A ruling by the Caribbean Court of Justice, CCJ, in a nearly two-year-old case, reaffirmed the importance of the 40% Common External Tariff, CET, for trade within the 15-nation Caricom trading bloc.
The February 1 judgment is hailed by regional sugar producers, represented by the Caribbean sugar umbrella association, as a positive outcome, despite the fact that the merits claim of Caricom member Belize was denied by the court that adjudicates commercial disputes arising from the revised version. Treaty of Chaguaramas, RTC, which is the founding document of the community.
“This court was right to affirm, on several occasions, the importance of the obligation for the Member States to impose and maintain the CET on the importation of extra-regional goods. The court considers it necessary to repeat these injunctions,” the CCJ’s seven-member panel said in its 49-page ruling on Belize’s September 2020 case.
The CCJ drew on its previous statements on the CET, noting its ruling in previous trade disputes, in which it described the CET as “a fundamental pillar” of Caricom’s single market and economy, CSME. He noted that the CSME is a customs union and regional trade agreement area covered and protected by Article XXIV of the General Agreement on Tariffs and Trade, or GATT, requiring the establishment of a CET. .
“This tribunal again emphasizes the importance of maintaining the CET, particularly in relation to a product such as brown sugar, which is of demonstrable importance to member states such as Belize that manufacture this product. The CET does not guarantee Belize’s sugar producers an assured market, but those producers are entitled to the market protection that the tariff is meant to provide.The tribunal also urges the community to oversee the conclusion of the sugar monitoring mechanism as soon as possible to ensure that the benefits intended to secure regional sugar producers are not frustrated and compromised,” the CCJ said in its judgment on the sugar trade impasse.
Belize had sued Trinidad and Tobago, a Caricom trading partner, alleging that the twin island state had allowed several shipments of brown sugar from non-member countries Guatemala and Honduras, both located in Central America , to enter the country without the 40% TEC tax. which is heavily used by Belize’s sugar producers to protect its access to Caricom markets.
THIS CREATOR OF BENEFITS
The TEC serves to increase the price of extra-regional products, creating an advantage for items made within the CSME, in which most Caricom members participate.
Belize’s September 2020 application on behalf of Belize Sugar Industries Limited, BSI, alleged that between November 2018 and June 2020, brown sugar from Guatemala and Honduras entered the Trinidad market without payment of the applicable CET, which had led to lower prices and sales of BSI-brown sugar product. Belize contended that by authorizing this import, Trinidad breached its obligation under Article 82 of the BTI.
Belize sought orders against Trinidad stating that it was not enforcing the CET on the importation of sugar and that approximately 3,000 metric tons of the named countries’ merchandise had been imported in violation of the BTI and revised procedures for the suspension of the TEC. Belize also requested that it be awarded damages to be paid by Trinidad and that its legal costs also be paid.
Belize originally named the Caricom Secretariat based in Georgetown, Guyana, as a defendant in the lawsuit, alleging that the entity failed in its duty to prevent the alleged breach of the trade treaty and failed to put in place mechanisms to ensure the protection of interests. Member States through proper monitoring of the implementation of the CET regime. He accused Caricom of failing to review the CET, failing to assess the impact of the CET on production and trade within the CSME, and failing to ensure the uniform application of the tariff on imported brown sugar. She sought court orders making these statements consistent with her allegations.
Belize also wanted the CCJ to compel the Secretary General of Caricom to urgently complete a planned sugar mechanism to monitor applications for sugar imports into the CSME, to submit such applications to the Council for Trade and Caricom Economic Development, COTED, for review and approval; and to report on the adoption of the mechanism to the court within three months.
However, the action against the regional body was dropped in October 2021 after Belize, together with Caricom, provided the court with documents showing that steps had been taken by the organization to implement the mechanism of monitoring.
Caricom would have considered the issue raised by Belize, established the sugar monitoring mechanism, mandated its members to comply with their existing obligations by applying the CET to all brown sugar entering the CSME, conducted consultations on the creation of an online service for the monitoring mechanism, and submitted the terms of reference for the system for consideration and adoption before the COTED meeting held in November 2020. He said that Member States needed more time to consult on the terms of reference and that COTED had agreed to hold a special meeting in February 2021 to consider the adoption of the terms of reference.
A March 2021 meeting at COTED would have set up a ministerial sub-committee to complete the review and adoption of the terms of reference for the follow-up mechanism. Following two sub-committee meetings in July 2021, the terms would have been approved at a COTED meeting in October 2021.
Caricom’s lawyers had argued that the case against the institution was premature and unfounded. This was Caricom’s assertion that only the member countries have the responsibility to ensure the imposition of the CET and that any failure of the states to ensure the imposition of the tariff was not a reasonable ground for bringing a complaint against the community. . Caricom said its responsibility was to do everything possible to urge member states to impose the CET on the import of extra-regional products, and it did so.
Community lawyers also argued that it was Belize’s right and responsibility to request a special meeting of COTED to address the issue of the alleged non-imposition of the CET on extra-regional brown sugar, but the member country had not done so between May and November 2019.
Trinidad filed its defense in February 2021, denying allowing the import of extra-regional brown sugar without imposing the 40% CET, in violation of its obligations under the BTI. His refusal was accompanied by customs documents which he provided to the court but refused to share in full with Belize. Trinidad insisted that its customs law prohibits the disclosure to Belize of documents and information relating to specific importers. Instead, it provided Belize with summaries of information generated by searches of its customs database. Belize’s challenge to the non-disclosure of information was not upheld by the tribunal.
The Caricom member acknowledged that extra-regional brown sugar was imported into the country between November 2018 and June 2020, but said the 40% CET applied to such imports. Any decline in BSI’s sugar sales to Trinidad, she asserted, did not mean that the CET was not being applied to extra-regional sugar imports, but rather to Trinidadian importers who may have sourced their supplies at a better price. market than they would have in Belize.
Trinidad also challenged Belize’s right to bring a claim on behalf of BSI, as it argued that although the company was incorporated in the Caricom member country, it is not a state entity and its owners resided in United States. As such, its lawyers argued, the Republic of the Twin Islands had no case to answer.
This point was rejected by the CCJ, which held that in its power to adjudicate disputes concerning the interpretation and application of the BTI, the tribunal had jurisdiction to determine its jurisdiction and, furthermore, was empowered by the treaty to grant special permission to individuals. entities or persons of any Contracting Party to the BTI, to be permitted to appear as parties in proceedings before the tribunal.
The CCJ ruled in favor of Trinidad and dismissed Belize’s original case on the grounds that the circumstantial evidence produced by the Central American country Caricom was unfounded and as such its claims against Trinidad n were not proven. It concluded that the documents relied on by Belize did not indicate that the CET was not imposed because there was no reference to tariffication.
Each party was ordered to bear its own costs.