CCJ upholds COTED’s decision on Rock Hard cement classification

The Caribbean Court of Justice (CCJ) yesterday delivered a judgment upholding the classification decision of the CARICOM Council for Trade and Economic Development (COTED) on cement, known as Rock Hard Cement which is imported and distributed within the Caribbean Community (CARICOM) by Rock Hard Distribution Limited, Mootilal Ramhit and Sons Contracting Limited and Rock Hard Cement Limited.

According to release from the CCJ, these proceedings in its Original Jurisdiction mark the culmination of complex litigation which to date has resulted in five separate judgments and numerous orders.

This judgment has settled the dispute as to whether Rock Hard Cement ought to be classified as ‘Building cement (grey)’ and be charged a CARICOM tax of 15% when imported into the region, or as ‘Other hydraulic cement’ which attracts a levy of 0-5%.

Earlier this year, COTED made the decision that Rock Hard Cement was to be classified as ‘Other hydraulic cement’ in line with the advice received from the World Customs Organization’s (WCO) Harmonized (HS) Committee.

The release explained that the trio comprising the State of Trinidad and Tobago, Trinidad System Cement Limited (TCL) and Arawak Cement Company Limited argued that COTED’s decision-making process was “procedurally flawed” and that COTED’s reliance on the WCO’s advice “went against the economic objectives of the CARICOM tax.” On this basis they contended that Rock Hard Cement should be classified as ‘Building cement (grey)’ and be subjected to the 15% tax as Rock Hard Cement was in direct competition with TCL’s regionally produced ‘Building cement (grey)’.

The CCJ in its judgment upheld the COTED classification decision as being binding on all CARICOM Member States in keeping with Article 29(1) of the Revised Treaty of Chaguaramas (RTC). The Court found that COTED was fully entitled to place heavy reliance upon the WCO advice, given the role of the WCO in harmonising rules on international trade within the context of the World Trade Organization (WTO).

While upholding the COTED classification decision, the Court also pointed out that recent developments in the cement industry made it appropriate for a study to be done by COTED to assess whether the tariff rate for imported ‘Other hydraulic cement’ ought to be increased “to give additional protection to regional cement manufacturers so that regional cement manufacturers might obtain an appropriate level of protection.”

The Court also indicated that the conduct of such a study would be entirely in line with the CARICOM Treaty obligation on COTED to keep the tariff under review as stated in Article 83 (5) of the RTC. The CCJ also recommended greater collaboration in undertaking global trade commitments, (for example, in their commitments to the World Trade Organization), and suggested the implementation of a project aimed at harmonising the classification of goods based on WCO standards in an effort to increase CARICOM trade, the release added