The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The private sector is "shooting in the dark" over World Trade Organisation (WTO) membership's impact due to the absence of proper economic analysis, the insurance sector chair is warning.

Emmanuel Komolafe, adding his voice to similar concerns already expressed, told Tribune Business it was impossible for industries to properly advise government on its negotiating approach - and accompanying legislation such as the proposed Fair Competition Bill - in the absence of research showing the likely consequences of WTO accession.

The Bahamas Insurance Association (BIA) chairman said the Competition Bill, which is presently being circulated for private sector consultation, needed to be forward-looking and account for the opening up of some industries to large foreign rivals post-WTO accession.

Yet it was impossible to properly frame such legislation, Mr Komolafe argued, without the necessary data on how joining global trade's rules-setting body will impact key sectors and local employment.

"When it comes to legislation for the efficient operation of the market, we have to look at what will happen; what the consequences of WTO accession will be," the BIA chairman said in relation to the draft Fair Competition Bill.

"We can't understand this without a proper economic analysis showing the impact of WTO accession on sectors of the economy. Once we have such a study done, we will see the figures and the consequences that will flow.

"In the absence of the economic impact studies, it's almost shooting in the dark. I'm not just talking about the impact on government's revenues. Opening up the market, what impact will it have on insurance, banking, tourism and manufacturing. Without the analysis, we cannot speak to it."

Michael Maura, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chairman, and the organisation's trade and investment committee chair, Darron Pickstock, have both previously warned that the absence of any WTO impact analysis makes it virtually impossible for the private sector to properly inform the government on where it should set the "red lines" - what it absolutely must not give away - in the accession negotiations. The chamber is now moving to conduct its own analysis on the private sector's behalf.

Mr Komolafe, meanwhile, pointed out that virtually all Bahamian companies would be considered micro, medium and small enterprises (MSMEs) in a global context. And accession to full WTO membership will now force some to go head-to-head against large foreign rivals for the first time.

"We have to be mindful of that," he told Tribune Business. "The discourse should not be limited to the ability of local businesses to compete with one another, but if the government is holding fast to the 2019 deadline for WTO accession, international competition should also be factored into the [competition bill] framework.

"This is bearing in mind that a business that is considered large in the Bahamian context will probably be classified in the MSME sector in a global context. This means that such businesses and MSMEs in the Bahamian context will struggle to compete in a global environment based on the current structure of our economy."

The BIA chairman added that the Fair Competition Bill must not stifle the private sector through over-regulation and "red tape", impeding normal commercial transactions such as mergers and acquisitions.

"Another key consideration in the enactment of fair competition legislation is the context and dynamics of the local economy. There has been much commentary on the need to address systemic and structural deficiencies - exchange control, energy costs, taxation, public sector output - as well as the cost and ease of doing business prior to the Bahamas' accession to the WTO," Mr Komolafe said.

"There has been a convergence of thoughts within the private sector on the need for a comprehensive economic impact analysis to guide the conversation and prior to offers being made."

Edison Sumner, the Chamber of Commerce's chief executive, called for the Government to give the private sector sufficient time to review the Fair Competition Bill and other WTO-related legislation despite aggressive accession timetable.

"It is a long time coming," he told Tribune Business of the Fair Competition Bill. "This has been one of the pieces of legislation sitting around for a while, and it has had to be dusted off. It has to be read with other legislation, like the intellectual property rights legislation, which speaks to competition and the protection of such rights.

"Our view and information is that quite a number of pieces of legislation will be making their way to Parliament this session, because there's a lot to be done and a short time to do it in. While there's going to be a very aggressive legislative agenda, there has to be adequate time given to those who will consider this legislation.

"We don't want to rush this thing; we want to provide relevant feedback to the Government. We know we're going on an aggressive timeline to get this done, but give us time to review the thing properly and look at the impact on the economy and private sector before they're finalised."

Mr Sumner said the Fair Competition Bill and similar legislation were all "leading ultimately to WTO accession", and acknowledged that competition was a double-edged sword for some Bahamian businesses and industries that may be required to open up to foreign rivals.

"There are many areas in the economy that people want to see protected for various reasons," he added. "They want to be competing on a level playing field, so that it's not opportunity identified and opportunity lost.

"There are certain assurances people are going to be looking for in the WTO negotiation process; there are areas of the economy, areas of interest that businesses are looking for protection, some sort of guarantee that they are not going to go out of business because of competition.

"Competition is good because it improves product offerings and keeps prices keen but, on the other hand, it could be detrimental to some businesses not prepared to compete on the global and international stage."

With WTO "on the door step", Mr Sumner said Bahamian companies needed to position themselves to compete internationally and ensure they are "strong enough to survive".

"The world is changing very rapidly," the Chamber of Commerce's chief executive added. "We have to be open to entering a whole new world where only the fit will survive.

"Unfortunately, at the pace we're going we're going to have to do a lot of things in tandem, and learn to walk and chew gum at the same time."