Bahamians must decide where they want to go before signing on to what could become a journey to a destination they may not like.
In some ways the proponents of FTAA make an alluring case but a closer look reveals that, particularly for the smaller nations of the Caribbean, there are many pitfalls along the way – and a great danger of them becoming marginalised and lost in the shuffle. As the WTO Cancun debacle recently showed, Free Trade is not always Fair Trade, and trade agreements tend to benefit the larger players while offering little to the smaller players and even damaging their economies.
Luckily for the Bahamas there is an attractive future outside the CSME and FTAA and it's one that springs from our past. It can be summed up in three words: "Go it alone!"
This policy is one that has built Bahamian prosperity over the past two centuries and – despite all the recent panic calls for embracing globalisation and surrendering our sovereignty to foreign bodies – it could continue to build prosperity in the future and keep us where we are at the peak of success – the country with, at $15,000 the highest per capita GDP in the Caribbean area.
Let's take a look at a country in Europe that has, in many respects, also followed a "Go it alone" policy. Luxembourg, a small country of less than half a million people, last year knotched up a per capita GDP of $42.000 – the highest of any nation in Europe. This tiny Duchy is not of the big five European industrial nations but it stands out from other European countries because it made a conscious decision after World War II to be "different", a standout from the much larger powers surrounding it. Luxembourg immediately embarked on a pro-active career as a tax-haven and remains, per capita of population, Europe's most successful tax-haven to this day.
Luxembourg, again pursuing a different track from the herd, in 1948 joined two other small countries, Belgium and the Netherlands, in a customs union called Benelux. This was so successful that it became the forerunner of the European Common Market – the famous "Six" which soon included France, West Germany, and Italy. Benelux became the central core of the budding European Union.
This expansion of Benelux, at first sight, might seem to presage the end of tiny Luxembourg's different "go it alone" track, but, far from being overwhelmed by the giants of the Six, Luxembourg looked after itself. At every stage it retained a veto power for itself if measures proposed by other members did not suit its interests.
This veto power, used many times over the years, recently enabled it to upset the OECD's recent worldwide strictures on tax havens. Luxembourg does not have to disclose information that would compromise its investors and its status as a tax-haven. In this it was joined by several other European "low-tax" countries. The OECD's level playing field therefore has not been achieved which, since they insisted on a level playing field, gets The Bahamas, and many other tax havens, off the OECD hook. Withdrawal of compliance letters to the OECD's strictures has already begun.
The other key-player in the OECD drama was Switzerland which, with a per capita GDP of $34,500, is the second most prosperous country in Europe. Switzerland has, rather more than Luxembourg, been the European country that is most associated with tax-havenry, bank secrecy, numbered accounts, and a tradition of never divulging client information – though this policy, to help crack down on criminal activities, was eased in 1990.
This small country of only $7.3 million in the heart of Europe is another standout, noted for "doing its own thing" as its record shows. For instance, though providing at Geneva the HQ of the UN in Europe, Switzerland only became a full member of the United Nations in the year 2000. It has, however, steadfastly refused to join the European Union, but is a member of the OECD whose strictures on financial services, like Luxembourg, it recently turned down.
Switzerland has a substantial industrial sector and exports much high-value precision machinery, including, of course, watches. But, like The Bahamas, much of Switzerland's wealth has been built on tourism and financial Services. And, again like The Bahamas, its agriculture is minimal – as 60% of its land area is covered by the Alps, and only 10%, mainly in the Jura area which borders France, is arable.
Like The Bahamas on this side of the Atlantic, geographically Switzerland is a "standout" – unlike any other country in Europe. Its central position, plus spectacular scenery in its tangle of mountains and lakes, makes it a natural tourism magnet – with great skiing in winter, and mountain climbing, hiking and boating in the summer.
Describing The Bahamas as "The Switzerland of the Western World" our Ministry of Tourism used to promote our diving and snorkeling by saying that in The Bahamas "our Alps are underwater". These, with our endless beaches and crystal-clear sea, make us another magnet for tourists – 4.5 million of whom came here last year. All of which has brought us, like Luxembourg and Switzerland in Europe, to the peak of prosperity. At $15,000 our per capita GDP is the highest in the Caribbean area.
There are other similarities between Switzerland and The Bahamas. 80% of our GDP comes from tourism and financial services, and only 6% from exports. While we have 700 islands, with some 30 islands inhabited, the Swiss are divided into 34 cantons which suit their mountainous terrain – a canton, you might say, for every valley. Like us they are multi-racial – divided into French, Italian and German cantons, all of whom get on well together. Switzerland is neutral, never goes to war, and has an army only to defend itself from attack.
The Swiss form of Government is the ultimate in democracy. The people of the individual cantons must vote important national issues under the Swiss constitution's built-in referendum. If the majority of cantons vote against it then the issue is dead.
In this the Swiss are ahead of us as a democracy – showing us the way when recently they voted "No!" to joining the European Union. Likewise we should hold a referendum and vote "No!" to joining CSME, FTAA and any other organisation of doubtful utility to our different country.
For, like Switzerland in Europe, we are unique in our area. We are a standout. Even when we were ruled by Britain, we had representative government, dating back to Woodes Rogers, which gave us the means of shaping our own economy – as a standout in tourism and, with our time-honoured absence of income tax, a leading standout in financial services.
Like Switzerland and its European neighbours, we do most of our business with our nearest neighbour the USA, whence come the majority of our tourists, the bulk of our imports, and much of our financial services business. We are, irrevocably and inevitably, in a trading partnership with our great neighbour. The USA, only a few minutes flight away to the west is, let's face it, the source of our bread, butter, jam, cake and champagne! So, let's not be seduced by the blandishments of our Caribbean rivals, let's stay away from CSME which cannot benefit, and might even damage us, if it adopts an anti-American stance.
As for FTAA, though the US, our main trading partner, is a key player, we need not join it either. Staying out will not affect our import trade from the US since no one else can fulfil our needs. Our high tariffs will not affect the amount we import and, as we have to continue to buy from our US suppliers, they will be more than happy to supply us as they do now.
So our best bet for the future is to remain the standout we have always been. Let other countries be mesmerised by the uncertain benefits and "pie in the sky" of CSME and FTAA. Let them give up their national sovereignty and be ruled by faceless "tradeocrats" who, once FTAA kicks in (if it ever does so) will start overwhelming them with a deluge of directives on every aspect of their economies – directives that will have the force of law without ever having been debated or vetted by their elected legislatures. For nations that join FTAA democracy will be damaged beyond repair.
So, let us head for a loftier goal. Let us be determined to safeguard our two centuries old democracy, give the boot to the tradeocrats and maintain our time-honoured position as an outstanding standout – the Switzerland of the Western World!
The views expressed are those of the author, and not necessarily those of the Nassau Institute (which has no corporate view), or its Advisers or Directors.
Born in Britain, Paul Bower served in the Royal Navy during World War II, afterwards receiving an Honours Degree in Politics, Philosophy from Oxford University. Coming to The Bahamas in 1958 he became Editor of The Nassau Guardian until 1962 when he formed Star Publishers Ltd to publish a wide range of tourist-oriented works. Now retired he still contributes occasional articles on economic subjects to the daily press.