On Free Trade
The tide has turned. A week ago, there was rampant concern about the signing of the CSME. Now, we're all breathing easily again; we've been told the government will not sign on to the CSME before 2007.Pay close attention. No one's said a word about the WTO. And they should.The whole world, you see, has signed on to a doctrine of "free trade". It's a doctrine that states that the Market, and not nations, is the ultimate controller of business. Nothing should be allowed to stand in the way of the Market -- not national interest, not cultural imperatives, and certainly not the need to encourage local products. You see, by placing barriers up for any reason, you hinder the Market from doing its work. And the Market's work is to find the best price for every product, and to sell.The World Trade Organization sets the rules that govern free trade. Each country who wants to participate in the great global economy is obliged to sign the trade treaties laid down by the WTO. Here in The Bahamas, we're running behind, and we're rushing to catch up.Now here's the rub. The rules set in the WTO are, by and large, rules that were developed by, and work to the advantage of, the economic G8: Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States. Most of them predate the actual period of globalization, and they are designed to allow the broadest scope for cheap labour, open markets, and high consumer demand for the products of these nations. Protectionism of any kind is anathema, and has been eroded over time.Take the West Indian banana industry, for instance. The small islands of the Eastern Caribbean were for years assured of a steady market for their bananas, because they were protected by the preferential trade agreements of the British Commonwealth. As a result of the Commonwealth agreements, the British market was closed to Central American bananas (those bananas grown by largely American companies like Chiquita and Dole), and even to the bananas produced in the French territories of Martinique and Guadeloupe.When Britain finally signed onto the European Common Market, this changed somewhat. The British market opened up to French bananas, and Europe began to trade with the Eastern Caribbean. Still, though, access to the European market for Dole and Chiquita was limited.Under WTO agreements, however, the preferential treatment given to Europe's former empire has to be removed. No market can be closed to any product. And now, with Chiquita and Dole finally finding a home in Europe, the banana industry of the Eastern Caribbean has died.What's insidious about WTO is that, unlike the CSME, nations don't have to change their legislation immediately when they sign on (although it's the rules of free trade that mandate that things like customs duties and other tariffs have to be removed). No. There's a clause in the WTO agreements that specifies "national treatment" for all. In other words, you can have as many rules as you like about who can do what in your country. The thing is, if a foreign company wants to come in and establish itself, you have to treat it exactly the same as you would treat a national company. In other words, you have to create a level playing field for the Market to work, and allow every foreigner the same advantages that you give to your own people.Now the good thing about the WTO is that when you sign on to it, you can apply for exceptions. The bad thing about these exceptions is that the treaty is huge, and the exceptions are niggly and very very detailed. The worst thing of all is that our very economic success in The Bahamas has made us badly prepared to negotiate any exceptions. Our habit of looking only at ourselves, or at the USA, has allowed us to develop many lawyers and economists who know how to make us or themselves richer, but the rules with which they work are outdated. We have very few professionals who are experts in the field of global commerce, which means that when we sign on to the WTO, we stand a very good chance of locking ourselves into all kinds of situations that will work to erode our economic edge.Consider this. The WTO governs trade not only in goods, but also in services. This means that everything -- banking, tourism, music, higher education -- is regarded as a tradable commodity and is therefore governed by WTO. This is something others have found out the hard way. In one situation, a trade minister signed onto the WTO without consulting all the economic sectors that would be affected, only to discover after the fact that the local university was negatively impacted by the treaty. The government, in an effort to support the regional institution, provided subsidies for students enrolled there. Under WTO, the principle of national treatment mandated that similar subsidies should be available for students enrolled in any international institution that had set up campuses in that country.One very good reason that I see for joining CSME in the long run (after looking at all the implications and working out what helps and what hurts us), is to avail ourselves of two things that membership in CARICOM will confer on The Bahamas: first, the right to seek exemptions from various clauses of WTO, some of which The Bahamas, with its high GNP and position as third richest nation in the hemisphere could not ordinarily access; and second, the ability to piggyback on the negotiating machinery, and use the work of the Caribbean experts who have been negotiating a place for the entire region in the WTO.After all, we have to be realistic. Our future is a global one. In this case, the worry about immigrants from the south is a fleeting one. Our real worry should be the immigrants from Japan, China, India and Israel who are already seeking to move to The Bahamas to establish businesses at the gateway of the greatest market in the world -- the USA.