The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A leading retailer yesterday said it will be "a slap in the face" to Bahamian businesses if this nation now modernises its economy for the benefit of foreign rivals and the WTO.

Gavin Watchorn, chief executive of BISX-listed AML Foods, told Tribune Business there was no reason why the Bahamas had to wait for World Trade Organisation (WTO) membership to drive a lowering of import tariffs and improvements in the 'ease of doing business'.

Arguing that there was nothing to prevent the Bahamas from enacting such "touted WTO benefits" now, Mr Watchorn said this nation's accession terms would be critical to the ability of local retailers to compete against foreign counterparts.

Pointing out that many Bahamian merchants are already battling head-on with overseas rivals as a result of online shopping's explosive growth, the AML Foods chief acknowledged the benefits competition brought to consumers through better prices and choice.

He expressed concern, though, that any entry of Wal-Mart-type businesses into the Bahamian market post-WTO could lead to reduced - rather than increased - unemployment if 40-50 local retail companies were forced to close as a result.

Mr Watchorn emphasised that consumers need jobs to enjoy the benefits from lower tariff rates, adding that Bahamian retailers were mainly focused on the domestic market and lacked the scale necessary to break into other countries.

He was speaking after attending the retail sector's first WTO consultation with the Government, as the latter seeks to obtain industry 'positions' that will aid efforts to craft this nation's opening 'offer' in an accession process that is targeted for end-2019 completion.

"There was a clear expression from the room that retailers don't really see any benefits for the retail industry from joining the WTO," Mr Watchorn told Tribune Business.

"The benefits touted for joining are things the Bahamas Government can do now. There was a discussion about lowering duty rates. Why can't we do that now? There was a discussion about improving the 'ease of doing business'. Why can't we do that now?

"The big discussion was the reduction of tariffs, and the revenue that needs to be replaced as a result. Without knowing how they're going to be reduced, there won't be support for this."

The Bahamian manufacturing and retail industries are among those likely to feel WTO membership's effects the most, given the need for this nation to remove import tariff barriers that are viewed as 'barriers to trade' by rules-based trading regimes.

The retail sector is currently reserved exclusively for Bahamian ownership only, but entrance to the WTO could potentially allow foreign rivals to establish a physical presence in this nation depending on which sectors the Bahamas agrees to liberalise and 'open up' - and to what extent.

With the Bahamas' accession terms yet to be determined via negotiation, Mr Watchorn reiterated that there was no need to wait for WTO membership to enact reforms long sought by the private sector and consumers.

"If you're going to tout a reduction in tariffs, reduce them now," he told Tribune Business. "If you're going to tout improvements in the 'ease of doing business', do them now. I don't see why we have to join the WTO for that to happen. I didn't get the sense from anyone in the room that they see the benefits [of WTO]."

Mr Watchorn said the Bahamian retail sector's post-WTO competitiveness depends heavily on the country's terms of accession, which will be negotiated by the Government and its Trade Commission.

"There is a shift to online commerce these days," he added. "Bahamian retailers are already in competition against far more established players. We've already got there.

"In terms of foreign entities coming into the Bahamas, in terms of the level playing field, you've got to welcome competition as competition is good for the consumer, but I don't know how many Bahamian retail companies are looking to expand into the US or other markets."

Mr Watchorn's comments reinforce how Bahamian retailers will need to successfully compete in their home market post-WTO, given that most lack the scale and necessary resources to seek out export market opportunities beyond potential online niches.

"If large retailers come in here, you're in competition with someone with far greater synergies and far greater resources," he said. "If the benefit is lower duties, why not do that now? Why does it take WTO and foreign companies coming to lower the duty rates. If it can be done, do it now."

The WTO accession process will force the Bahamas to become familiar with the language of non-discrimination, particularly the concepts of 'national treatment' and 'Most Favoured Nation'.

The former means that the Bahamas must treat foreign investors, companies and goods equally with their Bahamian counterparts, meaning the latter cannot enjoy 'special treatment' beyond the 'carve outs' negotiated by the Government. And Most Favoured Nation (MFN) means all foreign players must be treated equally, regardless of nationality.

The prospects for Bahamian retailers in a WTO environment, Mr Watchorn added, "depend on the playing field". He told Tribune Business: "Why would a Wal-Mart come in here now with the challenge of doing business with high utility costs and red tape?

"If you are going to make all these things easier for WTO, it's a bit of a slap in the face for retailers and other businesses that have been pillars in the community for years, and have had to endure unreliable and costly power, and excessive bureaucracy and red tape.

"To say you're now going to make it easier, and competitors will come into the market, it's a bit of a slap in the face for those already in business."

Brent Symonette, minister of financial services, trade and industry and Immigration, last week pledged that WTO membership would not lead to an influx of Wal-Mart-style businesses into the Bahamian economy.

Mr Watchorn said such 'category killers' could actually result in an increase in unemployment through the rivals they put out of business, adding: "It's great for consumers to have lower prices, but you need to have a job to pay for it."

The AML Foods chief added that many persons "don't realise the scope of employment in the retail sector", suggesting this was not "too far below the hotel industry", highlighting the importance of its well-being to Bahamian jobs and GDP growth.