The Truth Hurts

It has been over eight and one half years since The Bahamas and 33 other countries agreed to negotiate a Free Trade Area of the Americas (FTAA), to become effective in 2005, at the Summit of the Americas held in Miami in December of 1994. Although very little was said publicly about the impact of trade liberalization to The Bahamas in the mid and late 90's, quite a lot has been said during the last couple of years.

The Bahamas is faced with trade liberalization pressures from the region, the hemisphere, and globally; the CARICOM Single Market and Economy (CSME), the FTAA, and the World Trade Organization (WTO), respectively. These trade liberalization groups have generated a lot of fear in many Bahamians, some real, but most perceived. The biggest perceived fear is the natural human response of fearing the unknown. What will be our rights and obligations under each of these trade liberalization groups? What will be the effect on our society and economy? There are still no clear answers to these questions.

In trying to determine the pros and cons of trade liberalization, The Bahamas government commissioned a report by Professor Bishnodat Persaud and Dr. Michael Davenport entitled, "The Implications for The Bahamas of Participation in the CARICOM Single Market and Economy" produced in June, 2000. The Bahamas Chamber of Commerce commissioned a report by Trevor Hamilton and Associates entitled, "A Strategic Framework for Optimizing Benefits from Trade Liberalization in The Bahamas" produced in July, 2002. Both of these reports provide a wealth of information.

Some see the Bahamas' relationship with trade liberalization as being somewhat benign. For example a government publication in July of 2000 stated that direct benefits from FTAA are not readily apparent, however The Bahamas would benefit indirectly in that the world and regional economies would grow which would create a higher demand for tourism, financial services, and other services provided by The Bahamas. Some individuals foresee and will undoubtedly experience benefits, and therefore welcome trade liberalization with open arms. On the other hand some individuals foresee and will surely encounter economic ruin in the careers of their choice.

Everyone agrees that trade liberalization will affect The Bahamas, whether we become part of all the trade liberalization groups; just one or two of them; or none at all. In this new era of global competition and strategic alliances we recognize the need to become more efficient and productive as a nation - just to maintain our standard of living.

Many Bahamians point to Barbados as a shining example of an economy based on productivity initiatives and incentives, citing the Barbados National Productivity Council and their Protocols. They would like to see The Bahamas follow the example of Barbados. However the progress in achieving this goal has been slow and tedious. Why? For the most part Bahamians are too comfortable with our way of life to be willing to undergo radical change.

The Barbados productivity phenomenon was not the result of reasoned decision and sacrifices to make a good life better. The economy of Barbados was in ruins and the International Monetary Fund (IMF) was poised to step in and place Barbados in economic servitude. Those desperate times required desperate measures. Barbadians sacrificed by imposing national wage and price freezes while they hammered out a productivity protocol that radically changed their economic foundation, thereby avoiding the anguish of economic servitude.

There is an urban legend that if you drop a live frog into a pot of boiling water he will, by reflex action, jump right out; but if you drop him into water of a comfortable temperature and turn up the heat, he will sit there until he boils to death, becoming frog soup. This analogy is used to show the consequences of failing to recognize and react to slow, incremental changes in an environment.

Bahamians are in danger of becoming frog soup. The socio-economic environment around us is slowly deteriorating, and we are failing to recognize that fact, and react to it.

A Report on Trade Liberalization by The Tourism Task Force produced in April, 2003, clearly shows the deteriorating state of our socio-economic environment. Tourism is our number one industry, our golden goose; however The Bahamas' share of tourists visiting the Caribbean has dropped from 15.4% in 1993 to 10.7% in 1999. "The foreign threat to Bahamian tourism is here now..."

The report candidly addresses our country's basic problems, i.e. low productivity, high costs, inefficiencies, ineffective education, crime, and a disregard of the Rule of Law.

The participating organizations of the Tourism Task Force on Trade Liberalization are the Bahamas Hotel Association, the Bahamas Hotel Catering & Allied Workers Union, the Bahamas Hotel Employers Association, the Bahamas Tour Operators Association, and the Nassau Tourism & Development Board. The Report on Trade Liberalization was chiefly authored by Economist Ralph J. Massey who had a 37 year career in international business and banking, and has a 7 year association with the Nassau Institute.

The entire Report on Trade Liberalization (in PDF format) is available on the Nassau Institute website as well as the Bahamas Employers Confederation website. All Bahamians are urged to read this report.

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