'Shooting in the dark' over WTO's impacts

Tuesday, July 24, 2018

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The private sector is "shooting in the dark" over World Trade Organisation (WTO) membership's impact due to the absence of proper economic analysis, the insurance sector chair is warning.

Emmanuel Komolafe, adding his voice to similar concerns already expressed, told Tribune Business it was impossible for industries to properly advise government on its negotiating approach - and accompanying legislation such as the proposed Fair Competition Bill - in the absence of research showing the likely consequences of WTO accession.

The Bahamas Insurance Association (BIA) chairman said the Competition Bill, which is presently being circulated for private sector consultation, needed to be forward-looking and account for the opening up of some industries to large foreign rivals post-WTO accession.

Yet it was impossible to properly frame such legislation, Mr Komolafe argued, without the necessary data on how joining global trade's rules-setting body will impact key sectors and local employment.

"When it comes to legislation for the efficient operation of the market, we have to look at what will happen; what the consequences of WTO accession will be," the BIA chairman said in relation to the draft Fair Competition Bill.

"We can't understand this without a proper economic analysis showing the impact of WTO accession on sectors of the economy. Once we have such a study done, we will see the figures and the consequences that will flow.

"In the absence of the economic impact studies, it's almost shooting in the dark. I'm not just talking about the impact on government's revenues. Opening up the market, what impact will it have on insurance, banking, tourism and manufacturing. Without the analysis, we cannot speak to it."

Michael Maura, the Bahamas Chamber of Commerce and Employers Confederation's (BCCEC) chairman, and the organisation's trade and investment committee chair, Darron Pickstock, have both previously warned that the absence of any WTO impact analysis makes it virtually impossible for the private sector to properly inform the government on where it should set the "red lines" - what it absolutely must not give away - in the accession negotiations. The chamber is now moving to conduct its own analysis on the private sector's behalf.

Mr Komolafe, meanwhile, pointed out that virtually all Bahamian companies would be considered micro, medium and small enterprises (MSMEs) in a global context. And accession to full WTO membership will now force some to go head-to-head against large foreign rivals for the first time.

"We have to be mindful of that," he told Tribune Business. "The discourse should not be limited to the ability of local businesses to compete with one another, but if the government is holding fast to the 2019 deadline for WTO accession, international competition should also be factored into the [competition bill] framework.

"This is bearing in mind that a business that is considered large in the Bahamian context will probably be classified in the MSME sector in a global context. This means that such businesses and MSMEs in the Bahamian context will struggle to compete in a global environment based on the current structure of our economy."

The BIA chairman added that the Fair Competition Bill must not stifle the private sector through over-regulation and "red tape", impeding normal commercial transactions such as mergers and acquisitions.

"Another key consideration in the enactment of fair competition legislation is the context and dynamics of the local economy. There has been much commentary on the need to address systemic and structural deficiencies - exchange control, energy costs, taxation, public sector output - as well as the cost and ease of doing business prior to the Bahamas' accession to the WTO," Mr Komolafe said.

"There has been a convergence of thoughts within the private sector on the need for a comprehensive economic impact analysis to guide the conversation and prior to offers being made."

Edison Sumner, the Chamber of Commerce's chief executive, called for the Government to give the private sector sufficient time to review the Fair Competition Bill and other WTO-related legislation despite aggressive accession timetable.

"It is a long time coming," he told Tribune Business of the Fair Competition Bill. "This has been one of the pieces of legislation sitting around for a while, and it has had to be dusted off. It has to be read with other legislation, like the intellectual property rights legislation, which speaks to competition and the protection of such rights.

"Our view and information is that quite a number of pieces of legislation will be making their way to Parliament this session, because there's a lot to be done and a short time to do it in. While there's going to be a very aggressive legislative agenda, there has to be adequate time given to those who will consider this legislation.

"We don't want to rush this thing; we want to provide relevant feedback to the Government. We know we're going on an aggressive timeline to get this done, but give us time to review the thing properly and look at the impact on the economy and private sector before they're finalised."

Mr Sumner said the Fair Competition Bill and similar legislation were all "leading ultimately to WTO accession", and acknowledged that competition was a double-edged sword for some Bahamian businesses and industries that may be required to open up to foreign rivals.

"There are many areas in the economy that people want to see protected for various reasons," he added. "They want to be competing on a level playing field, so that it's not opportunity identified and opportunity lost.

"There are certain assurances people are going to be looking for in the WTO negotiation process; there are areas of the economy, areas of interest that businesses are looking for protection, some sort of guarantee that they are not going to go out of business because of competition.

"Competition is good because it improves product offerings and keeps prices keen but, on the other hand, it could be detrimental to some businesses not prepared to compete on the global and international stage."

With WTO "on the door step", Mr Sumner said Bahamian companies needed to position themselves to compete internationally and ensure they are "strong enough to survive".

"The world is changing very rapidly," the Chamber of Commerce's chief executive added. "We have to be open to entering a whole new world where only the fit will survive.

"Unfortunately, at the pace we're going we're going to have to do a lot of things in tandem, and learn to walk and chew gum at the same time."

Comments

Porcupine says...

Why don't we just pretend we're going to join the WTO. We'll eliminate duty. Become more business friendly. Eliminate subsidies. Institute a corporate tax. Do all the things we should be doing already.
But then, declare that we will stay out of the WTO for all the right reasons.
If anyone can show me how average citizens, and democracy, have benefitted in any country that has joined the WTO, I'll go along.
Personally, I don't believe the vast majority of Bahamians will benefit at all.
Show me otherwise.

Posted 24 July 2018, 3:26 p.m. Suggest removal

Alex_Charles says...

well... first of all the WTO does not call for the elimination of subsidies nor does it call for the elimination of customs duties. It actually allows for both of those things to exist and most major players within the WTO still employ protectionist measures to ensure the growth of their local industries. The WTO calls for massive amount of regulations, standardization and legislation to be brought fourth. There are actually so many different regulations that most technocrats I know within the organization don't know all of them themselves. Hence why they have so many specialists working there.

The government should absolutely release a policy paper on as to the what, why and how they plan to do with this. I am no Pro-WTO for the Bahamas but I am certainly not against it.

Posted 25 July 2018, 12:51 a.m. Suggest removal

tetelestai says...

AlexCharles, your individual points are accurate, as any quick search on the internet would reveal. But, Porcupine's larger point is equally accurate. A lot of the initiatives we can take to improve our financial situation can happen outside the realm of WTO. If I am interpreting Porcupine's comments (and forgive me Porcupine if I am wrong) what he/she is suggesting is that there are more efficient ways by which the Bahamas can "benefit" economically other than joining WTO. His/her second point is equally important...we (Bahamian citizens) have yet to receive a cogent and reasoned explanation as to the pros/cons of joining WTO (I do stand to be corrected, however) from the government (either PLP, FNM or DNA). I agree with Porcupine that this WTO cost/benefit should have been disseminated eons ago.

Posted 25 July 2018, 1:53 p.m. Suggest removal

You are correct.
I merely want to call for improvements to our Bahamian ease of doing business.
Do we really need to give up our sovereignty over trade deals with will only benefit a very few people?
The fact that so many governments have succumbed to the pressure only reminds me of lemmings heading for the cliff.
If there were true benefits to these trade deals wouldn't we be hearing this from the workers in Mexico, Haiti, and Caricom countries?
The fact of the matter is, the WTO is just another tool of the ruling elites.
Do the statistics on the world's wealth distribution not bear this out?
I mean, the WTO is not a new organization.
Hasn't it had enough time to benefit the workers in these countries, or do we need to find another excuse for the failure of these countries economies?
This is proof enough for me that "the people" were not considered in these trade deals.
Are they ever?
That's why I oppose most of them.

Posted 25 July 2018, 3:59 p.m. Suggest removal

birdiestrachan says...

doc will bring the Bahamian economy to ZERO in short order

Posted 24 July 2018, 3:47 p.m. Suggest removal

ThisIsOurs says...

It seems uncoordinated rushed and nonsensical because it is. Peter Turnquest is pushing ahead for no other justifucstion than someone with their own personal agenda told him to. As Mr Pinder said, not one country in the trade war, not China, Canada, Britain or Mexico has seen fit to lodge a complaint with the WTO, if the big guns dont see the point, what good will it do *wittle* ole us who have no weighty tariffs to impose in retaliation

Posted 24 July 2018, 6:04 p.m. Suggest removal

factually incorrect... actually most of your comment, as it relates to filing disputes, is pure unsubstantiated BS. If you've followed the news within the last two weeks alone you wouldn't have made this stupid comment.

Posted 25 July 2018, 12:49 a.m. Suggest removal

Really 1. which country filed a dispute with the WTO and 2. was confident enough in the teeth of that body not to take any other action 3. Filing was their first action??.. From what I saw reported all over US news, Canada and Mexico's reaction was to impose retaliatory tariffs on American products. In fact, on CNBC there was a "hearsay" report that the president of China didn't even know what to do next, because Trumps trade war was so nonsensical. I don't know why you believe wittle ole Bahamas will fare any better or find remedies with the WTO that the big 6 havent

The WTO is big people business. Things happen IF it doesn't affect one of the big countries negatively

Posted 25 July 2018, 11:52 a.m. Suggest removal

Dawes says...

https://www.wto.org/english/tratop_e/di…

Quite easy to find. seems to be a long lists of disputes that the WTO has dealt with. All the countries you mentioned are there as well as many others.

Posted 25 July 2018, 1:22 p.m. Suggest removal

**AND** the ones with weight have put retaliatory tariffs on US products.

Equally easy to find. Guess which action is getting Trump's attention.

He just announced 12 billion in relief for US farmers negatively affected and surprise surprise is talking about leaving the WTO

Posted 25 July 2018, 4:09 p.m. Suggest removal

newcitizen says...

What's not taken into account is how much countries spend on bringing complaints to the WTO. Lodging complaints and fighting them costs the countries involved millions and millions of dollar. We are out of our league, we will not have the money to fight anything even if we wanted to. We're a country of 350,000 people, that is not even enough people to be in the top 50 cities in the US. We need to realize that we don't stand a chance if we join the WTO.

Posted 25 July 2018, 12:29 p.m. Suggest removal

Just like the idea of justice anywhere.
Those with the big money eat up those who can't afford the best lawyers.
Pretty simple, isn't it?
newcitizen, you are right.

Posted 25 July 2018, 1:03 p.m. Suggest removal

The government has yet to say what the benefits of joining the WTO because the Bahamas will not benefit. We do need to get customs duty down and become more business friendly, but we should do this without the WTO. We have over a 95% trade deficit, we stand nothing to gain, we don't export anything.

Posted 25 July 2018, 11:14 a.m. Suggest removal

BahamaLlama says...

Let's be a lot more honest.

If we had anything to trade, it wouldn't be a problem.

Posted 25 July 2018, 12:52 p.m. Suggest removal

Ah, so just a second ago Trump says, they'll be working with the EU to "reform" the WTO. What does that mean? DO we know? MORE IMPORTANTLY he spoke about working to resolve the retaliatory tariffs and bringing relief to farmers. It's quite clear where the pressure came from fir him to budge and it wasn't disputes filed with the WTO.

Posted 25 July 2018, 4:28 p.m. Suggest removal

All deals, trade deals or anything else, are won by those who have the power and money.
The Bahamas doesn't stand a chance. We are out of our league, and want to pretend that we are relevant on the world stage. We aren't.

Posted 25 July 2018, 5:01 p.m. Suggest removal

bcitizen says...

WTO will not end well for the majority of Bahamians. Our economy will be opened up to large corporations. Even our largest companies are babies. So Bahamians will be forced to compete on the world stage while being restricted to our sandbox by the government. Who restrict our ability to get access to outside capital, invest in foreign companies and stock exchanges, and own assets outside of the Bahamas. So if we want to join the big global WTO stuff do not restrict Bahamians to only the Bahamas economy while letting everyone else in.

Posted 25 July 2018, 5:44 p.m. Suggest removal

killemwitdakno says...

A and B examples should be plain.

Posted 29 July 2018, 7:16 a.m. Suggest removal