Statement to the Senate by Senator the Hon Kamina Johnson Smith


Among the important tasks undertaken by the Ministry of Foreign Affairs and Foreign Trade is the surveillance and monitoring of trade related developments that have implications for Jamaica’s exports of goods and services.

In carrying out this function, the Ministry undertakes research and analysis of important developments in order to inform appropriate policy responses and provide timely and appropriate information to stakeholders and the Jamaican public. These responses must rely on facts available and cannot be driven by speculation.

The Ministry took note therefore, of the outcome of investigations conducted by the United States Commerce Department under section 232 of the United States Trade Expansion Act of 1962 which formed the basis of the decision by the US President to impose tariffs of 10 % and 25 % on aluminium and steel respectively, citing national security grounds.

It is important to recognise that after the initial announcement of the impending tariffs, the Presidential Decision of 8 March exempted Canada and Mexico – both NAFTA partner states – and provided for discussions on alternative approaches with certain countries. Australia has since been added to the list of exempt countries.

It is also important to note that the concerns expressed regarding global overcapacity in steel and aluminium are neither new nor unique to the United States. The concerns were in fact the subject of a joint statement by the Trade Ministers of the European Union, Japan and the United States at the 11th WTO Ministerial Meeting held last December in Buenos Aires, Argentina.

The statement acknowledged the existence of excess capacity in key sectors and indicated that the three countries would enhance cooperation in the WTO and other fora, in order to eliminate [quote] “market distorting and protectionist practices by third countries.”[end quote]. The Ministry will therefore remain alert to the approaches that other countries might take in their responses to the acknowledged challenges posed by global overcapacity.

Having provided this context Mr. President, let me now focus my remarks on the initial assessments of the status of the US measures and their likely impacts on Jamaica and Jamaican interests.

In so doing, I am mindful of positions that have been expressed in the media, including by the Opposition.

Understandably, the primary concern has been the impact of the US actions in respect of our exports of bauxite and alumina having regard to the fact thatJamaica is a leading producer and exporter of bauxite and alumina, which are vital components in the manufacture of aluminium. Let me seek, however, to correct some apparent misconceptions.
Mr. President,

I must emphasise that bauxite and alumina are not subject to the tariffs that have been imposed and that are due to take effect on 23rd March. They are actually tariff exempt under the provisions of the Caribbean Basin Initiative (CBI) which governs Jamaica’s trade with the US. Moreover, Jamaica does not currently produce or export either steel or aluminium and would therefore not be directly affected by the new US tariffs on imports of those products.

Having said that Mr. President, it is within the realm of contemplation that the tariffs to be faced by aluminium exports of various countries, could potentially have an impact on our exports of alumina to those countries. We have concluded, however, that any impact would be limited, as the greater portion of aluminium exports from these countries go to markets other than the United States. As an illustration, 30% of our alumina is exported to The Netherlands which processes it into aluminium. But, we are aware that only 1.7% of Dutch aluminium exports goes to the United States. Similarly, while 10% of our alumina is exported to Iceland, less than 1% of Iceland’s aluminium exports goes to the US.

These findings, coupled with the facts that 19% of our alumina is exported to Canada (which is exempt from the new tariff); and 9% goes to the USA, suggest that the level of exposure of our alumina exports to the indirect impact of the new measures, is limited. In the case of bauxite, I would add, 78% of our exports go directly to the USA and therefore, we do not foresee any immediate negative impact.

We are, however, quite aware that we are at the early stages of this matter and will therefore continue to monitor the trade reports relating to both aluminium and aluminium products. We will also consult closely with our partners, as we continue to assess developments and consider any measures that might be deemed necessary to secure our vital bauxite and alumina exports.

Mr. President, beyond the issue of the impact of these measures on our exports, there is interest in the possible effects on consumer prices as they take effect. In this regard it is important to note that the United States is not a major supplier of steel to Jamaica. Furthermore, it is not yet clear what the effects of the measures would be in markets for steel and aluminium and steel and aluminium products beyond the United States. We are mindful that there could be medium to long term effects on consumer prices, but these are not imminent and will be determined by market forces.

Finally, with respect to concerns expressed regarding the impact of these measures on recent significant investments in our bauxite and alumina industry and prospects for the introduction of aluminium smelting in the future – there is every indication that these investments remain very much on track.

Beyond these market-related issues we are paying careful attention to statements from some of the United States’ key trading partners which allude to the possibility of robust responsive measures. Already, the Chinese Government has hinted at “a justified and necessary response”, while the European Union has promised “countermeasures which will conform to World Trade Organisation rules”. Reports further suggest that the EU may publish a list of US exports that will be subject to increased tariffs at EU borders in the coming days. We will continue to consult with these partners on the steps they may propose to take in order to anticipate and counteract any potential fallout from the measures and countermeasures.

We will also support calls for restraint in the WTO and elsewhere, as we recognise that any escalation of protectionist measures could have a destabilising effect on global trade and economic prospects, at a time when the Jamaica is seeking to place our economy on a path of real growth and sustainable development, in which trade must play a critical role.

JIS Social