WTO: Bahamas may have to open reserved industries


Tribune Business Reporter

The Bahamas may have to open some of the 16 industries reserved solely for local ownership to foreign competition in becoming a full WTO member, the government’s top negotiator is warning.

Zhivargo Laing, a presenter at the Bahamas Bureau of Standards and Quality’s (BBSQ) National forum on standards facilitating trade, said countries who recently completed the World Trade Organisation (WTO) accession process had made concessions towards opening up long-closed economic sectors in response to demands from the body’s members.

He explained that this had set a precedent The Bahamas will likely have to follow, and revealed that government negotiators were now awaiting “instructions” from the Minnis administration on how to proceed given that “safeguards” protecting long-sensitive areas may have to be weakened or abandoned.

While The Bahamas had “held our ground” on making such concessions up to this point, Mr Laing warned that the country’s progress towards full WTO membership is unlikely to make any further progress until there is “some movement on our part”.

Besides opening up industries reserved for Bahamian ownership only under the National Investment Policy, he revealed that existing WTO members want lower tariffs than this nation is prepared to offer for certain goods. There are also calls for The Bahamas to create a more transparent, less arbitrary approval process for foreign investment projects that removes potential political interference.

However, the former Cabinet minister reiterated his belief that the domestic political timescale means The Bahamas will not complete the WTO accession process for at least another five years.

With this country virtually certain to miss its original target of June 2020, Mr Laing said the next WTO ministerial meeting - which has to ratify acceptance of The Bahamas’ full membership - will not be held until 2022. That date coincides with a likely general election, and the government is unlikely to desire having the WTO as a campaign issue.

Confirming that Bahamian trade negotiators are awaiting further orders on how to proceed, Mr Laing said: “These instructions from the government relate to the country’s willingness to do any of the following: Agree to a limited number of requests from about four countries to further lower some of the boundaries proposed in our goods offer; agree to adjusting our procedures relating to approval of foreign investments such that there is less arbitrariness in the approval process, and more transparency in the requirements for such approvals, including less political decision-making as opposed to technical administration in the areas of investments that are already open for foreign investors”.

He added that the other two concerns involved “agreeing to the opening up of some of the seven to 16 services areas now reserved for Bahamians, and doing so in accordance with agreed liberalisation by some of the recently-acceded countries; and agreeing to removing some of the limited number of breaches to the principles of most favoured nation (MFN) treatment and national treatment presently practiced by our country”.

Mr Laing warned that any reforms in this area, despite impacting just 25 percent of the economy, would represent a fundamental change to The Bahamas’ economic regime and way of doing business given the political and cultural sensitivities involved.

Given that long-standing safeguards that have protected Bahamian businesses from foreign competition could be challenged, Mr Laing said of this nation’s negotiators: ‘We have been rigorous in our efforts to maintain these safeguards despite the fact that recently-acceded countries with similar have had to make concessions in these areas. To this point, we have held our ground but, frankly, the negotiations are unlikely to move any further without some movement on our part.”

Real estate, media, retail and wholesale operations, security services, beauty establishments, auto and appliance services, parts of the fisheries industry and construction sector, and public transportation are among the industries supposed to be reserved for Bahamian ownership only under the National Investment Policy.

However, this is policy rather than statute law, and transforming this into a National Investment Act was always one of the reforms likely to be required by the WTO and other rules-based trading arrangements. Successive governments have also waived this policy when convenient, the former City Markets food chain and Sysco’s Bahamas Food Services acquisition being two such examples.

“There are some agricultural products that we produce that rely on high Customs duties in order to maintain a level of competitiveness with imports,” Mr Laing added. “So, if negotiating countries are asking you if you can lower your duties in those areas, then that is obviously going to have some sensitivities with some agricultural producers.

“There are some areas of the services sector where there might be a request to open up these areas, and we have 16 such reserved areas. We have not had any specific demand to open this area up, but the concept of liberalising in WTO is just that; it is a principle.”

Mr Laing said The Bahamas’ was on course to set a world record for the longest-ever WTO accession, given that it had initiated the process almost 19 years ago in 2001. Asked by journalists whether it will take another 19 years, he replied: “I can’t say it will be 19 years, but any fair reading of our circumstances would suggest that we are looking at a minimum of five additional years.”

He added that the average WTO accession took nine-and-a-half years, but The Bahamas is now perilously close to matching the record set by the Seychelles, which is 20 years.

He estimated that the earliest possible time at which The Bahamas can join the WTO would be 2022, and said it is highly unlikely the country will meet that deadline either. “It was the government’s aim to conclude our negotiations for accession by the next ministerial conference in June of next year,” Mr Laing said. “That will not happen.

“And since the next meeting will not occur for another two years after that, and it takes a ministerial conference to approve your accession, the next earliest time the Bahamas will be able to do so will be in 2022. I don’t have to tell you what’s happening in 2022.”