Wto's 'Red Lines' Impossible To Set


Tribune Business Editor


Business cannot advise the Government on where to set the WTO “red lines” because of an information vacuum, the Chamber of Commerce’s chairman warned yesterday.

Michael Maura, pictured, told Tribune Business that the private sector was unable to determine The Bahamas’ negotiating limits because it lacked the necessary industry-specific analyses to determine the impact of World Trade Organisation (WTO) membership and what the economy will look like post-accession.

He expressed concern that this would fuel “a fear of the unknown” that turns many Bahamian businesses against the WTO, and called for the Government and private sector to urgently partner on an “impact assessment” and post-WTO policy for every industry to address this.

Emphasising that neither he nor the private sector were saying “no” to WTO, Mr Maura warned against “betting on a single element of WTO” to put the Bahamian economy in a better position than it was pre-accession.

The Chamber chairman said import tariff reductions would not necessarily translate into lower consumer prices, given that the Government would have to compensate for the lost revenue via tax reforms that were as yet unknown.

He also cautioned against focusing solely on WTO’s potential benefits for attracting foreign direct investment (FDI), arguing that this could not be viewed in “isolation” from the domestic economy.

Instead, Mr Maura said the overriding objective in joining the rules-based trading regime should be to ensure “Bahamian investment, Bahamian businesses and the Bahamian people thrive” in the economic climate post-2019’s planned accession.

He echoed concerns expressed by others that the Government needed to fix The Bahamas’ “ease of business” concerns before taking the country into the WTO and “lowering the gates” to larger, lower cost and more efficient foreign competitors.

And, as the last Western Hemisphere country bidding to join the WTO with the longest-running accession process, Mr Maura said the Bahamas’ negotiations would likely be subject to “additional stress” because standards had toughened considerably since, for example, its fellow CARICOM members joined in 1994.

While appreciative of the Government’s efforts to consult with the private sector, and incorporate its positions into the country’s first WTO offer, the Chamber chairman said the various industry meetings had been more akin to “presentations” rather than consultation.

Explaining that this was not intended to be critical of the Government or the Trade Commission, Mr Maura also commended them for asking industry to provide its ‘limits’ - what absolutely must not be liberalised, and opened up to either foreign companies or imports, as a result of the WTO accession terms.

“They want to know, in going in to negotiate, the line they shouldn’t cross that is likely to cause pain to your industry,” Mr Maura explained, acknowledging this showed “sensitivity to the concerns of Bahamian businesses and the people”.

“The difficulty is they’re asking business professionals, industry and sector representatives to identify or forecast where these ‘red lines’ need to be from the standpoint of the future when we’re members of the WTO,” he added.

“Because we don’t have sufficient data, analysis and information on any sector we can’t decide where that red line is. While this conversation has ramped up in the last couple of months there is insufficient information in the private sector to interpret, and provide an appropriate comment, on what to do and what not to do with respect to WTO.

“The concern I have, because of the absence of analysis, information on what life will look like post-WTO; the consequence of that is we have a large segment of the business population saying we shouldn’t join, saying: ‘I’m scared, I don’t want to be put out of business’.”

Mr Maura said he was unaware of any detailed studies being conducted to determine WTO’s impact on different industries, such as the retail, light manufacturing, construction and hospitality sectors.

Although reports such as a ‘vulnerability study’ have been conducted, the Chamber chairman said he had met no one from the private sector who had been involved with such research. This suggested they may have been produced in “a vacuum”, relying heavily on assumptions, with little ‘real world’ interaction or data.

“It’s more of a presentation rather than the private sector industry groups being able to contribute intelligently what they need from WTO,” he told Tribune Business of current interaction with the Government, “because they don’t understand enough about the sector and the impact WTO can have on their sector and their economy.

“It comes back to information and trust. If they don’t know, and are not able to understand what our future looks like, they’re less likely to be supportive because they are fearful of what they don’t know.

“These are the concerns I have. We are not taking a position of ‘no’. I’m not against the WTO. There’s more work to be done, and we need more analysis notwithstanding we’ve been at this for 17 years.”

The Bahamas first served notice of its intention to accede to full WTO membership in 2001, and Mr Maura said the fact some 160 countries had already joined - including all others in the Western Hemisphere - suggested such a move has “some merit and value”.

Despite such a lengthy ‘lead in’, Mr Maura said: “That doesn’t, in my view, mean we should rush into such a significant decision that will substantially change our economy and likely change the social make-up of our communities.

“We can speak about ‘shame on us’, it’s taken so long. It is what it is, and because it’s 17 years late it doesn’t mean we shouldn’t conduct the appropriate level of due diligence so that we negotiate, capture and deliver the best terms for the Bahamas.

“I personally believe WTO has much to offer the Bahamas with the appropriate framework, both creating opportunities for all, and safeguarding and protecting some sectors to ensure that, at the end of the day, we provide continued opportunities for Bahamian businesses and investors, especially small Bahamian businesses.”

Mr Maura said uncertainty over tax reform, and the need to improve the ‘ease’ and cost of doing business in the Bahamas prior to WTO accession, were “recurring themes” adding to private sector jitters.

While WTO and other rules-based trading agreements often created some “losers”, the Chamber chairman said the Bahamas’ accession terms needed to be such that the “business population” - and wider public - saw a net benefit.

He added that WTO accession has to be “more about them than attracting foreign direct investment”, given that the statute-based rules likely to be imposed by the trade regime are often cited as improving the Bahamas’ competitiveness for attracting foreign capital.

“We cannot look at FDI in isolation,” Mr Maura told Tribune Business. “We need to make sure WTO allows Bahamian businesses, investors and people to thrive. They need each other.

“I agree that we need, and depend on, FDI. In my opinion, what people fail to understand is we’re more dependent on Bahamian businesses. We need Bahamian businesses and investors growing and expanding, and jobs supported by Bahamian businesses, to allow FDI to grow.”


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