Guyana provisionally agrees to adopt CET on sugar by 2022

Photo credits [Birches group]

Guyana’s manufacturers and sugar producers have agreed that the 40% Common External Tariff (CET) on imported extra-regional refined sugar will apply for the specific use by food and beverage manufacturers from 2022. A processing plant producing white sugar is expected to come on stream then.

The decision by the Guyana Manufacturing and Services Association (GMSA) and the Guyana Sugar Corporation Inc (GuySuCo) follows representations to CARICOM by regional sugar producers about the need to protect what is left of the cane industry by rigorously ensuring the CET is imposed on all imported sugar. The approach had proved contentious as Caribbean manufacturers of soft drinks and confectionary have expressed concern about the quality and price of regionally produced brown sugar, preferring instead to obtain waivers to import what they require.

In a joint statement, GuySuCo confirmed its commitment to producing white sugar of Codex ICUMSA 45 to meet the requirements of the GMSA’s manufacturers of food and beverage products. “The Company has already sent out a request for tenders for a processing plant to produce white sugar of the required quality and colour with a target of early 2022 for first production,” the statement noted.

Under the terms of the Guyanese agreement, refined sugar will continue to be exempted from the CET until white sugar produced in the region satisfies the specifications and quality required by manufacturers and is produced in sufficient quantities. It was also agreed that refined white sugar should only be ineligible for conditional duty exemption when regional sugar producers can demonstrate the have the capacity to produce white sugar at a quantity that meets 75% of regional demand and of the quality required by food and beverage manufacturers.

Guyana’s manufacturers emphasised that once quality white sugar is produced and manufactured within Guyana and is available to the required specifications at a reasonably competitive price, they would purchase Guyanese sugar for food production. The GMSA also said it would support the establishment of a monitoring mechanism to prevent the evasion of CET on brown sugar imported into the region, a problem that negatively affects all CARICOM sugar producers.

The issue of all Governments observing CARICOM’s 40% CET on imported sugar had been discussed on 18 November, when CARICOM’s Council for Trade and Economic Development (COTED) met in Guyana.

Amid disagreements over sugar producing nations’ manufacturing requirements, COTED trade ministers were asked to endorse three outcomes concerning sugar from a COTED Agriculture Ministers meeting held in October.

These were that:
• Refined sugar would be ineligible for Conditional Duty Exemptions when regionally produced white sugar meets the quantity and specifications required by industrial users of sugar;
• A monitoring mechanism for all sugars to determine the match of availability and demand requirements to ensure support to regional production of sugar must be urgently implemented and that the CARICOM Secretariat must develop the necessary Terms of Reference and initiate the process before the end of 2019; and
• CARICOM Member States must immediately apply the CET regime to all brown sugar entering the CARICOM Single Market.

Paula Gopee-Scoon, Trinidad’s Trade and Industry Minister, subsequently told Stabroek News that “discussions took place on the actual substitutability of plantation white sugar and naturally, countries with a manufacturing sector which is very focused on foods and beverage would have a concern”. She said that in Trinidad’s case, it was important to maintain specifications and standards to protect food manufacturers reputation and a significant proportion of the 60,000 jobs in the sector. Trinidad, she said, had a globally competitive food manufacturing industry that needs to meet export standards and specifications.

The issue had formally been brought to COTED by Belize, which had argued that it would also benefit sugar producers in Guyana, Jamaica and Barbados in the light of declining external markets and prices, and the emergence of nations able to produce plantation white sugar.

Separately it was announced that Guyana is planning a new 55,000-tonne white sugar refinery at Albion to be operational by the end of 2021. Reports in the Guyanese media indicate that in addition, GuySuCo envisages it will improve the capacity of a packaging plant at Blairmont for higher-value direct-consumption sugars and is exploring a joint venture to establish a distillery at Uitvlugt or possibly at Blairmont. It said that by 2025 the industry would be producing some 160,000 tonnes of sugar per annum.

The Sugar Association of the Caribbean believes that the Caribbean produces enough sugar to satisfy regional demand, and according to figures recently cited by Forbes, can reduce the single market’s balance of trade deficit by between US$132.5m and US$271.7m annually, though the CET.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

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