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October 17, 2007

Comments

Steffan Antonas

Larry,

During my time at Georgetown University as a graduate student, I had the privilege of attending lectures and classes given by very high-profile academics, one of which served as an Economic Advisor to Bill Clinton - another for Jacques Chiraque (President Of France). During these lectures, which were intended as a warning to governments of developing countries (like the Bahamas), the example of Jamaica's forced trade liberalization (through the WTO and otherwise) was used repeatedly to illustrate the vast damaging effects of poorly considered foreign trade policy. Fortunately, there is a considerable amount of data available on the internet, including studies by Jamaican officials and academics.

I think that it would be educational and instructive for your readers (and our government officials ;-)) to do their best to learn what they can from Jamaica's example in their attempt to "integrate into the world economy".

I would like to qualify this comment by saying that I have not read the full reports that I have provided links to below, but I have read the abstracts, and the message and takeaways seem to be on-par with previous lectures I've attended.

While it is important for the Bahamas to integrate into the world economy, it is of paramount importance for government officials to make well-calculated deliberate decisions based on data gathered on countries in similar situations to ourselves. There is a considerable amount of data out there that suggests that poor policy decisions that are just acts of good faith to sign on to free trade agreements like those of the WTO, can cripple a country's economy quickly when it is forced to compete with countries where multi-national brands can produce with enormous economies of scale.

Here are some links to studies and articles on the effects of trade liberalization on Jamaica's products, agricultural business as well as negative impacts on food security and poorest class. We can learn a lot from Jamaica's example.

http://www.wto.org/english/tratop_e/tpr_e/tp85_e.htm

http://www.igtn.org/pdfs//294_Jamaica%20Case%20Study.pdf

http://www.boj.org.jm/uploads/pdf/papers_pamphlets/papers_pamphlets_trade_liberalization_and_the_jamaican_economy_-_prospects_and_effects_of_tariffs_adjustments.pdf

http://www.twnside.org.sg/title/losers.htm

Bob Knaus

The kerfuffle over duty-free access for Bahamian goods ignores an elephant in the living room -- the Bahamian economy is almost entirely service based, and will remain so for the foreseeable future. As Larry points out, the volume of exports is so small a part of the economy that it hardly matters.

The Bahamas should eliminate its tariffs on imported goods, not to secure access to foreign markets for its own exports, but simply because doing so would benefit the ordinary Bahamian citizen.

For instance, I am writing this from a boatyard in Fort Lauderdale. Across the basin from me is a Bahamian lobster boat. Every day vanloads of goods get loaded aboard. Since it is now about a foot below its usual waterline, I think they will leave soon, just as the previous Bahamian lobster boat did a couple weeks ago. You can bet the customs officials won't see any of the cargo aboard. This happens all along the Florida waterfront every year.

Now if you are a Bahamian with a lobster boat, this works out just fine. But if you are a Bahamian who has to buy things locally, it does not.

This is only one example how the current tariff structure is regressive -- how it burdens the poor Bahamian much more than the better off.

Why "progressives" oppose trade liberalization is beyond me!

Christopher Lowe

Good point with the lobster boat reality, and there is another side to it.
While customs may not see that freight, some of those goods are going into a retail setting.
Problem is, those "business" people are not operating with true costs of doing business.
In other words, they are living a lie, which costs us all, but profits them, as they do not pass on the "savings" do they.
If graft and fraud on imports stopped overnight, many would fold up.
Legit business houses would remain and thrive.
I agree though, some other form of taxation should have been a long term national agenda, but most other forms of taxation demand some form of accountability, something we most surely lack as a society.

drew Roberts

"but most other forms of taxation demand some form of accountability, something we most surely lack as a society"

So, forget a VAT and forget an income tax.

Could a wholesale sales tax work? Do not allow cross ownership between wholesalers and retailers. Only allow wholesalers to import. Charge a sales tax when the wholesaler sell to the retailer.

There would be some wrinkles to work out, but it would drastically cut down on the accountability issue.

all the best,

drew

http://openphoto.net/gallery/index.html?user_id=178

Bill

Hi Larry,

First time poster and actually, this is the first thread I read in it's entirety from this blog.

During my time at the LSE, with my international trade seminar leader being the OECD deputy director for Trade, I had "in depth" tutoring in regards to the issues.

Fact is, yes, forced liberalization is bad. If you were afraid of CSME, you certainly do not want any part of the WTO or the EPA. Both WTO and EPA are dangerous, for different reasons. 1. WTO opens the door to higher levels of competition, with greater exposure to regulatory intrusion and 2. the EPA is borderline colonialism to me The EPA agreements I had the chance to read through, for the most part, most of them, including the drafted for the Bahamas back in 2003, smacks of legal expansionary allowances, for EU corporations into the Caribbean and Africa- with no human empowerment or meaningful FDI.

Now, they have the money and power to expand- so they should. However, we do not need more foreign monopolies in the Bahamas- especially since we do not have to afford it. Not have to afford it, because in this vein, I have to ask; what type of imports from the EU can we possibly enjoy, that we do not already get from the US or China or, we cannot get from Brazil or Venezuela?

As you mentioned, it is not exactly as if crawfish will go out of fashion or taste. And, they are not our biggest customers for polymers. So, why the secrecy on one end with the FNM and, why the hard sell from the PLP on the other end?

However, not to sound all down on trade liberalization, the good news is that liberalization can be good in liberal, moderated doses. We have not maximized out bi-lateral power. We have not even opened up a FTA with Haiti or Jamaica- don't even dream aloud trade with Cuba (even though I am all for it). For some reason, our trade specialists at home think that "liberalization" only can come in one fell swoop. Liberal-i-zation is a process and should be thought of as a process. Also, being liberal is about accepting a wide array of "choices"- signing off on one entrenched agreement in the EPA, or, going for broke with pre-arranged agreements from the WTO to a playing field, dictated to them by their regime, does not sound like liberal ideals.

Now, how do we go about furthering trade liberalization, is a similar issue, but from another starting point with different argumentative streams for the debate to turn. But, if we cannot liberalize our public utilities, which these trade agreements minimize the potential for Bahamians to do just that; then, what good is international trade liberalization?

We don't even know how to make money in our own economy. We depend on FDI, like most other developing countries, but, we have not had the creativity to create money for ourselves from even capital spillage- let alone use private equity, to empower more Bahamian millionaires....I digress.

To conclude however, Gilbert Morris has been eerily silent on these issues as of late- he must have gotten fed up with the system. But, we need all hands on deck. Not just talent wise, in order to check through these agreements with fine toothed combs, but, we need every Bahamian making a dollar, in the fray, spinning that around in the Bahamas to get our global machine ready to at least get out of the blocks.

After we maximize our domestic potential, THEN, we should by all means fully integrate.

As for now, we are behind and if we are forced into total liberalization, too soon, it will be the end of this country.

Just my notion.

Happy New Year.

Bill.

larry smith

As you probably know, Cariforum (and the Bahamas) have agreed to sign an EPA on goods only. As far as I know it has not been made public yet.

Bill

Hi Larry,

I heard this was a long time done deal, or, some variation of the agreement was signed when the Bahamian government changed hands- in fact, I saw an online news clipping with Luis Michel and PM Ingraham, shaking hands on the deal. The picture and clipping disappeared. However, the deal with Cariforum was announced on the 16th to be exact. Still no word from our leadership- and people blamed the PLP for secrecy.
http://ec.europa.eu/trade/issues/bilateral/regions/acp/pr171207_en.htm

My thing is, they did not engage the Bahamian people with the information- the deal is intrusion, and everyone with an ounce of common sense knows it. We could have done much better. However, I am not against trade liberalization- we simply, as Bahamians, have to benefit. What these folks have done, is they have handicapped Bahamian potential and development, by wrapping us up in a 20+ year deal with EU MNC's and governments, who we will never have the chance to compete with on equal par. We will be at the hand and foot of people, even more so than we were, for a definite period with still not development plan for Bahamians. Did they arrange for domestic industry support, or, did they arrange for competition policy to be capped for our factor endowments? I doubt that seriously- well, we signed in conjunction with other Caribbean countries so all may not be lost. But, that does not say much all the time as they are hoodwinked just as much as African countries, by the EU and US.

From the variations of the agreements I have seen, floating around since 2003- we are tied into the EU, and their capitalist machine for 20 years plus. Well, this is fact now. With that, the deal, as all deals, are subject to change- at the whim of the power no doubt.

What pains me is that, I must add that the powers that be always want to keep us in the dark and confused on the jargon- news and information on this has been scarce and dodgy for their own reason. Basically, they are hiding the fact that they did it. Both sides. EU and the Caribbean countries.

To top it all off, the politicians learned from the CSME PR mistake in the past, so, they now just went ahead and did and not even blinked. This is the most dangerous act of all- a hit we can take, but, a blind hit can destabilize this country.

We have not thought this one through for Bahamians and, we have not outlined the benefits for Bahamians. If we do not talk about it, how do you expect for Bahamians to maximize on something they do not know?

Not a question.

Bill.

larry smith

To correct my earlier post, I believe the situation (as expressed by State Finance Minister Zhivago Laing recently) is that the Bahamas agreed to the goods only portion of the Cariforum EPA. Apparently the Bahamas and Haiti have another six months to consider the services aspect.

I am trying to obtain a copy of the Cariforum agreement.

Bill

Hi Larry,

I Love your diligence on this. Please share with us the information you recieve- as I will do a search on this as well. I had a copy of a draft, drafted in 2003- not sure if this still has the same issues on the table.

But, the fact is, it is too late. As you have said, the Bahamian people don't know and were not informed on this at all. This arrogance by our political leaders, into them thinking that they are the smartest men and women in the room, makes me sick to my stomach. On top of that, no offence to lawyers, but, they are blinded by their own self imposed scope- only looking at how pretty their new laws and legislation looks on paper, and never enough thought into true policy making and thought into the true human impact of their actions. So, what’s the use of digging up information when we can’t do a thing about it? We killed the PLP for even talking about CSME- we would not have the chance to kill the FNM for EPA, even though what they have done, and whatever agreement they entered into, won’t be felt for another 2-5 years. Booby trap?

We did not desperately need an EPA on goods, and we certainly don't need an EPA on services; why would you want for more European professionals, to have the free ability, to travel to the Bahamas and work in our banks and law firms, to add to the ones we have already and can’t get rid of? I mean, Bahamians working in and rising to the top in OUR financial services, is a key Bahamian issue- not just for our xenophobia, but for our human and country development. Why would you want to even consider handicapping that? The damning fact is that the EU countries need us, to appease their citizenry who are fed up with their intrusive systems. This is even before we analyze the China effect on their bottom line.

Here is what the European countries have been doing- from little ol'e Sweden up the UK and France. They are exporting their highly trained work force, services leading the way- and for the most part, these people who have decided to travel again, are stepping aside from their individual prejudices, to escape the tax and living burdens of the European countries. This is why they want taxes collected here as well and, they want tax cooperation on tax evaders from us. They are taxing and forcing their own people out of their system, so that they can spread out into the rest of the world- colonialism, only by another method- this sounds like the Cuban boat lift of the 80’s, when Castro cleaned out the jails and allowed dissidents to leave- just that in this case, Castro could not affect US policy, but the EU can certainly buy their way into our policy structure. And in my honest opinion, looking at the last election, they may have don just that. With this, the police agents of change, the OECD, EU, WTO, UN and US, have begun to even more so consolidate their centralized world power- some people call if the New World Order, others call it Globalization, but whatever it is, it is against the individuality of states and human order and it will cause major global disruptions- more than it already has. The China effect does not apply directly to this YET, but certainly to goods it does and I think we can understand that.

But this leads me to another point, as I have mentioned before, which EU goods are so important to the Bahamas, that we do not get from the US or we cannot get from China and Latin America? We don’t need cheaper luxury cars, or, fur coats- we need food and education support. If anything, we need them for that alone.

By the time our people figure out that the lack of attention to detail, due to our political directorates lack of public engagement on the issue and that we have been basically short changed, from the looks of the tentative agreements I have seen and the scant snipits the news dares to print out, we will certainly want out of any long term deal with the EU, which does much more for them than it will ever do for us. On top of that, Bahamian businessmen and women and the general public, still do not even understand what all of this means- because they have been silent on this. We could have done much better- in fact, because of our small population, we could have worked much harder on the bi-lateral and tri-lateral arena. We have not even begun to work with our Caribbean neighbours to the extent where we have preferential treatment in our own back yard. And WE, The Commonwealth Bahamas, are supposed to be the regional heavyweights.

I can understand globalization and the good need for it to come about, but, home is home and where you were born, you deserve the right to have full stake in- this is for the entire Bahamas in conjunction with the Caribbean. This privilege has been eroded. Not the same dynamic for the EU however, and if you have lived in Europe for a while, you are almost certain to realize that no foreigner, from the Caribbean or Africa, will ever be able to penetrate their policy system, as to be in a position to affect change. The power of the policy mechanisms, and who controls them and under what circumstances, are crucial to keeping the peace we live under in the Bahamas- the last election, nearly brought bloodshed on a mass scale to our islands. You know that full well.

I am not against liberalization either, in fact, I encourage liberalization but, this deal does not support liberalization to what liberalization means; as stated in an earlier post. But, at least share with the Bahamian people, what exactly are we up against and what should we expect. There are enough chain links, to pass the message along so that we all can dig it on some level. People have not yet realized that large trade deals, follow with political unrest and inflation as well as loss of employment for the domestic citizenry. This would not bring Bahamians up to par in regards to their sophistication and training- this “tough love” will deepen the resentment, and force people out and into the easy way’s of doing business. Blood are spilling on our streets, because young men and women, are disenfranchised by the system and education and training, plays a pivotal role in stemming this. What does this “hot-shot” trade deal for us Larry?

Pound for pound, and be honest with yourself; do you think a student from COB, will be able to walk into a company like KPMG or Ernst and Young, if we were to follow through with a services pact with the EU, with graduates and professionals, who have 2 Masters degree’s before they are 30? Do you think, knowing full well the EU’s xenophobia, even amongst themselves, and blatant racial prejudices, a Bahamian can walk into their top firms, and land a job even with a degree from a top tier institution? They barely even let us into their top tier education institutions, let alone allow us to find meaningful work in their country. Have seen this with my own eyes and any Caribbean person, who got in on their first year attempt, has to be the luckiest human being ever- or the best damn worker EVER- and even that does not count, as being the best Caribbean and African worker ever, still does not count in their idea of a “work force” as they tend to make up excuses, to why they can’t work with you- especially in services, which most of us are. We, as Bahamians however, let Europeans and Americans in with open arms. In fact, we can’t get rid of people like Kozeny even if we threaten to put him in jail- in this country and in others. LOL….(not in a funny mood at all)

Thank you and Happy New Year again.

Bill

Bill

Sorry for being so long winded. Alot of things to say. And besides, I love a good brain jog.

Best,

Bill.

larry smith

I have discussed some of the points you raise in previous articles (eg: the failure of Bahamian education and inappropriate liberalisation).

There is just one thing I want to clarify here - the EPA was pushed strongly by the PLP. The FNM attempted to back pedal but ended up going along with a goods-only deal to buy time on the services side.

The reasons cited by both administrations are the protection of our exports to the EU.

Neither party has discussed the agreement in detail. The Jamaican government recently tabled an overview of the Cariforum agreement in parliament and says that a summary will be released soon.

Bill

Hi Larry,

The rhetoric I remember, was that both sides understood that we had to do something about it, but it was the PLP who stalled on moving forward with it in earnest- this was the talk in town.

My thing is, if it was brought forward by the PLP and, was in the formative stages, as said by the FNM (nothing detailed was prepared) maybe, just maybe, the round of discussion on the issues were to come? Or, we had some "real preparation" to do and information sessions, were on the way? We would not know now but, in any event, the record the PLP had on the CSME with the public, frank and open discussion we had on it's pro's and con's, it would be assumed that this administration would have followed suit with that trend. Like I said, hands were shaken with Luis Michel and the current PM, way back in late May or early June (I wish I could find that article and photo)

I am not defending the PLP for not getting into the research aspect of the losses and gains of the EPA, nor am I giving the FNM a pass by not realizing the long term implications of this arrangement, which apparently this administration is ashamed to share with the Bahamian public. I am however, going to put it at the feet of this administration, for cow-towing and in fact, signing onto something that has no benefit for the Bahamians people. I wanted this agreement, but, not this arrangement they went on with. There is no value in my mind- none whatsoever- in fact, they put in the coffin any sense of Bahamian ownership, in anything that may come up as a possible endowment we can control. And, if we follow up with services, we will lose out on everything big time- with bloodshed following behind. The EU really wants to push the services issue.

As I have said, I have NOTHING against getting involved with trade arrangements. We just have to get it right and know what we are getting into; WE, as Bahamians, have to know what WE are getting into. We have to understand the economic, political, historical and psychological framework of our “partner”- before we talk about actually talking about the issues for us and our benefit.
With your point however;” the FNM tried to back pedal”. First of all, how can they back pedal when they said nothing was done in preparation for it and how can they sign onto something, they had little time to get organized? There does not seem to be a correct answer for that one.

The two things that get to me are; 1. There was a lack of engagement by the party who signed on our behalf and 2. We have not had the process of true liberalization, which comes before such a massive trade partnership with the EU, who have been Mafioso like in their position with developing countries- some of whom are still colonies and the rest are former colonies. We still had bi-lateral power, if the EU truly and desperately wanted to do business with the Bahamas, in particular. This deal is somewhat meaningless for us as we don’t know what its about- basic premise of the position for Bahamians. So, why should we even indulge these people?

But back to the first point, which is more serious than people think because, if they ever would want Bahamians to prepare for these things properly, we would have to at least be informed. But, to rush into it, to beat a deadline for goods we are not dependent on and on the other end, to argue a point that our goods, should need to have the access to a market, which does not use or need them, opens us up for a one way trade advantage with a superpower, who have more to gain out of the relationship than we do- as mentioned before. All we have is services- trade in goods is dead now. Unless we produce Bahamian, which by many accounts, the idea of Bahamian is nothing, we will never take crucial market share in fisheries and agriculture, and it’s ministry, should be dissolved to save us money and manpower.

In addition, the political climate for these trade agreements in the Bahamas, after the firestorm the CSME blazed- some people still don't believe that we are not in any shape or form participatory with that package- for us to sit now in this type of political environment and for the PLP to ask the Bahamian people to join in and look at the more potent EPA, seemed politically foolish to me; even before we hash out the economic losses and gains. But, it was worth the risk as people would know what was up- this administration, has not shared with us any proper value on this "country wide" agreement and not just for Freeport Polymers. Yet, they are scared to say that they signed it. I wonder why?

I see no true gain in this, even when they narrow down this agreement to it's core, as seen in the news clippings I had a chance to get a hold of; regardless of goods for now and services for later. The protection and support for factor endowments, fish, sun, sand and sea, have no delineation in this broad sweeping package, designed to be a one size fit all package for the Caribbean and African countries; does that sound like liberalization or centralization to you Larry?

When you find out some information, and, when you tell Minister Laing that he can stop saying; “we have not signed the EPA”, let me know. Until then, there are no redeeming features in this move by our politicians. Both ends- the dragging of the feet and political cowardice on one end and, signing up for a deal the other side has no idea on how to maximize Bahamian benefit. Regardless if the lead MP was Laing, instead of the other all-star Bahamian, Minister of Foreign Affairs, Brent Symonette.

Best of luck for the New Year,

Bill


larry smith

I agree with much of what you say - particularly about lack of information on trade deals.

Laing said early on that the new government did not want to sign any trade deals until it had had time to formulate a broad policy in consultation with the private sector.

This is what was supposed to have happened years ago under the PLP, which appointed a 32-person trade commission in 2002 and then sidelined it when it didn't support CSME integration.

As you know, the Christie administration did produce a paper last year outlining the pros and cons of signing on to the EPA - tariffs on our seafood and styrofoam versus loss of duties on EU imports. And the PLP foreign minister recommended more than once that we should sign the agreement.

But obviously we are not a trading nation in terms of goods, so this is small potatoes - the devil is in the services details and the last government did not address that issue.

The present government did not want to sign the EPA at all at first, and then decided to go along with a goods-only agreement when that became tenable at the last minute.

However, there is at least SOME trade between the Bahamas and the EU. There is none with the Caribbean.

Bill

Hi Larry,

My last for the day and thank you for your engagement on the issues.

This package deal is a lead up to services- also, a trade diversion from China and the US. What they would try to do, is first hit us with sweetness on the goods, and then, try to revoke it later on when we don't give them total inclusion in on the services. This is how they operate. At least we could have gotten a deal on education and technical support- if only for education and training.

Also, I don't recall the EPA working paper by the PLP- just that of the CSME. However, with the dissolution of the CSME panel and, no pushing forward with the EPA, it seemed to be a good move considering how the trust line on this issue, from the people to the PLP, has eroded to such an extent that it infected the entire policy making arm of the PLP. (maybe you can help with the chronology of the events)

But, this move by the FNM is harsh. It shows a total lack of respect for the Bahamian people, like yourself, who can dig in and then put forth critical analysis of the issues, to the Bahamian people, so that we can take stock on what is needed from us en masse.

By them not engaging us, and at least saying to us; this has to be dealt with...they got nothing in hand for the majority and, they have given a green light to the Freeport Polymer lobby, which they can be called now, for them to affect policy with the rest of us has to suffer for.

That is not democratic.

Thank you for your time on this. Once again, Happy New Year!

Best,

Bill.

hank

Hi Larry

Appears as if you completely missed the boat on this particular issue.

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