The Guyana Manufacturing and Services Association (GMSA) has rejected a proposal floated to apply a 40 per cent Common External Tariff (CET) to refined sugar entering the Caribbean Community (CARICOM), while warning that refined sugar-dependent companies could be forced to close and jobs lost.
“To apply CET on a product that is not manufactured in the region will increase cost and make regional manufacturers unable to compete with extra-regional products coming into the region,” the GMSA said in a press release yesterday. It added that such a move will mitigate against local manufacturers’ competitiveness in extra-regional markets.
“Most regional manufacturers operate under small margins and loss of markets and increased cost will jeopardise the viability of these manufacturers. Many of these manufacturers that made many sacrifices and fought hard and long to survive will be forced to close their manufacturing lines. This will cause loss of hundreds of jobs directly and thousands indirectly through downstream trade,” the GMSA declared.
Last month, the Guyana Sugar Corporation (GuySuCo) had said that it and other sugar producers’ groups representing sugar producing countries in the region had discussed applying the 40 per cent CET now only applied for non-regional brown sugar entering the regional market, to all sugars, including white sugars.
This followed a statement in March by the Sugar Association of the Caribbean (SAC), which complained that the CARICOM Single Market and Economy is simply not working for the regional sugar industry when the need is most critical.
“The blatant disregard for CET rules is now a distinct challenge to the survival of the CARICOM sugar industry, which supports the livelihoods of more than 400 thousand CARICOM citizens,” a statement from the SAC said, while calling for the existing 40 per cent CET on all sugar imports to be rigorously applied.
In its statement yesterday, the GMSA said that applying the CET will not benefit regional sugar producers. It pointed out that under existing CARIFORUM agreements, sugar imported into countries like the Dominican Republic will not be subject to CET on refined sugar as imposed by CARICOM but can export sugar products to the region under concessionary terms. “They will therefore have a significant additional advantage over regional manufacturers other than those that they already have,” the statement said.
Further, the GMSA highlighted that plantation white sugar and refined sugar are not the same. “The processes to produce them are substantially different and the end products are similarly different,” the statement said, while explaining in detail how each is manufactured and used in manufacturing and how they can impact the quality of various products. In essence, it said that properly “refined” sugar can be used to produce quality foods or beverages while utilising plantation white sugar would result in products of an inferior quality. GuySuCo is seeking to produce plantation white sugar.
“If manufacturers were to use plantation white instead of refined sugar, for reasons of quality, products will no longer be as acceptable to consumers and will not be able to compete on the basis of quality with products coming into the region. Further, manufacturers will face difficulty to export products out of the region to compete in extra-regional markets – exports that bring in valuable foreign exchange,” the GMSA declared.
“Franchise owners, including CocaCola and PepsiCola, will not permit franchisees to use sugar not approved by them. In any case, if sugar of the required quality is not available for in the region, manufacturers will have to purchase extra-regionally if they want to continue to produce quality products,” it added.
The statement said that if refined sugar is manufactured in the region at an affordable cost, the regional manufacturers will have no problem in purchasing it. It further pointed out that the expertise to set up refineries in the region is not lacking as the parent company of regional producer, the Belize Sugar Industries, is American Sugar Refineries, one of the largest refiners of sugar worldwide.
“It manufactures refined sugar for many food and beverage manufacturers in the developed countries including in North America and Europe and also sells to developing countries, including Guyana through one of its subsidiaries, Tate and Lyle Corporation. The Association notes that Tate and Lyle Corporation had previous (recent) association with GuySuCo,” the statement said.
The GMSA said that it supports the efforts of the regional sugar industry as it seeks to improve its efficiency and make the sugar industry viable and commits itself to using regionally manufactured products that meet requirements of quality and cost. “At the same time, it refuses to offer products of quality lesser than it is accustomed to offer to its valued consumers and of lesser quality than is offered in extra-regional markets. Indeed, it cannot be competitive and continue to do business if it were to do otherwise,” the statement said.
