WTO membership to unlock ‘billions’ in trade potential

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Zhivargo Laing

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ chief WTO negotiator has urged businesses to identify overseas markets this nation should target, arguing it has “billions of dollars” in untapped trade potential to unleash.

Zhivargo Laing, the former minister of state for finance, told Tribune Business in a recent interview that the Bahamian private sector needed to proactively identify goods and services export opportunities that would secure its future growth in the World Trade Organisation’s (WTO) rules-based trading environment.

Disclosing that other countries were already approaching The Bahamas on behalf of their own industries about opportunities in this nation, Mr Laing said this nation was already fully engaged in international trade as highlighted by its $473.335m worth of goods exports in 2017.

He argued that full WTO membership will provide the platform for the Bahamian private sector to expand beyond this nation’s borders and grow gross domestic product (GDP) by millions of dollars, since it will provide “certainty and fair treatment” for both local and international investors.

Mr Laing said The Bahamas would better secure market access for its products, services and exporters under the WTO’s rules-based regime, while foreign investors will have more clarity over which industries they can invest in and the rules protecting their capital.

“One of the things I said to the Chamber is that we’re getting requests from countries for bilaterals, as they have a particular interest to pursue [in The Bahamas],” the Government’s chief WTO negotiator told Tribune Business.

“I invite the Chamber and private sector to tell me the areas you believe that we should seek audiences with countries to advance the business interests we have.”

Having emphasised that trade is a two-way street, and that the private sector needs to drive the Government in seeking out future export-led growth opportunities, Mr Laing said The Bahamas was already heavily integrated into the global economy.

Completing this process by finishing The Bahamas’ 17-year WTO accession process, he argued, would unlock further trade and investment opportunities that will fuel economic growth and diversify the economy away from its “twin pillar” reliance on tourism and financial services.

“If you understand the full story of The Bahamas’ trading profile you will know we have lots of trade: $400m-plus in goods exports, and $3bn worth of imported goods, and billions of dollars of goods and services potential we can still have,” Mr Laing told Tribune Business.

“Without question The Bahamas is an existing trading country, both on the goods and services sides, and has the potential to be substantially more. That said, The Bahamas needs to preserve what we have, enhance what we have, and develop ourselves further....

“Membership of the WTO does that as it gives you a more certain platform for both the goods side and the services side, and the investment environment. That’s good for Bahamian and foreign investors, more local business ownership, more entrepreneurial opportunities and more wage opportunities,” he continued.

“All these opportunities are enhanced by participation in the WTO. In addition to that, business people in The Bahamas put up millions and millions of dollars in import tariffs up front to import items. Under WTO membership that will be reduced substantially.

“I want you to ask yourself: What will businessmen do with millions and millions of dollars in capital freed up? The potential for that freed up capital is enormous.”

Mr Laing argued that full WTO membership, which The Bahamas hopes will be ratified by mid-2020, will ensure this nation “does things for ourselves” in modernising the Bahamian economy through initiatives such as competition law and intellectual property rights protection that will help domestic businesses to grow.

“Your competition rules, your intellectual property rights, all of the things Bahamian business people want to happen to give them transparency and certainty in operating in the country will extend to international investors,” he added. “You make the jurisdiction more attractive for doing business as a Bahamian and international person.”

Mr Laing said one disadvantage of The Bahamas being the last western hemisphere nation to join the WTO was that other countries are able to discriminate against it at will, and potentially deny market access to its goods and services exports - as happened when Polymers International sought to export to Mexico.

“Here’s what is true today,” he told Tribune Business. “The Bahamas does not have Most Favoured Nation status as a country because it is a non-WTO member. The US, for example, is not obligated to treat The Bahamas in the same way as a member of the WTO in respect of accessing its market.

“It makes your jurisdiction less attractive for investment than it otherwise could be. Upon joining, you will have that MFN status. Companies in The Bahamas can then use that to their advantage in accessing the market.” ‘MFN status’ means a country cannot be treated less favourably in comparison to other nations by a trading partner under WTO rules.

Mr Laing added that WTO membership will encourage increased cross-border trade by Bahamian companies “on a platform of certainty and fair treatment for Bahamian businesses”.

The Government has made clear it views accession as a key element in its plans to break out from the Bahamian economy’s low growth/high unemployment cycle that has persisted since the 2008-2009 recession.

It sees the move as part of efforts to deregulate and liberalise the economy, restructuring it towards new foreign exchange-earning opportunities, and reducing reliance on tourism and financial services while generating more jobs.

Not everyone agrees with this strategy, though, as opposition to WTO membership was among the many grievances aired by demonstrators on last week’s march to the House of Assembly.