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RIGHT OF CENTRE: Hard to sell import tax

Bobbi McKay

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As part of its treaty of obligations under CARICOM, Barbados allows duty free/quota free entry of goods originating from Trinidad and Tobago into its market.
Likewise, Trinidad and Tobago is obligated to extend the same treatment to Barbadian goods.
The challenge we face is that the playing field is not level.
Largely due to lower labour costs and cheaper access to energy, the cost of manufacturing in Trinidad and Tobago is believed to be considerably lower than in Barbados and several other CARICOM countries.
Additionally, many manufacturers in Trinidad and Tobago are believed to benefit from greater economy of scale than their regional competitors.  
Naturally, we will support any policy measure implemented in Barbados that will place our local manufacturers on a better footing to compete with others from abroad.
If Government were to impose a tax on imports from Trinidad and Tobago, this is a move we might support once it proves advantageous to the local manufacturing sector.
However, we recognize that we operate within a rules-based environment in CARICOM and at the multilateral level through the World Trade Organization (WTO) and therefore, any action taken by Barbados would have to be consistent with our obligations under CARICOM or the WTO.
To undertake such a measure, we would need to justify – to our colleagues in CARICOM in particular – that Trinidad and Tobago is providing benefits to its manufacturing sector in a manner that cause injury or adverse effects to a competing industry in Barbados.
Based on the above, we concede that it would be very difficult to present a case for an import tax to be imposed on goods originating in Trinidad and Tobago.
The appetite at the political level for such a move is possibly non-existent and when one considers that Trinidad and Tobago could retaliate with similar measures of its own, the commercial ramifications may also be too dire.
We also have to accept that the machinery within CARICOM to deal with issues such as competition, subsidies and dumping is inadequate.
Therefore it may not be in Barbados’ interest to undertake any deliberate policy measure which could ignite a trade war between Barbados and one of its closest trading partners in CARICOM.
Where we believe we need to focus our energies is in making our products more competitive.
We need to confront the issues affecting the manufacturing sector – high energy costs, inability to access finance at concessional rates and limited production capacity, for example.
While Barbadian goods might not be able to compete with Trinidadian products on a price basis, the Barbados Manufacturers’ Association believes that we can compete on quality.
Many Barbadian manufacturers produce high-quality goods, and just as Trinidadians support their own, we need to support products manufactured here at home.
• Bobbi McKay is executive director of the Barbados Manufacturers’ Association.