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Last Updated: Feb 6, 2017 - 2:32:04 PM |
 Nassau, Bahamas - The following are remarks made by the Hon. L. Ryan Pinder, Member of Parliament, Elizabeth Constituency and Minister of Financial Services to Rotaract of East Nassau on August 27, 2012:
I want to thank you for the invitation to speak to you today on the subject of trade liberalization, the opportunities it presents to Bahamians, and especially young Bahamian professionals, and an introduction to tax reform. As we chart the economic future of the country, these types of consultative efforts between public and civil society are invaluable. In our Charter for Governance, the Progressive Liberal Party made the following commitment to the Bahamian people: “The PLP will ensure that the Bahamian people are made aware of the terms and full implication of various trade agreements undertaken by The Bahamian Government. This would extend to a deliberate and sustained plan to integrate these agreement into everyday business activity in The Bahamas.”
To accomplish this, we have undertaken an aggressive consultative agenda. We are seeking to understand from private sector new and expanded industries that Bahamians can pursue not only to create an expanded economy but develop additional entrepreneurial opportunities for Bahamians, especially in non-traditional industry.
Trade Liberalization
There is much confusion and historically a lack of public dialogue in the Bahamian main on the topic of trade liberalization, the process undertaken for The Bahamas’ execution of the Economic Partnership Agreement, and the process of WTO accession in the Bahamas. Respecting the mandate in our Charter for Governance for consultation, I would like to take an opportunity to discuss with you, members of Rotaract and others present here this evening, some of the underlying benefits that will accompany trade liberalization, and the market access implications of WTO access and EPA implementation.
Market Access – One of the primary reasons for acceding to the WTO and executing the EPA is the concept of “market access”, and the benefits that would flow from it. There is little discussion, however, of what market access really means. We had an example of market access that prompted our entering into the EPA. The crawfish export industry represents some $70 million in pure exports. There was a concern that if we did not enter into the EPA that our regional counterparts would have a competitive advantage for exports into Europe because of the guarantee of preferential duty tariffs for crawfish into Europe granted to the signatories. As the Bahamas is the largest crawfish exporter in the region by a large margin, ensuring equal footing amoung competitors was essential.
This was an important matter for our fisheries industry, however, we also recognize that the same market access issues, market access to promote international trade from the Bahamas, is evident in our WTO accession process. The immediate benefit for the business sector from WTO accession is the legal guarantee of continuing access to U.S. and other world markets on guaranteed terms and in many instances on more favourable terms. While not widely recognized, The Bahamas currently has no guaranteed rights of market access to any foreign markets except those of the European Union and other CARIFORUM states (because of the EPA).
For instance, using the same example with the crawfish industry, which has substantial exports to countries in North America, if certain markets wanted to protect their industry, they could legally impose a prohibitive duty tariff on crawfish imports from the Bahamas. An action as specific as this would be perfectly legal in international trade law as we do not have the legal guarantee of market access for our goods because the Bahamas is the only country in this hemisphere, that is not a member of the WTO.
Tax Reform
The Prime Minister highlighted the need for tax reform both in the Speech from the Throne and his contribution on the debate on the Speech from the Throne. In the context of trade liberalization, given the natural reduction in tariff rates, tax reform is necessary. It has become increasingly apparent over the past few years that Government revenues are not keeping pace with expenditures. I am advised, believe and frequently have suggested that the introduction of an alternative tax regime with broad multi-faceted coverage could likely compensate for revenue losses stemming from tariff reductions and create the increased Government revenues needed.
There is much discussion about a consumption tax, such as a sales tax or VAT, to be a supplemental form of tax. This will be explored in more detail on the forthcoming public release of a consultation white paper on tax reform, to understand the consensus of industry and the private sector. One thing that I advocate within tax reform is the recognition that tax policy is not only a method to raise Government revenues, but also should be a policy that provides avenues for new economic development and expansion.
Strengthening and Developing Local Industry
As part of our Trade Agenda, we recognize the importance, and necessity of ensuring certain technical support is provided to better develop and promote domestic industry. This is the natural connection of trade and industry as portfolios under the Ministry of Financial Services. An example that I would like to discuss is the agriculture industry. I am of the opinion that the process of trade liberalization will allow for reform in sectors such as the agriculture industry, reform that can lay the platform for a stronger industry that can have a presence and participation in international markets.
Agriculture - In Bahamian industry, and particularly in the agricultural industry, we hear the complaints of sub-standard products being dumped in the Bahamas at low prices, to the point where domestic industry cannot compete. A fundamental component of our legislative reform process is to put in place the framework to protect Bahamian industry, and Bahamian agriculture in particular. As part of our reform efforts we propose to establish and implement Standards Regulations, creating a Standards Bureau that will ensure that products meet established standards. Likewise, the reform process includes the application of anti-dumping legislation to prevent the dumping of sub-standard products in the Bahamas that currently contributes to an environment in which local producers cannot compete.
I would like to give a real world example of how these reforms will protect domestic industry. Allow me to use chicken production as an example. We continually here the opinion that domestic producers cannot compete because chicken that is brought to the Bahamas is sub-standard, not necessarily fresh, and in some instances, dumped in large quantities in the country. The new proposed frameworks will not only provide certification and recognition that our domestic chicken production is of better quality, but will protect the market from the dumping of sub-standard and anti-competitively priced product, to the benefit of our premium domestic producers. Trade liberalization and reform can and will act as a support for the enhancement of local industry, Bahamian industry.
New Industry Models – One important consideration where civil society and public society can work together in the context of the economic development of the Bahamas includes the development of new, out of the box industry models. This has to be driven by the private sector and supported by Government. Private sector understands the economic opportunities; the public sector provides policy for the development of these opportunities. One example includes a panel that I was a part of last week that focused on the diversification of our economy by the development of the Creative Industry. Industry influenced and defined by the creativity of Bahamians is not only promising, but we are of the belief is new and fertile ground for economic expansion through Bahamian entrepreneurism.
In fact, our Charter for Governance places special emphasis on the economic development of a creative industry, committing ourselves to “work with the creative industry to ensure that Bahamian culture becomes a major factor in economic development, working towards the goal that by 2030 the number of visitors who come to The Bahamas because of arts and culture will rival those who come primarily because of our beaches and sea.” This partnership with the private sector is how economies are reformed, identifying opportunities and having a cooperative Government, a cooperative Ministry, and cooperative policy makers to promote and develop new and exciting industries.
Conclusion
The Bahamas has tremendous opportunity, we collectively have to be committed to bold and progressive steps for economic reform. For example, The Bahamas is positioned to be a dominant trade hub. You frequently hear in real estate it boils down to location location location. In international trade, it is the same. The Bahamas has a key market access location and infrastructure, allowing for a connection and distribution channel throughout the western hemisphere. As we continue to attract international and build up our domestic manufacturers, guaranteed market access is an imperative component. We have existing and potential manufacturers coming to us, who NEED a guaranteed right of access to markets such the US, Mexico, and Brazil. We don't have secured access and therefore we are losing out to other jurisdictions and losing job creation opportunities. We not only need the political will to continue this process, we must prepare Bahamians to be in a position to take advantage of the expanded opportunities.
We look to you, the young professionals of our country, the future of the economic engine of our country to work with the public sector to define new industry, to utilize your collective knowledge, to chart a new course for the economic advancement of Bahamians.
© Copyright 2012 by thebahamasweekly.com
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