Guyana sidesteps Treaty of Chaguaramas

I'm a believer that the presence of competition forces existing enterprises to operate more efficiently or get out of business. Now, I also believe that not having a particular industry, depending on what it is, can be bad for national or regional security. I do not know how best to determine which industries to protect from competition or not. I'm just glad that I don't have to decide at the moment. My main observation here is that Guyana surely can't expect Jamaica to adhere to the agreement in terms of rice, especially if it is unwilling to do it in terms of cement.

Guyana hardens on TCL cement

http://www.newsday.co.tt/businessday/0,68469.html

Thursday, November 22 2007

Guyana’s waiver of the 15 percent Common External Tariff [CET] on foreign cement imports is an indirect subsidy of foreign produced cement and is in conflict with the spirit of the Revised Treaty of Chaguaramas, which calls on Caricom countries to protect each other’s fledgling industries through the imposition of common external tariff (CET).

The CET waiver on cement by Guyana, a fellow Caricom State, represents the first major assault on the TCL Group of Companies. Guyana, by waiving the 15 percent Common External Tariff on foreign cement imports is tacitly subsidising imports to the tune of the 15 percent duty it would have received under CET, at the expense of TCL.

The controversial move by the People’s Progressive Party Government of Guyana appears on the face of it to be in retaliation for the equally controversial decision by Jamaica to import rice from the US — although the commodity is available from Guyana, the region’s principal rice producer.

This means that not only will Guyana’s action hurt the regional company, but that Jamaica, Trinidad and Tobago and Barbados and Guyana, itself, will experience a decline in profits and a loss of needed foreign exchange earnings.

TCL group executives, including TCL Guyana Plant Manager, Mark Bender, have met with Guyana’s Minister of Tourism, Industry and Commerce, Manniram Prashad, and presented a strong case for the reimplementation of the CET.

TCL has pleaded right of access to Guyana’s cement market “under CET as is the case for products produced in Guyana exported to other CARICOM countries”.

Unless Guyana reconsiders and Jamaica seeks to settle the issue of its rice imports from the US then the CET waiver may lead first to a dismantling of the agreement under which non-cement producing Caricom countries pledged not to allow access of foreign cement imports below production costs.

Additionally, it could lead to a unilateral dismantling of the 15 percent Common External Tariff and a loss of needed protection to several of the region’s industries as well as agricultural products.

This will clear the way for unlimited entry of foreign products untroubled by the 15 percent tariff wall, which the World Trade Organisation made available to the region after much negotiating.

Meanwhile, any pronounced contraction of the TCL Group of Companies’ cement market in the Caribbean may lead to a renewed bid by the Mexican cement giant, Cemex, TCL’s “strategic partner,” which sought to acquire a majority shareholding in Trinidad Cement Limited in the wake of the dumping of Thai cement.

If this cement waiver is not worked out, the battle by TCL to reassert its position in the Caricom cement market, is going to become increasingly difficult.