An application for an injunction seeking to block Government’s move to introduce a quota on imported cement and a proposal to increase the import duty to 50 per cent is set to be heard by a High Court judge today.
In the application St Lucia-based Rock Hard Distribution Ltd and its local affiliate Rock Hard Distributors of T&T are challenging the moves made by the Ministry of Trade and Industry, which they claim would cripple them.
In November last year, the ministry took a decision to cap the annual importation of cement at 75,000 tonnes.
The Government also wrote to Caricom’s Council for Trade and Economic Development (COTED) seeking the further suspension of the five per cent Common External Tariff (CET) for hydraulic cement, and indicated its intention to apply 50 per cent duty.
The quota and a new import licensing registration system went into effect on January 1.
Attached to the application is an affidavit from Rock Hard’s executive chairman Mark Maloney, who sought to explain the dire impact on the company, which imports its hydraulic cement from Turkey.
According to Maloney prior to Rock Hard’s entry into the regional cement market almost four years ago, Mexican-owned Trinidad Cement Ltd (TCL) had a monopoly due to the high tariffs on Portland cement.
“Within the first six to 12 months of the entry of Rock Hard Cement into the market the price of cement dropped by about 35 to 40 per cent and that drop has been sustained over the past four years,” Maloney said.
He claimed that for the company to remain viable, it had to import approximately 300,000 tonnes in the region annually as it started with a zero per cent CET and already absorbed a five per cent increase.
He also noted that between 2016 and last year, 130,000 tonnes were used by its local affiliate in the T&T market and neighbouring islands, which it services.
“RDHL and RHTT are therefore substantial contributors to the economy of T&T both directly and indirectly, by way of earning foreign exchange, the provision of employment and the development of the cement and construction related industries,” Maloney said.
“Even a temporary implementation of the second decision would likely destroy the business of both RHDL and RHTT because the absence from the market of Rock Hard cement even temporarily would irrevocably damage the goodwill, brand recognition and association of the business,” he added.
He said that the closure of the company would directly lead to a substantial increase in cement prices.
In the substantive claim, the companies are claiming that the Government sought to implement the measures without proper consultation.
The companies are seeking to have the decisions stayed pending the determination of the substantive case.
The application is scheduled to be heard virtually by Justice Jacqueline Wilson this morning.
The case is the most recent in a series of litigation which arose since Rock Hard was founded.
In 2015, TCL’s Barbados subsidiary Arawak Cement filed one claim when Barbados sought to reintroduce a CET of five per cent on hydraulic cement.
In 2001, Barbados sought an exemption on the tariff, set by COTED, in an effort to give regional producers an advantage over foreign imports with a 60 per cent tax.
In 2018, the Caribbean Court of Justice (CCJ) delivered judgement in favour of the Barbados Government and Rock Hard as it ruled that it was permitted to make the change.
As part of the ruling, the CCJ stated that a Member State must give adequate notice of such a decision to ensure that regional businesses “enjoy transparency, certainty and predictability of tax structures”.
TCL brought a separate case calling on the CCJ to decide if COTED had the authority to classify Rock Hard’s product in T&T.
The CCJ ruled that COTED had the competence to make the determination.
TCL and this country’s Government then brought another case challenging COTED’s decision to classify Rock Hard’s product as hydraulic cement as opposed to Portland, which attracts a higher tariff.
The CCJ eventually upheld COTED’s decision.