Thursday, March 2, 2017

The Hawksbill Creek Agreement (HCA) is the finest Development Agreement in the world


Gilbert Morris
The Hawksbill Creek Agreement (HCA) is the finest Development Agreement in the world. I know the force of this statement, since I grew up under this agreement; wrote nearly all my undergraduate law papers on this agreement and wrote my first economics paper - again - on the HCA.

I understand that the government wants to facilitate economic growth in Freeport, and I believe this is their true noble desire.

However, the GB (Port Area) Incentive Act is absolutely the wrong way to go:


A. It is wrong in Constitutional terms as the devolution of Sovereign concessions under the Hawksbill Creek Agreement was not a benefit to or intended for the Port Authority. Rather, it was to enable and empower the Port to deliver benefits to the Licensees.

Everything about this Act offends that.

Moreover, given the constitutional prohibition on discrimination, (on the one hand), no minister of governments of the Bahamas can be empowered, constitutionally, to give a tax benefit to one citizen, which is denied to any other under the same or similar circumstances. On the other hand, for any minister of government's of the Bahamas to make a distinction between Licensee applicants for the tax benefits, would require so much bureaucratic engagement, not to mention time, as to destroy any possible or conceivable actual incentive.

B. It is inconsistent with both the letter and spirit of the agreement itself, because - again - all benefits -
in the central thesis and core purpose of the Agreement - were to accrue to the Licensees.

This is crucial because under our Constitution, no government of the Bahamas is empowered to alienate or pass on the assets of the Bahamian people to others without "value for money".

The cardinal - value for money - prospect and concept in the HCA remains: TO BENEFIT THE LICENSEES!

Therefore ANY action that places the Licensees at ANY disadvantage offends the Agreement and is unconstitutional.

C. The Incentive Act is anti-Incentive. Everywhere in the world where economies are growing, governments are eliminating red-tape.

In this case, the very people who are disadvantaged by the economic doldrums in Freeport, are hit again by a regressive, over-burdening anti-competitive approach - even if well-meaning - infused with many confusions, thus limiting options for operations and investments for existing Licensee businesses.

It is critical to note that entities like the Grand Bahama Port Authority and it's companies under the Hawksbill Creek Agreement carry no market-to-market value as an entity.

Given the loss of the deep seabed advantages or the likely more aggressive approaches to trade by the Trump administration, now more than ever, the Port's net present value or "intrinsic value" is ONLY as is defined in the Hawksbill Creek Agreement. There is no other means to give Freeport a value beyond a low grade benchmark pricing of its component parts.

The effect of this initiative therefore also makes investing in the Port area LESS ATTRACTIVE and worse reduces the value of the Port's assets at a time when other jurisdictions are investing in port facilities.

I appeal to the government to withdrawal this initiative absolutely and completely.