Thu | Jul 29, 2021

Caricom soap fight in court

GOJ backtracks on export certificates as Trade Board, Customs, Blue Power sued

Published:Sunday | June 13, 2021 | 12:10 AMHuntley Medley - Associate Business Editor

The Supreme Court building in Kingston.
The Supreme Court building in Kingston.
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Regional soap producer Dominica Coconut Products Successors Limited, DCPS, has made good on a threat to head to court in a long-running feud with some Jamaican state agencies and Jamaican manufacturers and exporters of soap.

In a suit filed in the Supreme Court in Kingston on June 8 by Jamaican law firm Hylton Powell, DCPS named the trade administrator, the Trade Board, the commissioner of Customs, Jamaica Customs Agency, and listed company Blue Power Group Limited as respondents in a matter involving the export of Jamaican-made soaps to Caricom markets and the importation of raw materials for soap-making.

The lawsuit prompted the Jamaican authorities last week to immediately suspend the issuing of certificates of origin certifying soaps produced in Jamaica as being of community origin and therefore eligible to benefit from duty-free export to Caricom markets.

Minister of Industry & Commerce Audley Shaw told the Financial Gleaner on Thursday that the decision to pause the certificates while the matter was in court for determination was communicated to soap producers at a meeting on Wednesday. That meeting was also said to have been attended by Foreign Trade Minister Kamina Johnson-Smith, who had chaired a COTED meeting earlier this month at which the issues resurfaced, as well as representatives of the Trade Board and Jamaica Customs Agency.

The Dominican company and its principal, Yvor Nassief, contend in court documents that the Trade Board and Blue Power contravened a decision of Caricom’s trade deliberation body, the Council for Trade and Economic Development, which took a majority decision last November requiring the Jamaican authorities to cease issuing the certificates.

The decision resulted from a DCPS challenge, argued within COTED by Dominican government officials. They maintain that the soap pellets raw material imported from Indonesia by Jamaican producers was simply reshaped as soap without going through a process of manufacturing transformation that the Dominican firm contends is necessary for the finished goods to be classified as being of Caricom origin. Those goods benefit from the non-imposition of the 40 per cent common external tariff that goods of non-community origin attract.

In the aftermath of the decision, Jamaica appears to have continued issuing the certificates pending various levels of appeal, a situation that irked Dominica, which filed a motion of non-compliance against Jamaica at the most recent meeting of COTED, held virtually earlier this month.

While Blue Power had taken the step of advising the Jamaica Stock Exchange on December 8 that COTED’s decision would effectively close the Caricom market to it and other Jamaican soap exporters, the Trade Board said at the time that it had received no policy decision from its parent ministry, the Ministry of Industry Investment and Commerce, to change its process of certification.

Checks with the Caricom Secretariat provided little clarity on the matter. Joseph Cox, Caricom’s assistant secretary general for trade and economic integration, said in mid-December that the soap matter was “awaiting resolution”, even after the COTED decision, and that discussions were continuing.

“Since a final determination is yet to be made by COTED, we are unable to comment at this time,” was all he was prepared to say when contacted by email last week.

Trade Administrator and CEO of Trade Board Limited Douglas Webster on Thursday declined comment, referring the matter to the commerce ministry.

“I believe the portfolio ministry will be making a statement on the matter, so I will leave it up to the ministry to advise formally,” he said via telephone. Jamaica Customs said on Friday that it would not comment on litigation that was pending or active.

Minister Shaw, meanwhile, is putting up a strong defence of the Jamaican soap producers, echoing their assertions, reported before by the Financial Gleaner, that DCPS was attempting to lock them into buying its raw material, which they contend is below the quality they require.

“The Dominican company has not been making noodles of the quality that our manufacturers want, and they are seeking to get COTED protection for it; and they are trying to force our manufacturers to use their raw materials. They have tested it. It doesn’t even smell good,” Shaw told the Financial Gleaner.

“Now that this matter has been taken before the court, what the manufacturers will simply do, for now, is to cut down on exports to other Caricom countries or they might have to pay the duty. Otherwise, we will continue to support our manufacturers to produce materials of high quality, and if they can’t get the raw materials in the region, and they have to import it from third countries, then they go right ahead and do it. We won’t issue the certificates as long as the matter is in court,” he said.

The DCPS claim asks the court to compel the trade administrator and the Trade Board to respond to an unspecified DCPS access to information request of March 2, 2021, and to make a declaration that the trade authority unlawfully issued certificates of origin to Blue Power Group, contrary to the Revised Treaty of Chaguaramas that governs trade and other relations among Caricom member states, or for the issue to be referred to the Caribbean Court of Justice. The CCJ is designated in the trade treaty as the appropriate arbiter of disputes among Caricom countries.

DCPS is also seeking an order from the Supreme Court restraining the Trade Board from issuing certificates of origin to Blue Power or any other soap producer “in respect of soap produced with soap noodles/soap pellets imported from countries outside the region” or for the issuing of such restraint pending a determination by the CCJ.

The Dominican firm has also applied for “consequential damages” against the trade administrator, Trade Board, commissioner of Customs,, and Jamaica Customs for what is described as breaches of statutory duty related to their alleged failure to comply with their obligations and duties under the revised treaty, the Customs Act and the Revenue Administration Act.

In the case of the commissioner of Customs and Jamaica Customs, DCPS alleges and is seeking a declaration that they wrongfully exempted Blue Power from a 40 per cent CET said to be applicable to soap noodles or soap pellets, which it imports from non-Caricom countries, or for a referral of the issue to the CCJ. It also wants the Customs agency to be compelled to apply the duty.

The claim also urges the court to order Blue Power Group to refrain from engaging in what DCPS alleges as “falsifying the soap noodles it imports from non-Caricom countries as fatty acid pellets bearing the tariff heading 38.23 instead of the correct tariff heading 34.01”.

Nassief and his lawyers, Michael Hylton QC and Sundiata Gibbs, did not comment when contacted last week.

Blue Power Chairman Dr Dhiru Tanna told the Financial Gleaner in an interview on Friday that he had engaged an attorney to mount his company’s defence.

“We have had since December, six shipments to Caricom, for which we applied for certificates of origin, and they were granted by the Trade Board. We did everything perfectly legally. We had some outstanding certificates of origins which had been issued, which we have turned back in to the Trade Board. We are not planning to utilise any until the situation changes,” said Tanna.

“We applied for the permits, we got them, we shipped the goods. We have done everything legally since we opened many years ago. We followed the rules whatever were the rules. We haven’t done anything illegal or untoward,” he said.

huntley.medley@gleanerjm.com