FAIR TRADE AND FARE HIKES

Jul 13, 2013 Features / Columnists, Peeping Tom

The airfare for an economy travel to New York can reach as high as US$1200 at present. This includes the 15 per cent travel voucher tax that is charged by the government.
Without this tax the fare would be around US$ 1043 which is just under twice what was being charged last year by a low-cost airline for the same journey. This is a mere reduction of US$157 on a fare that is already way too high.
It shows that the tax is not the problem. A partnership for National Unity wants a reduction in the voucher tax from 15 per cent to 10 per cent. With this five per cent reduction the new fare would still be high at around $1150. With a five per cent reduction the new fare would be just about US$50 less than what is being charged now.
Given the high cost of parliamentary sittings, it will cost taxpayers more to pass the legislation than it will save the travelers on a single flight out of Guyana.
APNU’s call for a five per cent reduction in the travel voucher tax is a most ill- advised suggestion. It makes one wonder why APNU would make such a suggestion in the first place. Did they crunch the numbers?
Any reduction in the travel voucher tax will benefit the rich at the expense of the poor because the people who travel through our main airport to go overseas are mainly, not exclusively, drawn from the upper classes. But even the rich may find APNU’s suggestion laughable because it really amounts the savings will be a pittance relative to the actual fare.
The government, on the other hand, is blowing hot. One Minister said he was outraged at the fares and that it will not be tolerated. After that statement we have heard nothing more from him on the subject, nor have the fares been reduced.
Now we have a new twist. The government is questioning whether Caribbean Airlines, which it considers as the principal culprit in the high cost of air travel out of Guyana, receives subsidized fuel from its government.
The hint is obvious. If indeed the Trinidad Government is selling to its flag carrier, fuel cheaper than it is selling to other carriers, this would be in violation of international and regional trade principles and the Trinidadian government can be taken both to the regional competitiveness council and to the Caribbean Court of Justice for offering less favorable treatment to non- national entities than it does to its own flag carrier. The other option is negotiations, which in fact has to be pursued before any legal challenges are mounted.
The question however is whether Guyana can afford the cost of a legal challenge, or indeed whether it can even establish a prima facie case that subsidized fuel is being provided to CAL.
Legal approaches on trade questions are however financially costly. Guyana could not have afforded to pay the fees of the experts that prosecuted Guyana case in the Law of the Sea Tribunal in the dispute with Suriname.
Where therefore will the money come to challenge CAL and the Trinidadian government?
Even if it could afford the cost, will it be worth the effort? By the time this matter is even called, the problem may have already been alleviated.
Despite these considerations, it is a matter of principle that Guyana should act if it feels that it has a case against even if it does so merely for exemplary purposes.
Many years ago, a company took the Guyana government to the Caribbean Court of Justice on the grounds that Guyana had failed to apply tariffs on extra-regional cement. It was contended that this action by the Guyana government placed the company at a disadvantage. Guyana lost the case but was spared a major fine.
It would seem therefore that Guyana would be within its moral right to approach the regional competitiveness council and the Caribbean Court of Justice if it can make out a prima facie case that the Trinidadian government is supply subsidized fuel to its flag carrier.
Given cost and time considerations, the government of Guyana is more likely however to ride out the present crisis until the new airlines which have shown an interest in providing air travel to and from Guyana begin operations.
This does not however settle the issue of fair competition. It remains incumbent on any regional government or indeed of any firm which suffers unfair competition to seek remedies from those regional institutions which have established to either secure fair trade of defend the principle of fair trade within the context of the Revised Treaty of Chaguaramas.

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