 Hi, good evening. Welcome to Issues and Answers, a production of the government information service. I am Titus, previously this evening, sitting in with two guests who are going to, over the next 30 minutes, discuss an issue putting into regional trade. That is what is commonly referred to as Article 164. Now, in the revised treaty of Shagaramas, establishing the Caribbean community, Chapter 7 of that treaty makes provisions, special provisions for what is referred to as disadvantaged countries, regions, and sectors. And within that chapter, there are articles. And one of the critical articles in there is what is referred to as Article 164. Article 164 essentially is a special set of arrangements that allow the LDCs of Caricom to get particular advantages for certain industries for certain periods of time so as to allow those industries to grow. Quoted has approved a third round of Article 164. And to discuss this third round this evening, I have in the studio two persons, Dr. Thomas Samia, who is the director of trade in the Ministry of Commerce. And Mrs. Paula James, who is the executive director of the Sanution Manufacturers Association. Thank you very much for accepting the invitation from the government information service to be here. Dr. Samuel, Ms. James. Thank you. Dr. Samuel, Article 164. We hear a lot about this. We know it is a provision in the revised treaty. We understand that it is the third round of Article 164 will commence from the 1st of January, 2020. For the purpose of the listeners out there, no more than two minutes. Give us the context in which Article 164 is being rolled out a third time. Good morning, viewers. And thank you, Mr. Moderator. You have summed it up quite well in your opening statement. The Article 164 regime is part of what, as you indicated, the Chapter 7 of the treaty. But it's really what I call an innovative and creative provision in the treaty that recognizes that the countries that make up the CSME or the Caricom Integration Arrangement are not all of the same level of development. And with the aspirations and objectives that we have set for ourselves regarding CSME and regional integration, it was felt that it is necessary to provide some compensating arrangements, some kind of provisions that give the less capable, for want of a better word, or disadvantage countries, some assistance to better compete. And thereby helping to ensure more better distribution of the benefits of regional integration. So that is essentially the broader context in which Article 164. Now it's just a goods-only regime. A lot of our treaty, when it started, basically looked more tangible trade. Traded goods, yes. Traded goods. Over time, and as I would argue elsewhere, we will also have to look at similar arrangements for services. But on this occasion, it's really about goods. The chapeau, I feel like the title of this initiative is really objective is production, industrial development, promotion of industrial development. So this is really what Article 164 tries to do to make sure that LDCs can participate in intra-regional trade, but they need some assistance. And this is what Article 164 tries to do. Ms. James, you've been one of the persons speaking on Article 164 and its need for your members and even firms that are not your members, but will also be beneficiaries from Article 164. From the firm perspective, what is it that they see as the opportunity for them from the regime, Article 164? From a business perspective, a lot of the members are still struggling with the high cost to produce an item. And competing with the MDCs, which is the bigger ones, some of them have oil, they have the capacity, they have everything, shipping, everything, it becomes harder for all manufacturers to compete. So Article 164 gives them an opportunity to try and put some more systems in place whereby it will help reduce their costs. And from the first round of the implementation of Article 164, shipping has been an issue, an area that we have been trying to address. To get something from here to get to Antigua, you may have to make a round, depending on what it is, send it all to Miami, and then it comes back down to Antigua. So that in itself throws your costs way above a normal person that will have something that is much bigger and the manufacturing cost is cheaper to deal with. But for us, it is something that is hard. So Article 164 is only giving them an opportunity to enhance and put systems in place so that it can help their product to come a little bit cheaper than the bigger countries. I'll go back to you, Dr. Samia. We talk of Article 164 on rates. Give me a clear sense as to what the regime will do. Is it a regime for the entire universe of goods, a subset of goods? And if so, give me a sense also, how the regime departs from the normal arrangements within carry-on in terms of free movement of goods. Right. As you know, in an integration arrangement, we have what they call a sort of mature, high level of integration. Integration at its most basic level starts at a free trade agreement. And then after you have something called a common market, a customs union, and then a common market. And after that you have the notion of economic union as we have in the OECS. So at the level of a common market, you have something called a common external tariff, which basically says that the countries in that arrangement have a common treatment of goods coming from outside of that space. And the corollary also is that all the member trade within that space is at zero tariffs. So that's the normal treatment. So if a good originates from any part of that space, whether MDC or LDC, whether say Jamaica to Antigua, Trinidad to Grenada, it does not matter. The treatment is zero tariffs. That's one of the benefits. So it's a preferential space for the members within. But recognizing that as I indicated earlier the disparities or the differences between the members themselves, we have some sort of a structure, dichotomy really of LDCs and MDCs. And recognizing that the LDCs for reasons of size, scale of operation, as Paula indicated, cost of production and other constraints, we need some kind of mechanism to, as I said, act to ensure that the trade is consistent with the aspirations of the region, which is sort of everyone benefits, a win-win proposition. And so article 164 allows us to break away or derogate or move away from the normal treatment and actually apply a tariff on a good from within the space. So if I should go further, so if a good on that list comes from an MDC, it would attract a tariff. And in our case, the regime covers 39 tariff lines or 14 product groups. And these groups or these products are products that the beneficiary countries or LDCs have capacity to produce or existing production capacity, capability. I want you to keep your thoughts on that. I mean, too, we need to go to a break at this point. We'll take the break and then when we come back, we'll continue your examination of the regime itself and how it is actually going to work. Okay, we'll be back in a moment. Mobile number portability is here. True choice. Change your service provider and still keep your current mobile number. True convenience. No hassle of advising personal and professional contacts of new numbers. True value. Mobile number portability is free. It's your number. Keep it. Visit NTRC or Ektel's website for more information. Yeah, welcome back to issues and answers. As you know, it's a production of the government information service. And this evening, we're having a discussion on article 164, a measure, a curriculum measure aimed at benefiting the LDCs of curriculum for a specific period of time. Before the break, Dr. Samed, you were looking at the actual working of the article 164 regime and you clearly explained that the small group of items, 39 tariff heads, 14 product categories or industries, that the LDCs of karaoke will be free to produce these goods. And these goods would be exported to other MDCs without any duties. And if these very goods were to be imported from the MDCs into the LDCs, there would be a tariff applied to them, which is not the norm in the Common Union. Yes, common market. In the common market. The question that arises is trade among the LDCs themselves in those specific goods. Will there be any duties applied? Well, the short answer is no. Because they would be consistent with what we call community treatment or community origin. As long as a good moves between member states, normally it's zero. Even in the absence of article 164, that same would apply even for an MDC. But we are moving away from the normal community treatment in the case of the article 164 regime, the products covered there, the 14 product groups or categories you mentioned, to give, as we indicated, the LDC firms, the firms in the LDCs, that competitive advantage and space in terms of tariff protection. Okay. Would prices rise as a result of article 164? And it's from a consumer perspective? The short answer is not necessarily. It really depends on the origin of the product. If the consumer buys a product from, well, locally then or from an LDC, there would be no increase in price. There should not be. If they choose to keep their preferences, as far as the brands that they have been consuming, and if these brands originate from an MDC, there is likely to be an increase in price. Because remember the object of this thing, the objective of this arrangement is to actually increase trade and production in the LDCs. So it stands to reason that the MDC product would be affected. We are trying to promote a shift. Yes. And if the product is coming from a third country, it's automatic. Yes. If it's coming from outside the region, it would face a much higher tariff. I want to also add titles that in the structuring, in setting up the tariff rates that apply between MDCs and the rest of the world, care and attention was paid to ensure that the margin of tariff, in other words, the wedge between a good from outside the region and the MDC is the same with what existed before. With the normal CET. Which is the CET. So if before the arrangement, the tariff was 20%, the CET was 20% or 30%, that would be the gap or the wedge between the good coming from outside the region and an MDC. So in other words, MDCs are not affected by the article 164 relative to goods from outside, substitutes from outside the region. Gotcha. So that's important. The article 164 and what we've spoken about so far has focused the tension on the duties, the new duties that would be applied on goods that are article 164 and that are going to be traded either with carry-com or come from carry-com into our jurisdiction or from a third country into a MDC jurisdiction. But I gather that, and Ms. James made that point very early, that apart from the duties, there are other factors that can impact the trade of goods or trading goods among ourselves. Are there other arrangements in place to support or buttress the regime, that does the tariff regime itself? Yeah, certainly there is. Actually, in the treaty, article 164 paragraph two in particular speaks to a set of what they call accompanying measures, which really is a set of support measures that are necessary to supplement the first, the impact or the effects of, the price effects caused by the tariff component. And that includes basically a number of firm specific challenges or constraints, which can be, for example, standards, a company may have a difficulty meeting a standard to enter market, so that'll be where we can direct some support. It can be an issue as she indicated of a logistic challenge in terms of shipping. Shipping may be the main problem in actually being competitive in trying to get to a particular regional market. So that is another area that will be brought to attention of a regional, the relevant regional body. So standards, for instance, would be referred to a cross queue. Right, now we have, for example, there might be scale issues. The company may need to upgrade its plant, maybe to have a bigger plant that has higher throughput and is more efficient, and it may need some resources to help with a plant upgrade. That kind of proposal might find its way to the CDF or Caribbean export, all right? The issue, so we have a number of regional bodies that will play a role in helping to ensure a more successful Article 164. So I could tell you the OECS commission through the Ex Competitive Business Unit, which is based in Dominica, has been doing some work to sort of get an indication of what are the needs of the various Article 164 beneficiary firms. In Celusia's case, we are going to be conducting our own needs assessment, where we prepare a diagnostic survey instrument which would be circulated to the firms where they would indicate to us. They would tell us what are their needs and having received that information, we would then be able to say, if we have, for example, 40 beneficiary firms, we would be able to rank and prioritize and see what are the needs of these firms. We will send this to the OECS commission and then later on to Carycom Secretariat. The Carycom Secretariat will then disseminate that information to the relevant regional body, which will now be included in the work program. So that is basically the approach we hope to take so that we can provide support to also ensure that all the agencies are acting in tandem with us to ensure that the treaty objectives are realized. So this is what the accompanying measures and support of phase two component of the Article 164 is all about. Okay, so when I come back from the next break, which is coming up shortly, I want Ms. James to talk to you, come to you with respect to the participation of your members, the cooperation as it were, in facilitating the data collection and the monitoring of Article 164. And also Dr. Samuel, for us to look at some of the, what you perceive as difficulties or hurdles that we may have to address as we implement Article 164. We'll watch any issues and answers, production of the government information service. We'll be back in a moment. Yes, I'm Usha. This is your point, Mark 11, telling all the drivers on the road. Be careful on the roads today and always roll if a designated driver. If you are the driver, drink responsibly. Go and come back home safely, out. A message from the Ministry of Health, wellness, human services, gender relations, and this station. Welcome back to the program. We've been speaking, and as I said before the break, I wanted to turn to you, Ms. James, to look at the matter of your members and their participation over and above just production in terms of making the regime work for them. Dr. Samuel mentioned earlier that a diagnostic would be conducted to determine what are some of the constraints that your members have. That's members who are beneficiaries of Article 164. Are your members ready to cooperate and provide the information that's necessary? My members were always ready to cooperate from day one. We are in the third round of Article 164 and we've been saying that something needs to be done with the shipping. Something needs to be done with helping them get across the hurdle of the electricity cost. So we are in the third round and none of these two has happened. So you're saying that in addition to Article 164 as, and with their support in our company measures as explained by Dr. Samuel, some of the real challenges are energy costs, shipping. And shipping. And these two, I don't believe are front and center in terms of what is contained in the quoted decision on Article 164. Dr. Samuel, how do you see that playing out? Is it a case where each country on its own may have to find its own shipping arrangements? No, but before we even go there, there were some things that MDCs had to put in place. From the inception of Article 164. So I would like Dr. Samuel to tell us where they are with these things that they have to put in place. As we have argued at the quoted level, this is the success of Article 164 depends on the collaboration and consistent action of a number of parties. Not only the firms themselves and the beneficiary, but the regional organization and the MDCs. I could recall as far back as the second edition when we were moving into the, to start it in 2013, that was quoted 35. The 35th quoted outlined the number of support areas which included at the time energy costs and also the shipping constraints. Now, that is what they call environmental. It's part of the ecosystem in which the traders must operate. And that is not something can be done, as you say, at the level of a member state. That is basically a regional response and an enabling arrangement to ensure that goods can move in a timely way up and down the chain. Do you see any action happening on these? I would say yes. There has been some movement, even at the OECS level for sure. The much talked about ferry service is one that we have. It continues to be one that we have been working on. And it is my hope that within the lifespan of the current Article 164 that we are likely to see the commencement of probably better supply in terms of shipping options for traders. We also have another local agency, a body of the Ministry of Commerce affiliate body. Here I refer to the... Export San Lusia. Export San Lusia, trade San Lusia, that I think has done some work and also an ally, I feel like, an agency that will also be working to support the efforts of the San Lusian Article 164 beneficiaries in a number of areas, including engaging at least the shippers, if necessary, to facilitate the movement of the goods. But this is an area that is of priority and it is recognized that we need to address these concerns. I want to look at two quick constraints. We have five more minutes in this program. So let's look at a constraint immediately. Is there any obligation on the part of every other... Now we've been speaking of MDC and LDCs. Well, of course, the LDCs are the less developed countries of Caricom and the MDCs are the more developed countries of Caricom. Is there any obligation in terms of the implementation of the rates for all members of the LDCs to apply the relevant duties to every item on the list in their respective country? Was it optional? I'm not sure if this is the correct framing of the question. What I know is that at the level of Quoted, a decision has been taken regarding the treatment of a subset of tariff lines, which allows the LDC countries to treat, so treat these tariff lines in a manner prescribed in the schedule attached to the decision. It is the reality that not all the products covered on the list are produced in all the members. And some members, it would appear, have taken into account consumer considerations in terms of the likely impact on their consumers if the rates were to be applied on goods that they did not produce. So what I am seeing emerging, and I don't think it's an official position that has been decided or provided at the Quoted, is that while all the rates will be applied eventually across all the member states, really what's happening is the regime seems to be implementing a partial approach where members' states are implementing the rates on the products that they produce. I understand, but that has the potential to constrain the potential market of, say I am a producer in St. Lucia, of an item that is covered by Article 164. I expect the duties applicable to that product to be enforced in another LDC member state so as to give me that protection in that market. So if I am producing, I am able to export, I have the opportunity to move into another LDC member state with my goods entering free. And this member state ought to provide me the protection by having that particular good terrified at a particular level. What recourse do I have as a producer? Can I go to the CCGN protest? Is that contemplated? Do you foresee that happening in the implementation of Article 164? Or what's case scenario? I'm not sure what can happen. I can't tell the future on this one. But what I can say to you is that there is not really a built-in incentive for a producer from an MDC in the first instance to want to challenge such a regime because they would prefer if the rates were not applied on their products. Because it's essentially a sacrifice which they are making in terms of it weakens the competitiveness of their product in the LDC state. In the LDC, among LDCs, perhaps is where there is likely this kind of rise, where maybe a producer of a good in one LDC is concerned that the rates are not applied in another LDC state and what that means. But they already start with zero, meaning their good is only affected in so far as to the extent that the LDC imports the same good from outside the region or from an MDC. But if the good, for example, you take example, flour. Flour is not likely to be imported into the LDCs from outside of the LDCs. There are about at least three. So where we have capacity to produce? That should not be an issue. That should not be. And then the shipping problem, which is the one we're trying to address, is also one of the reasons why the regime is less porous. I am being asked to wind up the discussion. Ms. Deems, I want to come back to you. Your members have the discussion we were having in Dr. Semmel. Has that been of concern to them? Have they raised that? Well, we had issues with dumping that we had to go to court to address. And but then you have the flip side, because when you ship something to one of the MDCs, they look for every reason, every piece of document to hold your goods on the port. And it can stay on the port for weeks. And you keep fighting that battle as an LDC against an MDC. We have had quite a bit of issues with that. Ask you for documents that he's not a part of. I suspect that we would have to have a separate program to discuss that one. We did wind up. But Dr. Semmel, Ms. Deems, thank you very much for your comments on the regime Article 164. I wish the Ministry of Commerce and the country all the best in that and our producers. I wish they would take advantage of that provision in the treaty to expand domestic as well as the original, subregional market share for those goods. Because after all, Article 164, the items on that list will only be receiving that preferential benefit for a limited period of time. 10 years in for some items. Most items except curry powder and pasta, which will be for five years. OK. So thank you very much, Dr. Semmel. Thank you very much, Ms. James. This has been a production of the Government Information Service. That was a program, Issues and Answers. I'm Titus Pravell. Have a good evening.