Minister of Foreign Trade and International Coopera-tion, Dr Henry Jeffrey is against the reduction of the Value Added Tax (VAT) since trade liberalisation was eating away at border taxes with VAT being a form of replacement.
Responding to PNCR frontbencher Winston Murray’s call for a reduction in the VAT, Jeffrey in the debate on the budget told the House that the government was attempting to use the revenue gained to properly target and support those who are really in need such as old age pensioners, vulnerable youths and single parents.
Jeffrey told the National Assembly that it was good that the government implemented the VAT at this time since tariff liberalization under the Economic Partnership Agreement (EPA) entered into between Cariforum (CARICOM member states and the Dominican Republic) and the European Union will eventually remove taxes on imports and exports.
He explained that the tariffs on 80 per cent of the value of EU imports are to be removed in five-year phases over a 15-year period with an initial three years moratorium; a further six per cent is to be removed in 25 years; and 14 per cent of Cariforum’s trade with the EU, which represents the more sensitive products in terms of industrial protection and revenue, is excluded from the liberalization process.
Already 51 per cent of Cariforum’s trade is zero-rated or liberalized.
In the case of Guyana, some 12 per cent of total imports is from the EU of which 37 per cent is duty-free and a further 50 per cent enters with duties below five per cent.
Although 85 per cent of imports from the EU will be eventually liberalized, he said this amount represents only 11 per cent of total imports and six per cent of customs revenue.
He noted that 50 per cent of the revenue raised from EU imports is charged on products excluded from liberalization.
On the criticisms that there was greater need for consultations on the EPA in the region, Jeffrey said that “the EPA negotiation was buttressed by wide ranging and consistent consultation with stakeholders: This was certainly the case in Guyana.”
EPA funding, he said, would be provided from the Tenth European Development Fund with funding in the sum of 165 Euros, a part of which is for EPA implementation. Moreover, EU member states have committed to provide Aid-for-Trade assistance in the sum of 2 billion euros per annum by 2010 of which 1 billion Euros has been reserved for EPA implementation. And to address efficiency for delivery the EU has proposed using budgetary support in the sum of 340 million euros and the Regional Development Fund to address efficiency for delivery, while the European Investment Bank will continue to provide 2 billion euros in investment financing.
Speaking on bilateral issues, Jeffery noted that coming out of the 24th session of the Guyana-Cuba Joint Commission, his ministry was able to source technical and human resources for the agriculture, health, education, culture, sports and trade sectors.
During the Second Session of the China-Caribbean Economic and Trade Cooperation Forum in China, Guyana concluded two grant agreements to fund economic and technical cooperation projects, which would be used to build two ferry vessels, possibly in Guyana. Upgrading the local shipyards and building the vessels are estimated to cost US$21 million.
ICT park
It is expected that through the Guyana-India Joint Commission, Guyana will benefit from a proposal submitted to the Indian government for the creation of an Information Communication Technology (ICT) park and the construction of two sports complexes in Guyana. Already representatives from the Indian companies have presented to Guyana plans which are being revised for the projects.
In terms of relations with Japan, Jeffrey noted that an agreement for Phase II of the Corriverton Potable Water Project was concluded last year. The project which will include the establishment of two water treatment plants, costing some US$6 million, will be funded by the Japanese government.
The Japanese government, too, he said has expressed an interest in funding the rehabilitation of the East Demerara and Boerasirie Water Conservancies and flood and water control in the Mahaica and Mahaicony areas. It is expected that this year the first batch of Japanese volunteers will provide expert services to the health and agricultural sectors.
On trade relations with Africa, he said that Guyana continues to benefit from the services of Nigerian volunteers in the trade, health and legal sectors.
Guyana-Brazil trade
Closer home, he said that Guyana and Brazil were working closely with their private sectors to review and renew the Guyana-Brazil Partial Scope Agreement to gain additional access for Guyanese exports to Brazil in view of increased trade expected with the opening of the Takutu Bridge later this year.
At the level of CARICOM, Jeffrey said that the CARICOM Single Market and Economy (CSME) should be fully in place by 2015 with the regime for free movement of goods fully implemented and the phased approach adopted by regional governments for the free movement of skills underway.
Apart from the first five categories of workers, which included university graduates, media workers, sports persons, artistes and musicians, the others now added are nurses, teachers, managerial, technical and supervisory staff of companies; self-employed professionals, industrial, agricultural, commercial and artesian service providers; and persons establishing companies and other types of businesses.
He said that the National Coordinating Committee (NCC) which assists the government to manage its cross border activities with Brazil is coordinating activities to make the multi-purpose complex at Lethem operational for the movement of persons and goods across the border.
The complex, which would house the operations of the immigration, port health, customs, security, agriculture and tourism authorities, is now 90 per cent complete.
The committee is also dealing with the implementation of the Guyana-Brazil international road transportation agreement, insurance, and health security of the Linden-Lethem route, among other pertinent issues.
