The Bahamas plans to offer a 40 percent reduction in its average peak tariff for goods as part of its revised trade offer to the World Trade Organization (WTO), Minister of Financial Services Ryan Pinder revealed yesterday.
Pinder, who also has responsibility for international trade, added that the government is arranging an international consultancy which will examine which industries and companies stand to benefit the most from, or be challenged most by, WTO accession.
During his contribution to debate in the House of Assembly yesterday morning, Pinder told parliamentarians that the country's initial offer submitted in March 2012 was "extremely conservative" and did not reflect the existing levels of liberalization in the Bahamian economy.
The offer which will now be resubmitted will be more liberal in terms of the degree of market access it offers with respect to goods and services.
Based on negotiations and accession trends, Pinder said his ministry has recognized that demands for greater liberalization in both trade in services and goods will be made by the WTO during the next round of negotiations as part of the WTO accession process.
In preparing the second services offer, the Ministry of Financial Services consulted with companies in nearly 25 services sub-sectors including legal service providers, medical petitioners, real estate firms, telecommunications companies, restaurants environmental services firms and tourism service providers.
"The second services offer seeks to: Maintain by horizontal commitments the existing regulatory regimes as regards exchange control, National Economic Council and Investments Board review and approval procedures, business licenses, real property tax and immigration (and) reflect in the sector-specific commitments the levels of liberalization which exists in the tourism, financial services, manufacturing and the telecommunications sectors," said Pinder.
It also seeks to align the WTO offer with the commitments made under the economic partnership agreement (EPA) and address the requests for market access by our international trading partners, while preserving the positions in the National Investment Policy of The Bahamas.
The second goods offer provides for an average peak tariff of approximately 15 percent, a reduction from 55 percent.
The average peak tariff is not the same as the average applied tariff, which is most often quoted to be somewhere in the range of 35 percent. Some "protective" tariffs were maintained in the offer in light of the "sensitivities" of certain domestic sectors.
"The recommended rates were informed by submissions made from the Ministry of Agriculture, dialogue with agro-industry participants, and consultations with and written submissions from light manufacturers," said Pinder.
As The Bahamas prepares for a third working party meeting in November, the government is proposing to determine via a consultancy which sectors stand to potentially gain and/or lose most from WTO accession.
"It will help to determine which sectors of the Bahamian economy are vulnerable in the context of WTO accession; to review our economic framework and provide recommendations on internal reforms required to ensure that Bahamian businesses are prepared to take advantage of trade liberalization... and to identify in specific terms those sectors of the economy which stand to benefit from trade liberalization, and to seek to quantify those potential gains," said the minister.
The consultancy will include an international firm with expertise in WTO accessions supported by The College of The Bahamas' Economics Department, and will be funded from a trade sector support loan obtained from the Inter-American Development Bank (IDB), which makes provisions for trade-related consultancies.
Pinder pledged his ministry's commitment to launching an aggressive public awareness campaign, ensuring that Bahamians are informed on WTO accession.
Cabinet approved The Bahamas' revised WTO offer last month, reportedly the same day the decision was made for The Bahamas to pursue a Model I Intergovernmental Agreement (IGA) under the Foreign Account Tax Compliance Act (FATCA).
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