by Tradewinds
It is often difficult to understand the foolish pronouncements and cockamamie statements made by high level representatives of the WTO when they visit The Bahamas.. At times one wonders what they ever learned about about the Theory of Comparative Advantage and international trade..
All their chatter is designed to create what they call a "level playing field" between so-called trading partners.. What they are reluctant to admit is that a level playing field ignores a country's comparative advantage that permits a country to prosper even more by looking outward rather than inward..
Comparative advantage fosters specialization and when combined with free trade creates wealth and real growth.. In passing I don't think the Cubans or the Mexicans think in terms of a level playing fields when it comes to tourism..
Out of the beaks of these bird...... we are told that WTO membership will create greater investment..
This is absolute nonsense and a demonstration of not understanding how direct investment is created.. In our Bahamas, Custom Duties (Excise Taxes) do not restrict trade as imports are a function of demand fulfillment.. Our principle export product, Tourism, is a function of our unique comparative advantage, our geographic proximity to the USA and our beauty of sun, sea and sandy beaches..
The only restraints to trade is the government imposed tax structure which has significantly reduced our competitive advantage as this tax burden is ever increasing..
What the WTO seems to be slow to understand is that absolute amount of Excess Tax Burden restrains demand and reduces trade.. Whether its is called Customs Duty, Stamp Duty or the dreaded VAT, it is an excess burden impacting the Bahamian economy across the board..
Perhaps our government does not understand this Supply-Side principle as well..
