What is the WTO

The World Trade Organization is body of Countries, 153 (soon to be 156- Russia, Samoa and Vanuatu will soon be members) to be exact. The Organization is located in Geneva, Switzerland. With roots dating back to 1946 with the General Agreement on Tariffs & Trade (GATT), the WTO was formed to ease and facilitate trade between members.

The original GATT had 23 members and only covered trade in goods, specifically tariffs.  Tariffs have long been seen as an obstruction to international trade (they are a tax on goods imported from a foreign country- these taxes are only due on imports and not locally produced goods). One of the founding principles of the WTO is that all countries be treated equally amongst themselves (this is the Most Favored Nation Principles [MFN]), and that foreigners and citizens be treated equally as well (National Treatment [NT]).

Over the years the scope of the WTO has expanded to include

Rules on non-tariff barriers – instead of only requested lower tariffs, countries requested that other restrictions such as quotas and unfair standards be removed)

Trade in Services – for many years the trade of services was an unrecognized contributor to economic activity because of the difficulty of ‘seeing’. Trade in services includes – legal services, telecommunications, architectural services, postal services, maritime services, financial services, transport, and many other sectors. Services are traded across borders every day. When you travel to Miami and you use your BTC phone you are engaging in the trade of telecommunications services. When a foreigner comes to the Bahamas to open a company he ‘consumes’ legal services. It wasn’t until the GATT was transformed into the WTO in 1995 were services included.

Intellectual Property (IP) – intellectual property refers to creations of the mind, and intellectual property rights are the exclusive rights given to persons over things which they have created. They usually give the creator a right over the use of his/her creation for a specific period of time- and give them the right to charge for others to benefit from their creations. IP rights can be granted on many things; medications, music, wine, designs, and even slogans

The WTO Agreements cover many other trade related topics as well.

Why isn’t The Bahamas a member of the WTO?

The WTO was formed over a period of several years beginning in 1986 and ending in 1995. During this period the Government did not think it was necessary for The Bahamas to join, but application was made for membership in 2001. For several years not much occurred, however in 2009 the process for accession (the WTO refers to the process of joining as ‘acceding’) was rejuvenated. The decision was made to revive the accession process as the necessity of becoming a member was being more evident. Countries which are part of the WTO appear more investment friendly as they must abide by certain internationally accepted principles. Investment is very important for the Bahamas; the major sectors of our economy are tourism and financial services; and both these sectors are heavily dependent on the free flow of goods and services.

What work has to be completed to be accepted as a member?

As stated, the WTO has ‘rules’ on how countries should operate. This does not mean that Governments cannot make decisions independent of the WTO, it just means that laws must be fair to both locals and foreigners. As such, the Government will have to change some laws to reflect these fair practices.

Another major component of joining is the reduction of tariffs, WTO members will encourage the reduction of tariffs so that their exports may enter the Bahamas more easily.

The Bahamas will also have to draft a ‘Services Schedule’ which will likely liberalize the investment regime.

How will joining the WTO impact Bahamians?

Bahamians stand to benefit greatly from the WTO, for example:

i.  Import duties will decrease and this means that Bahamian businesses and consumers will pay less for many items

ii. Transparency: because legislation will change to reflect international practices, certain Governmental procedures will now be explicitly stated in law; and

iii.   Bahamian exporters would have more favorable access to over 100 countries; this will make it easy for Bahamian businesses to sell their goods abroad.  

For more information contact:

Economics Unit

Ministry of Finance

Cecil Wallace-Whitfield Centre

PO Box N 3017

Nassau, The Bahamas

242-327-1530

242-327-1618