Some manufacturers are now fuming over the recent withdrawal of duty exemption benefits on inputs covered under Schedule III of the Revised Treaty of Chaguaramas for items, including fats and oils, which most of them use for production.

The adjustment to these exemptions provided for under Productive Input Relief (PIR) regime affects a number of widely used production items such as margarine, lard, and shortening.

In a notice issued by the Ministry of Investment, Industry and Commerce, manufacturers were advised of the decision which the ministry said Government had to adhere following a ruling by the Caribbean Court of Justice (CCJ) which urged states to apply the established rate of duty set by the Council for Trade and Economic Development (COTED) on all imported oils, fats, and their substitutes. The court, in its ruling, also indicated that the established rate of duty may [however] be suspended by COTED when there is insufficient supply in Caricom.

“The GOJ’s withdrawal of exemption benefits to items on the Schedule III Indicative List of Goods produced will bring Jamaica in compliance with the CCJ’s ruling and Caricom’s Revised Treaty of Chaguaramas rules,” the ministry notice said.

As a cushion to the measure, the ministry said Government will allow for affected manufacturers, with approved PIR status, to benefit from other measures under the PIR regime, including general consumption tax deferral on imports, PIR on the importation of equipment/machinery and spare parts as well as packaging and labelling materials, 50 per cent discount on the Customs Administrative Fees (CAF) and additional stamp duty.

Additionally, the ministry also said that affected manufacturers could benefit from an exemption through the CET suspension regime administered by Caricom.

“The Government will immediately commence the processing of CET suspension applications to avail manufacturers of the benefits under the Caricom CET Suspension Regime for extra-regionally sourced inputs,” the notice said.

One manufacturer who is not pleased with the stipulated adjustments told the Jamaica Observer that it has brought about unplanned disruptions to the operation of his business and also for a number of his colleagues who utilise these inputs in production.

“The issue is that shortening overnight attracted a duty it never had before and this is now disrupting my business and many aspects of food production in Jamaica,” he told the
Caribbean Business Report, while noting that these products, which were once zero rated, will now attract a 20 per cent duty.

“With my company now having to pay duty on something I’ve already bought, I had to quickly put through a price increase, and giving a price increase without significant notice is what leads to unhappy customers,” he said.

“In light of the developments, I think the most important thing right now is for the general public to be made aware that this has happened and that it will lead to price increases for food items, including patties, ice cream, and many other products,” he added.

Indicating that while he was among a few other manufacturers in attendance at a meeting recently held by the ministries of industry, investment and commerce and finance “to provide further clarity on the matter and to commence discussions on accessing common external tariffs (CET) suspension arrangements”, he said nothing of major significance was said.

CET is a uniform tariff adopted by members of a customs union, which applies to goods imported from countries outside of the union (third countries). Locally, goods imported from third countries are subject to the duties listed in the CET, but goods imported from Caricom countries and are certified to be of Caricom origin do not generally attract these import duties.

Lobby body for the local productive sector, The Jamaica Manufacturers and Exporters Association (JMEA), in commenting on the adjustment, said the approach taken by the Government of Jamaica is likely to create unnecessary bureaucracy for manufacturers who will now have to apply for CET suspension.

“We don’t know if Jamaica made any assessment as to how this ‘risk aversion’ move will impact locals and how other jurisdictions such as Trinidad is approaching the matter. It is, however, new information, and members of the association are still assessing,” JMEA President Sydney Thwaites commented.

For large manufacturers such as Seprod, which, through its Caribbean Producers subsidiary, stands as one of the main producers of these inputs locally, it is believed that the move is likely to be more beneficial for that business.

“If it works the way it ought to, it could present an opportunity for us to be more competitive vis-à-vis extraregional imports, thus increasing our export sales to the other Caricom countries,” CEO of the Seprod Group Richard Pandohie said.