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Address
By The Hon. Fred
Mitchell
Minister of Foreign Affairs
National
Congress of Trade Unions
BCPOU
Hall
5th May 2005
On
CARICOM Single Market and Economy.
Ladies
and Gentlemen:
It
is a pleasure for me to be able to address you tonight on the topic of
the CARICOM Single Market and Economy (CSME) which has become one of the
key topics of interest in The Bahamas in recent weeks.
This
evening’s discussion is part of the continued effort to educate our
citizens on the nature and scope of the CSME.
In
the course of the debate, the opponents of the policy have sought to use
wrong information, fear and irrelevant information. Tonight, I wish to
deal with the facts.
It
is my intention, tonight, to bring the discussion back on course and go
back to first principles and continue the Government’s programme of
educating the Bahamian people as to the overall nature of CSME.
Definition
of CSME
In
the first instance it is important to state that at present, the CARICOM
Single Market and Economy is a proposal for all the English-speaking
Caribbean countries as well as Haiti and Suriname in South America,
known collectively as the
Caribbean Communty, (CARICOM), to form an economic grouping or bloc for
the purpose of improving commercial activity of all kind among them.
This proposal was first put forward on 4 July, 1973, when all the
English speaking Caribbean states, except the Bahamas, signed an
agreement in Chaguaramas, Trinidad, therefore called the Treaty of
Chaguaramas.
Although
The Bahamas participated in all the activities of the Caribbean
Community such as the Heads of Government Conferences and contributed to
the regional institutions such as the University of the West Indies, we
did not sign the Treaty until 4 July, 1983.
And even then, we made it clear to our Caribbean colleagues, and
they accepted our position, that we would not agree to the provisions in
the Treaty that dealt with trade, commerce and economic matters.
The Treaty, at that time allowed for us to remain outside of the
Common Market while being an active member of the Community.
As
time progressed and as other regions in the world moved toward securing
their trade interests by forming trade blocs, there was seen the need to
deepen the trade arrangements between the Caribbean countries; and so,
in July 2001, all the Caribbean countries, with the exception again of
The Bahamas, signed the Revised Treaty of Chaguaramas, agreeing to
create the CARICOM Single Market and Economy by the end of the year
2005.
This
close cooperation in commercial activity is expected to raise the
standard of living of the vast majority of the 14 million people who
live in the CARICOM region. It
is expected that this close economic cooperation will lead to an
increase in competition among the providers of goods and services in the
Region and thus cause a reduction in the prices of goods and services.
A reduction in the prices of goods and services should lead to
increased savings and investments and thus raise the standard of living
in the Community.
So,
this is the essence of the trade proposal called the CARICOM Single
Market and Economy: it is
designed to improve the standard of living in the region by lowering the
cost of living while ensuring that top quality goods and services are
available to the more than 14 million consumers from The Bahamas in the
North to Suriname in the South.
So,
what then, one may ask, is a single market?
This is an economic system where goods, services, people,
technology and capital are able to move freely from one location to
another without having to deal with restrictions and approvals of
various kinds. In essence,
The Bahamas makes up a
single market, where goods, services,
people, capital and technology are able to move freely from Abaco to
Inagua without permits, restrictions and approvals.
The freedom of movement of people, capital, goods and services
across the United States, is also an example of a single market.
And
what, might one might ask, is a single economy?
This is a situation that goes a few steps further than a single
market and involves close cooperation between the Caribbean states on
general policy matters affecting industry, trade, money, investment,
agriculture, transport, competition, consumer protection, human and
social development and trade dispute settlement.
Once
again, The Bahamas serves as a good example of a single economy, in
that, barring some slight variations in Freeport, there is complete
harmonization of various policies affecting trade, investment, and
economic and social development throughout the island.
I
should add that the reason why it is preferable to sign a trade
agreement like the CSME is that under the terms of an agreement, the
rules are known, the procedures are transparent, and disputes have a
clear mechanism for settlement. This
will avoid unfair practices which can undermine local economies.
The
Benefits of the CSME to The Bahamas
In
dealing with the question of the benefits to The Bahamas of joining the
CSME, it might be best to look at the disadvantages so as to get a clear
perspective. It certainly goes without saying that if there are no
benefits to The Bahamas, it makes no sense to join the CSME; and it is
certainly valid to say that if the disadvantages of joining would be far
greater than the benefits of joining then again it would be prudent to
remain outside of this trade bloc.
Under
the present Treaty of Chaguaramas, The Bahamas participates in all the
activities of the Caribbean Community but does not participate in the
Common Market. In clearer
terms, we participate in CARICOM organizations such as the Caribbean
Development Bank, the Caribbean Tourism Organization, the University of
the West Indies, the Caribbean Regional Negotiating Machinery, the
Caribbean Disaster and Emergency Response Agency, the Conference of
Heads of Government, the Caribbean Council on Community and Foreign
Relations, the Council of Economic and Trade Development, the Council on
Finance and Planning, the Council of Human and Social Development.
The
Revised Treaty, however, which is what the present national discussion
is all about, does not allow for a State to join the Caribbean Community
but remain outside of the Single Market and Economy. The economic
integration movement has developed to such an extent that membership in
the Community by definition means membership in the Single Market and
Economy.
What
this means in effect is that once the CSME comes into effect by the end
of 2005, with all the other CARICOM countries signing on except The
Bahamas, we would be outside the CARICOM system and would not be
beneficiaries any longer of all the CARICOM organizations that we have
benefited from since we became an independent country in 1973.
This
of course would have serious negative implications for our social and
economic infrastructure and would set us at a serious disadvantage as a
country, rather than enhance our growth and development, in that, our
access to the facilities and services provided by the Caribbean
Development Bank, the University of the West Indies, the Caribbean
Disaster and Emergency Response Agency and others, would be greatly
diminished.
We
would be the only country in the Caribbean, apart from Cuba, that would
be outside a regional trade bloc; and since trade blocs provide benefits
for their members that are not provided to non-members, it could easily
be reasoned that our tourism industry, our manufacturing industry, our
beleaguered agricultural industry and even our financial services
industry would be immediately and negatively affected, largely in terms
of the relatively higher cost of doing business in The Bahamas that we
would invite by trying to stand alone.
In
the modern world of blocs and regionalism, The Bahamas is not seen as a
separate sovereign entity that other countries in the world are prepared
to engage in separate negotiations and discussions.
The cold fact is that in the new global environment of trade
negotiations, The Bahamas, with a population of some 300,000, will not
be given any special and differential treatment unless we are a part of
the CSME club, that represents a population of over 14 million.
Here
is a case where it is clear that the old maxim that “There is safety
in numbers” is indeed true. In
order to survive as a relatively high-income country in the 21st
Century we have to show to the world that, to a globally acceptable
degree, we are similar rather than different from our sister CARICOM
states
In
the 21st century the key to our success is not and cannot
ever be to isolate ourselves from what is happening regionally, but to
intimately integrate our
interests into the interests of the region because that is the direction
in which the world economy
is heading.
Those
opponents of this policy often use Switzerland as an example of standing
alone. A true examination
of the raft of international and regional agreements that Switzerland
has signed shows that the opponents are simply wrong.
To
the outside world beyond the Caribbean region, The Bahamas would emerge
as a less than favourable place to do business because we would suddenly
be outside a globally recognized trading bloc with a system of rules and
regulations in conformity with the changing nature of the world economy.
We could envisage reduced investments, since traders and
investors would naturally be more comfortable doing business in an
environment with a set of globally recognized rules, rather than in an
environment with a set of rules unique and peculiar to The Bahamas.
Against
this background of disadvantages, then, the advantages become clear.
By joining the CSME and conforming to the new global trend where
trading blocs are the preferred medium for negotiations, The Bahamas
would be more able to maintain its high standard of living.
By
being at the table, as a full member of CARICOM, with all the other
regional state players, The Bahamas would always be in a position to
have first-hand knowledge of new trends and developing issues, and would
be able therefore to plan the necessary structural adjustments to deal
with them. If we are not at the table, because we have declined to join
the CSME we could find ourselves being the last to know of any
innovation in the global system affecting the region and we would
therefore slip further and further behind in our capacity as a people to
maintain our standard of living.
One
of the key principles that we as a Bahamian nation must understand is
that we have entered into a new economic age where constant monitoring
of global events and constant planning and negotiation will now be the
key to success. Our ability
to change with the changing times will be the key to our continued high
standard of living.
Clearly,
we live in an age where we can modify the saying that “No man is an
island” and say emphatically that “No country is an Island”.
We cannot survive on our own without falling back from our
position of being the third richest independent country in the whole
western hemisphere.
Elements
of the Bahamian Trade Regime
The
Government of The Bahamas has deliberately initiated this dialogue
regarding the CSME because of its fundamental policy, as enunciated by
the Prime Minister over and over again, that Bahamian citizens should be
given the greatest possible opportunity to be educated as to the vital
issues that affect them.
And
we in the Government fully understand that the process of education
involves raising questions and issues.
We in the Government fully understand that in the education
process, people, on many occasions, raise questions and issues in an
attempt to expand their knowledge.
So
we are not perturbed because persons in the Opposition, such as Zhivargo
Laing, Sir Arthur Foulkes, Sir William Allen and others are raising
questions. We are in the
process of education, of providing the incontrovertible facts to all the
Bahamian people, including Zhivargo Laing, Sir Arthur and Sir William.
You
often hear from these opponents that The Bahamas has nothing to trade.
What they really mean is that we have no goods to trade, because
we do a huge volume in the trade of services.
But
even when confined to goods, to state that, “We have nothing to
trade”, is just plain wrong. The
whole economy of Matthew Town, Inagua, the southernmost outpost of The
Bahamas, is based on the production and export of salt.
Were this industry to be dismissed, in real terms, hundreds of
Bahamians would suddenly find themselves without a means of livelihood
and the community of Matthew Town would become a virtual ghost-town
overnight. The policy of
any Government of The Bahamas should be to secure the future viability
of Matthew Town by seeing to it that the country remains on the cutting
edge of trade developments.
To
state that we have nothing to trade is to ignore the important fact that
the annual export of fisheries products, largely crawfish and to a
lesser extent conch and scale fish account for over $70 million worth of
sea products exported from The Bahamas annually.
This is an industry in which Bahamians are involved from Abaco to
Inagua and which enables many fishermen in the Family Islands such as Abaco, Andros, and Spanish Wells to enjoy an extraordinarily
high standard of living enviable throughout the Hemisphere.
In
fact fishing is said to occupy 20,000 souls in The Bahamas.
This is a workforce equivalent to the Public Service, the
country’s largest single workforce.
And
up until a few weeks ago, when the citrus canker viral infection hit our
groves in Abaco, we had a viable citrus export industry to the United
States; and it is envisioned that as soon as the disease is eradicated,
the industry would be revived , simply because we are globally
competitive in the production of citrus in Abaco.
And
then, there are the Bacardi rum products produced in The Bahamas for
global export and there is the export of cascarilla bark to Europe for
the manufacture of certain alcoholic beverages, which activity, though
small, is an important source of income for some Bahamians particularly
in Cat Island and Acklins.
Even
if it were true that we ourselves have nothing to trade, we are in fact
deeply involved in the movement of goods through the Hemisphere, owing
to the existence of Freeport, one of the biggest and most modern
containers ports in the Hemisphere.
Certainly we, as a responsible Government, are obligated to keep
apace of the rapid and complex changes in the trading arrangements and
the trading environment in the world to ensure that the economy of
Freeport, which supports an economically active population of some
50,000 throughout Grand Bahama, remains on the cutting edge of
hemispheric and global trade.
Remaining
on the Cutting Edge of Change
The
modern economic history of The Bahamas is very instructive
to us in the 21st Century Tourism, because we learn
from what happened in the middle of the 20th Century in The
Bahamas.
It
is quite clear, now, when we objectively scan modern Bahamian history
that men like Sir Stafford Sands were in touch with prominent
hemispheric and global thinkers who persuaded him and his colleagues
that the forward movement of The Bahamas was along the paths of the
global trends in the aftermath of the global devastation of World War
II.
At
that critical juncture, there was the vision and the intellectual
capital in The Bahamas that placed our country on the cutting edge of
modern economic development and thus we were able to create the first
service economy in the Caribbean region, based on emerging growth
industries such as tourism and financial services, at a time when many
of our sister countries in the region were still cutting sugarcane and
roasting cocoa beans. Today
we are still enjoying the effects of this forward-looking attitude as we
continue to enjoy the third highest per capita income in the Western
Hemisphere, after the United States and Canada only
Now
in 2005, when the global environment is characterized not by bank
secrecy and tax avoidance but by trading blocs, freedom of movement of
capital, trade in services and low tariffs, the visionary
characteristics of Bahamian leaders are once more being challenged as we
as a people are being called to read the obvious signs of world change
and move strategically to position ourselves at the cutting edge of
change.
In
the forties and fifties we faced global change successfully and created
a vibrant and wealthy social and economic environment second to none in
the Western Hemisphere. Once
again, we are called upon to respond to global change and it is my firm
belief and the belief of my colleagues that, armed with the facts of
reality and the appropriate analysis, we as a people are once again able
to seize the opportunity and continue build a prosperous society in
these islands.
Argument
against Referendum
In
closing, I would address a question that is being asked, which is whether there should be a referendum to decide whether the
Bahamas should join the CSME. The
argument being advanced by the proponents of this idea is that it is
such a great step affecting the country, that the question must be put
to the people. On the face
of it, this might appear to be a sound argument; but when taken in the
full context of Bahamian history, we see where it is not the proper
process.
The
greatest move that The Bahamas ever took was the move to become an
independent country in 1973. This
move did not only affect the economic viability but the political and
social viability of the country.
But
there was no referendum on this issue.
Granted,
there was a General Election in 1972, when Independence was one of the
major issues; but the specific question was never put to the Bahamian
people as a singular issue for voting.
Another
major move taken by the Government of The Bahamas, prior to the current
CSME initiative, that promised to have a profound effect on The Bahamas,
was the move by the Hubert Ingraham administration in 1994 to begin
negotiations along with every other country in this Hemisphere, except
Cuba, “to create” the Free Trade Area of the Americas.
And
try as they might today, to say that they did not commit The Bahamas to
the FTAA, the language of the document is patently clear.
The
Free Trade Area of the Americas anticipates the creation of a single
market and economy not only among the 15 English-speaking Caribbean
islands, as the CSME is attempting, but will create a single market and
economy among the 34 countries in the Hemisphere from Canada in the
North to Argentina in the South.
Did
Hubert Ingraham ask the Bahamian people, in a referendum, before he went
to Miami in December of 1994, whether we agreed that he should sign the
Declaration of Miami that started the negotiations to include The
Bahamas in this grand hemispheric scheme?
While we agree that no referendum was necessary, we say that what
was required was a process of education and consultation.
That is where this process differs today from the decision on the
FTAA.
And
then, when the FNM Government, in 2000, decided to make application to
join the global World Trade Organization there was no question put to
the Bahamian people as to whether we should enter this, the largest
trade organization in the world, even though our membership would have
far reaching implications for the way our economy is organized and the
way we would interact commercially with the world in the years ahead.
That is a done deal. Yet,
there was no call for a referendum on that.
The
point being made is that a referendum is a precise, democratic process,
required by the Constitution of The Bahamas for changing certain
specific articles of The Bahamas Constitution.
It was never intended for the referendum process to be abused by
putting a myriad of questions to the Bahamian people. Referenda are
expensive exercises to mount and they, like General Elections, require
the temporary diversion of large amounts of financial resources and
manpower; and those persons who are calling for it should research the
matter to see exactly where, in Bahamian law, a referendum is required.
For any Government to go to referendum for every presumed
important matter such as becoming independent or entering into FTAA
negotiations or joining the WTO would be profligate and irresponsible.
There
is nothing in the Revised Treaty of Chaguaramas that would require a
change in the Constitution of The Bahamas and therefore warrant a
referendum. And even in the
case of the Caribbean Court of Justice, where, without changing our
Constitution, we can agree to it being the Court to decide on all trade
disputes arising out of the Treaty, we have in fact decided, anyway, not
to agree to the Articles of the Treaty that call for our joining the
Court of Justice on the appellate side at this time.
It is a matter we need to study further.
So,
if we did not hold a referendum to become independent, or to join the
hemispheric FTAA negotiations or to apply for membership in
the global WTO, then it is spurious to call for a referendum to
join a mere regional trade bloc.
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