Nov 2009 Financial News

Denied - Cement waiver killed, but Samuda still suiting up for battle

Nov 11, 2009

CARICOM has denied Jamaica an extension of the cement duty waiver, scoring a victory for Caribbean Cement Company and its Trinidad parent, TCL Group, but last night Industry and Commerce Minister Karl Samuda vowed to fight the decision on several fronts.

The bigger blow is against importers but Chris Bicknell, who heads the Tank-Weld Group, said he sees the current developments as a "temporary setback".

"I think we will prevail," he said, but proffered no real basis for the optimism.

"No policy should ever result in one company having a monopoly on a market ... this is, in essence, what CARICOM's decision would result in."

It was, he added, a flawed decision.

Jamaica was hoping to secure 15 per cent, or 120,000 tonnes, of the domestic cement market for importers, but needed CARICOM to approve the lifting of the 15 per cent Common External Tariff for another year, and on October 8 had received conditional approval from the Council on Trade and Economic Development.

A final decision was, however, contingent on Barbados and Trinidad not being able, in a crunch, to fill any supply shortfalls in Jamaica.

The countries later said they could, leading to COTED's rescinding of its earlier decision.

TCL has manufacturing operations in both territories.

Samuda said Tuesday he would protest the decision with the CARICOM Secretariat but was also prepared to take Jamaica's case further up the chain directly to the Heads of Government, the highest decision makers within the trade bloc.

But even at that level, Jamaica will likely meet resistance from the oil-producing Trinidad where Caribbean Cement's parent, TCL, is domiciled, but will find an ally in Guyana which lost a legal battle with TCL over the imposition of a similar waiver and is still fighting with the cement producer in court.

Samuda says the Heads will be asked to re-examine the treaty provision, Article 29.2, to determine what truly constitutes 'a qualified majority'.

His questioning of 'qualified majority' - the only technicality that appears open to Jamaica were it to file an appeal - relates to a poll among CARICOM states to vote on the waiver, with Samuda complaining that only three of 14 territories responded at the October 29 deadline.

Two of the three voted against Jamaica, but Samuda appears to be arguing that the two could not practically constitute a majority in the 15-member bloc, and that 'majority' ought not to be defined by the numbers voting, but by the bloc's membership base.

He wants the issue placed on COTED's next meeting agenda for discussion.

In the meantime, he will be appealing to Jamaica's Attorney General to raise the issue with the CARICOM Secretariat and to lodge an objection to waiver denial.

Jamaica has waived the CET on imports for the last three years, first to cover a shortfall sparked by Caribbean Cement, which released tonnes of faulty cement on the market, temporarily locking down the construction sector, but later as cover while the cement maker modernised and expanded its Rockfort operation.

Needed to recoup

Cement Company, however, sought to reclaim full control of the market once its project wrapped up mid-year, saying it needed to recoup its investment on the US$177 million investment.

Tank-Weld Group, which entered the cement import business just last year, says its nascent operation needs at least 15 per cent market access to remain viable.

"Jamaica and the Caribbean have to act together to ensure that no one company dominate our markets," Bicknell reiterated.

Last night in the midst of victory, Caribbean Cement stepped back somewhat from its claim that it would prefer to have full control.

"We were not saying we wanted 100 per cent of the market; what we were saying was that we want the fair trading laws to prevail, the laws as it relates to the rationale for having CET in place," marketing manager Alice Hyde told Wednesday Business, but still reiterating that Rockfort could meet all supply demands here.

"We believe that there is room for competition ... we still believe that importers could import as they have done in the past."

Hyde now says the more urgent concern is dumped cement, which the company alleges is coming in from Dominican Republic, China and the United States.


Source:
business@gleanerjm.com
Jamaica Gleaner
Wednesday November 11, 2009

http://www.jamaica-gleaner.com/gleaner/20091111/business/business1.html