By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Arawak Homes' chairman is "deathly afraid" that WTO membership will undermine Bahamian economic ownership because many locally-owned firms cannot compete internationally.
Sir Franklyn Wilson told Tribune Business that "a high percentage" of Bahamian businesspeople "don't have a clue" what joining the World Trade Organisation (WTO) will mean for the country or their companies.
With the Minnis administration, by its own admission, targeting a "very aggressive" 2019 deadline for the Bahamas to complete accession to full WTO membership, Sir Franklyn said he was praying this "doesn't represent as radical a change" as he fears.
The well-known businessman suggested many Bahamian companies would be unable to compete head-on with multinational rivals that enjoy greater economies of scale and access to cheaper financing, thereby placing local entrepreneurs at a significant disadvantage.
Suggesting that the Bahamas was being forced to adopt rules that did not favour small, vulnerable economies such as its own, Sir Franklyn said one potential 'saving grace' was this nation's relatively small size, which may prove unattractive to major foreign companies.
"I am deathly afraid of it, deathly afraid," he told Tribune Business of the Bahamas' potential WTO membership. "I may be wrong, but I think a very high percentage of people in business in this country, they don't have a clue what WTO is or what it brings.
"When I say deathly afraid, my prayer is that somehow, some way, it [the WTO] just doesn't represent as radical a change as we hear about. If it does represent the change people fear, what businesses in this country are ready to compete? Who can compete?
"When I say deathly afraid I'm not fearful the country is going to come to an end; I'm not saying that. When I say deathly afraid, it's more about empowering Bahamian ownership of the economy and being competitive internationally. It's in these areas that I think it's going to be very difficult." Suggesting that public education on WTO, and other rules-based trading regimes, has to-date been lacking, Sir Franklyn said it typically "takes years to get people to really understand it".
The Bahamas' accession is the longest such process in WTO history, with this nation having first served notice in 2001 - through then-trade and industry minister, Zhivargo Laing - of its intention to become a full member, and Sir Franklyn implied that the education effort should have been ongoing and consistent ever since.
Recalling the "effort" made in 2007-2008 when the Bahamas signed on to the Economic Partnership Agreement (EPA) with the European Union (EU), the first rules-based trade agreement in its history, the well-known businessman said many in the private sector then were "scratching their heads and trying to understand that".
"I just don't remember it becoming a topic of conversation," Sir Franklyn said, implying that the intricacies and complexities of rules-based trading agreements did not remain at the forefront of Bahamian private sector thinking for long.
His words, though, will strike a chord with the reservations many Bahamians hold about becoming a full WTO member, notwithstanding the Government's eagerness to rapidly complete the accession process.
The Minnis administration sees WTO membership as a key element of its strategy to reposition the Bahamian economy through liberalisation and deregulation, thereby ending its 'isolation' from the world's open, rules-based trading regime.
Advocates of this strategy have argued that it will open up new export-led opportunities for Bahamas-based companies and industries, enabling them to sell services and manufactured goods abroad under the protection of WTO rules.
Presently, all Bahamian exports are exposed to be the imposition of trade barriers - such as tariffs, quotas and subsidies - by other countries wishing to deny them market access and protect their own industries. As a WTO member, the Bahamas would be able to challenge such actions by invoking trade dispute procedures.
Sir Franklyn's comments, though, reflect fears that WTO membership will require the Bahamas to open up many industries to foreign competitors, who will then use their deeper pockets and access to cheaper capital to squeeze out locally-owned companies.
However, much will depend on the skills of the Bahamas' negotiating team, headed by Deloitte & Touche (Bahamas) managing partner, Raymond Winder, to reserve key industries for Bahamian ownership only in talks with the Working Group of nations it will have to determine accession terms with.
Sir Franklyn, meanwhile, suggested that FOCOL Holdings' 2006 acquisition of Shell's Bahamian operations could not happen now because "the rules have changed" regarding how such deals play out.
While Shell decided to sell off its operations on a 'country-by-country' basis, its rivals - Esso and Texaco - exited by placing their entire Latin American and Caribbean networks for sale. The latter two structures, Sir Franklyn argued, made it difficult for Bahamian groups to participate because of the sheer scale and capital required.
Suggesting this was an indication of what might be to come under WTO, the Arawak Homes chairman said: "FOCOL buying Shell was the last time [such a deal] could have happened.
"By the time Esso and Texaco came along, if you committed to buy them you had to buy multiple countries in Latin America and the Caribbean. How many businesses in the Bahamas can really do that?
"That's a really clear indication. Now you're talking about WTO, it means you're really out there. Look at the numbers. I'm not just being theoretical about it. Bahamians were able to buy Shell because certain realities existed at that point, but by the time Texaco and Esso came along, the rules had changed. No Bahamian came close; no Bahamian was ever mentioned."
Sir Franklyn said a similar situation now existed with CIBC FirstCaribbean, which was exploring a New York Stock Exchange (NYSE) listing as an avenue that would allow its Canadian parent to exit after failing to find a buyer for the region-wide business.
Hinting that scale was again a barrier to Bahamian ownership and participation, he added: "Where's the Bahamian capital to come and say: 'Let one investor buy a dominant position'. The numbers guys may have the cash, but there aren't many investors in this country able to deals of that magnitude."
Sir Franklyn, though, said the Bahamian economy's relatively small size and lack of growth since the 2008-2009 recession could act as a deterrent to the influx of foreign corporate competition feared by many.
"One consequence of the general lack of growth the country has experienced over time is that, more and more, the country is not likely to be of interest to the deep-pocketed global investor," he told Tribune Business.
"That is a factor that may be relevant. I spoke the other day to the chairman of a company that has a relatively big presence here in the Bahamas, and he was saying that if activity in a country doesn't have the potential to move his stock price on any exchange he's listed on in the world - it doesn't have the potential to move his stock price one penny - what's the point?
"If you're a really large company, and to move your stock price you need nine-figure profit levels, you don't have many opportunities in this country," Sir Franklyn added.
"One side to WTO accession is the smallness of the country may not attract many players big players from the global arena. There are not many industries in our country for global companies to buy into, and that to some extent is a mitigating factor.
"Our relative smallness may not be enough to attract big players. It [WTO] may not have the consequences some fear." He pointed to the oil and insurance industries as examples of sectors where foreign owners had exited after selling their interests to Bahamians.
Still, Sir Franklyn argued that WTO was another example where, in common with the international financial services regulatory regime, the Bahamas was being forced to adopt rules and laws to its disadvantage.
"A real big takeaway is the large countries of the world are finding every possible way, in my opinion, to be unfair and unkind to small countries," he told Tribune Business. "They're finding every possible way to be unfair. The biggest tax havens in the world are in the US.
"They're putting hell on us to open bank accounts. I did a transaction the other day, and there was provision to create a bank account. Even though the venture was under Bahamian law, the process of opening a bank account in the Bahamas was such that we had to agree to open it in Florida.
"The rules are all changing, and the rules are very much in favour of large, settled economies and multinationals. These rules are not geared towards the smaller economies. I don't know what we can do about it. It's just the way it is."
Comments
DDK 6 years, 2 months ago
Indeed, a wery Wicked Trade Organization. I say keep resisting, explain we would need a referendum, whatever, they will implode eventually. We have already jumped into bed with the damned EU. Hopefully their days are also numbered.
Aegeaon 6 years, 2 months ago
At the same time, the local economy is still screwed regardless of joining or not. With or without WTO has it's own advantages and disadvantages. Although there's no Bahamian businesses that can compete with the more experienced foreign companies, it's a bit better to grow the FDI tree further to have more financial growth for the government or with allied Bahamian companies.
Or keep the FDI low, which the reasons for isn't too clear. Local companies will still grow, but too slow to meet up with demands due to botched business laws and regulations. If anything, the WTO can be helpful if done correctly. Just mind the disadvantages, that's all.
ohdrap4 6 years, 2 months ago
It is not just the merchants.
Gone will be property tax exemptions in the family islands for bahamians.
Gone will be your 250.000 exemption for your residence.
The Bahamas wants to have its cake and eat it too. They do not want to lower customs duties, They do not want to open up sectors exclusive to Bahamians.
they want VAT+business license+ income tax+ health insurance.
TheMadHatter 6 years, 2 months ago
I've never heard this guy being concerned about the zillions of foreigners we have hear draining our resources before now. Tens of thousands of Bahamians are out of work because they cannot support their families on $40 a day and sustain a sub-human living standard. Those who can, compete and take their jobs from them. This has been going on for decades.
Now that the influx of foreigners may affect HIS business, he has waken up to the existence of them.
Hopefully he will use his vast resources to guide Government in a Pro-Bahamian direction with this new Immigration Law they are currently proposing. So far, the rumors are implying that Brent plans to give the entire country away wholesale and at a 99% off discount.
DDK 6 years, 2 months ago
Hopefully. The 1% only ever worry when it affects their pockets, and let's hope those rumors are wrong. The Minister's intentions are never very clear.
Aegeaon 6 years, 2 months ago
(Sigh)... No one understands how advantages and disadvantages work. This isn't about how the WTO can screw us up, more like, how we squandered too much funds on failed projects.
Gotoutintime 6 years, 2 months ago
My heart bleeds for Sir Snake!!
Guy 6 years, 2 months ago
“Suggesting that the Bahamas was being forced to adopt rules that did not favour small, vulnerable economies such as its own, Sir Franklyn said one potential 'saving grace' was this nation's relatively small size, which may prove unattractive to major foreign companies.”
Meanwhile the Bahamas is the ONLY country in this hemisphere that is not a member of the WTO. Smaller, less developed island states seem to be doing just fine benefiting from the positives WTO membership affords them.
TheMadHatter 6 years, 2 months ago
Really? Name one. Cause I'm ready to take a used Haitian sloop and sail on down there. I just need the country name. Thanks. Quick too please - I'm ready to go.
Economist 6 years, 2 months ago
Better get ready to go to Trinidad, and also Barbados. That is where all the banks moved their head offices to.
Porcupine 6 years, 2 months ago
Guy, Present your facts on the benefits of joining the WTO. Show the benefits to ordinary people. On this rare occasion, it is probably best that The Bahamas is an outlier. If you would like to learn more about trade organizations; http://www.globaltradewatch.org/Page....">http://www.globaltradewatch.org/Page.... I wonder how many Bahamians will actually do any homework on the issue, perhaps before commenting in public?
DDK 6 years, 2 months ago
Proponents of the WTO, or World Trade Organization, assert that it creates a strong, stable international economy, while opponents contend that it favors wealthy, developed nations and is widening the global divide between the rich and poor.. The WTO was created in 1995 to encourage and regulate trade between its over 150 participating member nations. The primary objective of the WTO is to create economic growth and encourage free trade among nations: supporters contend the WTO creates economic opportunities, while others say it is disfavors lower class citizens, limiting their opportunities for social and economic mobility. Those in favor of the WTO say that its positive impact extends beyond just economic benefits. By creating a strong international economy, proponents contend, the WTO in turn creates an international framework of political stability, and offers a solid foundation for promoting international peace by encouraging good political relations among member nations and providing a solid dispute resolution process. Opponents, however, argue that the WTO is only widening the global income gap between the wealthy and poor: as the rich get richer, the poor get poorer. They also contend that the WTO favors prosperous countries and multinational corporations, while preventing smaller and poorer countries from having a fair shot of engaging in open market trades and exchanges.
International Orgs
BONEFISH 6 years, 2 months ago
Wow.The Bahamas the only country in the hemisphere that is not a member of the WTO.Even tiny St.Kitts is a member. Somebody told this, a Jamaican business executive told him, in his opinion,The Bahamas is closed backward economy.
TheMadHatter 6 years, 2 months ago
Tell his to check his exchange rate 128 Jamaican Dollars to one $US
SP 6 years, 2 months ago
NOBODY can expound on any positive benefits a single developing country have gained since joining WTO!
Why should the Bahamas join WTO? For what?
TheMadHatter 6 years, 2 months ago
NOBODY in Government or in the Chamber of Commerce will answer that question. We are given NONE - ZERO - reason that we should join.
I guess it's like Nancy Pelosi said "We have to pass the Bill so that you can find out what is in it." She was speaking at the National Association of Counties’ annual Legislative Conference on 9 March 2010, in Washington D.C.
OldFort2012 6 years, 2 months ago
Here is one, small reason: you will no longer pay double the price in Miami (at least) for anything you care to mention.
Aegeaon 6 years, 2 months ago
This is just ridiculous. Is this another anti-foreigner argument or what? This isn't about how to take away more jobs, but this is about how we wasted so much money on failed projects or other hotels that only direct money to political pockets for foolish gains.
TheMadHatter 6 years, 2 months ago
Yes, but at least they were Bahamian pockets.
Aegeaon 6 years, 2 months ago
Good lord, we've gotten too far deep in criminality to the point that the right thing doesn't matter anymore.
John 6 years, 2 months ago
Someone (maybe it’s me) says that our national leaders are not really leaders but more like middle management in a corporation. Because by the time they are finished taking dictates and instructions from foreign countries and international institutions with hidden agendas and self serving motives, both hands and feet of our leaders are tied before their even can consider meeting the mandate of the people who elected them. Not to mention they are also blind folded and gagged. Case in point when the US and other countries cracked down on the offshore banking system in the Bahamas and othe countries, they virtually had these countries shaking in their boots and peeing on their selves to try meet the compliance requirements of this body. But now, today, The US is the largest offshore market, holding 22.3% of all offshore accounts belonging to foreigners and non US residents. Most of the rest of the market is monopolize by the other countries that forced the Bahamas and other countries out of the market. And while they try to list The Bahamas aaa a narcotic state, the US is, without doubt, the largest single user and importer of narcotics. And which country dares to question that. Then to take it even a step further, the WTO has requested countries like The Bahamas to remove customs duties from their imports. Yet Trump comes and puts tariffs on imports like solar panels and other items and no one questions it ‘Not A creature was stirred, not even a mouse.’ So even if oil was discovered in the Bahamas do you think it will ever be explored or Bahamians benefits from it? It will go the same way as the salt and the aragonite. As a matter of fact there is talks that the current $67 price of oil is being propped up. And since those who control the market want $100 a barrel oil again, then plan to disrupt the market supply to get it. Bahamians have learned to catch jitney and sleep in the dark... right?
Aegeaon 6 years, 2 months ago
Good grief, talk about playing the victim card. The Bahamas's blight is caused by the natives themselves. From the Cartel alliance from the 80's and the PLP's most broken and depraved administration from 2012 up to 2017. We kept playing pirates with the IRS and other financial organizations for years on end. Besides, who knows how deadly these offshore bank accounts are in the hands of the PLP. Their own friends were Cartel Sicarios and Lieutenants that they made as allies with Pindling, and they're mandated to pay them for each of the money stolen from the US.
dfitzerl 6 years, 2 months ago
Unfortunately, Bahamians fail to appreciate that we have benefited from trade agreements for decades. They have typically been bilateral, but trade agreements non-the-less.
A. These agreements are expiring and are being replaced with WTO.
B. The existing agreements are only goods based. Service and intellectual property are generally not covered.
C. We seem to take historical access to foreign markets for granted because we are small and have good foreign relations. Without guaranteed access, we can easily be excluded like Haiti and Cuba have historically been.
D. We already see how this works when we try to do things in cyberspace only to be face with, “sorry, this [blank] does not allow access from your jurisdiction”. Or OECD blacklisting of our financial industry. People were up in arms when they thought that Florida had banned the import of seafood from The Bahamas.
Lord help us if 45 work up this morning and decided to prohibit US citizens from visiting The Bahamas or Bahamians from visiting the USA.
We seem to only think domestic when we discuss business. We only survive because we export goods and services. If we closed our borders and made only B$ transactions (or were closed by others), we would starve.
We need to cease the emotional response and figure out how to use WTO access to our expanded benefit while charging Winder to negotiate well to protect our vulnerabilities.
OldFort2012 6 years, 2 months ago
You might as well be explaining to 13th century people that the world is not flat. They lack the very basics of knowledge to be able to understand your argument. Like teaching 4x2=8 to people who have not mastered addition as yet.
But they obviously enjoy paying 65% more for everything they consume.
Sickened 6 years, 2 months ago
I personally prefer paying 65% on stuff than to pay 35% tax on my income. You probably don't mind getting rid of duty because you're retired and won't have any taxable income to pay/declare.
OldFort2012 6 years, 2 months ago
But I guess you would prefer that your children or grandchildren could choose a profession other than conch-breaker or room cleaner, right?
For that to happen, they need access to foreign markets. First they need education and after that they need access to foreign markets. Imagine how wonderful it would be if Bahamians could produce and sell their intellectual property from right here. Imagine a world full of Amos Fergusons (in their own fields, naturally), living, producing and selling right from here. Now imagine a world in which Amos Ferguson cannot sell any pictures abroad. You don't need to imagine. That is what you have at the moment for 1000s of young (and not so young) Bahamians who cannot design and sell their intellectual property. Look at me. Thousands and thousands of people buy my products. But to receive money from them I need to have a company in the US to invoice them as no electronic service will deal with the Bahamas. I spend 30% of my time figuring out how to get round all the moronic legislation imposed by either the Bahamas or the US. The WTO does away with it. It unlisheases creativity and business.
Dawes 6 years, 2 months ago
You would only pay 35% on your income if you earn over $200,000 in the US, and thats on every dollar over $200,000 not on the amount below.
DDK 6 years, 2 months ago
Points taken.........
TheMadHatter 6 years, 2 months ago
OldFort ... so you are suggesting that under WTO, Bahamians will be able to receive credit card payments online from people abroad and also we won't get blocked by some companies (like Circuit City when they existed) who said they "don't accept 'international' credit cards"...?
If that is so then why doesnt the Chamber or Min of Fin say so? List that along with the other benefits we would receive. Why the SECRECY? Bahamians are only hearing on the street "foreigners coming to put me out of business". At the same time Govt got shut-mout-itis....so only rumours are allowed to spread.
The SECRECY of WTO is why people are worried.
Yes...i know the documents are voluminous....but somebody in authority could at least unleash a few bullet points eh?
OldFort2012 6 years, 2 months ago
I am not in authority, otherwise, believe me, I would do it.
OldFort2012 6 years, 2 months ago
PS: there is nothing automatic in this world. Us not being members of WTO is ANOTHER reason why large companies steer clear of offering any online services in the Bahamas. The absolute stupidity of our currency controls is another. People could just not be bothered to screw around for the sake of a market of a few thousand people. That is why we need the WTO. That is why we need to abolish currency controls. That is why we need to bend over backwards to enable ease of doing business. To remove the excuses. The first step is the WTO. All other steps are dependent on that first step.
TheMadHatter 6 years, 2 months ago
2nd step - family planning for ALL. It makes no sense for Government to make great efforts to clear the pathway to allow companies to create another, say, 7000 jobs to employ the unemployed - if people just turn around and make another 14,000 people - 7000 to take the new jobs when those persons retire/die - and another 7000 to continue to be unemployed.
SO you are probably right about the 1st step - and that's my opinion of the 2nd step.
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