Dumping ground!

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Barbados is at risk of becoming a dumping ground for cheap goods from abroad unless Government acts decisively to protect local manufacturers, one member of the Senate has charged.

Lindell Nurse, an independent senator, today warned that repeal of the Fiscal Incentives Act would place Barbadian manufacturers at a disadvantage because they would lose the protections provided by the legislation.

Nurse said this would be compounded by the new taxes announced by Prime Minister and Minister of Finance Mia Mottley in her June 11 mini-Budget, making it even more difficult for local manufacturers to compete.

“We can very well find, if we are not very careful, that we find dumping [in Barbados]
. . . and therefore Government must seriously be thinking how they can, if necessary, have some anti-dumping legislation put in place to ensure that at least we are protecting our manufacturers from what could turn out to be a level of unfair competition,” he said.

Like the House before it, the Senate today passed a bill to repeal the Fiscal Incentives Act in order to comply with World Trade Organization (WTO) rules.

Among other objectives, the Act provided exemptions on customs duties for some manufacturing entities and made provision for incentives for manufacturing companies to invest in Barbados.

The Act, which also provided a number of tax exemptions and waiver of taxes on dividends for various classifications and categories of enterprises, was deemed to be in direct contravention of the WTO’s Agreement on Subsidies and Countervailing Measures, the rules regarding whether or not a member may provide a subsidy.

Those subsidies were first scheduled to be phased out by 2003, but after failing to meet that deadline, a new deadline of December 2015 was set by the WTO, with a disclaimer that no further extension would be granted.

Nurse today argued that Government needed to find new ways to assist the sector in order to save manufacturing.

“I think we have to look to see how Government can assist those manufacturing companies, not by means of incentives as worked in the past, but by means of making them more efficient,” he told the Senate.

“Is it possible, for example, that Government may be able to assist in terms of capital loans to allow such companies to purchase new and more technological efficient equipment to help them in their manufacturing processes?” he added.

He argued that the removal of the National Social Responsibility Levy was likely to make the importation of raw materials and goods cheaper.

However, he said the introduction of the Garbage and Sewage Contribution levy of 50 per cent of commercial businesses’ water bills, and the tax on fuel, would have some impact on operational costs.

“Our fuel tax, which is going to be applied to diesel for example, is going to have an impact on those manufacturers and we know that energy costs tend to be a significant cost in the manufacturing sector. So are there any ways that relief can be granted for those energy costs?” he asked.

Also raising concern about the repeal was Crystal Drakes, the opposition senator and economist, who called for a replacement for the Fiscal Incentives Act.

“Repeal this and replace it with what?” Drakes asked.

“So clearly then the goal going forward then has to do with encouraging small and medium-sized plants to have skilled intensive labour along with export orientation. There needs to be a participatory approach to this,” she said.

Drakes also described the abolition of the Act as “a bit opportunistic”, given that Government was “a bit cash-strapped and we have issues as it relates to our expenditure and revenue and we are going into an International Monetary Fund programme”. (MM)

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