Later this week in Geneva, Switzerland, I will convene the fourth meeting of the Working Party on the accession of The Bahamas to the World Trade Organization to continue negotiations. What does that process involve? And why is it in The Bahamas’ interest to join the WTO?
The WTO accession process has several elements. The first pillar involves negotiating The Bahamas’ level of market opening for goods and for services. Trading partners will ask The Bahamas to guarantee its level of openness through binding commitments. In exchange for its commitment, The Bahamas would benefit from that same level of security and predictability when exporting to the other 164 members of the WTO. The second pillar involves negotiating subsidies provided to the farming sector, which have the potential to distort trade. The Bahamas farm subsidies are not at a level deemed to be harmful, and so they are unlikely to be the most difficult part of the negotiations. The third pillar involves an examination of The Bahamas foreign trade regime. In other words, do The Bahamas’ laws and regulations comply with the WTO’s legal framework?
It is not an easy or fast process. But it is not intended to be. The accessions process is designed to reassure the existing members of the WTO that the incoming member is committed to the free trade principles that underpin the organization, is willing to abide by its collective rules and will implement the necessary domestic reforms where the laws and regulations are not currently in line with the rules.
So why bother? I can see several potential benefits. The most obvious is the more secure and predictable market access for exporters. At present, many WTO members can raise the tariffs faced by Bahamian exporters or indeed block trade altogether. I have seen other small island economies outside the WTO that have faced exactly this, for example bans on their exports of seafood. Sadly, because they were not a member, they had no legal rights in the WTO to do anything about it. Once inside the WTO, trading partners are obliged to treat The Bahamas the same as any other WTO member in the same situation. Bahamian service providers would also be able to access the service sectors, in which other WTO members have legally committed, and again, if they encounter problems, have a forum to resolve those issues. Antigua and Barbuda, for example, was able to take the United States to WTO dispute settlement to resolve a barrier to its offshore gaming services.
This leads me to another benefit of joining the WTO; i.e., being a part of the global trade rulemaking system. The WTO is quickly approaching universality with more independent countries, regardless of their level of development, being members of the organization than those that are not. There are currently 23 prospective members. The Bahamas is the last nation in the Caribbean and, indeed in the Western Hemisphere, still not a member of the WTO.
Being a WTO member means that you are in the room when the rules are decided. Under the consensus decision-making system in the WTO, a small island economy has a voice equal to any other member. The members of the WTO are constantly reviewing the trade policies and practices of members to ensure that they do not unnecessarily restrict trade. The WTO provides a forum to discuss problems encountered by exporters gaining access into other markets. Membership to the WTO would give The Bahamas the right to comment on draft trade regulations of other members and to raise concerns before they become law. Where trade measures are inconsistent with WTO rules, The Bahamas would have the right to use the WTO’s dispute settlement system to bring others to account. You can actively contribute to discussions on the future direction of the WTO and the rules that underpin it.
For example, the WTO rules do not provide adequately for the digital economy, big data, new technologies and the growth in e-commerce. Earlier this year, a number of WTO members launched negotiations in Geneva to start shaping the rules. The Bahamas was not in the room but, as a WTO member, hopefully soon, you [they] could be part of the conversation, helping to shape the rules of the future and – like any WTO member – defending its own interests. These discussions and negotiations might be particularly beneficial for a services-led economy such as The Bahamas.
Another example is the current negotiations on fisheries subsidies. WTO members have been mandated by Heads of Government in Sustainable Development Goal 14.6 to find, by 2020, to prohibit harmful fisheries subsidies which contribute to illegal, unreported and unregulated fishing and overcapacity and overfishing.
There are also economic benefits to joining the WTO as the liberalization of trade through the reduction of tariffs and the updating or introduction of WTO consistent laws and regulations are intended to decrease the cost of living, reduce unemployment and grow the economy by creating an environment conducive to the development of Bahamian-owned businesses and attracting foreign investors.
Membership of the WTO sends an unambiguous signal to investors that The Bahamas is open to business. Investors dislike uncertainty and restrictive trading practices. Membership reassures prospective investors that The Bahamas has a long-term commitment to a well-managed business environment, including a transparent and predictable trading regime. This should encourage new foreign investment, in turn creating new employment, promoting innovation and attracting technology and expertise.
WTO statistics back this up. The WTO Secretariat compared the performance of those WTO members who founded the organization in 1995 against the performance of members that had gone through the accession process. Acceding members have grown faster, been more resilient to crises and had more success in attracting foreign direct investment. Whilst the process for joining the WTO is rigorous, it is necessary to ensure that the acceding government is able to reap the benefits from trade liberalization.
My role, as chairperson of the Working Party, is not to weigh the advantages against any disadvantages. That decision is rightly for the government of The Bahamas and the people. My job is to: (i) ensure that the benefits of being a WTO member are fully understood and appreciated, (ii) run a smooth process; and, most importantly, as a friend of The Bahamas, (iii) support it along that path. As chair of the Working Party, I will be standing alongside The Bahamas as we take negotiations forward.
• Ambassador Andrew Staines serves as the chairperson of the Working Party for the accession of The Bahamas to the WTO. Staines is the United Kingdom’s deputy permanent representative to the World Trade Organization.