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THE HOYOS FILE: Inniss flexing a muscle, selectively


THE HOYOS FILE: Inniss flexing a muscle, selectively

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Saying that the intent was to ensure consumers got a better price on cement, Minister of Commerce Donville Inniss said last week he was standing by his position that the rate of duty should be lowered on imported cement.

The goal of these protectionist tariffs is to make imported items in the same category so expensive when landed here that few people can afford to buy them, and therefore turn instead to the local alternative. But the reality is that these tariffs provide a cushion for the local manufacturer that allows it to put off looking for more efficient ways to drive his own costs down in order to compete, there being little or no competition in his price range.

This is true not only of cement, but almost all of the other products still attracting very high tariffs, like the processed meats used, for example, by Burger King and the Subway chains, which are struggling to compete here because of the high prices they pay for the meats they must import, even though they are not even made here. Is Inniss unduly troubled about these? It seems not. How about the high tariffs on clothing not produced in this country but which still attracts ridiculous tariffs? Never a thought given, apparently. What about the high tariffs recently imposed on electric vehicles, which have suddenly added about $30 000 to their price, thus depressing a market in direct opposition to Government’s own stated policy of reducing our dependence on fossil fuels?

The fact is, Barbados has no answer to these questions, because the Government simply won’t give up its power over tariffs, to use as it sees fit to punish or reward specific sectors. As a member of the World Trade Organisation (WTO), Barbados’ trade policies are reviewed every six years. The most recent one took place last January, and the repeated references to Barbados’ extremely high tariffs made it clear that the rest of the world is not happy with us, despite all the diplomattic back-slapping.

In its report on Barbados for the third trade policy review, the WTO secretariat pointed out that the European Union’s Economic Partnership Agreement (EPA), which came into effect in 2008, carried a three-year moratorium period, and so the phased reduction of tariffs by CARIFORUM countries began on January 1, 2011, and is scheduled to continue over the 25-year period to 2033. It noted that “the authorities indicated that Barbados lowered tariffs both in 2011 and 2013 on an administrative basis”. However, it added: “Up to October 2014 Barbados was still lacking the legal instrument to make the tariff cuts permanent and was therefore applying them administratively.”

So there you have it, folks: a procedure designed to take decisions on tariff level out of the hands of the politicians remains firmly in their hands in Barbados, seven years after all the hoopla over the EPA signing. The WTO secretariat said it was told that the legislation to apply the cuts “will be introduced after certain areas and tasks of the Customs and Excise Department have been incorporated into the new Barbados Revenue Authority and the adoption of the HS2012 nomenclature has been completed”. Let us not hold our breaths on that one.

The secretariat summarised Barbados’ remaining high tariff regime as follows: “Barbados bound all its tariffs in the Uruguay Round, with the exception of fish and fish products, so some 97.1 per cent of lines are bound. Bindings are mostly at ceiling rates. Most agricultural products are bound at final rates of at least 100 per cent, with other duties and charges bound at 70 pre cent; some 40 items have been bound at rates ranging between 110 per cent and 233 per cent, with other duties and charges bound at rates of over 170 per cent.

“In the case of non agricultural products, tariffs have been generally bound at rates of at least 70 per cent, with other duties and charges bound at 200 per cent; certain items were bound at higher rates . . . . Tariffs on motor vehicles were bound at 247 per cent, with other duties and charges bound at 346 per cent. Given the high level of Barbados’ bindings, there is a huge gap between bound and applied rates, with the average bound rate (87 per cent) being more than five times higher than the average applied rate. A narrowing of the gap would certainly contribute to enhanced predictability of Barbados’ tradde regime.”

Does Barbados have any plan to narrow the gap? That was an actual question posed to this country by one of the other countries in the trade policy review? What was Barbados’ response? Well, it could not have been weaker.

“Response: the existing applied rates which are currently in place have not changed over a substantial period of time. Barbados has always been committed to the multilateral trading system and has complied with the results of rounds of negotiations which have mandated a reduction in the bound rates. This commitment has not changed.” (from the minutes of the third trade policy review). My translation: we have not changed the rates for years, but we have indeed agreed to change them and that has not changed either.

So we have a situation here where the Government, as usual, speaks on both sides of its mouth. When it comes to Arawak, they are now firmly on the side of the consumer, who must no longer be punished by having to pay so much more for cement than anyone else in the region simply to protect one cement company, no matter if it causes even more workers to be sent home, or the plant to eventuall close. But when it comes to everybody else – you can look back at the long summary provided by the WTO secretariat – well, er, we must protect the jobs of Barbadians and if it makes the cost of living extremely high, well, get over it.

So while I am all for lowering the tariff on cement, I just can’t stand the hypocrisy that comes along with it.