Freeport News, Bahamas

Chamber president urges government to sign accord between Caribbean countries and EU

By Lisa S. King, FN Asst. Editor

20 April 2007

Grand Bahama Chamber of Commerce President Christopher Lowe is calling on the Government to seriously consider signing on to the CARIFORUM-EPA -EU trade agreement, claiming that failure to do so could result in the loss of jobs for two major industries on Grand Bahama.

The Caribbean Forum (CARIFORUM) comprises all but one CARICOM country, Montserrat, plus Haiti and the Dominican Republic, and represents over 22 million people.

It’s main objective is to facilitate a unique trade accord between the European Union (EU) and countries within the Caribbean that are members of CARICOM. The agreement states that all goods exported from CARIFORUM countries will be able to enter the EU duty free and vice-versa beginning January 1, 2008.

It is believed that to sign on to such an agreement will give The Bahamas an opportunity to tap into the European market without having to pay duty on goods exported to European countries. But, most of all it will allow local manufacturing plants like Polymers International Ltd., Pharmachem Technologies (GB) Ltd. and Bacardi to continue exporting their goods without paying tariffs on them.

On the other hand, because The Bahamas has an import tariff-based economy, to sign on will also mean that the Government would stand to lose much revenue if tariffs are not charged on goods entering The Bahamas from Europe. However, Lowe states that the amount of revenue the Government stands to lose with such a move would not be as great because the majority of goods imported into the country at present comes from the United States.

Additionally, he said, should The Bahamas sign on to the CARIFORUM EPA agreement, access to the European market could have just as much benefits in terms of importing consumable goods as the country now enjoys with the United States.

Lowe said it will also allow local business owners to consider the value of doing more business with countries such as the U.K. and other large European countries, who are now proving that their products are just as good as those found in the United States.

The major problem this poses, Lowe said, is that should the leaders of our country sign on to the agreement, the government will lose money because of the present tariff system in place, but if they chose not to sign on, it is possible that companies like Polymers, Pharm-chem, Bacardi and 50 percent of the nation’s fishing industry would suffer great loss.

"It does make it difficult for the businesses mentioned because they export goods to the Europe," Lowe said. "It also affects 50 percent of our commercial seafood catch, which is currently also exported to the EU.

"If we don’t sign that agreement then all of a sudden our Bahamian fishermen through the fish houses will no longer have a market for their fish. Then they would have to find some other market or country to sell it to. Which they will no doubt get the decent price that they are getting now."

In the case of Bacardi, he said it is possible that there will be no reason for them to be in The Bahamas any more because they can easily shift their production to countries that have a favourable trade agreement or somewhere else where they can export without paying tariffs to EU.

Lowe explained that the World Trade Organization (WTO) was set up to level the global playing field with respect to trade or to try and open up free trade and is now being recognized as the prime model for the trade of business around the world.

The Bahamas, he said, is still holding on to what he describes as an "old fashioned, outdated import tariff tax regime," which goes directly against today’s WTO rules. For a number of years now, the country has been granted WTO observer status, but no concrete talks have been held by the Government to sign on to it.

"The problem is a tariff-based taxation system is diametrically opposed to WTO rules," Lowe said. "Where the rest of the world has basically dropped all of their import tariffs down, we have had difficulty in trying to find something that would replace the loss because obviously, government needs money."

The Caribbean Basin Initiative (CBI) was an agreement put in place by the United States to help out the smaller Caribbean nations by allowing anything they manufacture to go into the United States duty-free.

But as Lowe pointed out, it was partly beneficial to The Bahamas as goods being imported from the United States were not duty-free. CBI later expired in 2005 because it was supposed to be replaced by FTAA.

Certain Caribbean nations then got together in response to what the United States was trying to do with FTAA and began forming the CARICOM Single Market and Economy (CSME), particularly after they noticed that the FTAA could possibly be done away with.

According to Lowe, the problem with FTAA and CSME is that they are not just about imports and exports, they are about government procurement. They are also about government transparency, freedom of not only trade of goods, but also of labour and opening your markets to the threshold of other countries.

"So they are not just simple trade agreements anymore. They are now like global rules across the board," he said.

"So now, we are sitting here and our exports are still going into the United States tariff free, but nobody has reenacted the CBI. So stuff are going to the U.S. without a viable trade agreement."

Lowe said when they (U.S.) failed to enact the FTAA, they put into the WTO to renew CBI, but Paraguay jumped up to the WTO and is presently trying to prevent the renewal of CBI. Should they continue and serious consideration be given by the WTO not to renew it, that will mean that all exports going into the U.S. will have to endure tariffs. This, Lowe said, would hurt companies like Polymers, Pharmachem and the majority of the country’s seafood exporters.

Europe, he said, had the Lome Agreement which was then superseded by the Cotonou Agreement check. That also expired just as the FTAA failed, EU agreements were losing ground and so the EU got together with Caribbean nations and created the CARIFORUM- EPA -EU.

The GB Chamber of Commerce President says that because not enough information is being discussed about the agreement, he believes there should be more done about it. In fact, he said it would be a good thing if Government and the business sector could come together more on the issue so that adequate input could be gathered so that proper decisions can be met.

"Are we going to stay having a tariff driven economy and remain different or in isolation from the rest of the world and get mashed up," he said. "Or do we join these trade agreements and if we do, how do we replace the revenue that is going to be lost by the government?"

"Yet the consultation has been sorely lacking," he said. "Whereas they have communicated to us on it, they have also at the same time share certain documents with us and then asked for confidentiality. Now are we to work or discuss this if we are to keep our mouths shut."

Another problem Lowe said, is the WTO can start putting pressure on The Bahamas to sign onto their agreement and this could big a huge problem for our present tariff system, "so this is a very complicated thing," he said.

The business sector, he believes, once educated on such agreements, will be able find a way to work with them, but it will be so much easier if government would consult with them or to get their input on what is being done about it openly.