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The
Editor
The Tribune
Dear Sirs:
You
published a letter on Monday 2nd May under the name of
William C. Allen, whom I take to be the former Minister of Finance.
The former Minister was responding to the public debate on the
issue of The Bahamas’ participation in the CARICOM Single Market and
Economy (CSME). I thank him
for his thoughtful comments.
His
position is that he is opposed to the participation in the CSME because
“the potential risk is worrisome”.
Nowhere in his statement does he tell us what the potential risk
is and what is particularly worrisome about it.
If The Bahamas were to sign on with the reservations that have
been advanced publicly, there would be absolutely no change in the
status quo of the Bahamian economic situation.
There will be none whatsoever.
That
is the reason why both the major political parties take the position
that with the reservations on the free movement of people, the monetary
union, the Caribbean Court of Justice and the Common External Tariff,
there is no difficulty in signing on.
What
signing will do is complete the process of The Bahamas joining CARICOM,
which we are a part of for sensible geopolitical reasons. The former Minister agrees at least with that part.
The
revised Treaty of Chaguaramas anticipates that all countries that are a
part of CARICOM will have signed on to it by the year 2005. That is this year. The
Bahamas is still not in a position to accede to the full provisions of
the Treaty but the present Treaty does not allow non-participation in
the Common Market provisions as the previous Treaty did.
Thus there is the need to complete the process with the
reservations, making us fully a part of CARICOM but with the stated
reservations in advance.
The
Government does not hang its participation in CARICOM and the Single
Market and Economy on “the presumption that CSME Membership will
somehow benefit The Bahamas application for membership process in the
World Trade Organization”. What
is a fact is that if you have become a member of a regional body with
certain arrangements with regard to tariffs, you have a stronger
position from which to argue the tariff arrangements upon entry in the
WTO. That is not a reason
for joining CSME, but it is a benefit of doing so.
The
former Minister concedes that the removal of the Exchange Control
mechanism on the capital account is a desirable public policy that would
not only allow freer access by Bahamians to Caribbean markets and to the
outside world but also facilitate foreign enterprises to access our
markets. Once he concedes
that; what then is his argument against CSME since, as he suggests, we
are headed in that direction anyway?
That is a zero sum argument then.
In fact, he never states what is so otherwise worrisome about
CSME but presumably he must be thinking of the competition issues that
would arise with a relaxed capital account regime.
Well, to use the logic of his argument, if the removal of
Exchange Control on the capital side is desirable, and can be done
without CSME, then, whether we remove it as a result of CSME or without
CSME, we will still have to face the question of competition for
previously protected businesses.
The
former Minister raises the issue of trade with the Caribbean, which is
less than one per cent of the total volume of trade. He would know this based on the fact of his being the former
Minster responsible for Customs. He
would also know that this is contained in the Persaud and Davenport
Report commissioned in 1997 when he was the Minister of Finance for the
country. He would also
know, then, that the revenue impacts of joining CSME would be negligible
if any at all. So what,
pray tell us, is his argument there?
The
public policy issue today is not so much what trade we do today, it is a
question of opportunities, both real and potential, which might arise
for Bahamians who are looking for expanding markets; for non-regional
companies which wish to invest here to access the Caribbean markets; for
a company that is here that can access the Caribbean as a result of our
signing on to the CSME; and for additional opportunities to invest here,
hassle free. Again, there
is no negative effect and while the benefit is not immediately huge, the
fact is that there is a benefit. So
that seems to cancel that argument.
The
former Minister is not correct when he asserts that the Caribbean
economies are different from The Bahamas economy; there were certainly
vast differences some 40 years ago but certainly not today.
The vast majority of Caribbean economies today are dominated by
services, more particularly tourism, even Jamaica. The notable exception to this is Trinidad and Tobago, which
has an oil industry; and even in this case, the economy of Tobago itself
is largely tourism. It is
only Guyana and Suriname that are now principally involved in primary
production in agriculture, forestry and mining.
So clearly, his argument about there being no convergence does
not hold water at all. There
is no significant divergence. As
a matter of fact, they look to emulate our success.
No
one is overwhelmed by the idea of CSME.
It is the critics who have chosen to make this a huge issue.
In the life of the country, this agreement is not a life or death
issue. There is no special
drama in it. There is
nothing worrisome about it. With
due respect to the former Minister and his former colleague Zhivargo
Laing, one has to begin to look to other reasons why these arguments are
being advanced, since the ones now being advanced simply do not add up. I will not seek at this time to speculate about the motives.
I
wish only to say that there ought really be no political difference on
this matter. The two
parliamentary parties ought to be united on this one.
I
remind them both that it was the Ingraham administration in which they
served that committed the country to pay for its share of the costs of
the Caribbean Court of Justice, even though they agreed and we agree
that we will not participate in the appellate side of court.
There were sensible reasons for doing so which they are in a good
position to explain.
There
is one further red herring that needs to be dispensed with and that is
the question of why the Ministry of Foreign Affairs has been dealing
with this matter. This is a
similar argument to his former colleague in the Cabinet who at first
claimed that the Minister of Foreign Affairs was on a frolic of his own
with regard to the decisions on this matter.
It is passing strange that two men, both of whom are members of a
party that used to be known for and used to believe in trade
liberalization now stand saying we must not liberalize trade, at least
that is the effect of the smokescreen that is now being created in their
public arguments on what is quite a simple and straightforward decision.
Relations with CARICOM are the responsibility of the Ministry of
Foreign Affairs and it is in that light that the decision was made on 21st
December, 2004 to give carriage of this matter to the Ministry.
The Government’s position is clear that unless and until the
four pre-conditions adverted to above are in place, The Bahamas cannot
sign.
Your
readers will note that this is quite a more measured and cautious
position than that adopted by the former Finance Minister’s former
colleague, the former Minister of Economic Development, who, adopting
Prime Minister Owen Arthur’s argument, writes in his book “ Who
Moved My Conch?” that we “cannot opt out of CSME”.
The Bahamas government and myself do not go that far, we simply
believe that the benefits outweigh the risks and are proceeding ever so
cautiously.
Yours sincerely,
Fred
Mitchell
Minister of Foreign Affairs &
The Public Service
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