The concern that cheaper imported products will flood the local economy hence depressing prices and capturing market share is a legitimate one for a manufacturer in any country where the government proposes to enter into reciprocal trade agreements. Therefore Jamaican producers could be forgiven for being wary of the plans to freeze, reduce and or eliminate customs duties on various European imports, even if it is over a number of years, under the recently concluded EPA.Although cheaper imports have the obvious benefit of savings for the consumer, where they cause the local manufacturers to be uncompetitive for extended periods and hence to go out of business the result will be
Although cheaper imports have the obvious benefit of savings for the consumer, where they cause the local manufacturers to be uncompetitive for extended periods and hence to go out of business the result will be loss of jobs, loss of revenue for government and dependence on foreign imports for what are sometimes essential goods. This is illustrated now in the topical issue of our dependence on foreign grain products. When these imports are cheaper because of better economies of scale and efficient manufacturing practices local producers should be encouraged to become more competitive however when they result from unfair trade practices such as dumping and illegal subsidies domestic producers should rightly expect action to be taken.Fortunately for Jamaican producers, and consumers to an extent, the EPA incorporates provisions to deal with dumping, subsidies and import surges. These measures or trade
Fortunately for Jamaican producers, and consumers to an extent, the EPA incorporates provisions to deal with dumping, subsidies and import surges. These measures or trade defence instruments include anti-dumping and countervailing duties to deal with dumping and illegal subsidies and safeguards to address import surges. Dumping is where the exporter sells a good more cheaply in a foreign market than it does in its domestic market. Subsidies are benefits that the exporter receives from the state for producing/exporting the goods. Import surges as the name suggests are sudden increases in imports that cause disturbances or serious injury to the domestic industry.
The EPA maintains the rights of the parties to adopt multilateral safeguards and measures against dumping and subsidies in accordance with World Trade Organisation (WTO) rules. Jamaica already has legislation and an active Anti-Dumping and Subsidies Commission and legislation to address these issues. However the EPA gives additional benefit to local producers as under it the parties can adopt safeguard measures at a lower threshold of injury than currently exists under the Jamaican Safeguard Act, 2001. Under the Act definitive safeguard measures may be adopted only where there is clear evidence that increased imports have caused or threaten to cause serious injury to the domestic industry and it is in the public interest to impose these measures. Under the EPA safeguard measures can be adopted if import surges cause or threaten to cause: serious injury to the domestic industry, disturbances in a sector of the economy (including major social problems), or disturbances in the markets of agricultural products.
Safeguard measures adopted must be proportionate to the harm caused and can only include a freeze on the reduction in customs duty, increase in customs duty up to the level applied for other WTO members and the introduction of tariff quotas. Jamaica, as a CARIFORUM (CARICOM and the Dominican Republic) member, has the additional power for the first ten years to adopt safeguard measures to protect an infant industry.
The EPA promotes a consultative approach to resolving disputes, therefore, it requires the EU to inform the relevant CARICOM state before investigating any dumping or illegal subsidy complaint and the parties have to notify the joint Trade and Development Committee before adopting a safeguard measure. The idea here is to prevent obstacles to trade and to enable a cost effective resolution to the issue i.e. negotiations before imposing duties or quotas.
Even though duties and quotas are the more obvious forms of trade barriers Technical barriers to trade (TBTs) and Sanitary and Phytosanitary (SPS) measures can also cause exporters difficulty. TBTs include labeling and technical regulations, standards and conformity assessment procedures. Sanitary and Phytosanitary measures are plant and food safety measures. Under the EPA the parties are going to inform each other of any proposals to modify technical regulations or standards relevant to trade between themselves. There are similar provisions in relation to SPS requirements.
Under the EPA businesses will get assistance to enhance their capacity to meet international SPS standards. Centres of expertise will also be developed in CARIFORUM for the purpose of assessing regional goods’ entry into the EU market. In addition, the parties are to cooperate to harmonise their SPS requirements and technical regulations. A lofty goal indeed and one if achieved will truly be beneficial to our producers as they will be able to say that their standards are on par with those required of EU producers.
Roxanne Miller
Attorney-at-Law
DunnCox
48 Duke Street, Kingston
Roxanne.Miller@dunncox.com