Minister of Foreign Affairs Fred Mitchell took The Bahamas’ fight for a level playing field in the financial services sector to the Commonwealth Heads of Government Meeting yesterday, in another push to stand up to an “attack on the country’s second economic pillar.
Mr. Mitchell made the intervention at a session at CHOGM, being held in Malta this week, on behalf of small economies like The Bahamas, which must meet certain criteria handed down by the Financial Action Task Force. The FATF “blacklisted” The Bahamas and 14 other “non-cooperative” offshore financial centres in 2000. The country was de-listed in 2001 and monitoring was discontinued last month.
The Commonwealth has commissioned a report which notes that small states use the financial services sector as a means of diversifying its economies, this is especially the case when it comes to countries like The Bahamas, Antigua and Barbados.
It’s a point that Mr. Mitchell tried to bring across strongly at yesterday’s meeting.
“What happened through the OECD and FATF is that un-funded mandates were imposed upon our small economies, the latest of which is this so called Harmful Tax Initiative. The point I made is that clearly there is a philosophical difference between our countries and the European countries on the nature of tax,” Mr Mitchell told The Bahama Journal yesterday in an interview from Malta.
“For us the lack of tax is an issue of a competitive advantage for our economies, but they see it as a harmful initiative. But within the framework of their own economic arguments it’s clear that when you are competing against somebody you’re supposed to use whatever advantages you have, and if you can use zero tax or close to zero tax, then that’s an advantage over somebody else.”
Mr Mitchell added: “We have this philosophical fight and we want to win them over to our side, in fact, when an FATF meeting took place and they tried to apply the criteria to themselves, it turned out that none of the countries who are a part of that whole body could meet the criteria they set. So they are imposing something on countries like the Bahamas that they cannot even meet, and I gather it was a very embarrassing moment, and now they decided not to apply the criteria to themselves, yet they are applying the criteria to the Bahamas.”
It is clear that there must be a level playing field and it is clear that the FATF is not the forum for that to happen, he said.
The Bahamas has been using the United Nations, the Commonwealth and every possible forum that it can to make the point that there needs to be a global response to the issue, and not just this limited response to an “exclusive club.”
The FATF comprises only 33 member states.
“The value of a forum such as CHOGM, is not so much that it can take executive action to solve these problems, but we need to use every opportunity that we have where countries are, to bring people around to our philosophical view,” said Mr Mitchell.
“We are certainly at one with the US on this, they disagree with the Europeans on the question of the harmful tax initiative. They see the philosophical point of a country being able to use whatever economical advantage that it has.”
Mr. Mitchell accused the Europeans of taking steps to “undercut” economic advantages of smaller states.
“The Europeans are taking steps to undercut the preferential tarrifs on agricultural commodities in the Caribbean, and then the Caribbean turns to financial services, and now they are trying to attack financial services,” he said.
“The Bahamas has to stand up because the next step that they are coming for is our shipping registry. At every step of the way The Bahamas has to defend its interest and its concern that we have a strong financial services sector.”
The Commonwealth Heads of Government Meeting officially opens today. Prime Minister Perry Christie arrived in Malta yesterday following a meeting in London with British Prime Minister Tony Blair and Caribbean heads of states.
By: Erica Wells, The Bahama Journal
