The Common External Tariff for imports should only be suspended where the conditions in Article 83 of the treaty apply

Dear Editor,

Thank you for allowing us the opportunity to respond to a letter titled “Cement imports ensure a competitive price”, which was published in your newspaper on Wednesday, October 17, 2007. The points raised in the letter require that we clarify our position on these very critical matters. We are going to present the facts objectively in an effort to clarify the comments made by me, as well as to put forward our position on the CET and cement prices in Guyana.

First, I was quoted as saying that “the price of cement is not a major issue in Guyana but is more a matter of principle”. I was making a statement in the context of Article 83 of the rules of the Revised Treaty of Chaguaramas which sets out three (3) conditions for the alteration or suspension of the Common External Tariff (CET). These are (1) the absence of production within the region, (2) poor quality and (3) the issue of sufficient supply to meet the demand in the region. Price is not listed anywhere in the Treaty as a determining factor in suspending the CET. In fact, this is the same argument the Government of Guyana has been using in its current issue with the importation of rice into Jamaica. Guyana is claiming that it is a “principled” position based on the said Article 83. I was therefore drawing to the attention of the authorities of Guyana the need for equality of treatment. That is, it would be unfair for Government of Guyana to use the principle of Article 83 for their benefit but seek to move from this “principled” position when the onus to implement the CET is on them.

Secondly, we agree with the author that cement “should be available to Guyanese at a competitive price”, which is of course, the price that is determined by the market. This is a principle that has defined our operations in Guyana from the inception.

A perusal of the statistics on the supply and price of cement in Guyana would show that prices for cement were actually stable from 1997-2004 (or is it 2003?). In fact, it was in 2004 when the CET was suspended and importers dominated the market that prices began to escalate. The “yo-yoing” of prices as described in the letter continued until 2006 and it was only on TGI’s entry into the market in 2006 that prices stabilized. In fact, the period of TGI’s operations in Guyana has been marked by a downward pressure on price.

Thirdly, the TGI investment is a substantial one which was undertaken in order to ensure that the consumers in Guyana were provided with a consistent supply of quality cement at a competitive price. This investment reflects the TCL Group’s commitment to the people of Guyana. Can the producers of the imported cement make the same claim? The history of trade in the region and the world would shows that importers would only continue to import cement as long as it is in their interest to do so. Only recently the Government of Grenada imported cement from Brazil, which attracted such a high retail price that it could not be resold. In this regard, with shipping costs tripling in 2007, and a similar trend expected in 2008, one can safely say that the importation of cement into Guyana would soon decrease. When this happens, TCL Guyana Inc (TGI) will still be in Guyana to ensure that the consumers in that country are not disadvantaged in any way.

Finally, please note that cement comprises only five percent (5%) of total building costs. In fact, all materials used in the construction sector have been increasing, However, the increase in TGI’s cement price have been relatively small compared to the increases experienced in some of the major construction products.

Yours faithfully,

Mark Bender

Plant Manager – TCL Guyana

Inc (TGI)

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