Embracing entrepôt trade as our third economic pillar

Dear Editor,

Minister of Financial Services, Trade and Industry and Immigration Elsworth Johnson recently stated the government’s intention to develop The Bahamas into an entrepôt.

Entrepots generally operate as jurisdictions that facilitate commerce, credit, and capital flows while not strictly serving production and trade ends (Archer 2016).

It is a strategy embraced by select jurisdictions across time and space, from Biblical-era Jericho to contemporary Singapore.

My doctoral research focuses on entrepôts, and from it, I offer five recommendations:

1) If embraced as a national economic development strategy, entrepôt may also offer Bahamians a much-needed national mission statement: To transform The Bahamas into the world’s top entrepôt, capturing n% of global trade, contributing to x% of GDP, with y% of the population directly or indirectly employed in the industry, within the next z years.

2) The Bahamas’ international financial services sector branded its extensive industry specialization as ‘wealth management.’

I recommend The Bahamas rebrand its national ‘service economy specializing in tourism and financial services’ lingo with ‘entrepôt economy.’

Be warned, however, that some scholars claim entrepôt countries utilize their low or no-tax structures to facilitate tariff evasion (Fisman, Moustakerski and Wei, 2005).

To this end, I clarify The Bahamas’ tax-structure as a comparative advantage, a legitimate and authoritative ‘level playing field’ disposition in the global capitalist market.

3) Recall first that Canadian bank expansion into the Caribbean followed the shipping/trade routes of its maritime provinces (RBC, 1919); second, that many foreigners/tourists initially arrived here as traveling merchants; and third, that our local merchant elite became such through warehousing and retail as opposed to plantation musings.

This historical triune provides evidence that The Bahamas’ service offerings were always inherently subject to its wider entrepôt disposition. A re-branding of the economy may therefore reveal industries’ interconnectedness and coordination, and trigger new opportunities for innovation, labor organization and economic growth.

4) When WTO ascension was a hot topic, I blogged that the most mutually advantageous route would be to demand special admission status as a global entrepôt. Perhaps such negotiations would be new for the WTO, but The Bahamas is notoriously right-standing for demanding recognition as a special case—a hinterland economy—in the larger world system.

5) Clarity on entrepôt culture is essential.

Ringfencing, for example, is a way of life for many entrepôts – taxing goods entering the country for retail but profiting from fees on goods entering transshipment or re-export. (For example, see Marzagalli 2005).

Another example is found in an 1869 British Parliamentary report, where House members debated the pros and cons of transforming London into an entrepôt (Curson, 1869).

The confused state of members on the entrepôt profitability mechanism highlights the importance of distinguishing entrepôt-trade from mere warehousing and transshipment.

Conclusively, even if only motivated by the extensive employment prospects, pursuing entrepot trade as a national development strategy causes The Bahamas to add value to the global economy, and positions it as a bellwether of post-COVID-19 globalization.

Now is the right time.

— Lesvie Archer

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source https://thenassauguardian.com/2020/06/19/embracing-entrepot-trade-as-our-third-economic-pillar/