The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government "has not yet made the case" for joining the WTO, a senior Chamber executive arguing that the Bahamas had "squandered" a 16-year period to ready itself for this day.

Darron Pickstock, who heads the Chamber of Commerce's trade and investment division, told Tribune Business this nation should have used the longest-running World Trade Organisation (WTO) accession process to prepare its economy and individual businesses for a rules-based, liberalised trade environment.

The Bahamas first signalled its intention to become a full WTO member in 2001, but Mr Pickstock said the country had waited until now to create a competitive platform for the private sector through the proposed 'ease of doing business' reforms.

The Minnis administration has set a 2019 deadline to complete the WTO accession process, a deadline that Mr Pickstock described as "very aggressive but doable" if the Government, business community and civil society work together.

Yet he warned that the process was "not moving as fast as as we would like" in terms of the Government advising the private sector on "what we can expect", and what it was seeking to negotiate on the country's behalf.

Mr Pickstock argued that the Chamber, and wider private sector, would have to "force dialogue" between themselves and the Government to ensure both were "on the same page", and that there are "no surprises" in what the latter negotiates on its behalf.

A partner at the Glinton, Sweeting & O'Brien law firm, Mr Pickstock said WTO accession was "the single most important topic facing our country" given that it will impact every Bahamian and locally or foreign-owned business. Besides opening up the Bahamian economy to foreign goods and services and, in some instances, foreign businesses, the Chamber's trade head said the Government will have "its work cut out for it" in determining how to replace the Customs duty revenue foregone through tariff elimination/reduction.

Describing full WTO membership as "a big cultural change" for the way commerce is conducted in the Bahamas, Mr Pickstock said the Government had yet to show why the benefits of joining will outweigh the disadvantages.

"The case has not been made. There's still a lot of uncertainty and, quite frankly, people don't understand. We believe the Government has not made the case for accession to WTO yet," he told Tribune Business. "Based on the timeline, which is very aggressive but very doable, there needs to be more dialogue to answer that question. No, the case has not been made." The Bahamas will seek to negotiate WTO accession terms that produce a 'net benefit', leaving it better - or at least no worse off - than if it had not joined the body that sets global trade rules.

The Minnis administration views full membership as a key element in its plans to reposition the Bahamian economy for greater growth via liberalisation and deregulation, arguing that this nation cannot afford to adopt an isolationist stance.

The Bahamas is the only Western Hemisphere nation yet to join the WTO, and this is viewed as inconsistent with efforts to position itself as an international financial and business centre heavily reliant on services exports and open to the world.

Other arguments in favour of joining the WTO are that it could unlock Freeport's potential as a manufacturing/logistics/assembly hub through providing protection to exports originating from the Bahamas, guaranteeing them market access through preventing other nations from imposing trade barriers. And it could also provide opportunities for Bahamian companies to expand or export services abroad, along with their intellectual property.

However, Mick Holding, the Grand Bahama Chamber of Commerce's president and a member of the Bahamas Trade Commission, the body that will help negotiate the Bahamas' accession, recently told Tribune Business that he and others were just now identifying the potential WTO benefits.

And concerns have already been expressed about the ability of Bahamian companies to compete against foreign rivals in a WTO environment, given the economies of scale and other advantages that the latter will likely enjoy.

Sir Franklyn Wilson, the Arawak Homes chairman, recently told Tribune Business he was "deathly afraid" of WTO full membership because opening up the economy will have potentially negative consequences for Bahamian ownership - especially small and medium-sized enterprises (SMEs).

And Robert Myers, the Organisation for Responsible Governance (ORG) principal, warned that energy reform, exchange control liberalisation, lower interest rates and other changes were critical to providing a foundation for Bahamian companies to properly compete post-accession.

Echoing these calls, Mr Pickstock told this newspaper that the Bahamas should have exploited the ample time provided by its 'stop-start' WTO accession process to implement these fundamental upgrades but had failed to do so.

"We squandered the opportunity. We squandered it. By this time we should have already prepared the country for accession to WTO," he said. "We're only now discussing the ease of doing business in the country. It should have been top of the agenda 16 years ago.

"As you say, there is no sense in crying over spilt milk..... Yes, it could have been done 16 years ago. Yes, we squandered the opportunity to put in place reforms that would get us ready for accession to the WTO.

"I get the sense the Government is serious about getting it done. It should have been done already, the process was far too slow, and we're having to rush now. You never want to rush when you're negotiating things so important to your country, but we have to that, and I want to impress upon the the Government to have an open dialogue because a lot of people still don't understand."

Mr Pickstock said the Chamber intended to take the lead by staging a number of WTO-related forums, so different industries could inform the Government of their specific concerns; the sectors and tariff lines that need to be "protected"; identify opportunities and detail the negotiating position they want the Bahamas to take.

"This is one of the single most important topics, in my view, for the Bahamas; our accession to the WTO," he told Tribune Business. "I think it's extremely important for the private sector to stay engaged and inform the Government of their concerns.

"Normally we're very reactive in this country. It always happens after the fact. We get what we negotiate. We need to let our government know what our concerns are, the industries that need to be protected, because we get what we negotiate. We can't be reactive as a private sector. We have to be fully engaged with the Government.

"We're talking about opening our borders for goods and services. For businesses in the private sector, you're opening the economy of the Bahamas. Private sector businesses have to think about their ability to compete. It is going to be a big cultural change."

The Chamber of Commerce and Mr Pickstock will be key in facilitating two-way feedback between the private sector on one side, and the Government and Trade Commission on the other, as the pace of WTO membership negotiations picks up over the next year.

Given that it is the private sector that will have to live, and work, with the accession terms the Government is able to obtain, it is vital that it drives the process and crafts the 'offers' that the latter makes to members of the WTO Working Party it will negotiate with.

This requires the private sector to remain engaged and focused throughout a long-running, sometimes tedious negotiation. And, equally important, is that the Government shares information on the accession process just as willingly with the private sector - rather than negotiate something on its behalf and informing it later.

"This also requires the Government to share information," Mr Pickstock said. "That's why it's very important for us to hold these public forums and force dialogue between the private sector and the Government, so we are on the same page and there are no surprises at the end of the day.

"That's why it's very important for the Government to understand what the private sector's concerns are. It's no use going and negotiating something, and then we have a problem with what's negotiated. Dialogue and communication, I can't express this more. 2019 is very aggressive. It's incumbent we force the discussion.

"Things are moving," he added. "They're not moving as fast as I would like in relation to the Government coming out and advising the private sector and holding forums as to what we can expect and what are the private sector's concerns."

Mr Pickstock said the Chamber was working closely with Raymond Winder, the Bahamas Trade Commission's chairman, to organise these forums, the first of which will be held on March 14. The ministries of financial services and agriculture, and others responsible for leading the WTO talks, have been invited to attend.

"That is a very aggressive timeline," he added of the Government's WTO accession target, "but we've been down this road for a number of years. While it may be aggressive, if everyone can work together to get us to that position it can be achieved.

"I would be the first to say it's a very aggressive timeline, and with a 2019 timeline the work has to be there. We're looking for Ray Winder and his team, and the Ministry of Financial Services, to also be aggressive in bringing forward to the public exactly what they're negotiating."

Mr Pickstock said the construction, retail and agricultural sectors had made their concerns known already, and more industries were likely to come forward as the WTO membership march intensifies.

And he urged the Government to keep the business community informed as it assesses tax reform options, given that the Bahamas will have to either reduce or eliminate multiple tariff lines in acceding to full membership.

Customs/border taxes are viewed as barriers to trade under the WTO, and Mr Pickstock said it was vital the Government keep the business community informed on this issue as what it decides will affect every single company.

"We're talking about one of the main revenue-generating sources, Customs duties," he told Tribune Business. "The Government is going to have its work cut out for it in relation to how it's going to replace Customs duties.

"That should also be part of this WTO discussion. It's so important to force this discussion, force the Government's hands. We need to lay this on the table. The private sector has already expressed concern as it relates to tax reform.

"We need to know from the Government what it's position is on tax reform. It's going to have a direct impact on local businesses."

Brent Symonette, minister of financial services, trade and industry and Immigration, has previously told Tribune Business that internal government studies are already being conducted on this issue. Among the potential reform options are increasing the VAT rate.