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Last Updated: Feb 13, 2017 - 1:45:37 AM |
The Minister responsible for Financial Services and Trade, The
Honourable Ryan Pinder, resigned his post as Minister to take up a
private post. This leaves his Ministry without a Minister. In addition,
just previously to his resignation, the Director of his Ministry, was
selected to head up the secretariat charged with producing a national
development plan for The Bahamas. Without a doubt, international trade
and integration for The Bahamas has been put under a very serious test:
With or without the understanding that the ministry of finance has dual
carriage for trade matters.
Over the last 15 years The Bahamashas beenmaking greater steps towards
becoming a member of the World Trade Organisation (WTO). This is an
important step in the developmentfor any country that wishes to become a
member of this grouping. So far, the Bahamas is among a particularly
awkwardgroup of countries that are currently not members: Iran and Iraq
are some other notable countries, with Russia officially joiningin
2012.
Just for background information, the WTO has been around since the end
of the Second World War. It was formerly called the General Agreement on
Tariffs and Trade (GATT), before the conclusion of the 1996 Uruguay
Round of world trade talks which then established a universal name for
the grouping and tighter rules on goods and services. Before 1996 it was
promoted as a post-war economic integration mechanism for European and
North American countries and since then, it has been promoted even more
so, but with more countries included along with their contentions and
complexities.
The WTO is currently in the middle of a seemingly endless round of trade
talks, which started in Doha Qatar in 2002. Having a round of talks in
the Middle East, post 9-11 attacks and the US Middle Eastern invasion,
was supposed to be the olive branch extended to the Middle Eastern world
by Western powers (well, let's just say by the USA) as a way to show
them "peace through trade”. Sort of like the US's Iraq invasion strategy
of bombs and bread, with trade added to it.
More importantly, however, the idea that the WTO is a complex
organisation is true to a great extent. Its rules based arrangements are
designed purposefully to be intrusive on sovereign authority and
sovereign economic policy making.
This international rules based mechanism, makes the interconnection and
coordination of multi-national protocols and standards, based on
traditions and customs as well as sovereign protection on industries
deemed as sacred, difficult, when this system has to cater to the needs,
the flexibilities and sometimes inflexibility of its members.
The position the Bahamas finds itself in at this stage by not being a
member, can be good, or bad, depending on the premium placed on the
economic position of the Bahamas and what Bahamians feel as their best
interests for the future.
For one, not being a member makes you a pariah. Even though the Bahamas
is a member of a lot of other international bodies and agreements and
has a good political and economic track record, not being a member of
this standard bearing group looks a little dubious. Along with being a
pariah, doing business with international firms that expect a
transparent system for them to invest, becomes problematic if national
standards aren't, at least, at baseline international standards and
compliance benchmarks.
The second thing is with regard to tax reform and the need for The
Bahamas for taxation reform. Tax reform has never just been a trivial
matter in any country, let alone for a country that has no other forms
of taxation other than from import tariffs and public service charges
and some minor, real property taxes- with the latter not taken very
seriously. But, the matter of proper taxation is critical to being
successful at world trade level and at the same time, protecting
domestic interests.
One thing is clear with WTO economic principles: Reducing tariffs on
import competing products is at the essential core of the WTO. In fact,
two foremost policies are: 1. The non-Discrimination of goods and
services and 2. The reciprocity of that trade openness, between
countries, either by direct tariff cuts or through modality approach-
that being, phased in over a period of time.
A country, like The Bahamas, which is heavily dependent on
tariffs/customs duties for government revenue, once the phasing in of
WTO standards and honouring commitments to other members on reducing
customs duties on certain items, indicates very bluntly that the Bahamas
will have to find other sources of revenue, as it is poised to
implement Value Added Tax by January 1st, 2015.
Everything from tax reform, to increasing the transparency in public and
private investments, to even proper record keeping, speaks to a larger
issue of broader public sector reform and also to the cultural way we
tend to do business. Not only broader private and public sector reform,
but having the capacity to commit to contracts and agreements over the
time period in which you said you were going to do exactly that.
Cutting this point short: The entire way we do business has to change. A
colleague of mine from Trinidad, who worked in the Bahamas for a short
time stated to a group he was presenting to; "Do you remember when your
mother used to bake that sweet bread every Sunday? (YEA!) And the
neighbour used to fix her door or cabinets for her in exchange for that
baked bread? (YEA!) Well, those days are long gone! (OOOOOOHHHH!!!)"
The changes needed in the way we do business do not have to be drastic
and done overnight. It can be done bit by bit to suit our needs, or,
actually- “GASP”- structurally planned! The issue of whether or not what
change comes first; to what extent should certain institutions- whether
they are public or private- should change; and how to sensitively
change what we know needs to change without public insurrection, is
where the discussion on WTO accession should be. But itisn't.
The reason why the discussion isn't where it ought to be is because the
broader public, on average, tend to become frustrated when we speak
aboutlarge macro-economic and macro-financial jargon and concepts. It's
like, for example, an accountant trying to understand quantum
physics.They would be no better off than a person who has the reading
capability of a second year college student- or perhaps even a first
year college student.
The other reason why the discussion isn't where it ought to be- and that
being on the institutional and the economic way of how we do business-
is because no one has been able to break down the large concepts and
ideas, into bite sized nuggets for thecitizensto digest.
For the most part in The Bahamas, the public discussion comes in after
the fact. In fact, not only does public discussion come in after the
fact, it sometimes isn’t very fruitful to the issue at all. The reason
being that the persons explaining the issues, become frustrated at times
at the lack of, seemingly, intellectual depth by the broader public on
the matter (like the average Joe understands stochastic measurements and
the difference between the HO model and the Laffer curve).
In addition, the broader public become angry at the persons making these
decisions and making them without their input and apparently always in
secret- a very open secret I may add. So, the cycle of confusion and
obfuscation continues.
All of this uncovers another problem (well, not really another problem
uncovered, because anyone who has ever done anything in The Bahamas
understands this by now), and that is the lack of information that is
readily available for the general public to digest. Not just
transparency in the public sector, or private sector for that matter,
but, the transparently coherent of initiatives for the broader public.
My sentiment is that: You can't blow my mind if I don't understand what
it is you are blowing my mind with. This goes a very long way in
educating the public on the importance, for them, of what trade
agreements and in particular, what the WTO means.
The issue of knowing what to expect is critical to putting in place the
safety mechanisms in order to protect the state revenue and the public
interest with regard to consumer protection, commercial protectionism
and cultural influx.
What should happen with labour and unions? What should happen with tax
reform and state revenue? What would happen when legalimmigration and
immigration become larger problems? What would happen to sovereign
rights? What should happen to infant industries? What should happen to
the inflow of capital becomes too much or too little? What should happen
to import competing companies? What should happen with regard to
exports and export support? What should happen to the lives that depend
on the decisions made upon all of these?
There's no cookie cutter solution for these problems. This WTO accession
approach simply needs a touch of policy flexibility, imagination and
creativity, put into realistic institutions that don't harm the domestic
economy or be damaging to global competitors and the clout they carry.
The proper discussions need to take place. Not discussions on what
people have done after the fact. But, what should we do and why it
affects you. There is no easier other way!
Youri Aramin Kemp, is
President and CEO of "KEMP GLOBAL", a Management Consultancy firm, based
in the Bahamas which serves all markets. Our core competencies are:
Business and Project Planning and Design; Project Execution; Market
Researchn and Analysis; and Operations Development. Through our
affiliates, we offer Construction Services; Public Relations Services;
and IT and back office support to small and medium sized businesses.
Email: globalviewtoday@gmail.com
Read more by Youri Kemp
Disclaimer:
The views expressed here are solely those of the author in his/her
private capacity and do not in any way represent the views of
TheBahamasWeekly.com
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