...the revenue losses The Bahamas will suffer from signing on to the Economic Partnership Agreement (EPA) with Europe...

WTO to force 50% Bahamas tariff reduction
By ALISON LOWE
Business Reporter
alowe@tribunemedia.net


A CARICOM trade specialist warned yesterday that the revenue losses the Bahamas will suffer from signing on to the Economic Partnership Agreement (EPA) with Europe will be little compared to the "much more significant impact" that will be felt from new free trade deals with the US and Canada.

Sacha Silva also suggested that the most significant revenue loss to the Government under the EPA will not come from dropping tariffs on imports coming into the Bahamas from Europe, but on those imports from the Caribbean and Dominican Republic.

The economist, a consultant with Caricom's Office of Trade Negotiations (OTN), argued that between $2 million and $3.8 million each year in tax revenues from trade with the Caribbean could be lost by this nation on the 5,000 tariff lines that will become duty free not only for Europe but for the Caribbean community, too, under the EPA.

"The Bahamas is for the first time liberalising trade with CARICOM and the Dominican Republic under the EPA - the same 5,000 lines to be liberalised with the Europeans," said Mr Silva.

"The fiscal implications here are a little more significant (than with respect to losses stemming from droppin tariffs on trade with Europe). There is relatively speaking quite a bit of trade (between the Caribbean and the Bahamas)."

Meanwhile, Mr Silva warned that while the loss of revenue from tariff reductions on imports from Europe is "highly unlikely to have a significant impact, given the Bahamas' small trading relationship with Europe", another development which will have "a much more significant impact on development" will be the Bahamas' accession to the World Trade Organisation (WTO), and deals soon to be signed between Caricom, Canada and the US on trade between our nations.

He was addressing a technical workshop on the EPA organised jointly by the Bahamas Chamber of Commerce, Caribbean Export Development Agency (CEDA) and the Caricom EPA Implementation Unit yesterday.

Speaking of the WTO accession and the Canada/US trade deals, Mr Silva said: "These are things that the Chamber and the Government need to keep a very close eye on because there is likely to be a much more significant impact. Those coming in (to the WTO) at this late stage pay a very high price. Tariffs will have to come down in the Bahamas by about 50 per cent. And the people on the other side, particularly in the US, negotiate very, very hard.

While Europe, which held Caribbean states as former colonies, has a "special understanding" of the region, which may make it more prone to offer concessions in trade negotiations, "this does not exist anywhere else - the Canadians and the Americans do not have this understanding," contended Mr Silva.

Challenged on the premise that Canada would take a harder stance with the Caribbean in its ongoing negotiations over a new trade deal with the region, Mr Silva said his position is based on analysis of previous trade deals Canada has struck.

"When I look at what they have granted and what Europe has granted, the difference is enormously large. If you look at the negotiating stances Canada has taken in free trade agreements it's not appreciably different from the US. Traditionally, they ask for liberalisation of agricultural items and a lot of non-agricultural items. The EPA did not go this far," said the economist.

Mr Silva added that while the EPA will be a "spur" to the process of internal tax reform in the Bahamas, "the WTO will be a more serious kick to that", as the Bahamas seeks to finds means to replace the revenue sources that will be phased out with the tariff reductions the two trade-related processes demand.

December 10, 2010

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