The five imperatives we must address to enjoy WTO membership
Nobody doubts the benefits that World Trade Organization (WTO) membership brings, but to reiterate a key previous argument, benefits are not automatic, nor are they fairly or equally distributed, especially when it comes to small island developing states like The Bahamas, which do not have the capacity to participate fully in reciprocity, a main pillar of “most favored nation” status:
Small and poor countries pose a challenge for the WTO. These countries have acquired a significant say in WTO decision-making, however, they have limited ability to engage in the reciprocity game that is at the heart of the WTO and have limited interests in the broader liberalization agenda.
Here are five imperatives that our government must address if we are to begin to enjoy the benefits of free trade under WTO:
1. Agree to a Bahamas-centric economic model and industrial policy;
2. Develop a human talent pool that is attractive to foreign companies;
3. Assist our professional classes to prepare for competition;
4. Assist our enterprise stock to prepare for competition;
5. Develop a robust negotiating capacity.
To most observers, The Bahamas has labored under an antiquated economic model for decades, a point reaffirmed several days ago by our former attorney general, who argued that our economic model is past its “best by” date.
Alfred Sears, in the March 8, 2019 edition of The Nassau Guardian, was quoted as saying, “In 46 years of independence, The Bahamas continues to operate according to the assumptions of the Stafford Sands model, with a deepening systemic dysfunctionality and diminishing competitive position in tourism and financial services. In 2019, the macro picture of the Bahamian economy reflects a broken model.” It is not too much to ask that we agree what’s important to us, what we are prepared to yield or not yield on or what constitutes our red lines. To attempt a move to accession without re-thinking the basis upon which our economy operates or an industrial policy that serves our interests, first and foremost, is irresponsible at best and naïve at worst.
Second, in my research of internationalizing technology, media and telecommunications (TMT) firms into the UK (circa 2010 — 2012), I found that TMT firms overwhelmingly locate and site operations for three main reasons. Those reasons are all to do with access and proximity to: (i) a pool of human talent from which they can draw; (ii) markets and customers, which they can serve cost-effectively and efficiently; and (iii) strategic suppliers, including advanced research, which are needed to sustain competitive advantage. I also confirmed that whilst tax incentives can make a good deal better, they can never make a bad deal good! To commence WTO accession without re-thinking what human talent we require and how we create a talent pool that is fit for competition in the fourth industrial revolution, again is irresponsible.
Third (and fourth), the government has a responsibility to our existing enterprise stock and professional classes, to prepare both for competition. By assisting our professional classes to become more knowledgeable of potential transaction-specific issues or those relating to regional and world trade, is probably the ‘flip side’ of encouraging and helping to prepare our enterprise stock for competition. Some of our larger firms have enjoyed virtual monopolies for decades and need to be shaken out of the lethargy and comfort zone they have come to know. In general, Bahamian products are uncompetitive due to high labor and production costs, and our services do not fare much better. In short, it’s about enhancing awareness about the bases of competition and points of tension that will arise when competition heats up. Yes, the GATT and WTO have offered ‘technical assistance’ for over 50 years, but these short training courses on trade policy are targeted at public officials. Besides, it could be argued that the EU, U.S. and others are keener to increase awareness of what they might do (so you can’t say you didn’t know). To commence accession without re-thinking how we prepare our current professional workforce and enterprise stock for competition is grossly negligent and tantamount to saying “every man (and woman) for himself, and God for us all …so let the chips fall where they may”.
The final imperative, developing a robust negotiating capacity, is one that may be the most challenging for the simple reason that we have a relatively new government and whilst they seem to have a relatively new way of viewing our world, I am not optimistic that its current knowledge, expertise and capabilities, as represented in our Cabinet Subcommittee on International Trade and Investment, extend to multilateral regional and international trade negotiations and dispute resolution. Given the constraints on financial resources, capabilities are unlikely to be replenished anytime soon. What this means, in practice, is we would be compelled to rely on external assistance (which we cannot be sure would work in our best interests, yet we would have to pay, if it’s not included in our “technical assistance”); we could unwittingly be seduced into agreements, the consequences of which, we may not be aware; or third, if taking part in high level discussions, we may regrettably find ourselves “in over our heads”. None of the above is a good or desirable situation for a government, so to commence accession without preparing for the demanding talks, is akin to entering battle without the necessary intelligence to guide our actions or the appropriate dress to ensure we are protected against its ravages.
Oxford Analytica (2010) has warned that small developing country delegations at the WTO typically share several characteristics because they are or have:
1. Seriously understaffed, with some states not having a permanent delegation in Geneva;
2. Inexperienced in trade policy issues and multilateral negotiations, having not been involved in WTO disputes;
3. Little to contribute in WTO negotiations, so are not invited to crucial informal meetings; and
4. Receive very little support from their equally ill-equipped capitals.
Individually and collectively, small states do not account for any significant share of any element in world trade, making them inconsequential at best. We also know that “in the 10 years since the WTO pledged to deliver pro-development changes, developing countries have been completely sidelined by the global powers”. This is unlikely to cease anytime soon, unless and until small states develop capabilities to prepare for the demanding negotiations and discussions that inevitably attend accession.
Whilst the above changes cannot happen overnight, we first became observers in 2001 and attended our first working party meeting in 2010, so there should be evidence that preparations are well underway. In the meantime, I suspect we will have to lean disproportionately on the services of Ambassador Staines, the deputy permanent representative of the United Kingdom to the WTO, who was elected to chair the Bahamas Working Party on accession.
• Dr. Selwyn S. Seymour is a teaching fellow in the Department of Strategy and Marketing at the University of Sussex Business School.
- The five imperatives we must address to enjoy WTO membership - March 15, 2019