House Suspends Debate to Increase Duty on Imported Cement?More Information Requested


Debate on a resolution piloted by Minister of Finance and Planning, Dr. Omar Davies, seeking the approval of the House to increase customs duty (Common External Tariff – CET), on imported cement from 15 per cent to 50 per cent, was suspended at Tuesday’s sitting of the House, to allow the Minister to provide more information to substantiate the proposed increase.
In moving the resolution, Dr. Omar Davies said, “the rationale for this is to provide Carib Cement Company time to retool in order to face competition, which will be coming under the Free Trade Areas of the Americas (FTAA), but more immediate is that Carib Cement has faced serious competition where Cement has been dumped from Asia”.
He said that the move by the Government was no different from other Caribbean countries that had imposed higher customs duties on imports to protect their local industries.
“With regard to Trinidad and Barbados, Barbados increased its CET from 16 per cent to 60 per cent in November 2001, and this rate will be reviewed in March 2005. Similarly, Trinidad increased the CET from 15 per cent to 60 per cent in late 2001 and the rates were again reviewed in March 2003,” he said.
The Minister informed that the Government has been reviewing the request for the past two years and that “in looking at the data provided by the cement company, it is our opinion that unless they are provided with this additional period of protection the viability of that plant could be in question”.
Meanwhile increased duties are also to be imposed on five other items including; cake mixes in retail packages not exceeding two kilos; soaps, including medicated soaps, gloves other than surgical, glaze ceramic tiles and paving.
Dr. Davies told the House that the objective of the increase in the CET was to “provide each of these domestic producers with the opportunity to retool and put themselves in a position for competition”.
However, Opposition spokesman on Finance, Audley Shaw asked that the Minister provided more details on the resolution. “The Minister has a duty and a responsibility to the people of this country to ensure that when a company gets this kind of privilege from 15 to 50 per cent protection, that they must in return put out in terms of the capital outlays and in terms of the technical outlays and in terms of the productivity gains, so that the people of Jamaica can benefit,” he said.
Opposition spokesman on Industry and Commerce, Karl Samuda, also argued that while he backed any move to support local industries, “we must be mindful of the fact that history has taught us some rough lessons when we overprotect. in other words you give a blanket coverage, which enables movement and you have not presented to this House any mechanism that will carefully monitor that aspect of it”.
Continuing, he pointed out that if the company was under supplying it could not be protected. “You cannot be under supplying and expect to get protection. The market at the moment is 900,000 tonnes and what is being produced is less than 700,000 tonnes. Therefore you can’t expect to protect a supplier that can only provide 65 per cent of the market,” he stressed. Responding to the concerns raised, Dr. Davies said, “this additional duty will not eliminate import but what it will do is put the domestic producers in a more competitive position. The reality is that if they do not receive this additional protection … the potential (exists for the) closure of this facility”.
The Finance and Planning Minister later acquiesced to suspend the debate on the resolution so that more information could be supplied at the next sitting of the House.

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