By NEIL HARTNELL
Tribune Business Editor
The Bahamas’ World Trade Organisation (WTO) negotiations “will never” interfere with the Government’s fiscal reforms, the Minister responsible indicating the membership push would be delayed if necessary to assist the latter goal.
Ryan Pinder, minister of financial services, told Tribune Business that the December 2014 target he had previously announced for completing the WTO accession negotiations was never ‘set in stone’.
He added that “administrative” factors at the WTO meant this goal was unlikely to achieved in any event, and promised that the talks were not taking place in a vacuum ignoring other aspects of government policy.
“We would never do anything that is not co-ordinated with the entire strategy of the Government,” Mr Pinder, who has ministerial responsibility for the WTO and trade, told Tribune Business.
“We would never do anything inconsistent with the fiscal reforms of the Government at all. If the best advice is for that [WTO] to be delayed a bit, we’ll do our best to co-ordinate with the fiscal reforms.
“We’re one government, so we’re working with the Ministry of Finance and the Cabinet to achieve the best results.”
Describing December 2014 as an “initial goal” targeted for completing WTO accession negotiations with the ‘Working Group’ comprised of the Bahamas’ major trading partners, Mr Pinder added: “It looks even administratively that it will not likely be finished by December 2014, but we’ll still be in a position to advance as soon as possible.”
The Minister said the next step in the WTO accession process was the third Working Group meeting, which has been pushed back to the 2014 second quarter end.
At this meeting, the Bahamas’ major trading partners will likely seek more concessions in terms of opening up this nation’s markets and industries to foreign products and competitors, and this nation will push back in the normal negotiating manner.
The private sector has previously urged the Government to delay this nation’s WTO accession and bring it into line with Value-Added Tax (VAT) implementation, giving the Bahamas a perfect opportunity to “align all the stars”.
Gowon Bowe, the Coalition for Responsible Taxation’s co-chairman, previously told Tribune Business the Bahamas could not allow its planned accession to full WTO membership to “get ahead’ of fiscal reform because of both initiatives’ impact on government revenues.
With the WTO demanding significant rate cuts to the Bahamas’ main Customs duties revenue source, Mr Bowe said the Government had to take extra care to ensure that whatever tax replaced it - whether VAT or another option - generated enough revenue to enable it to run the country.
He added that moving ahead with fiscal reform, and implementing, for example, a 10 per cent VAT tax, would not be wise if the WTO accession requirements left an unexpected revenue gap that needed to be filled.
The Coalition, and private sector, are this seeking to gain a better understanding of WTO’s likely fiscal impact by taking advantage of the presence of the latter’s deputy director-general.
Mr Pinder confirmed that one of the WTO’s four deputy director-generals will be in the Bahamas for meetings and consultations this week with the private sector. He described him as possibly “the top WTO official to ever visit the Bahamas”.
Robert Myers, the Coalition’s other co-chair, yesterday confirmed that it was trying to arrange a meeting with the senior WTO official, describing such discussions as “hugely important”.
“We just want some indications from him on what the schedules are, and what the pressure points are,” Mr Myers told Tribune Business. “We need to understand that, and to understand how it impacts the rest of what we’re doing.
“We’re hoping we have some definitive answers and schedules, and will factor that into the modelling we’re doing.”
Mr Myers added: “This is hugely important. We get $700 million in revenue from duties, and if that has to be cut in half by a specific date, we need to understand that.
“Is there any flexibility? Yes/no? How much and when? It’s critical. We have to know the whole picture, not part of the picture. We have to know the what, when and how to properly evaluate what our revenues will be. It’s very important.”
Raymond Winder, the Deloitte & Touche (Bahamas) managing partner and former lead WTO negotiator under the Ingraham administration, said the country did not have the luxury of phasing in/waiting on tariff cuts because it also needed to cut deeply to get to the WTO’s 15 per cent desired average.
Tribune Business understands that not all tariffs have to be cut to this level, as the Bahamas can negotiate higher duty rates to protect specific local industries, or in sectors that its trading partners have no interest in.
However, major cuts in many tariff lines will be required.