The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The DNA’s deputy leader yesterday expressed fears that The Bahamas is “walking in the dark” towards WTO membership without the government “making the case” for joining.

Arinthia Komolafe, pictured, told Tribune Business that accession to full World Trade Organisation (WTO) membership was “not a priority item” for this nation given that it needs to put its own house in order first.

Speaking as the party unveiled its WTO “position paper”, Mrs Komolafe said this nation needed prioritise tackling long-standing “structural and systemic deficiencies” within its own economy before looking further afield.

Pointing out that the benefits from WTO membership have yet to be quantified for the Bahamian people, she expressed particular concern over the Government’s failure to-date to disclose how it plans to replace the revenues lost from tariff reductions/eliminations.

Mrs Komolafe argued that it was “not very prudent” of the Government to suggest only $40m would be foregone in reducing the average tariff rate from 32 percent to 15 percent, given that the exact amount would only become clear after The Bahamas’ WTO accession terms were finally agreed with those nations wishing to trade with it.

Suggesting that the Democratic National Alliance (DNA) was likely to “hold fast” to its position no matter the outcome of negotiations, she said: “There are so many local issues, structural and systemic deficiencies in the Bahamian economy, that this is not the right policy for the Government to be pursuing at this time.

“Our priority is to address the structural deficiencies in the economy.... Our fears is if we walk into this [WTO membership] in the dark, which the Government is doing, and we don’t give the Bahamian people an opportunity to weigh in with the vulnerability study, the impact will be unquantifiable. That’s the challenge.

“It’s a very tenuous situation. There’s so much that has to be done at the local level before we go full speed into this organisation. There are so many things to take into consideration. They’ve not put put out a revenue replacement policy as to how they’re going to replace the revenue,” Mrs Komolafe told Tribune Business.

“It’s not very prudent for the Government to put that out there [$40m revenue loss] without regard to the offer on the table being accepted.” Zhivargo Laing, the Government’s chief WTO negotiator, cited this figure as the estimated revenue loss from reducing/eliminating tariffs, which rules-based regimes such as WTO view as barriers to trade.

That, though, is related to The Bahamas’ opening goods and services offers, both of which have yet to be agreed with the WTO Working Party that will negotiate this nation’s accession terms. Previously, government officials referenced studies showing that the import tariff revenue loss could be between $100m-$200m.

Mrs Komolafe yesterday expressed concern that the Government will turn to regressive forms of taxation, such as Value-Added Tax (VAT), to help fill the revenue gap left by tariff reductions and eliminations.

This, she added, would impose a disproportionate burden on lower income Bahamians and the middle class, who would pay more of their income in taxes, while threatening to further increase an unemployment rate that rose to 10.7 percent in the November Labour Force Survey.

The DNA deputy leader also urged the Minnis administration to publish the “vulnerability study” it has conducted in relation to WTO accession, arguing that Bahamians needed to see something “absolutely convincing” to persuade them of membership’s benefits.

“If we’re going to enter into trade agreements we have to know what the benefits are for The Bahamas and how it impacts GDP growth in a positive way,” she told Tribune Business. “We don’t see it with WTO. Once you’re in it, you’re in it, and the same rules apply to you.

“If we move forward like we are, the Government is going to be shooting in the dark and doesn’t know how much revenue it’s going to lose. In this environment, where revenues are persistently under-budget, we now know we are going to be reducing tariffs. How are we going to replace them?”

The DNA, in its WTO position paper, said there was “no urgency” to accede to full membership given the organisation’s many outstanding issues. These include the constant calls for reform by the Trump administration, which produced a statement from the G-20 agreeing on the need for change late last year.

The party added that the WTO’s dispute resolution mechanism, much-touted by the Government as one of the benefits of joining, was in disarray and “unable to function to its full capacity” because the US has blocked the reappointment of four of its seven judges and the terms of the remaining three are due to expire later this year.

“The focus of the Bahamas Government at this time must be internal reform for the betterment of the Bahamian people,” the DNA said. “There is much work to be done in ensuring the empowerment of the Bahamian people and local businesses before exposing our nation to the vulnerabilities of formally submitting to a rules-based regime that is disproportionate and unfavourable to nations like The Bahamas.

“We maintain that the WTO cannot and must not be the impetus for long overdue reform within several sectors of our economy. Current members of the WTO have not been spared from adverse listings and blacklists by international or multilateral bodies. It would be naive to suggest that accession to the WTO would be a panacea to the shifting goal posts or lack of a level playing field for International Financial Centres (IFCs).”