BECAUSE OF the levying of a new tariff, urea ammonium nitrate (UAN) producers in TT will now have to pay a €22.24 (TT$174.14) per tonne fee on fertiliser shipped to the European Union. This may sound like a matter of esoteric interest until we consider the impact such moves can have on tax revenues and business interests within our jurisdiction. It represents an instance of falling afoul of protectionist rules that signals our collateral place within international business wrangling.
The petrochemical manufacturing sector overall contributed $11.38 billion to GDP in 2018, or 7.3 per cent. Therefore when tariffs are being applied to key commodities like UAN, it signals the susceptibility of our economy to regulated zones like the EU.
That the tariffs have also been applied in relation to the US and Russia and that there are ongoing trade and political disputes involving these actors cannot be without implication for our ability to navigate the choppy waters and steer our own course.
We stand resolute in our advocacy for free trade. At the same time, we also understand the problems caused by dumping. We know there is a time and a place for protectionism. However, smaller countries often end up in the crosshairs of far bigger international players. Can we take comfort in the fact that the tariff imposed on local production is lower than that applies to Russia and the US? Proman/Methanol Holdings Trinidad Ltd, the main producer, is not likely to. The company’s diverse global profile, with operations in Europe and the US, complicates the situation.
In a statement, MHTL said it was aware of the European Council’s decision, and as the sole UAN producer in the Caribbean, had been engaging the EU commission on the issue since it was first raised. It has also been keeping the Ministry of Trade and Industry and other stakeholders closely informed. The company said it had taken the possibility of these tariffs into account as part of its regular forecasts and contingency planning, adding that it will continue to utilise its global integrated supply chain to ensure customers’ needs are met.
“Like other globally competitive UAN producers, we are disappointed by the commission’s recent findings, and are assiduously exploring all of our available options.”
Given the damage to our reputation caused by the ruling, it would be germane for the Ministry of Trade and Industry to conduct its own review and clarify what position or role it has adopted in relation to these developments. Will the ministry seek to engage the EU on this matter? Will it examine the anti-dumping laws and issue general advice on how they can be complied with by firms in our jurisdiction? The ministry might be in a better position to make a case on behalf of domestic production facilities, from the perspective of any linkages it may have with foreign affairs linkages.
As the 2020 budget showed we are still an energy-based economy and tariffs against the country must be addressed with urgency.