By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
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.
Comments
newcitizen 10 years ago
We should be backing away from the WTO. There is no benefit to the Bahamas to join. We don't export anything so we don't benefit. Unless we exported as much or more than we import, then we are just shooting ourselves in the foot.
We are far better off without it.
Liberty 10 years ago
One benefit is more competition in the goods imported leading to increased quality and lower prices. In addition, most of the disadvantages that we would experience with joining WTO; we already experience. Might as well join and get some of the advantages.
killemwitdakno 10 years ago
We'll always buy from next door. Businesses can't buy quality because they don't have an incentive to since they're duty is the same as individuals. WTO favorites their big players. Would be sitting in the middle of gators. Not good to present yourself as a commodity for absolutely no reason when we have nothing to trade. We may only be forced to remove tariffs on products coing in form them, like Britain. Though we may be accustomed to UK items, who shops in those places or knows those brands? Why volunteer for intense regulations. It's giving away governance. Would like to know the benefits , please share.
Liberty 10 years ago
Well the first would be reducing the cost of living by lowering tariffs for all member countries meaning clothes and cars for example will be cheaper. Not only will they be cheaper because of lower custom duties rates; but lets say for example we previously bought from the U.S. and the U.S. bought from South Korea, we can essentially cut out the U.S. and buy directly from South Korea cutting out the middle man.
The next would be increased growth because now investors know that they may invest in The Bahamas with less government interference. Foreign direct investment is key to The Bahamas maintaining the 1:1 value with the U.S. dollar.
An argument against joining would be that joining kills Bahamian businesses but it also increases lobbying. For example because there is no international competition, persons like Mr. Roberts may threaten to fire 500 employees because they don't like VAT.
A next benefit would be allowing Bahamian to export to nations that it currently are unable to because they are not a member.
There are a few others which I may list with more time if those above do not satisfy you. Nevertheless, we must recognize that not joining means that countries impose external tariffs on us(sending goods to their countries has a higher custom duty rate for us than for members of WTO, making our goods more expensive and less attractive). In addition, we may not what is good brands in the UK currently but who is to say we can't learn as we did with The U.S.?
killemwitdakno 10 years ago
killemwitdakno 10 years ago
Who do you lobby for except your chain holder when you have minimal product of your own. Volunteer hostage.
Some of that quality is also crap culture.
So bring walmart here to shut Mr. Roberts down , that would be reeaaaaal nice. Wait til a Walmart and all those others show up out of nowhere and people realize there were no talks of the threats/opportunities to our workers and markets. Walmart would hire all of the illegals in a factory then we'll foot the bill of dealing with human rights and even more immigrants and whatever else comes with hosting big cooperations. Sticking 5 year olds in class with seniors won't make them innovative enough to compete. Do something about stores buying things they won't buy for themselves and being greedy which leads to it sitting there for decades which is why I believe no duty on business imports ( since there'll be vat) whilst not reducing duty on individual imports will help greatly. We've also seen too many times when big hotels shut down and fire hundreds with no warning. We should already be able to sue for actions like that or there's a problem with our laws not protecting locals. That makes it the worst environment to invite steamrollers to. That's why you invest in people. We are on the brink of a boom . Technology has just changed drastically and we are first adapters. But gov is already jacking emerging markets and diversity. Bimini was making major strides on it's own marketing and attracted significant tourists to home grown tours, attractions, ect when suddenly big hotels and casinos were planted, many not hiring bahamians. Can we expect that locals will ever reach ceo levels. That completely went against Perry's promise of we'll be able to start our own bed n breakfast. Bringing in major retail that you can never outdo isn't the way to deal with lack of innovation, entrepreneurial investment, and manufacturing machines. Jobs aren't careers, give innovation a chance. I think it's shooting ourselves in the head. Business groups need to discuss this, loudly. Where's the moratorium on how much we should turn into Africa. Second grade citizens in our own establishment because gov wants us to look like the facade nations whilst the framework is not present. If the benefits doesn't translate to gdp per capita, it doesn't work for us.
newcitizen 10 years ago
You're simply trying to trade one tax for another, but at the same time destroying the small but still import manufacturing sector of the Bahamian economy. The government requires some tax revenue, so if you take it away from duties then it becomes things like VAT and payroll tax. It does nothing to decrease our cost of living.
It does not lead to greater competition in any way. There are no restrictions on what goods can be imported now. Duties are applied evenly as it currently stands.
Your idea that we can now buy from Korea and cut out the US, we already can. Joining the WTO doesn't change that at all.
We can also export to any country we like. The issue is, we don't export anything apart from crawfish, which goes to the US market without any issue. Our resource here in the Bahamas is the beautiful natural landscape, not raw material, not manufactured goods. The WTO benefits exporters. Countries who have more resources than they can use themselves, it does not benefit import heavy nations.
Liberty 10 years ago
Goods made in the Bahamas are not subject to customs duty tax because they are imported. However foreign goods are taxed because they are imported. The VAT for example with no custom duty would mean that they both are now duty free and when u go to the final goods counter at Solomon's both the foreign good and domestic good are taxed equally.
We actually do export several things, and we may export even more if we were to engage in research and development to discover these assets. For example, calcium carbonate is used in many industrial activities, we live on it, tell me why we can't utilize it? Also, who is to say we won't find and drill oil!
The_Oracle 10 years ago
WTO accession is more the over-arching cover for the actual trade agreements signed, in our case the EU-EPa and the CARIB-CAN. Known as Super WTO Trade agreements, they go beyond with respect of trade liberalization in both goods and services. Disputes arising are presented at the WTO. The onus to lower duty rates is due to their being viewed as barriers to the trade of goods from other countries, and to stop import duties being used to protect local products. "Most favored Nation" means none can be treated differently, nor above anyone else. Think about that in the Bahamian context, and one should immediately see conflict with our xenophobia at least.
killemwitdakno 10 years ago
"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,” Doesn't mean anything when aspects of government policy and the entire strategy of the Government doesn't cover bringing things to the public to hear professional's view. Value of US dollar will tank. Many countries are moving away from it. China is making moves against it , Iranian oil will be exchanged for Chinese imported products, Malaysia has paid for their oil in gold, Zimbabwe moving forward. Some stocks are held to yen. So you can only be talking about special drawing rights in wto terms.
Shouldn't we actually have the true value of the older american dollar because whilst we accept theirs, you could never spend a bahamian dollar in the US. Like a mercedes that drives around the globe vs a merced that only drives around the showroom, one isn't as worn , still has mileage. The point is our dollar retains it's value so why go for a wobbly dolar in a wobbly currency market. Consider Jamaicas dollar. Eurozone grouped and all fell together, now Cyprus is doing it Bahamian style. Point is it isn't going to change, main reason why we are probably the largest box in the 2 trillion dollar world's safe. Isn't it suddenly risking their interest rates which coud now fluctuate irregularly. Wouldn't WTO even force stricter regulation on the off shore banking markets? If anything, peg to something else, don't float around. Otherwise this provides for a global recession what twitter provided for conversation. Instant.
Liberty 10 years ago
The United States accounts for approximately 20% of global trade. So regardless of the U.S. dollar depreciating against other major world currencies everyone would be affected. The United States also has natural resources, so in the event the dollar drops; it may export more because labor is cheaper relative, which allows the U.S. dollar to appreciate.
I see where you are coming from with pegging to another major country who is not going down but we must remember that the U.S. is our major trading partner and to peg to the Euro for example, would mean that American tourist have to now get Euros or prices have to priced in Euros and American Dollars.
killemwitdakno 10 years ago
Tourists were privileged to spend it here anyway. They could just buy yuan or BD on their way in like we have to buy US dollars when we visit (usually exchanged at the bank before we go). It is not complicated. There's all types exchange services , travel cards that convert and exchange any currency depending on the location of the atm, machines , virtual wallets, bitcoin global currency ( totally against bitcoin but americans already have it), ect. We're scared to change simple stuff. All that China runs here , they'd set it up. Or we could also watch what Jordanian dinar and Oman‘s rial does. They are pegged to US more than 1:1.
It's about being less affected if you can avoid it. Right now the US dollar is all of our value. The article is showing they're looking for alternatives so I'm not sure on your argument to stick with US dollar by all means as if depreciation might not affect us just because it will otherwise affect the world regardless. It has fell before and it will at least change in use drastically. The dollar declined 54.7% against the euro between 2002 and 2012. We have the least chance at selling it off in a rush.
killemwitdakno 10 years ago
With trillions in debt , the US dollar will not appreciate due to cheap labor unless they enslaved everyone to work for free. And people are demanding raise in in wage and got it so that's the opposite direction of cheap labor unless they document all immigrants. If recession recovery was as simple as having a sale , they could do that now and it would have been working. If it drops causing them to export cheaper, doesn't it also mean that we'll suddenly be less able to buy their cheaper goods if our/their dollar is almost worthless? If ya can't afford to keep it , you can't afford to buy it back after you sell it. Bahamas can't afford to buy at america's garage sale if our dollar value depends on how cheap they're selling their stuff, if they're selling and earning, ect. So are you saying WTO positions us to buy their resources cheaply when they depreciate? If they don't do debt elimination deals with China, the most they can do is sell their gold and natural resources because individuals hurt by the recession won't be able to buy personal goods. But the US trend is they are trying to be energy independent of Russia so there's alot of personal use required first. And if they do what they always did, which was have all money and resources yet borrow to spend and practically never pay anyone back , we can bet gold may not be quickly sold. So that leaves trade offs with China, which China believes yuan should be the global currency so US still risks trigger for decline and using yuan. It would also be in China's interest to trade sweatshop locations in or near America ( which you could then buy from next door in yuan even if it's not global instead of volunteering to be the slave location needed). Cheap American products and Chinese products straight out of factories next door would be nice if local businesses are supported to buy them, not forced to compete with their giant setups here ( btw they don't care to sell to the few of us, they need to buy us out ). Cheap American resources would be great if our dollar could still afford it and not suffer from the sale.
killemwitdakno 10 years ago
Btw why is bsd not showing in google currency converter. Big marketing loss right there.
killemwitdakno 10 years ago
For WTO to be worth it ,you first have to have products to export, countries that want it, governments that want the countries to have it. See how hung up we are after all the work to open trade with Dubai. We will never be able to uphold all regulations required and for slight chance at it's benefits. Even if those WTO benefits were cheap energy sources, the pressure presented could lead to us not afford it and to selling ours (potentially ours) cheaply, who would want that when some countries are getting paid in gold for theirs. So this isn't about GDP opportunities or trading nothing, it might be about fulfilling requirements for debt mercy when we could just pay it off.
We're not risking lack of exports in a recession by being pegged. Who else are we trying to sell the other resources to that would better afford them if we weren't pegged to USD? If so, Pinder could have said that. If we even had at risk markets or new markets to benefit, they would have reported so.
Tell me what's on WTO's dispute list that we have, except maybe suing Puerto Rico for their "Puerto Rico does it Better " tourism commercials, Luxury chains for overkilling our brand, US for false warnings to tourists, Bahama Breeze, Tommy Bahama, Bahamas Sperrys, Bahama everything else, Bahamian fashion, Marine Poacher countries . However the other way around, this means that the average bahamian businessman will need to avoid infringement (at least goodbye essence, miss bahamas world , selling brand names out of approved franchises, all those stolen pictures in our media, and fake brand names in stores). It will create a need for jobs to cope with compliance but too bad the people don't have the skill ( unless they can show us firms lined up to benefit off international business compliance, which they never show who's lined up to benefit from our legal plunges, probably doing it for the stem cell "cures", which hiding that means we can't count any profits, or they probably weren't even considering getting anything other than license fees). So the local businessman doing international business is going to have to hire foreign services to properly comply (legalzoom, international lawyers, obtain usage licenses!!!, quality assurance, ect ). Also , be prepared to get bullied with all type of lawsuit threats and higher hoops to jup through just because you're a small bahamian grade business who can't possibly actually have an international product. PLP themselves placed separate laws on bahamian stem cell hopefuls versus foreign stem cells clinics stationed here.This might just be Pinder's way of getting an extra billion spent in FL ( aside from the "cures" copyrights), bc we're in no way ready for international business to go both ways.
killemwitdakno 10 years ago
Unless the currency depreciated or is at risk of plunging rapidly because the government was unwilling or unable to just repay the debt and defend reserves, Pinder needs to say that. It might explain why paypal converts bsd as 60 US cents. If we're being forced to float under imf circumstances and requesting a bailout, Pinder needs to say that or confirm stability otherwise, whilst on topic of fiscal reforms. They've never been responsible about preventing financial panic hence stores are already increasing prices to compensate for a worrisome VAT.
They're thinking they can sue for stuff, when WTO supports big countries suing small ones over their own markets. Has forced countries to take products that are ban or don't meet standards. At home this would force individual sellers to have to sell internationally through government.
You can get much of what Bahamas Bureau of Standards provides directly through already internationally approved agencies which are often highly preferred if not required in your market. How kalik and others have been doing it without WTO. Even with BBS we don't need WTO. "exporters would find themselves having favourable access to more than 100 countries". We already have that, it's called alibaba.com, bunch of bahamian conch shell exporters already listed. Bet even that surprises them.
Show me in numbers that this isn't going to make us the slave nation for cheap labor.
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