for the people.”

K P Turnquest, minister of finance, yesterday warned, though, that the Government could not continue using taxation/tariff policy to protect Bahamian manufacturers “for very much longer”.

He emphasised that the 45 per cent tariff rate on imported paint was protecting just one local manufacturer with a 5 per cent market share, and suggested its continued imposition was both against Bahamian consumers’ interests and this nation’s commitments to current and future rules-based trading regimes.

“We decided to leave the duty rate as was with a view to supporting local manufacturers,” Mr Turnquest told Tribune Business on the paint, “but, as I indicated in the House, we fully recognise this kind of protection cannot continue on very much longer given this country’s position in the global market, and its position on the EPA (Economic Partnership Agreement), WTO (World Trade Organisation) and other international agreements.

“We’re going to have to find other ways to incentivise, facilitate local manufacturers without using tariff protection.”

Mr Turnquest suggested this would involve lowering energy costs, reducing raw material costs and sourcing cheaper equipment. He added that concerns over the Budget’s tariff cuts on imported batteries were misplaced, given that they impacted products not made locally in the Bahamas.

The Bahamas has already signed on to the EPA with the European Union (EPA), and is still in the accession process for full WTO membership. The country’s entry into the world of liberalised, rules-based trading regimes means it must significantly reduce or eliminate a number of tariffs, given that these are viewed as barriers to trade.

Apart from providing the Government with much-needed revenue, part of the strategy in introducing Value-Added Tax (VAT) in 2015 was to provide the Government with a ‘number one’ revenue source to replace Customs duties as the Bahamas becomes more deeply integrated into the world economy. As this happens, the VAT rate is likely to rise progressively.

Mr Miller, though, yesterday challenged this process as the rationale for introducing the manufacturer-impacting tariff cuts in the 2017-2018 Budget.

He emphasised that even if the Bahamas became a full WTO member, this nation would still be able to protect its domestic industries by ‘reserving’ certain sectors or products, and maintaining relatively high duty rates.

“I take the gravest exception to them talking about the WTO,” Mr Miller told Tribune Business. “I was the second [Bahamian] minister to go to the WTO, and I made a presentation. I made it clear the Bahamian people have a right to derogate certain products in the effort to impose WTO on us.

“We reserve certain products. We are a small country, a small market; you can’t expect us to compete globally with these companies bigger than our country. That’s so unfair.”

Mr Miller said there were numerous examples where some of the WTO’s largest members, such as the US, Canada and the EU, had used tariffs to protect their domestic industries and companies against foreign rivals, enabling them to grow and become stronger.

“That’s what countries do,” he added. “You have an obligation to protect what is yours. Every country has a right to protect their home base industries, and everyone does it. Even those in the WTO protect their own country. All of them.

“It’s not fair for the giant to crush the David every day of the week because they have the capacity.”