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Trade Incentives for Local Manufacturers

Article 164 to spur production, competitiveness

Manufacturers from the Less Developed Countries (LDCs) are in line to receive trade

incentives that would allow them to be more competitive on the global market.

The implementation of Article 164 Regime of the Revised Treaty of Chaguaramas, which took effect on January, 1 is geared to allow LDC manufacturers more equitable business prospects with the More Developed Countries (MDCs).

The objective of this regime is to increase the participation of the LDCs in intra-regional trade and in so doing, increase the level of equity in the distribution of the benefits from the CARICOM Single Market and Economy (CSME) by enhancing the competitiveness of the products covered under the Article 164 Regime.

The Ministry of Trade and Commerce perceives this initiative as a boost for Saint Lucian manufacturers and says they will receive the requisite support to help bolster the local manufacturing sector.

Dr. Thomas Samuel …

At a press conference, this week, Dr. Thomas Samuel, Director of International Trade at the Ministry of Commerce explained the finer details of this initiative with focus on market integration.

“The regime is about production, it’s about manufacturing,” stated Dr. Samuel. “One of the main pillars of the regional integration movement …in the CSME is the movement of goods and /or trading goods.”

In this context, he said, the trading process involves trading between countries at different stages of development in their respective states. In CARICOM, the islands are divided into two groups called the MDCs and LDCs.

This initiative also applies to other CARICOM Member States, through the implementation of various regimes; such as the implementation of the Article 164 Regime which seeks to promote industrial development through the provision of tariff protection to manufacturers for a specified list of goods by temporarily suspending the community origin treatment on imports from MDCs and from third countries. The regime covers 14 product groups across 39 tariff lines and provides tariff protection to most of the products on the list for a period of 10 years.

Dr. Samuel said in an effort to ensure equity in the trading process, there exists a clause in the treaty that deals with disadvantaged countries, sectors and regions. He added: “To compensate for that disadvantage, Article 164 is one such initiative.”

The regime consists of two components, namely: (1) A Tariff Protection component, where the normal treatment of goods of community origin is suspended. “The structure of the Article 164 Regime is targeted at providing assistance to the manufacturers of a specific set of goods,” explained Dr. Samuel,

He said that from the overall universal line of goods numbering 6,000 lines, only 39 product lines are covered regionally. “It’s basically trying to support existing production, areas that we have capacity to produce …and it’s also temporary. It will be for a period of 10 years for most products, and five years for two products, namely pasta and curry powder,” Dr. Samuel said.

The other component deals with support measures or accompanying measures to assist beneficiaries. “It is recognised that tariffs alone will not provide the sort of outcome we want in terms of increasing the level of competition in a sustainable manner,” said the trade official. “And so the treaty speaks to a set of accompanying spot measures that help the beneficiary firms. These support measures would range from things like boosting production, upgrading a plant …and it might involve looking at standards to make sure the products are well packaged and looking at labels; the standards needed to enter regional and international markets.”

He said the range of challenges may also involve shipping and other logistics.

Said Dr. Samuel: “This is a multi-prong intervention. It creates, promotes and supports employment, creates foreign exchange and makes our economy a lot more resilient. So, it’s a win-win situation.”

He said it was also worth noting that, “this is a creative innovation in our treaty, without which perhaps we would not be able to compete, given the advantages that some of the larger territories have relative to us.”

Executive Director of the Saint Lucia Manufacturers Association (SMA) Paula James, is pleased with the initiative, which she feels will augur well for local manufacturers as they attempt to make inroads into the wider global trade market. She said these interventions will make it even easier for local manufacturers to compete internationally.

James said it was a costly endeavour for local manufacturers to ship products abroad and even through the region. She hopes that introduction of Artcle164 will open up better prospects for producers and looks forward to better shipping arrangements for the long term.

[By: Reginald Andrew].

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