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Govt Reassurances On Wto 'Irrelevant'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government's drive for full WTO membership by mid-2020 is "unnerving" for Bahamian firms, a businessman branding reassurances from its new chief negotiator as "irrelevant".

Robert Myers, the former Bahamas Chamber of Commerce chairman, told Tribune Business that the private sector faces "a very scary and daunting reality" because it still lacks a "level playing field" with foreign rivals when it comes to cost competitiveness.

Zhivargo Laing, the former Cabinet minister who recently replaced Raymond Winder as head of the Government's World Trade Organisation (WTO) negotiating team, recently sought to soothe business concerns by arguing that full membership would help to address The Bahamas' "ease of doing business" weaknesses.

While he agreed that joining the overseer of global trade might help to modernise The Bahamas, Mr Myers said the competitiveness of individual businesses and the wider economy represented a "greater concern" that had yet to be addressed.

Reiterating that these issues needed to be resolved prior to full WTO membership, he added that much in this area depended on the Government - from inefficient, costly state-owned utilities and enterprises (SOEs) to bureaucratic red tape when it came to obtaining necessary approvals and permits.

"It may do on the ease of doing business," Mr Myers said in reference to Mr Laing's remarks, "but the greater concern is the level of competitiveness and cost of doing business. Ease of business is one thing, but if we're to compete on an even playing field with foreign competitors the cost of business remains a concern.

"That presents a problem. If we open up in 2019 and my base of operations has paid 65-85 percent duty on tools and equipment; is paying power costs of 39-40 cents per kilowatt hour; I'm paying interest on a loan at 6.5 percent and my competitor has got a loan at 2.5 percent; is paying eight to nine cents per kilowatt hour; and will pay no import tariffs if they're coming in to compete because they've lowered the duty, the question is: How am I supposed to compete?"

Mr Myers argued that Mr Laing's reassurances were "irrelevant" on this point, and added: "It [WTO membership] has nothing to do with lowering the cost of doing business and the level of competitiveness that Bahamian companies will be challenged to meet against foreign competitors operating at a fraction of our cost.

"It's a disadvantage to be in the Bahamas trying to compete with foreign entities because we're inefficient and made so by the Government; not by us. I keep hammering that point home. We've got a very low labour productivity factor. That's a huge challenge, along with bank rates, energy costs and land costs. How are you going to level off what we've paid in duty over a number of years.

"It's endless. It's not a level playing field. I don't care how you shape that. If the agreement [for full WTO membership] doesn't address that, we're at a disadvantage. That's the bottom line. How are we supposed to compete?" Mr Myers argued.

"It's a very scary and daunting reality. It's very unnerving. It doesn't seem like the Government is backing down at all on this quest to drive into the WTO, and this thing has not been addressed satisfactorily. They have not been transparent at all. I'll give them the benefit of the doubt but it's unnerving."

The precise impact that full WTO membership will have on the Bahamian economy will be determined by the skills of Mr Laing and the negotiating team, and the accession terms they strike with the WTO and its members that have an interest in trading with this nation.

The Government is presently gearing up for the Third Working Party meeting on the Bahamas' accession bid, due to start in Geneva on September 21. Members of the working party will likely feature the US, China, Canada, the European Union (EU), UK and CARICOM states - all the countries that trade with this nation.

The Third Working Party meeting is key, since this will likely establish the foundation for the Bahamas' accession terms and pave the way for more detailed follow-up negotiations with individual members of the working party on a bilateral basis.

Among the major changes affecting all Bahamians will be the elimination, or substantial lowering, of many import tariff rates as these are seen as barriers to trade by rules-based regimes such as the WTO. This will require the country to replace between $100m-$200m in revenues via new or increased taxation elsewhere.

Those industries facing the greatest impact from joining WTO will be those that are currently heavily reliant on high tariff protection or barriers to foreign competitors/imports entry, such as local manufacturers and retailers. The Government is arguing that the services industry, the largest component of the Bahamian economy, is already widely open to competition and will be largely unaffected.

Mr Myers, though, said he remained concerned that the Government might agree to something unfavourable in Geneva, with affected private sector representatives only finding out about it after the fact.

"They've had consultations but not shared their views," he told Tribune Business. "Having consultations but not sharing views is no help. If they're going over there and negotiating, how do we know they're negotiating in our best interests?

"There's no transparency at all. Don't come back and say this is what the provision is; is this OK? Now they've sent our offers in, we'll be told what they've done. That may not be in my best interest. We have all the hope in the world, but I wouldn't call that transparency and real consultation and consensus.

"That seems to be the modus operandi. That hasn't changed yet, despite the fact everyone is screaming for more transparency and more consensus and consultation. But I accept that when you're crisis managing it's awfully hard."

Comments

DDK 2 years, 1 month ago

I truly get the impression that, apart from the bullying from WTO and the like, The Bahamas joining this mammoth oppressive entity is really an ego thing for Government and they will be in way over their collective head if they proceed with this 'ascension'.

I also get the distinct impression that for many lesser informed Bahamians, the paying of VAT means "We reach. Now we pay taxes like they do in Miami!". VAT has not helped The Bahamas and there is nothing to indicate joining WTO will either. The big member countries will swallow us whole!

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The_Oracle 2 years, 1 month ago

Mr. Myers is right, their consultations are worthless, full of disjointed bits and pieces accumulated over the last 4 + administrations by functionaries who are neither in business or astute enough to go beyond the initial WTO Bureaucratic statement of purpose. And they seem bound to keep secrets since Mr. Laing and his appointees were originally running this circus. Government keeps claiming consultation with the private sector, but I wish those who have been consulted with would own up. I can't seem to find any. Laing is irrelevant but is unfortunately again in a position to bugger things up. I will add that every other caribbean nation has leaned heavily on its private sector for as large a negotiation team as they can muster. Not Mr. Laing and co. And Mr. Winder, the most recent participant is now gone. They're all sworn to secrecy!

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Sickened 2 years, 1 month ago

The best negotiators have skin in the game. Shivargo, no matter how smart he may be, doesn't have enough skin in the game to negotiate well. Please send R. Myers, R. Roberts and M. Maura over there to negotiate for us.

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Sickened 2 years, 1 month ago

Shivargo, please give me just 3 specific examples of how just one of our industries will benefit from our joining the WTO. Let's start there. But then, I want to know what our GDP will look like after joining; and what industries will be negatively effected and by how much. This information must certainly be at your fingertips at this very moment

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