The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

FULL WTO membership will "drag the Bahamas from the 19th century to the 21st", a well-known attorney yesterday urging: "We must make it work for us."

Carey Leonard, the former Grand Bahama Port Authority (GBPA) in-house attorney, admitted to Tribune Business that this nation will face "a rough two to three years" once it completes the accession process.

While many Bahamians and businesses will be "unhappy" during the prolonged adjustment, Mr Leonard argued that full World Trade Organisation (WTO) membership will ultimately reap "huge benefits" by forcing this nation into a long-overdue modernisation of its archaic economy. The now-Callenders & Co attorney said WTO-driven tax reforms and legislative changes will benefit both the private sector and consumers, with the introduction of health and quality 'certification' potentially "opening the door" to local producers supplying the hotel industry and export markets.

The reduction/elimination of import tariffs, he added, will reduce "carrying costs" for Bahamian companies that presently have millions of dollars locked up in unsold inventory.

And foreign and Bahamian investors will be able to develop 15-20 year business strategies because the WTO will require investment regimes to be 'set in stone', removing rule-making "out of the hands of the politicians".

Mr Leonard, urging Bahamians to view WTO membership from the perspective of how it can benefit this nation, also questioned why the GBPA had yet to address the issue, saying: "Their silence is deafening."

"I think the WTO has huge benefits for the economy," he told Tribune Business. "We're going to bring the Bahamas out of the 19th century, kicking and screaming, into the 21st century."

Pointing out that some of the Bahamas' recently-amended laws dated from the late 18th and early 19th centuries, Mr Leonard argued that full WTO membership would force this nation into badly-needed overhaul of its commercial regulatory regime.

"We need it, and we need the WTO to modernise us," he said. "We need to look at WTO in a different light, and see how we can make it work for us."

Mr Leonard, though, admitted that such 'modernisation' would not be painless. "It's going to be a difficult two to three years," he said of the Bahamas' immediate experience, with the Government targeting end-2019 for completing the accession process.

"It's going to be a rough time," the ex-GBPA attorney reiterated. "We're all going to have to make adjustments. As we build into it to 2019, everyone's going to be very unhappy.

"For two to three years afterwards everyone's still going to be unhappy, but after that they will feel the benefits. I don't expect any immediate benefit; it's going to take a while. As long as everyone can bear it out until then."

Mr Leonard said many in the private sector had yet to realise how the WTO, and other rules-based trading regimes, were the primary influences on much legislation recently passed by Parliament.

"The Bahamas has already made a tremendous amount of progress on this. A lot of people are now aware," he explained, pointing to the Customs Management Act and introduction of Value-Added Tax (VAT) as two reforms designed to ready this nation for WTO accession.

Mr Leonard said the Bahamas had also moved to address health-related sanitary and phytosanitary measures through the Food Safety Act and related plant/animal legislation, while recent improvements to intellectual property rights were also driven by impending trade regulations.

He added that the Bills' 'objects and reasons' sections often specified that they were motivated by the WTO and similar agreements, such as the Economic Partnership Agreement (EPA) signed with the European Union (EU) in 2008, while noting that many laws had yet to be brought into effect because they were awaiting their accompanying regulations.

"There are 10-12 pieces of legislation passed through the House but not brought into effect yet," Mr Leonard said. "The pieces of the puzzle are already falling into place.

"I don't think many businesses are aware that we've already committed to a number of things when we signed the EPA in 2008, and these things are gradually creeping in on us as well. It's very important that Bahamian businesses are engaged in these consultations, as we're already well down the road."

Mr Leonard suggested one way that Bahamian businesses can benefit from WTO membership is through the health, safety, quality and other standards/certification that the rules-based trading body will mandate.

He argued that the current absence of such standards was likely one obstacle to local businesses supplying the domestic hotel sector, or export markets, as potential purchasers had nothing to validate the quality of these goods and services.

"It opens the door for Bahamian businesses to benefit much more from the tourism industry than they have ever done before," Mr Leonard told Tribune Business. Citing the example of an organic egg farmer, he added: "It's unlikely a lot of hotels and food stores will buy it until the product is validated and certified. WTO does have that benefit.

"I don't think only local businesses will benefit, but consumers too. They will be able to buy with certainty, and know they will be able to buy Bahamian products. A lot of times Bahamians bypass Bahamian products because they think the foreign product is better. Now they have the certainty to say Bahamian products are better."

With rules-based regimes viewing import tariffs as barriers to trade, Mr Leonard said full WTO membership will also spur long-overdue tax reform and eliminate the multi-million duty payments frequently locked into Bahamian companies' inventories until they are sold.

"It pushes the cost of business in the country up quite substantially," he added. "Whereas if you do a sales tax or VAT, and reduce Customs duties, you reduce the carrying cost of items and allow the business to operate more efficiently. It will benefit everyone all the way through."

Mr Leonard also argued that WTO membership would reduce political interference with private sector investments, as the relevant laws and regulations would be set in law - not policy.

"That's critical," he added. "It takes it out of the hands of the Minister. You know where you're going and can invest. It's out of the hands of politicians. I now have certainty as a businessman and can look out 15-20 years with confidence, with all the regulations, statutes and certainty. It's all there."

Mr Leonard said the Bahamas did not yet have to focus on how it will marry the Hawksbill Creek Agreement, and Freeport's free trade zone characteristics, with the WTO's requirements.

He acknowledged that this nation's negotiators will have to "see what we can get in on that specific economic zone" while ensuring that the Bahamas' regulatory regimes are harmonised throughout the country.

"By the same token we in the Port area need to take positive action," Mr Leonard told Tribune Business. "We've yet top hear the GBPA say one word on this. Their silence is deafening."