SEPROD FACES CARICOM HURDLE

Seprod, Jamaica’s producer of condensed milk, cannot maximise on more than $10 billion in investments to supply the region because fewer than half of CARICOM countries have implemented a mandated tax on imports from outside the bloc.

In 2021, CARICOM’s Council for Trade and Economic Development (COTED) ruled that Seprod met the threshold to supply at least 75 per cent of regional demand and required member states to implement a Common External Tariff (CET) of between 30 and 35 per cent on extra-regional imports.

The punitive duties effectively raise the price of imports from outside of the region, giving internally manufactured products competitive advantage.

The rates should have been applied from January 1, 2022.

But the compliance rate is about 46 per cent, the Guyana-based CARICOM Secretariat told The Gleaner on Thursday.

It said Belize, Jamaica, St Kitts and Nevis, St Vincent and the Grenadines, and Trinidad and Tobago have reported their implementation of the rates. Though asked, it did not name the non-compliant states.

“Member states that have not yet implemented the new rate indicated that the rates would be applied in 2023,” said the secretariat, of commitments made at a meeting of COTED earlier this month. “The COTED urged these member states to take immediate steps to implement the 30/35 per cent CET rate for condensed milk.”

The situation “points to a major problem we have in the Caribbean”, argued Richard Pandohie, CEO of the Seprod Group, who said his company faced many difficulties in getting the COTED ruling. “There’s always an obstacle in place, and we literally hurdle every obstacle.

“They have been given a timeline to implement, and we’re really hoping it will happen. As a region, we’re going to continue to struggle with developing production and productive capacity if we continue to have countries just flouting the rules or just deciding what is relevant to them or not,” he said.

In May 2021, Audley Shaw, the then Jamaican industry minister, told Parliament that Seprod invested about US$77 million to meet the regional production and sanitary requirements to get market protection.

Pandohie said Seprod has spent an additional US$2.5 million, but the company needs the volumes “to justify the investment and to go forward”.

“You have to make investments to be in a position to supply, so when you make the investments and it doesn’t materialise, it’s a big blow to you,” he told The Gleaner, while crediting the Jamaican investment and foreign trade ministries for pushing the issue with CARICOM.

“We understand the CARICOM process. We’re not giving up hope yet,” said the Seprod boss. “People who are in the region have recognised that you can’t just produce only for a country any more. The base has to be the region.”

Dealing with breaches, however, remains a challenge for the regional bloc that has been plagued by a history of implementation failures and questions of political will to make integration work.

Article Nine of the Revised Treaty of Chaguaramas, CARICOM’s governing instrument, says member states “shall take all appropriate measures, whether general or particular, to ensure the carrying out of obligations arising out of this treaty or resulting from decisions taken by the organs and bodies of the community”. There is also a dispute settlement mechanism in the treaty.

The Aubyn Hill-run Ministry of Industry, Investment and Commerce said it has concerns about “the length of time it has taken for some member states to comply and the potential negative impact on Seprod”. It said demand for locally produced milk “would have been impacted”.

“Except for Antigua and Barbuda and Suriname, all member states should be compliant by August 2023,” the ministry said. But an official there said Jamaica is “wary” of the commitments as previous ones were not followed through.

At a special meeting of COTED in March, Jamaica recommended that further consideration be given to the secretariat implementing a sanctions policy within the context of the treaty “to address any failure of a member state to comply with decisions” of CARICOM institutions.

A draft report of the meeting obtained by The Gleaner said Jamaica registered “strong concern with the failure of member states in breach” to apply the condensed milk CET.

The Antigua and Barbuda representative reportedly said delayed or the non-implementation of decisions by less developed CARICOM countries “was not meant to create mischief, but evidence-based challenges persisted”.

There are also concerns of non-compliance with the CET required on imports of soap and several food items. Grenada also continues to face problems exporting honey to Trinidad and Tobago.

There remains no consensus on Jamaica’s recommendation for leaders to consider empowering the CARICOM secretary general to request advisory opinions from the Caribbean Court of Justice on states in breach of decisions.

jovan.johnson@gleanerjm.com