The Opposition has questioned the accuracy of the statement by Finance Minister Dr Nigel Clarke that the Government was forced to remove the General Consumption Tax (GCT) on imported raw foodstuff to avoid being blacklisted by the World Trade Organisation (WTO).

“Based on our research, the WTO does not blacklist or unilaterally punish member states for non-compliance. Instead, an aggrieved member state must first enter into consultations with a non-compliant member state to seek changes in the offending measure, or to win concessions before requesting the establishment of a panel to settle the dispute,” said Opposition Leader Mark Golding as he made his contribution to the 2024/25 Budget Debate in the House of Representatives on Tuesday.

According to Golding, “The panel will thereafter issue a report, which can subsequently be appealed before the WTO’s Appellate Body. The Minister therefore needs to state whose bidding he is doing”.

Golding pointed out that in recent years, tensions in the US-China relations and Russia-EU sanctions resulting from the war in Ukraine, have adversely affected the working of the WTO.

“For some time now, the WTO has not had a functioning dispute settlement mechanism, since the US decided not to appoint members of the appellate body.

“Furthermore, the recently-concluded MC-13 meeting of Trade Ministers in Abu Dhabi has left a number of critical issues unresolved, including subsidies in agriculture and fisheries by developed countries, reforms in the dispute settlement mechanism, and other long-outstanding issues for the benefit of small and vulnerable economies like Jamaica,”

“In this context, we must question why the Minister finds it necessary to proceed down this path, instead of entering into negotiations with an aggrieved party as provided for under the WTO rules”.

Golding argued that the Minister was also vague on the scope of the announced measure. He questioned which imported raw food items will be affected by the removal of the GCT, noting that under the GCT Act (Third Schedule, Part 1, paragraph 6) the category of raw foodstuff is extremely wide, and specifically includes fresh fruit and vegetables, ground provisions, legumes, onions and garlic, meat, poultry and fish.

“The removal of this protection leaves our farmers very exposed to unfair competition from importers, who have little risk. We know that the rich countries in North America and Europe provide massive subsidies to their agricultural sector, distorting fair competition and giving food imports from those countries an advantage over Jamaican producers,” said Golding.

The opposition leader also noted that local farmers already contend with high overhead costs, including GCT on input farm supplies, which producers in other countries do not face. He said Jamaican farmers also have other disadvantages, including their small scale, reliance on rainfall rather than irrigation systems, and limited access to mechanisation and financial resources. He noted that in 2022, loans allocated to farming operations amounted to a mere J$146.3 million.

“The removal of GCT on imported foodstuff will worsen this imbalance between locally-produced and imported foods. This move is likely to adversely impact the sector and the livelihood of farmers, while undermining rural communities, who are the breadbasket of our country,” Golding said. He also pointed out that in removing the GCT on imported produce, nothing has been put in place to protect local farmers from the wave of imports of produce that will now come into the market without paying GCT.

And Golding said there was a critical necessity for transparency in the allocation of permits for the importation of foods, to ensure that there is proper consideration for local production capacity, and to eliminate the possibility for nepotism, cronyism and other forms of corruption.

He also stated that the Jamaica Agricultural Society was not consulted “before this measure was announced by the Minister, which in itself is an egregious example of arrogant and uncaring governance”.

Golding said the opposition has consulted with the farming community and has developed a raft of measures that can mitigate against what could turn out to be a heinous and misguided action – if Jamaica’s farmers are to get a fair deal.

The opposition has proposed the following:

● Simultaneously remove GCT from farm input supplies, including essential planting materials such as seeds, farm tools, and equipment, to incentivise local producers and strengthen their sustainability.

● Remove GCT from local food products, such as table eggs, to make them affordable, stimulate demand and bolster local production.

● Enhance transparency in food imports, by making the grant of import permits subject to parliamentary approval, and by requiring that import permits be allocated by an equitable and transparent process such as a public auction.

● Until protective measures like those already mentioned are put in place and are working effectively, replace the GCT on imported foodstuff with a stamp duty on imported foodstuffs, to level the playing field between imported and locally-produced foods and discourage over-reliance on imports.