Last month, the Caribbean Court of Justice (CCJ) ruled in favor of Barbados-based Rock Hard Cement Ltd. in a longstanding tariff war with Trinidad Cement Ltd. (TCL) and its Barbados subsidiary Arawak Cement Co. Ltd.
“Today’s judgment settled the dispute as to whether Rock Hard Cement ought to be classified as ‘Building cement (grey)’ and be charged a CARICOM tax of 15% when imported into the region, or as ‘Other hydraulic cement’ in which case a levy of 0-5% would be payable,” said the CCJ in a statement on the day of the final ruling.
Earlier this year, the CARICOM Council for Trade and Economic Development (COTED) decided that Rock Hard Cement was to be classified as “Other hydraulic cement” in line with advice received from the World Customs Organization’s (WCO) Harmonized System Committee. However, TCL and Arawak Cement reportedly argued that COTED’s decision-making process was procedurally flawed and that COTED’s reliance on the WCO’s advice went against the economic objectives of the CARICOM tax, according to Barbados Today.
While the CCJ upheld the COTED classification decision, it has advised that recent developments in the cement industry make it appropriate for a study to be done by COTED to assess whether the tariff rate for imported “Other hydraulic cement” ought to be increased to provide additional protection for regional cement manufacturers.
However, Rock Hard Cement Executive Chairman Mark Maloney believes the study is another attempt by Cemex, parent company of TCL, to increase the tariff.
“They have tried everything possible to stop us from competing with them; and this [court] action was brought by them. So, for us to win in a case that was brought against us, is testimony to the fact that we have done all of the right things. What concerns us now, is their lobbying governments through COTED to do a study on the impact of lower duties on cement imported to try and have the duties increased to protect them,” Maloney told Barbados Today.
Although the CCJ itself suggested the study be done by COTED, Maloney has expressed some concerns about how the study was likely to be conducted.
“We hope that such studies will include all stakeholders and that all consultations will take place as mandated by the court and that the cost impact on consumers, not just on the protection of manufacturers, be taken into consideration,” said Maloney.
He contended that the Revised Treaty of Chaguaramas and the CARICOM Single Market and Economy (CSME) are designed to advance and protect the interests of all Caribbean people and not just one group over the other. “So just as producers need protection, consumers need protection from excessive costs and unnecessary prohibitive and anti-competitive pricing. I think these and more, are the things any study that is done should consider,” Maloney argued.
Meanwhile, TCL and Arawak also have concerns of their own. In a newspaper advertisement, the group stated its disagreement with the CCJ ruling and warned that the judgment could result in job losses and adversely affect the way foreign investors would take decisions about investing in the CARICOM market.
“It is very challenging for local industries to compete and survive against duty-free products coming from larger and low-cost countries; it is a question of scale and competitiveness, and about the kind of country we want for our future generations,” the advertisement said. “Essentially, the CCJ’s decision has the potential of inadvertently preserving extra-CARICOM industry and labor, while putting our investments in manufacturing and workforce at considerable risk.”