The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bilateral trade agreements are an “impractical, cost prohibitive” alternative to full WTO membership for The Bahamas, a well-known attorney argued yesterday.

Carey Leonard, the former Grand Bahama Port Authority in-house counsel, told Tribune Business it was “a lot more complicated” to secure market access for this nation’s goods and services exporters outside the multilateral rules-based framework provided by the World Trade Organisation (WTO).

The now-Callenders & Co attorney said negotiating separate deals with multiple countries would require The Bahamas to maintain a 50-60 strong trade talks team on an almost permanent footing, and to do extensive research on a nation-by-nation basis - tasks that he described as extraordinarily “labour and capital intensive”.

He added that the concept of Most Favoured Nation (MFN), a widely-used clause in international trade agreements that means The Bahamas cannot discriminate against a country or countries by offering more favourable terms to other states, would force this nation to grant the same deal to all as it had struck with the US - even though the benefits it gets may be less.

Both the Democratic National Alliance (DNA), in its WTO position paper unveiled yesterday, and anti-free trade activists such as Paul Moss, the Bahamians Advocating for a Referendum on Free Trade (BARF) principal, have argued that The Bahamas should pursue bilateral trade deals with the likes of the US - its major trading partner and others - as an alternative to membership in global trade’ rules setting body.

“I understand the idea but don’t think it’s practical,” Mr Leonard told Tribune Business. “It’s a lot more complicated to do each agreement individually. They seem to forget we’d like to do more trade with Central and South America, and would have to go and do separate deals with all those countries.

“Those guys that are arguing for it, let them fund the negotiating team and 50-60 people and the research required. To me, the expense is prohibitive and you have to have a lot of research done because you need to know where you’re going - not for the next five years, but the next 20 years. It’s an extremely labour intensive and capital intensive thing to do.”

He recalled how Freeport-based Polymers International lost an export contract that would have “doubled” the size of its factory after Mexico abruptly hiked import duties on its Styrofoam products to both protect local producers and keep the Bahamian firm out of its market.

Mr Leonard said Mexico would not have been able to take such access had The Bahamas been a full WTO member at the time, as this nation would have been able to file a complaint and seek dispute resolution with world trade’s governing body.

Citing this as a salutary example of the lack of protection facing Bahamian exporters outside the WTO, he said adopting the bilateral approach to trade agreements would result in each country approached seeking concessions from this country in order for it receive something in return.

“We’re better off within WTO,” Mr Leonard argued. “In dealing with the WTO you have to talk to individual countries and be pushing for different things but, at the end, you have a set framework within which to do it.

“With bilateral agreements you’re starting over each time. It becomes prohibitively expensive, and the cost of doing it far outweighs the benefits. You’re not working within the framework any more so you need a full blown negotiating team doing research all the time.”

Potential investors, both domestic and foreign, would also encounter more difficulties in “knowing where they stand” under a series of bilateral trade deals as opposed to WTO membership, Mr Leonard argued, as they would have to study multiple documents to determine whether their business models and strategies were feasible.

A long-time advocate of the potential economic benefits that will be felt if The Bahamas finally completes the world’s longest-running accession process, Mr Leonard said the Economic Partnership Agreement (EPA) with the European Union (EU) - the first rules-based trade agreement it has entered - is already delivering benefits.

“The EPA required e-government,” he told Tribune Business. “The Government would not be as far advanced on e-government were it not for the EPA. We now have a Standards Bureau and similar things, and would not have any of that if not for the EPA and WTO.”

Although both agreements were forcing The Bahamas to modernise its economy, Mr Leonard said the economic benefits from full WTO membership were unlikely to materialise in the near-term but would become more apparent in the long-run.

He likened the effects to “going to the gym and getting in shape to get fit”, and dismissed claims that full WTO membership would lead to an influx of workers taking Bahamian jobs.

As for suggestions that the WTO is of little use to The Bahamas because it does little by way of manufacturing or physical goods exports, Mr Leonard countered that this nation “manufactures services” which are covered by the global rules-setting body. He argued that membership would open up more services export opportunities.