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Wto To ‘Modernise 70-Year-Old Model’

photo

Carey Leonard

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government is “absolutely correct to modernise a 70-year-old economic model” by seeking full WTO membership, a well-known Bahamian attorney argued yesterday.

Carey Leonard, a former Grand Bahama Port Authority (GBPA) in-house counsel, told Tribune Business that Bahamian companies needed to prepare themselves to exploit its potential benefits rather than “moaning that the world is changing”.

He urged Bahamians to follow Fiji’s example, as set by its Fiji Water brand, and seek to export their products to the world, adding: “If Fiji can do it, we can do it.”

Besides securing overseas market access for Bahamian exports, Mr Leonard said joining the World Trade Organisation (WTO) as a full member would also boost foreign direct investment (FDI) through the “absolute certainty” it will provide over the rules governing its presence and protection for its products/capital.

Making the case that this would also enhance The Bahamas’ economic competitiveness, Mr Leonard said Bahamians needed to look beyond the present economic reality with “out of the box thinking” to envision future possibilities in the WTO’s rules-based trading environment.

The Bahamas will this week stage its fourth meeting with the Working Party overseeing the longest-ever WTO accession process, standing at 18 years and counting, and Mr Leonard agreed with former Chamber of Commerce president, Edison Sumner, that the debate on whether this nation should join is effectively over.

“Without a doubt they’re right and absolutely correct,” Mr Leonard told Tribune Business of the government’s decision to finally complete the WTO accession process. “We really now need to look at the opportunities it will start providing to us.

“The market in The Bahamas is small, and the nice thing about WTO is it opens it up to the whole world. We may not be a manufacturer at the moment, but look at Fiji where they export water and ship it 8,000 miles.

“They have a niche market in Fiji water. All over the world, consumers are paying a premium for Fiji water. The same thing with Swiss Chocolate, and Switzerland is hardly the cheapest place to produce something.

“It’s up to us to find niche markets for our products. If Fiji can do it, so can we, and maybe our water companies in Nassau can find something rather than talking of woe. There’s opportunities.’

Mr Leonard agreed with Mr Sumner’s comments, made after a national productivity legislation press conference last week, that WTO-related conversations needed to switch from whether The Bahamas should join to preparing for its coming given the Government’s desire to join.

“I agree with Edison that that conversation has ended,” he said. “The Government has determined it is going to do it, and I think the Government is right in doing it.

“We’re changing laws that make the country more efficient in any event, and the consumer will benefit from that eventually. There will be absolute certainty for foreign direct investment (FDI). Why invest $100m in a factory in The Bahamas if they cannot protect my product? I can do it with absolute certainty if you’re in the WTO because my product is protected.”

Mr Leonard said The Bahamas needed to do a better job of managing and exploiting change, adding of the WTO: “It’s going to make a major difference for foreign direct investment, and make The Bahamas more competitive in the long-run.

“That’s a major problem we have in The Bahamas. We’re non-competitive. We don’t have to think out-of-the-box because we’ve been running on the same design for 70 years, and we’re going to have to change and modernise and join the rest of the world.

“People complain about the cost of power, but there’s nothing to stop you lowering the cost of operations by investing in solar power. There are so many things that we can be doing rather than moaning the world is changing.”

However Robert Myers, the Organisation for Responsible Governance’s (ORG) principal, warned it would be “dangerous” to leave Bahamian manufacturers traditionally reliant on tariff protection exposed to cheaper imports in a rules-based WTO environment.

He echoed previous calls for the Government to achieve the WTO-mandated reduction in the average tariff rate, from the current 32 percent to 15 percent, but do so in a manner where it maintained - or even increased - the rates for Bahamian-made goods that compete with foreign imports.

“Manufacturing is going to be tough if we cannot negotiate higher rates for some of the manufacturers,” Mr Myers told Tribune Business. “If those manufacturers create employment, GDP and taxes, it would be dangerous to remove or lower some of the taxes to the point where those guys are struggling.

“That’s where the details become critical. It all depends on the fine print and what we’re pushed into. Hopefully we’re not pushed into anything, and we can protect those industries that are Bahamian-owned like retail.”

Mr Myers said revenue replacement for reduced/eliminated import tariffs would be a key issue, but added that The Bahamas’ high import consumption meant this aspect of the economy was unlikely to change much post-WTO.

“As long as we go in sensibly and we’re successful in negotiating the terms that we’ve thrown out there, I don’t think it’s terrible,” he told this newspaper of the WTO. “There may be some advantages in the services sector if we can level the playing field where architects, contractors and other professionals go and open up businesses in other jurisdictions.”

But, to achieve competitiveness post-WTO, Mr Myers reiterated that The Bahamas needed to tackle its own cost and ease of doing business issues - particularly bank regulations and fees, the cost of electricity, labour productivity and exchange control liberalisation.

Arguing that many of the necessary reforms lay “out of the private sector’s hands”, the ORG chief said: “Let’s hope that gets done before full accession.”

Comments

ThisIsOurs 1 year, 5 months ago

"*I agree with Edison that that conversation has ended,”

Hmmm, neither owns the Bahamas. Here we go another looming BTC sale what a horrible negotiation giveaway

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BahamaPundit 1 year, 5 months ago

"He urged Bahamians to follow Fiji’s example." Really, your best argument for us joining WTO is a bottled water?

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B_I_D___ 1 year, 5 months ago

My thoughts exactly...realistically, what do we have to export that is not rapidly running out already...Conch, Fish, all that stuff, we are trying to close down to preserve it, not open it up to the WTO. The Fiji example is just downright stupid.

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The_Oracle 1 year, 5 months ago

The 18 year long problem is Government has been negotiating, not the private sector. Government has kept the private sector in the dark, where they have been quite happy quite frankly. Private sector input has been dismal at best, creating a very steep learning curve on top of the ever increasing domestic economy stagnating government bureaucracy. A snail moves faster and more efficiently. Thus far government has pressure from the external, (IMF, OECD, WTO, et al) and virtually none from within.

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ohdrap4 1 year, 5 months ago

the private sector sees no need for wto because we can only manufacture things with protection.

look at the chicken situation, 20 years ago there were many local chicken producers now there is maybe one or tow and the wto members are already telling them to lower the chicken tariff.

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BahamaPundit 1 year, 5 months ago

The bottom line is this folks: If we join WTO, income tax is a done deal. If you don't want income tax, don't celebrate and encourage WTO!

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Revolutionary 1 year, 5 months ago

Modernizing the economy shouldn't mean allowing the WTO to remove regulations that benefit local companies over much larger foreign entities (duty, FDI taxes, local preference, etc). These regulations exist because these foreign companies have billions; they won't compete with Bahamians, they'll bankrupt or buy us.

Fiji Water, founded by a Canadian, purchased by Americans and headquartered in Los Angeles, takes more than they make for Fiji. Just research them. They have tried to avoid taxation and local employment since being founded, and they laid off 40% of their employees in 2008 after Gov tried to make them pay duty. Just what the Bahamas needs, another foreign company extracting resources and avoiding contribution.

"securing overseas market access for Bahamian exports" - what exports? "We may not be a manufacturer at the moment, but look at Fiji" - Another Bahamian eager to sell natural resources to foreign entities at the expense of Bahamians. Shouldn't we manufacture goods before trying to export manufactured goods?

"It’s going to make a major difference for foreign direct investment, and make The Bahamas more competitive in the long-run." Competitive with who? Making Bahamian companies compete with each other is very different from making Bahamian companies compete with billionaire transnational corporations. Massive international companies will open up shop in the Bahamas without any counterbalance to protect Bahamians. Disney can compete with local tourist operations, Walmart competes with Kelly's, the big dog vs. the little dog- and we know who wins. The idea that consumers will benefit from Walmart prices ignores the reality that many consumers will be out of a job due to unfair competition.

WTO benefits big corporations, not small nations- do ya homework and modernize the economy without selling the country!

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BahamaPundit 1 year, 5 months ago

Very well said. The WTO isn't modern, it's an ancient failed globalist dream. It allows rich, union-busting companies to sell out their countrymen and exploit cheap third-world labor at slave wages. The problem is we have a bunch of lazy "do-nothing" leaders that would rather sell the shop than fix it. It is much more "modern" for the Bahamas to enter bespoke, bilateral agreements with specific nations, such as the US.

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Well_mudda_take_sic 1 year, 5 months ago

Carey Leonard probably doesn't even know that native Fijians are now a minority in their own country which has been over ridden by a massive influx of Indians from India in recent decades. Just look up Fiji on Wikipedia to understand the sad state of that country's affairs today. And Leonard wants the Bahamas to be more like Fiji !!??!! This man is definitely not one of the bright crayons in the box. LMAO

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