Mon | Jul 15, 2019

Tariff flaws crippling CARICOM exports, says trade expert

Published:Thursday | January 24, 2019 | 12:48 AMChristopher Serju
Karl Hyatt, chief planning analyst in the Ministry of Industry, Commerce, Agriculture and Fisheries.

Trade expert Karl Hyatt has called for meaningful amendments to the Common External Tariff (CET) now under review to address some of the entrenched flexibility that has been abused by some CARICOM states.

“CARICOM is a customs union, and the CET is really there to facilitate the development of the industry within CARICOM,” said Hyatt, chief planning analyst in the Ministry of Industry, Commerce, Agriculture and Fisheries.

“So, for example, the manufacturing sector should be afforded some level of protection based on the CET because that’s what it is there for, but it’s not operating in that way. It doesn’t facilitate development, so it needs to be addressed to really work as it was intended,” he charged during yesterday’s agri-business forum hosted by the Inter-American Institute for Cooperation on Agriculture (IICA) and the Jamaica Manufacturers and Exporters Association at its head office in downtown Kingston.

“One of the major impediments to intraregional trade is, in fact, the Common External Tariff ... . The CET should be there to protect regional manufacturers and producers, but it doesn’t do that,” the senior technocrat told The Gleaner afterwards.

Under the revised CET of the Caribbean Community, the rates of duty shown in the schedule of rates will be applicable to imports from third countries into the member states of the Caribbean Community as well as to goods traded among the member states that do not qualify for Community treatment. In addition, CARICOM states designated as less-developed countries may apply the facility of conditional duty exemption by the inclusion in their national customs tariffs of a ‘zero’ rate or a rate lower than that shown in the schedule.

The senior technocrat explained how countries such as Jamaica, which are self-sufficient in poultry and well ahead of its neighbours in production efficiency, sometimes still lose out to globally competitive producers like Brazil based on economies of scale.

Uncompetitive exports

This is because with the tariff range of 0-40 per cent for agricultural products, Jamaica could find it uncompetitive to export to regional neighbours with less-developed country status that opt to allow duty-free entry to poultry from outside the region, effectively rendering the price of the CARICOM-produced meat exorbitant.

“So until the issue of the Common External Tariff is addressed and addressed seriously, then we’ll continue to have these problems of trying to get products that we can produce fairly efficiently into our partner countries,” Hyatt added.

The forum, themed ‘Business and Trading Opportunities for the Regional Agri-Food Private Sector’, is the latest in a seminar series by IICA, which has the mandate to promote and support its 34 member states in achieving sustainable agricultural development and rural well-being.

For the period January to October 2018, Jamaica’s trade deficit with CARICOM increased to US$351.2 million, up from US$276.3 million, for the corresponding period in 2017, according to the Statistical Institute of Jamaica. Last year, total imports were valued at US$414.1 million, a 20.7 per cent increase over 2017. On the flip side, total exports to CARICOM fell by 5.9 per cent to US$62.9 million, compared to the 2017 figure of US$66.8 million.

christopher.serju@gleanerjm.com