The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Fulfilling The Bahamas’ long-standing commitment to enact competition laws could help prevent the cruise lines directing passengers to patronise select tours, attractions and retailers, it is being argued.

The draft National Trade Policy, which is to be discussed at a public consultation tomorrow, affirms that this nation has failed to meet its obligation under the Economic Partnership Agreement (EPA) trade agreement with the European Union (EU) to implement antitrust legislation that would act as a safeguard against anti-competitive behaviour.

Given that The Bahamas signed on to the EPA in 2008-2009, such laws should have been enacted by 2013-2014, but this has yet to happen despite draft legislation being crafted in both 2007 and 2018. Several consultations were held on the latter version at a time when the Minnis administration was mulling whether to reignite The Bahamas’ bid for full membership in the World Trade Organisation (WTO).

“The Bahamas currently has no competition law in place,” the National Trade Policy confirmed. “A draft law was prepared in 2018, based on an earlier draft of 2007, which comprehensively addresses anti-competitive conduct, merger control, as well as some elements of consumer protection (unfair and misleading trading practices).

“The adoption of the Bill, however, remains outstanding to-date. Under the Economic Partnership Agreement (EPA) with the EU, signatory states commit to have competition laws in place within five years of the entry into force of the agreement.”

The report continued: “Following from the absence of competition law, there are currently no instruments available to address cartels or the abuse of dominance by businesses. Based on research undertaken and information obtained from stakeholders, some indications into practices that might constitute abuse of market power by large players under competition laws could be identified.

“Examples include the purchasing practices of large hotels or the practices of cruise lines to nudge passengers into using only tours organised by the lines, not by Bahamian operators. Generally, such behaviour appears to act in detriment of domestic (small) businesses.”

Calling on the Government to push ahead with bringing competition legislation to Parliament, and enacting it into law, the National Trade Policy added: “The adoption and implementation of a competition law, and the establishment of a competition authority, are needed not only because the establishment of a functioning competition regime is a commitment under the EPA, but in particular because it helps protect domestic businesses against unfair practices by larger companies, thereby promoting the competitiveness of domestic businesses, and is ultimately beneficial for the economy and Bahamian citizens alike.”

Elsewhere, the National Trade Policy said Bahamian exporters will have difficulty penetrating the Chinese market, in particular, because this nation remains outside the WTO. While it made no recommendation on whether The Bahamas should complete the longest-running accession process, now into its third decade, it pointed out that non-membership enables Beijing to impose higher tariffs on Bahamian products and therefore restrict market access.

“A more general issue related to foreign market access is that not being a member to the WTO means that exports from The Bahamas are not entitled to receive most-favoured nation (MFN) treatment in destination countries,” the National Trade Policy said.

“Although most countries do not make a distinction in their tariff treatment (and other import regulations) between imports originating in WTO member countries and other countries (including The Bahamas), some important economies do make this distinction, in particular China.

“For example, China imposes a duty of 70 percent on crustaceans from The Bahamas compared to an MFN rate of 7 percent. Accordingly, Bahamian exports to China are quite limited. Chinese tariffs on other Bahamian export products are also above the MFN rates,” it continued.

“For example, taking some others of the most important exports in 2019, the differences are as follows: Polystyrene 45 percent versus MFN 6.5 percent; and heterocyclic compounds 20 percent versus MFN 6.5 percent. These differences are very substantial and constitute an impediment to export to China.”

The National Trade Policy said the market access enjoyed by Bahamian exporters is thus entirely dependent on foreign government “goodwill” in such circumstances with the country remaining outside the WTO and no bilateral (country-to-country) trade agreements in place.

“WTO accession negotiations have been underway, with varying intensity since 2001. The National Development Plan mentions accession as one of the targets in its strategy related to trade policy. However, a number of issues would still need further clarification,” the report said. 

“For example, some WTO members have claimed that some of The Bahamas’ current tariff and tax provisions are not in line with WTO rules. Also, the implications of some commitments expected by WTO members will need to be carefully assessed. A careful review of the costs and benefits of WTO accession, and the accession negotiation strategy, is therefore needed prior to progressing with the negotiations.”