Local manufacturing industry may be at risk with EPA
By VonDez Phipps
Reporter-SKNVibes.com
BASSETERRE, St. Kitts – Local manufacturers are concerned that the recent signing of the Cariforum/ European Union (EU) Economic Partnership Agreement (EPA) will negatively affect the industry.
During a recent interview with SKNVibes, CEO of Sun Island Clothing, Mahesh Nariani worded his unease regarding the implementation of the EPA and the impending CARICOM/Canada trade agreement which will involve the removal of duties on goods imported into St. Kitts-Nevis from the EU and Canada over a period of time. He opined that it will “definitely be detrimental to local manufacturers of goods”.
“I fear it will discourage manufacturing in the Organization of Eastern Caribbean States. We have small markets and our manufacturers, as such, do not have the economies of scale to be highly competitive. Thus, our costs in many cases are very high.
“Under the present regime of taxes we have to pay consumption tax on goods manufactured and traded in the OECS. This tax is on the Cost Insurance Freight (CIF) value of the goods. We are all aware that we do not have a proper interisland freight service and rates on small schooners are very high. This increases the CIF among other taxes, finally making OECS-manufactured goods less competitive. The high port charges, high energy charges and labor costs are also contributors to lower competitiveness.”
Nariani recommended that the OECS adopt a policy of “not charging any consumption tax on goods made in the OECS and traded within the OECS for a period of 5 to 10 years”. He stressed that such a move would give manufacturers a chance to expand their production and take advantage of the bigger OECS market, as he informed a similar decision has already been taken in the case of agricultural goods. ~~Adz:Right~~
Minister of Finance and International Trade Hon. Dr. Timothy Harris informed that the only businesses which may not be able to compete in the international markets are mainly domestic ones and added that he does not foresee “anything new coming out of the new EPA arrangement that would further provide competition”.
“Our factories here are export-oriented and are already competing with international companies. Also, more than 80 percent of our domestic businesses are not challenged by the EU manufacturers. There are certain protective measures for small and vulnerable businesses. In such cases where competition is to come, the EPA provides a 25-year waiver, which is more than enough time for smaller businesses to expand.”
Harris said smaller businesses must now develop a “special niche within the [local] market and establish a niche to serve the region”, an act he said should encourage such businesses to form strategic partnerships and capitalize on collective resources for investment.
