I am honoured to be here this evening to further the national discussion on the Caribbean Single Market and Economy.  It is one of a number of agreements that exist in the world to promote trade liberalization.  The liberalization of trade is ultimately to lead to cheaper prices for consumers, more choices in the market, and the freedom of individual citizens to act in their own best interests.

The Bahamas as it stands today is a country that believes in protectionism.  Its economy is structured around reserving areas of commerce exclusively for Bahamians, and this goes not just to the issue of the management of the enterprise or entity but also more fundamentally to the issue of ownership and financing.  There are those who argue that this must continue, because it is the only way to be able to preserve the ability of Bahamians to advance in their own economy.

What the present policy does not allow is for a Bahamian entrepreneur to get capital from a foreign person to start up a business in The Bahamas, offer that person or entity equity in the business in exchange for the capital, or even the opportunity to be involved in its management, without the special permission of the agencies of the Government which is relatively rarely given.

One result of that policy is that the economic benefits of the economy have continued to be reinforced in the hands of the few established businesses, and the barriers to entry for the new entrepreneur have become higher and higher.  Thus the complaint of the small business sector today that while there is a surplus of money in the economy they cannot access the capital.  The argument then is there is a need to liberalize the area of access to capital.

Some argue that it can simply be rectified by the Government establishing venture capital funds and administering such funds themselves.  While undoubtedly this may be part of the solution, it would certainly more efficient and less parochial and corruptible for individuals to be able to find and access their own capital at the cheapest price they can find and for the Government to remove any barriers for doing so.  One of the regimes for CSME is the free movement of capital.

I am not arguing that this is a magic bullet which will solve our capital access issues but it is a start in the right direction toward further liberalizing the environment for trade and business in The Bahamas.

Caribbean Single Market and Economy is a difficult sell to Bahamians.  I have been trying through this exercise to allow people to look at this rationally and not emotionally.  I have tried to explain the nature of our country.  We are a country of immigrants.  The very creation of the Commonwealth of The Bahamas is that of the sons and daughters of immigrants to The Bahamas in the 20th century.

In looking at the CSME regime, I have also tried to explain what it is.  If we begin at first principles, The Bahamas is a single market and economy.  In other words, we have one economic and fiscal policy for the whole country, and there are no taxes to move goods and services from one part of the country to another.  The theory is to make this available Caribbean wide.

The implications for the revenue are not significant, since the current trade is less than one per cent of the total volume of trade.

The CSME is the economic side to Caricom which is a geopolitical arrangement of which the Government is a part, where we coordinate foreign policy, education, health, transport, fisheries and other aspects of international public policy.  We have been members since 1983 and we have always deferred from joining the economic side of things.  The question is whether this is in our best interests.

I think so but I am not nor is the Government inclined to force anything down anyone’s throat.  The ideas are clear and concise and they come down to this.  We cannot let the fear of change, nor an irrational fear of West Indians, cloud us to the opportunity for wealth enhancement.  The fact that for our own nascent production sector, it opens up the entire Caribbean region to The Bahamas, instead of thinking of it as one-way assault on The Bahamas, which it will not be.

I think I would like to allow the maximum time for dialogue on these matters so I will not say much more except to respond to some comments made in The Tribune of Tuesday 5th April and attributed to a former Minister of the Government Zhivargo Laing.  I was quite frankly embarrassed for him so I am hoping that he was misquoted.

But it is reported that he said that I was wrong to remind the now Opposition spokesman on Foreign Affairs Brent Syomonette that it was the FNM that signed us on to the Free Trade Agreement of the Americas.  Mr. Laing’s argument is that there was no Free Trade Agreement to sign and that what the FNM signed us on to was to the process of creating a Free trade Area in the Americas.  I find this kind of idle sophistry, and hair splitting disappointing.  Since the bottom line is that the former Prime Minister who led Mr. Laing signed The Bahamas to the process, and until they lost office it was a process to which they agreed and would have signed had they been the Government.

Secondly, he claimed that this was the second time that I had stated something which was false.  He claims that it was the previous PLP administration that agreed to us joining the World Trade Organization.  Again, I hope that what was attributed to him in the newspaper is wrong because I have cause again to be embarrassed for him.  The World Trade Organization (WTO) came into being as far as I am aware in 1994.  Both the PLP and the FNM, as far the country knows did not agree to become a part of the process of becoming part of WTO.  In any event, it was the FNM that made the decision to seek observer status for The Bahamas and certainly it was obtained during their time in office.  By the time the present administration came to office, the observer status had been granted to the country, and the FNM had hired consultants to prepare The Bahamas for formal application, the final stages of which we are now entering.

Finally, Mr. Laing expressed curiosity about why this Minister was speaking on the matter and not the Minister of Trade.  Curiosity will kill the cat.  This is of course just a bit of idle political mischief on his part, seeking to sow the seeds of discord when there are none.  Mr. Laing knows full well that the Ministry of Foreign Affairs deals with international obligations, and with relations with Caricom.  CSME is clearly a Caricom issue and so there is nothing unusual or peculiar about this.  The Ministry of Foreign Affairs is acting in accordance with the instructions of the Cabinet.

And having made these decisions for our country during their time, the real question is whether or not their party is going to join issue with us or are they going to find common cause.  I would invite them to find common cause and seek to get the best deal for The Bahamas.  The experts have told us that these regional arrangements will help us with our WTO application.

In the mean time, the White Paper on CSME is in its preliminary draft for submission to the Cabinet.  Our view is that we ought to be excepted from the provisions on the free movement of people, the common currency, the Caribbean Court of Justice on its appellate side, the provisions of the common external tariff, until arrangements are made for the level at which the tariff can be set so as to avoid adverse revenue impacts.

Remember that the CSME regime and all the other trade regimes will require migrating from customs duties to another form of taxation that will be more equitable and fair.  Since income tax is off the table, Value Added Tax is being studied for implementation which will be able to tax services and provide more revenue for the Government.  But there has to be a transition period, thus the reason for the reservation on the Common External Tariff.

All of this is quite a mouthful and it will require dialogue to further express all of the nuances.

Thank you.