CCJ rules against Jamaica in soap tariff case
Published:Thursday | February 1, 2024 | 12:27 PM
Local soap makers are now faced with a dilemma of choosing duty-free inputs from the Caribbean Community (CARICOM), described as unfit by some players, or pay a 40 per cent duty to source similar items from Asia.
This arose from Wednesday's ruling by the Caribbean Court of Justice (CCJ) which upheld the duty on soap noodles, which are the raw materials used to make soap.
This decision arose from the case brought by DCP Successors Limited out of Dominica against Jamaica.
Already, the major local player Blue Power Group said the ruling would result in changes but declined to give details.
“The decision by the CCJ against Jamaica may result in some changes to our manufacturing process to maintain our markets and financial strength over time,” said chairman Jeffrey Hall in response to the ruling.
“There will, however, be no change to the core operating principles of Blue Power Group.”
The CCJ found that Jamaica, a CARICOM member state, was in violation of Article 82 and paragraph 18 of Schedule III of the Revised Treaty of Chaguaramas by not imposing the 40 per cent common external tariff (CET) on soap noodles imported from extra-regional sources.
The CCJ awarded costs to DCP and said that it will hold a case management conference to consider how the matter will proceed for determination of the question of whether, and if so, what other possible remedies or relief are due to the company.
DCP Successors Limited, led by Yvor Nassif, specialises in the manufacturing of soap noodles and related products within CARICOM.
The Dominican company, whose soap products enjoy preferential treatment within CARICOM, filed the claim against Jamaica alleging that Jamaican soap producers were importing soap noodles from Malaysia and Indonesia without being subjected to the 40 per cent CET.
These imported noodles were then processed in Jamaica, where fragrances, oil extracts, moisturisers, and colours were added before being repackaged and sold as final products, according to the statement on the ruling from the CCJ.
Initially, Jamaica's failure to impose the CET was based on a misclassification of the soap noodles tariff.
Despite subsequent confirmation of the misclassification by the World Customs Organisation, Jamaica continued to exempt the imported soap noodles from the 40 per cent CET, according to the ruling release.
This exemption was initially based on the claim that Jamaican soap products were community goods eligible for preferential treatment, and later on a domestic exemption regime, the Productive Inputs Programme, the statement added.
DCP attempted to engage Jamaican soap producers to supply them with soap noodles, but disagreements over its product ensued.
The CCJ, after hearing from both parties, ruled that duty exemption on soap noodles imported from extra-regional sources was impermissible when similar products were available in CARICOM in sufficient quantities.
The court held that Jamaica's exemption regime, while consistent with the principle of sourcing from within CARICOM before granting exemptions, failed to adequately consider the availability of soap noodles from regional manufacturers.
The evidence presented indicated that DCP Ltd could supply the entire CARICOM Single Market with soap noodles, disproving claims of inferior quality made by some Jamaican soap producers.
“The court held that the evidence given proved that DCP Ltd could supply the entire CARICOM Single Market with soap noodles, and the soap noodles manufactured by it were not rancid or otherwise unfit for purpose, as claimed by some Jamaican soap producers,” stated the ruling.
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