The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government was yesterday urged by the private sector to "put on the brakes" over the submission of its latest negotiating "offer" for WTO membership.

Darron Pickstock, who heads the Chamber of Commerce's trade and investment division, told Tribune Business that the Minnis administration appeared to be "forging ahead" with efforts to join global trade's rules-setting body despite the business community's unanswered questions and concerns.

Calling for the private sector to be given more information, Mr Pickstock said many Bahamian industries were unable to determine where to set "the red line" in terms of what this nation could absolutely not concede in its negotiations because WTO membership's impact remained uncertain.

He was backed by Ryan Pinder, the former financial services minister, who yesterday confirmed to this newspaper that the government's chief WTO negotiator had informed the recent national Chambers of Commerce conclave that the Bahamas' latest offer was before Cabinet for its approval prior to being sent to the WTO.

Raymond Winder, who is stepping down as Deloitte & Touche (Bahamas) managing partner, said he was in a meeting and unable to speak when contacted by Tribune Business. But Mr Pinder, who had responsibility for trade when in office under the Christie administration, said he was "rather shocked and surprised" that the Government appeared to be proceeding with its WTO accession drive without fully consulting the private sector.

Mr Pickstock, an attorney at the Glinton, Sweeting & O'Brien law firm, said industries such as insurance and the legal profession (via the Bahamas Bar Council) were "in the process of" submitting their WTO "red lines" to the Government.

The Minnis administration requested from all sectors, during industry-to-industry consultations earlier this year, such positions on what the Bahamas cannot afford to concede in negotiating its WTO accession terms - particularly how far they should open up to foreign imports and companies wanting to establish a physical presence here.

Mr Pickstock, though, said many industries were unable to draw these "red lines" due to uncertainty over how WTO membership will impact them - a gap the Chamber of Commerce is now seeking to fill through empirical studies and economic modelling.

"While we're doing that, I understand the Government is forging ahead to go and sit with the WTO and start its negotiations," he told Tribune Business. "We definitely think more information is needed.

"The Government has still to provide a revenue study, and industry still has come concerns. We're trying to say to the Government: Put on the brakes. Let us get some information. We want to be in a position to further advise the private sector, the people we work for, and the only way we can do that is having the necessary research done."

Recalling the extensive economic modelling on the likely impact of VAT's introduction in 2015, Mr Pickstock explained that the Chamber wanted to "do the same thing for WTO".

"We're trying to say to the Government: Let us do that," he added. "You may have your own research or you may not, but at least get another opinion. These studies will involve looking at various sectors and really seeing what kind of impact joining WTO will have on them.

"A revenue study will be a component of that. You eliminate Customs duty at the border, and what is the appropriate alternative tax? They've obviously made that decision by raising VAT to 12 per cent. I feel that was done in part to get ready for WTO and elimination of these Customs duties.

"How are you going to bridge that gap? The 12 per cent by itself won't do that. The question is what other tax are you going to have to implement to bridge and fill that gap."

Mr Winder previously suggested that the Bahamas will have to replace between $100-$200 million in import tariff revenues as a result of accession to full WTO membership, since such rules-based trading regimes view these duties as barriers to trade.

He was unable, though, to specify just how much revenue the Government will have to replace as this depends on the accession terms the Bahamas will have to negotiate on the elimination and reduction of import tariffs. In the meantime, the Government has engaged Deloitte & Touche's UK arm to conduct a study of the Bahamas' current tax system and reform options with one eye on the WTO.

Mr Pickstock said the Chamber was now seeking to engage its own consultants "to assist us with some technical points on the offers that will be made, and give us some more information".

"We're not experts on everything," he added. "Neither is the Government. Let's get the people who have done this already, are experts in the area, and that's what we are seeking."

The Budget, with its VAT and web shop tax increases, has consumed the Government's and private sector's attention for the past month. With its provisions set to be implemented come Sunday in time for the 2018-2019 fiscal year, the focus is now swinging back to other matters such as the WTO.

"What I'm afraid of there was this little talk because of the Budget, and all of a sudden the Government is going full steam ahead with the negotiations at the WTO and putting in an initial offer," Mr Pickstock told Tribune Business.

"There's a feeling in various sectors that the consultation did not achieve what it needed to achieve. They felt it was a rubber stamp, and the Government was checking a box to say they have consulted.

"When you ask industries what their red line is, they don't know. In some industries you're really backing them against the wall without knowing what you're asking them for."

The result, Mr Pickstock said, was likely to be industries and individual businesses turning against full WTO membership and the prospect of opening up to foreign rivals and products.

Meanwhile, Mr Pinder, who is advising the Bahamian manufacturing and light industries sectors on WTO, confirmed that Mr Winder had revealed the Government's progress during a panel discussion at the Chambers of Commerce conclave.

"He had indicated to me and the room that the latest offer was before the Cabinet to be approved and sent to the WTO," Mr Pinder told Tribune Business. "I found it rather surprising and shocking given that industry was not consulted on the additional offer and reductions in duty with respect to specific items."

While acknowledging that the Government should not disclose its negotiating hand by publishing the entire WTO 'offer', he argued it should at least hold "side bar conversations" with individual industry groups to explain how they would be impacted specifically "as a fundamental part of good governance".

Mr Pinder said this would have involved meeting with Bahamian bottled water manufacturers, for example, to explain the tariff rates on rival imported product that would be submitted as part of the WTO 'offer'.

"The offer is going out, in my opinion and the opinion of many in the private sector, without adequate consultation with industry," he said. "These industries are significant for Bahamian entrepreneurship and employment, and significant for the stability of the domestic economy.

"Have the conversation with the private sector; it's the right thing to do. No one's saying publish the full offer in the newspaper. My understanding is that they're proceeding without that happening, and proceeding without proper consultation with the private sector.

"I don't think it's a good way to go about an accession process. Let's hope they have a little more transparency about what they plan to do. No one is asking for more. Once you propose it, you can't back off it. People should know, and be consulted, about what they're doing."

Mr Pickstock, meanwhile, said the escalating tit-for-tat trade war between the US and its major trading partners, such as China, Europe, Canada and Mexico, was making Bahamians extra cautious about the move to join WTO.

Many, he added, were questioning the "relevance" of the WTO and its dispute resolution mechanisms as Donald Trump and other developed nations appear to be doing as they please in violation of international trade rules.

"Some manufacturers want their tariffs increased because that's their way of protecting their industry," he added. "We're still soldiering. We're again meeting, and meeting with various sectors to get a further understanding and letting them know what we're doing. We are going about getting these studies done."

The Government has set an ambitious end-2019 target for completing the Bahamas' accession to full WTO membership. The move is a key component in plans to restructure and reposition the Bahamian economy through deregulation and liberalisation, diversifying it away from reliance on tourism and financial services by attracting new industries.

It views the WTO's rules-based regime as providing greater, more certain market access for Bahamian exports, a development that would potentially encourage higher levels of foreign direct investment (FDI).