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Where's our plan to combat Trump's tariffs?

Lisa
Hanna

Thursday, March 15, 2018

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The Opposition notes with concern the proposed tariffs on a number of countries for imported aluminium and steel recently announced by United States President Donald Trump which could have serious direct and indirect economic implications for Jamaica.

For example, Jiuquan Iron & Steel Company Limited (JISCo), the largest steel producer in China, strategically invested US$320 million in the former UC Rusal plant in St Elizabeth. This is the largest single investment of any kind to Jamaica in current terms which aims to refurbish, modernise and expand the alumina plant for the establishment of several 'downstream' and ancillary manufacturing activities. This could ultimately make Jamaica a manufacturer of aluminium and steel products while producing millions in tons of alumina. Results of this investment should include exportation of these goods to China and elsewhere on the world market.

Already major expansion and rehabilitation of the 49-year-old plant are underway to insert a new power facility and production line. This specially designated economic zone will also see the importation of aluminium ingots for further processing in the manufacturing of other capital goods for export and local consumption. No doubt the market opportunities in the USA and Jamaica's trans-shipment capability to economically reach anywhere in the world were factors which led to the JISCO investment.

The proposed tariffs pose a definite risk to the international market for these products as they could now attract the new US tariff, potentially limit our exports in these industries, and result in some price increases to our local construction sector.

The US has historically operated on a premise of free trade and encouraged countries to open their markets to American products. Furthermore, other goods before now have been allowed entry under the Caribbean Basin Initiative. As a result of these recently proposed tariffs by President Trump, products from the St Elizabeth plant may not in the circumstance be cost-effective, thus putting at serious risk this billion-dollar investment, potential jobs and foreign exchange earning capacity, not to mention the lower cost of steel to Jamaican consumers, especially in the local construction sector.

The Opposition recognises that the imposition of these tariffs could be disadvantageous for our local economy if they, in any way, shape or form, impair our export alumina markets; impair important ancillary investments in the sector; and result in increases in the costs of perhaps some imported steel and aluminium products.

The USA over the past year appears isolationist, protectionist and inward-looking in an attempt to change the rules of the game but have only succeeded in complicating foreign trade negotiations and placing strains on “settled” relationships.

In these circumstances, Jamaica must not adopt a “wait and see” approach, but rather have a proactive, operationalised foreign trade policy that is courageous, strategic and principled. The Opposition is calling on the Government to present to the country its plan for foreign trade, especially in light of the repercussions that the US tariffs could have on our national priorities.

The country is entitled to be apprised by the Government of any possible effect on our fragile economy. Silence is totally unacceptable.

Lisa Hanna is the Opposition spokesperson for foreign affairs & foreign trade. Send comments to the Observer or mplisahanna@gmail.com.

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