By NEIL HARTNELL
Tribune Business Editor
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.”