In what has to rate as one of the most insensitive and outrageous demands on a Caribbean country, US government representatives have told the Bahamas government that it must drop “all duties” on US products entering the country as a condition of being admitted to membership of the World Trade Organisation (WTO).
Should the Bahamas agree to do so, the country would lose the larger part of US$700 million that it earns from duties on imports, the vast majority of which comes from the US for obvious reasons of proximity. In effect, agreement to what amounts to a preposterous request from the US would create such a large hole in the government’s revenues that it would be impossible for it to provide the goods and services that the Bahamian people have a right to expect of their government. Incidentally, that includes fighting drug trafficking and curbing the inflow of refugees on which the US places great emphasis.
What is more, surrender to the US demands would have a wholly decimating effect on such manufacturing that occurs in the Bahamas or that may be introduced in the future as part of a chain of operations that adds value in the course of multi-country production.
If there is a phased approach to the reduction or elimination of duties on US products that compete with theirs, the present manufacturers would have the time to make adjustments to their production and marketing, and thus may survive.
Not unreasonably, the Bahamas Minister for Financial Services, Ryan Pinder, told his country’s Chamber of Commerce and Employers’ Confederation that his government rejected the US request on the basis that it would virtually wipe out the domestic economy.
Who are the advisers to the US government on its relations with the Caribbean? Whoever these persons are, they could not possibly be the US diplomatic staff in the region who would understand, at the very least, the difficult international trade and financial environment in which Caribbean countries are operating.
In that connection, it would be a fair expectation that they would advise the US Trade Representative’s Office that to demand immediate removal of duties on all US products would harm any Caribbean country in whose economic development and social progress they should have a vested interest. The US, as a good friend, should be helping its small neighbours to enter and function in the WTO, not making entry tough for them.
If the US government is surprised when Caribbean governments do not vote with it on resolutions in United Nations bodies and in the Organisation of American States, its officials should understand that US government’s insensitivity to the development challenges of Caribbean nations plays a large part in determining how they vote.
In this context, the US does not help itself and it should not be distressed when Caribbean countries hail China as a better friend to Caribbean development than the US. That salutation may not yet be entirely true – the US is still the largest market for Caribbean exports, the second largest home for its diaspora, and the largest source of tourists. But, the scenario is changing as China provides grants, low-cost loans for infrastructural projects, hundreds of scholarships and technical assistance in agriculture and renewable energy projects.
The US government should not take the region for granted, and assume that because of their shared hemispheric location, Caribbean nations will automatically bend to the will of the US. When Vice President Joe Biden met the leaders of the Caribbean Community (CARICOM) in May 2013, he pledged US support for Caribbean economic growth and development.
In turn, CARICOM leaders insisted that the US should back its words with actions, and, particularly, in the delivery of a definite framework for any “partnership for sustainable economic growth,” and the conduct of trade “on a level playing field”. The Bahamas experience makes it look like the US right hand knows not what the left hand is doing in relation to the Caribbean.
Of course, the existing provisions for admission to the WTO are entirely disproportionate, disadvantageous and wrong for small economies. They result in demands on applicant countries that are onerous and bear little relation to their size, significance or development status. The US is making its current demands of the Bahamas based on the current provisions that were fashioned in large part by powerful nations.
Under the system, existing WTO members review the trading practices of applicant countries, acting as judge and jury on the applicant’s trade regimes and making demands to which many of the developed countries do not adhere. Indeed, small applicant countries have been pressured to accept requirements that are not in the WTO agreements.
The provisions should have been changed long ago, but the developed nations won’t do so because those provisions suit them, and, regrettably developing countries have not used their combined weight in organisations, such as the 53-nation Commonwealth, the 79-nation Africa, Caribbean and Pacific States and the Organisation of American States, to press for urgent reform of the WTO procedures.
Even within the WTO itself, independent Caribbean countries have not used their votes and their intellect to build strong enough alliances to advocate for change. Truth be told, only a few Caribbean countries have resident representation at the WTO and even those are poorly-resourced. In this sense, Caribbean countries play into the hands of bigger countries.
The Bahamas Finance Minister has rightly warned that the US demands may arise when the Caribbean has to renegotiate the present trade agreement with the US that runs out next year. In this connection, the Caribbean should long have been assembling the arguments for those negotiations with intellectual rigour. They should also have begun to work out how far they are willing to accommodate the US and what alternatives are available to them.
At the same time, the US should be mindful that the trade of countries like the Bahamas – and indeed the Caribbean collectively – is less than 2 per cent of global trade in goods and is too small to pose any threat to US exports even with the duties that now exist. Why, therefore, make demands that would harm countries who have been traditional friends and which have no desire to be anything else?
(Sir Ronald Sanders is a Consultant, Senior Fellow at London University and former Caribbean diplomat)