What Dr Clarke did not say!

THE GOVERNMENT’S decision to remove general consumption tax (GCT) on all raw foods, including imported vegetables, is being defended on the basis that Jamaica must become compliant or risk World Trade Organization (WTO) sanctions.

As Opposition and farming interests study the announcement and consider its implication, Finance Minister Dr. Nigel Clarke explained earlier that Government had the option of placing GCT on local food stuff or lifting the value-added tax from all raw foods. He said the Government chose the lesser evil in order to fall in line with WTO Rules and avoid being blacklisted.

Citing Jamaica’s soaring food import bill which stood at US$1.43 billion in 2023, Lenworth Fulton, president of the Jamaica Agricultural Society (JAS) suggested that if it became necessary to remove GCT, then the Government could have considered increasing stamp duty, as a balancing act.

And while the levels of imports continue to record impressive growth, Mr Fulton pointed out that local farmers who are operating under the burden of GCT on feeds, tools and planting materials, could only manage exports of US$273 million in 2023. The larger question for Mr. Fulton is whether this low level of production can all be attributed to GCT, or whether there are other inhibiting factors that need to be addressed by farmers.

Meanwhile, Opposition Leader Mark Golding, questioned the minister ’s claim of W TO blacklisting, while reciting how the WTO’s appeal-dispute settlement regime actually works. Mr Golding pointed to the fact that the recent trade ministers’ WTO meeting in Abu Dhabi had not settled several matters including agriculture and fishery subsidiaries by member countries. He also cited other contentious issues emanating from the posture of Washington after former US President Donald Trump’s threat to withdraw from the organisation.

BLAME

So should the blame for freeing imports of GCT rest squarely at the feet of the WTO? In his presentation to the House of Representatives, Dr. Clarke spoke about how the policy of applying GCT to raw food could be interpreted as government-sponsored protectionism and how Jamaica, as a WTO member is not permitted to implement measures that are designed to protect domestic products.

What the minister did not explain is that within the powerful WTO, agreements and rules are agreed by member governments of which there are 164. Free trade is not forced on any member. In fact, member countries can decide how far they want to go in removing trade barriers as they fix their negotiating positions according to their national priorities.

As we understand the WTO, it is a negotiating forum, so agreements allow time for barriers to be removed, for adjustments to be made and special circumstances to be taken into account. For example, standing rules permit temporary safeguards against imports that are viewed as damaging to local interests.

For many years, the WTO has been criticised by independent voices who claim that the rules agreed by member countries essentially serve the interest of multinational organizations and undermines domestic interests in small developing countries. Could it also be that many small countries do not have the negotiating muscle and therefore blindly agree to positions which they know are inimical to their national interests?

It seems Dr. Clarke needs to have a session with the country’s agricultural leadership and its diplomats to re-negotiate some commitments which are obviously harmful to the national interests. Let us exploit some of the explicit exceptions which are provided on health, safety, national security and other public policy grounds.