A CLASSIC case of the merits of protecting an important local industry versus the virtues of unrestricted trade, has arisen in the past two weeks, with the cement case.
At first, the Jamaican government offered the sole local producer, Caribbean Cement Company, tariff protection, but then withdraw the offer as criticisms mounted. By seeking to impose a hike in tariff rate on cement from fifteen per cent, up to fifty per cent, this would no doubt have effectively removed from the market imports distributed by Mainland International and Arc Limited, restoring Caribbean Cement Company's monopoly of a few years ago. To confuse the picture, there is also the question of whether the imported cement is being 'dumped' (i.e., sold at uncompetitive prices in the Jamaican market, below true production costs). The quality level of such imports is another consideration.
VARIOUS ARGUMENTS
What is playing out is the various arguments about protectionism versus consumer interests, in the short and long-term. Carib Cement Company may be a de facto majority-owned Trinidadian Company but its Jamaican antecedents and its previous contributions make it as Jamaican as any other local company.
The resort by the local cement company to get redress, from unfair dumped cement, through the Anti-Dumping and Subsidies Commission, by bringing individual cases against specific country imports (first Thailand, and then Indonesia), has not been working as the slow and cumbersome process has simply meant that imports are then switched from country to country as soon as a case is won against the specific country. Cement has therefore been coming from a myriad of countries, ranging from the Asian ones mentioned to Russia, Egypt and of late, one in Latin America.
INTEREST GROUPS
The various interest groups will no doubt be in support or against this tariff hike according to how it will impact on their bottom line. On a wider basis, however, we have to question whether this protection is justified, but then, is there a level playing field? Is the cement company using the Red Stripe precedent (tax relief given to this company to make a considerable level of investment) to justify its new offensive (U.S.$100 million will be committed to re-tool to expand production and, cement prices will be kept stable over the next few years, barring any Jamaican dollar depreciation) if it gets protected?
Is it unfair trade or simple an attempt to restore a lost monopoly? Will the local cement distributors be willing to up the stake and guarantee cheaper cement prices over the next two years, knowing they largely cannot determine this? It will be an interesting resolution, with keen observers being the local farming community and existing manufacturers.
