The Government of Belize announced a big win this week for its local sugar industry having achieved a settlement with its sister Caribbean Community (CARICOM) member state, St. Kitts and Nevis, over the latter’s alleged failure to apply the Common External Tariff (CET) to roughly 1,000 metric tons of brown sugar imports from Guatemala and Honduras.
“This out-of-court settlement is a major victory for the sugar industry of Belize, which has been disadvantaged by imports of sugar from non-CARICOM sources, including Guatemala, as this sugar is displacing regionally produced sugar from the CARICOM Single Market,” the government stated via press release. “The sugar industry is now assured that it will get the trade policy support that it is entitled under the Revised Treaty (of Chaguaramas), including the application of the CET [Common External Tariff], and a renewed opportunity to fully enter the market of Saint Kitts-Nevis.”
The matter dates back to October 2020, when Belize—in accordance with Articles 211, 213 and 216 of the Revised Treaty of Chaguaramas (RTC) which, inter alia, establishes the Caribbean Court of Justice as the body with “original jurisdiction” over matters pertaining to the interpretation and application of the RTC—filed suit against three defendants: St. Kitts and Nevis, Trinidad and Tobago, and CARICOM.
In the case of the first two defendants, Belize’s application sought relief in the form of judicial declarations that the member states “failed to apply the Common External Tariff of 40% on imports of extra-regional brown sugar imported into their respective territories from Guatemala and Honduras during 2019”. The CET, established under Article 82 of the Treaty, is a cornerstone of the RTC, as it was designed to help protect CARICOM products from competition from outside the trade bloc and, thereby, incentivize regional investments.
Belize’s application alleges that St. Kitts and Trinidad and Tobago had not applied the CET to 1,000 metric tons and 3,000 metric tons of brown sugar imports, respectively. Combined, the former and latter quantities would represent just about 2.0% of Belize’s total sugar production for 2019.
While the case against Trinidad and Tobago continues, the government explained that “shortly after being notified of the legal action taken by Belize in the CCJ (Caribbean Court of Justice), the Government of Saint Kitts-Nevis commenced discussions with Belize on a possible out-of-court settlement”. The release explains that following “targeted negotiations” the parties were able to agree on “conditions satisfactory to Belize”.
Apart from the two member states, Belize is also continuing its proceedings against CARICOM. The application calls on the CCJ to declare that CARICOM “failed to continuously review the Common External Tariff in respect of brown sugar, failed to assess its impact on production and trade within the CSME [CARICOM Single Market and Economy], as well as failed to secure [the CET’s] uniform implementation throughout the Community on imported brown sugar, in particular, by reducing the need for discretionary application in the day to day administration of the Tariff.”
The Belizean authorities are also maintaining their call on the Court to order the CARICOM Secretary General to, among other things, “urgently complete the monitoring mechanism that is designed to monitor the requests for imports of sugar into the Caribbean Single market.”
The agreement regarding the establishment of a monitoring mechanism is an output of the 49th Meeting of the Council for Trade and Economic Development (COTED). Held in November 2019, COTED had approved, inter alia, that before the end of that year the CARICOM Secretary General would have initiated the process of instituting a monitoring mechanism for “all sugars” so as to “determine the match of availability and demand requirements to ensure support to regional production of sugar.”
Belize's case has also received support from the Sugar Association of the Caribbean (SAC), which in a November 2020 release similarly expressed its concerns regarding the inappropriate application of the CET and the lack of the monitoring mechanism. "In November 2019, COTED mandated the Community to introduce a monitoring mechanism to tighten control of sugar imports," SAC stated. "So far, this has not materialized."
The SAC release would go on to reference instances of blatant abuse of the current institutions. "In recent months, exaggerated requests for CET waivers under the safeguard mechanism indicate scant regard has been paid to the political sentiments expressed by COTED," the organization added. "In one recent case, a single manufacturer has sought permission to import around half of their country’s national annual demand."
In concluding its release, SAC underscored that regional sugar production for 2021 is "likely to exceed 400,000 Metric Tons", a figure that is notably higher than the "total regional demand of 280,000 MT". This led the Sugar Association to lament the fact that only "a quarter" of the regional production is sold within CARICOM.
Speaking on the matter, SAC Chairman R. Karl James shared, “It is ridiculous to import most of our sugar from outside the region, when Caribbean sugar is under-utilized at home”.