The Tribune

By David F. Allen Jr.

LLM International Comparative Business Law

Bahamas Law Chambers

Have you ever been bullied? It is not fun. Bullying usually occurs when someone stronger and larger perceives their target to be weaker and smaller. In financial services, The Bahamas has been bullied for decades by the European Union (EU) and Organisation for Economic Co-Operation and Development’s (OECD) repeated blacklists, using the platform of correspondent banking to leverage their attacks on Bahamian sovereignty. In joining the World Trade Organisation (WTO), The Bahamas is likely to be bullied by WTO member states in the accession process. And, once The Bahamas joins the world’s rules-based trade enforcer, as with financial services the WTO platform will likely provide its larger members with the the leverage to bully this nation in the future.

The Bahamas is susceptible to bullying by WTO member states because of a lack of demand for The Bahamas’ small consumer population; the lateness with which The Bahamas is joining the WTO; and, finally, due to the perception that our negotiating team is desperate to join and inexperienced in dealing with international trade matters.

Evidence Of WTO Bullying

Evidence that The Bahamas is possibly being bullied by WTO member states is that the bar is being raised for entry, requiring this nation to make greater concessions in opening services industries to foreign firms from these countries when compared to others who joined earlier.

In the recent Bahamas Bar Association meeting on WTO accession, Bahamian attorneys were informed that The Bahamas offered to open mode one and mode two, and keep mode three and mode four “restricted”, in its initial legal services offer. The mode one and mode two forms of supply are not controversial because they do not change the status quo; they provide for WTO member states to use Bahamian law firms, and Bahamians to use WTO member states’ law firms, in their respective jurisdictions. However, it appears that The Bahamas may be going further than the position outlined by lifting restrictions on mode three, which deals with the ability of foreign law firms to establish a physical presence in this nation.

Few countries have lifted restrictions on mode three in legal services. This form of supply enables any attorney or law firm from the 164 WTO member states to “open shop” in The Bahamas. What is more, these WTO member state law firms would have to receive the same treatment as Bahamian law firms from the government. Can you imagine? All of a sudden, a flood of Jamaican and Haitian law firms could enter The Bahamas, and there would be nothing we could do about it. (Editor’s note: Zhivargo Laing, The Bahamas’ chief WTO negotiator, told Tribune Business on Monday it was “absolute nonsense” to suggest this nation was readying to open the legal profession to commercial presence by foreign firms. He said this position had been made clear to the Bar Association, WTO and member states who are part of the working group that will negotiate this nation’s accession terms).

The few limits to mode three imposed in the revised Bahamas WTO offer on legal services are that foreign law firms can only practice public international law and the law of their home nation. How can these limitations be enforced? Once these law firms move here, it will likely be impossible to determine if they are trading and practicing in Bahamian law. Further, the legal system of English-speaking Caribbean countries is based on the English common law system, so it would be very tempting for them to advise on Bahamian legal matters.

WTO member states have no interest In our market for goods

Why is The Bahamas in such a weak negotiating position in joining the WTO? Why are we likely to be bullied? The WTO’s main purpose is to facilitate the trade in goods between nations. The trade in goods is most profitable when it involves large consumer populations. The Bahamas’ small 300,000-400,000 consumer base is quite uninteresting to most industrial nations, due to the small margins and poor economies of scale involved. Their focus is on our service industry, which has much higher margins and access to wealthy clientele. The Bahamas has many very wealthy residents. Our services industries are also tempting due to our proximity to the US, and a currency pegged to the US dollar, which many of our southern neighbours would wish to be paid in.

It has been announced that only eight WTO member states have raised queries over The Bahamas initial goods and services offers. It also appears that these few WTO member states are more interested in access to our services than goods. Opening legal services in this manner would almost certainly lead to direct competition between Bahamian law firms and foreign law firms (Haitian, Jamaican, Trinidadian and Guayanese) attempting to poach Bahamian clients.

We are late to the WTO game

The majority of Caribbean nations joined the WTO in 1995, some 24 years ago. Because The Bahamas is attempting to join the WTO more than two decades after they did, these nations likely will not make it easy for us to accede. It was cheaper to buy property 20 years ago than today. Our Caribbean neighbours likely feel that we should have a more difficult time acceding to the WTO than they did because we waited so long to join.

The end result is that our negotiating team will be faced with bullying by WTO member states. The Bahamas likely will be bullied to open services sectors that other WTO member states were not required to open.

We appear desperate to join the WTO

Whether due to losses sustained in financial services as a result of the EU’s constant blacklisting, a fall in VAT receipts, or stagnant economic growth, it is clear that the Bahamian government is now desperate to join the WTO. The avalanche of WTO press conferences, talk radio shows, news reports and meetings with industry insiders over the last few months points to desperation. Desperation is the worst position to negotiate from, and increases the likelihood of being bullied to accept a bad deal.

At the Bahamas Bar Association meeting on WTO, I asked the panel representing The Bahamas if they had experience and advanced degrees in international trade. I myself hold an LLM in International Comparative Business Law. I did not ask this question to be rude, but to ensure that The Bahamas is represented by experts in the industry. International trade is one of the more complex areas of law, and without advanced degrees and experience in this area one can lose one’s shirt or, in this case, one’s country.

In the case of mode four, it is clear that countries such as India are pushing for mode four to be defined more broadly to allow professionals to move between WTO member states. The evolutionary trajectory of mode four suggests that mode four may be used for the movement of people between WTO member states in the near future.

Conclusion

The Bahamas must not be bullied. Our negotiating team should hire the best, most veteran WTO experts to advise them. They should not take free advice from our southern Caribbean neighbours because there is a clear conflict of interest. The danger of opening the Bahamian legal services industry using WTO’s mode three is that it will give the government almost no control over the quality of law firms that enter, and the law they practice once they arrive. If The Bahamas does wish to some day open its Bar to foreign firms, it should do so outside of the WTO context so it can limit entry to only the most qualified and reputable foreign law firms from select, elite jurisdictions.

In the WTO negotiations, The Bahamas is likely being bullied into losing control over important sectors of its service economy. If the deal is not right or on parity with other WTO member states’ goods offerings, The Bahamas should walk. It should not open its service sectors to WTO member states, where it has little control over the quality of those who enter. The Bahamas is far too blessed a nation to allow itself to be bullied into accepting a bad deal in the WTO accession process.