Bahamas Will Not Join CSME This Year

by Jason Gorringe, Tax-News.com, London

20 June 2005

Bowing to the inevitable, the Bahamas Minister of Foreign Affairs, Fred Mitchell announced in Parliament last week that the country would not join the Caribbean Single Market and Economy (CSME) this year.

The government has always been ambivalent about economic aspects of the Caricom Treaty of Chaugaramas, and against some other aspects, including free movement of labour and the appellant function of the Caribbean Court of Justice, and has now given in to a storm of criticism from the opposition and local academics.

Mr Mitchell accused opposition figures such as ex-Finance Minister William Allen and ex-Economic Development Minister Zhivargo Laing of confusing the public, saying: “This is the political season and no matter what the truth is, there will be fudging, misinformation and mix up”.

The government has now passed the dossier over to the Bahamas Commission on Trade for re-evaluation. The major changes that would be needed to the Bahamas' external tariffs are one of the key issues holding back the government, although studies have shown that only a small fraction of external trade is with the Caricom area.

The Minister is personally in favour of participation in the CSME, it seems, but local fears whipped up over immigration, and loss of the country's currency (tied to the US dollar) have become too strong to be ignored.

During the budget debate last week, Mr Mitchell told legislators that the introduction of VAT was inevitable in the interests of fiscal stability, although he explicitly denied that it was a necessary consequence of joining the CSME. Import and export duties are forecast to pull in more than $500m in 2005/2006, and would not fall much or at all under the CSME; but they are under threat from wider trade initiatives such as the FTAA.

Recommended