The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Bahamas' chief negotiator says joining the WTO can help solve this nation's 'ease of doing business' woes, arguing: "We must move the needle on new industries."

Raymond Winder told Tribune Business that becoming a full member of the rules-based trading regime will force the Bahamas to modernise its economy and remove structural impediments to growth, citing the absence of "quality investment legislation" as one such bottleneck that must be addressed.

The Deloitte & Touche managing partner said he was "convinced we have lost out on potentially significant investment", especially for Grand Bahama, with this nation "never making the first cut" among investors due its status as a WTO non-member and uncertainty over "the rules of the game".

Trade regimes such as the WTO mandate that countries codify their investment rules in statute law, rather than leave them open to change as 'policy', and Mr Winder suggested one benefit from such an enforced change will be to "level the playing field" between foreign and Bahamian investors.

Many in the private sector have argued that the Bahamas must first improve its economic competitiveness, and address its 'ease of doing business' deficiencies in particular, if local businesses are to 'survive and thrive' in a post-WTO environment where they will have to battle larger foreign rivals 'head on'.

They have called for these weaknesses to be addressed 18-24 months before the Bahamas becomes a full WTO member, but Mr Winder rejected using this as an excuse to delay the country's accession.

He argued that the two issues - WTO membership and 'ease of doing business' - are not mutually exclusive and independent, but interlinked with progress on one helping to move the other forward.

With the economy's 'twin pillars' of tourism and financial services "under attack", Mr Winder said the Bahamas had little choice but to diversify and restructure its economy through WTO and other initiatives.

He argued that the country had wasted the past decade "fighting" over how to redistribute economic wealth, rather than "growing the pie" for the benefit of all Bahamians.

Explaining why 'ease of business' concerns "do not have a bearing" on the Bahamas' WTO progress, Mr Winder told Tribune Business: "We ought not to use these problems to not have a good quality conversation on the merits, and pros and cons, of becoming a member of the WTO.

"Some have alleged we should not be talking about WTO until we address the 'ease of doing business'. The 'ease of business' is a process, and most of it is internal. But the Economic Partnership Agreement (EPA) process, in particular, has helped to move the process of improving the quality and 'ease of doing business', and by moving further forward on the WTO some of the things that will come out of that - becoming a WTO member - will also help the quality and 'ease of doing business'."

Mr Winder cited as a specific example the Bahamas' investment framework, which is currently set out in policy via the National Investment Policy rather than in statute law. This means investment 'rules' can be subjected to sudden, arbitrary change at the whim of the then-government, with the resulting uncertainty doing little to inspire investor confidence.

"We've lagged behind in adopting quality investment legislation," the Bahamas' chief WTO negotiator argued, "that specifically spells out what's available for foreigners to invest in, what's reserved for Bahamians to invest in, and what's needed as we go through the investment process.

"WTO requires all that [to be in law] before we sign on. That will help in laying the groundwork where the policy is clear for a foreign investor and Bahamian investor. What are the steps in law that one can do and can't do.

"Today, we constantly find ourselves tweaking the policy depending on who the investor is. WTO will not accept that as the way." The National Investment Policy has long been subjected to such treatment, with different governments frequently waiving the rules on industries seemingly reserved for Bahamian ownership only to facilitate specific foreign investors.

The Government has long known such reform was necessary if the Bahamas was to pursue WTO membership. Tribune Business can recall interviewing Zhivargo Laing, the minister of state for finance with responsibility for trade, almost a decade ago in which the conversion of the National Investment Policy into an Act of Parliament was a key topic of discussion.

Mr Winder, though, said codifying the Bahamas' investment regime in law would boost local investors and eliminate some of the mistrust that exists between the private sector and government.

"Bahamians have long voiced their concern about foreigners receiving concessions and Bahamians not receiving similar concessions," he told Tribune Business. "As long as they are policy, and the law is not clear, this feeling will persist.

"I'm not saying they're [Bahamians] wrong; in some cases they are right. Once this is codified Bahamians will find themselves in a better position to understand how they meet some of the requirements for these concessions.

"Today, the whole picture is clouded, and there's this whole mistrust between the Government and private sector as to what's going on," Mr Winder continued. "When this whole process is looked at, the Bahamian private sector will find themselves in a better position, and not just to complain about it. If the Government violates the law, they can take it to court.

"It will level the playing field between Bahamians and foreigners. That's one of the things WTO does. It ensures you have a level playing field where everyone can understand no particular group is receiving an advantage to their detriment."

The chief negotiator's argument that the Bahamas should not halt WTO accession while it addresses its 'ease of business' concerns is unlikely to be accepted by everybody. Robert Myers, the Organisation for Responsible Governance's (ORG) principal, described such a notion as "naive and irresponsible" in a recent interview with this newspaper.

He warned that the Bahamian middle class and small and medium-sized enterprises (SMEs) will be "decimated" should the country open up to foreign competitors able to exploit greater 'economies of scale' and squeeze out local firms.,

"I'm pro-WTO because it provides Bahamians with an opportunity to expand beyond our borders, but we cannot do so when our hands are tied behind our backs by the Government," Mr Myers told Tribune Business. "They've got to unshackle us and allow us to be competitive.

"He's [Mr Winder] saying we should disregard it, that it's not relevant. That's absolute rubbish. To say so shows no understanding of what we're doing..... So we should ignore that and march on to opening up our borders, and allow in people that are far more competitive because of they operate in a range of economies with massive economies of scale and lower costs?

"What do you think that's going to do to SMEs and large enterprises in the Bahamas? You're simply going to eliminate and decimate the middle class and middle income group unless you address the gorilla in the room."

Mr Winder, meanwhile, said the Government agreed with the private sector that improvements to 'the ease of doing business' are "not moving along fast enough". And its current investment regime was inadequate when it came to attracting foreign capital.

"It is clear that we haven't been able to make any meaningful strides in modernising this country to attract quality investment on a regular and ongoing basis," the Deloitte & Touche (Bahamas) partner said.

"While I cannot say all is principally due to the fact that we are not a member of the WTO or more trading agreements, it is clear that for us to make meaningful improvements in the number of private sector job opportunities we're going to have to be far more competitive in attracting investment to the Bahamas that results in ongoing, quality jobs for Bahamians.

"We have lagged behind in that area, and one of the primary reasons we have lagged is that any investor coming to the Bahamas does not get a clear position on what the rules are, and what can and cannot be done," Mr Winder added.

"It creates, and further gives this perception, of corruption and folks receiving benefits and information they should not be receiving. It gives that impression - I'm not saying it's actually happening - simply because we have this policy position which constantly moves depending on what type of day it is."

Mr Winder said the Bahamas has reached a stage in its economic development where "it cannot do the same thing over and over", and expect tourism and financial services to keep carrying the job creation load when both are under constant external pressures.

"The time demands we move the needle to create new industries and do some things in this country," he told Tribune Business, pointing out that the Bahamas was failing to properly exploit its US proximity and assets such as Freeport's deep water harbour.

Calling for "a major shift", rather than the "tweaks" employed to-date, Mr Winder added: "We must make a major jump, and the WTO can help with that a great deal.

"I'm concerned we have lost out on potentially significant investment for Grand Bahama solely because we are not a member of WTO. Those investors will not even have spoken to the Government or Port Authority. They would have seen from a distance the challenges of doing business in the Bahamas. No need for further analysis; we never made the first cut as a place to do business."

Emphasising that economic growth is a must, Mr Winder added: "For the last decade now we have been fighting among ourselves over the distribution of the pie. We must now expand the pie.

"This is not about distributing the pie; it's about making the pie bigger so others can benefit."