Guyana’s Local Content Law is in violation of the Revised Treaty of Chaguaramas

Jan 14, 2022 Features / Columnists, Peeping Tom

---

Kaieteur News – The reaction of sections of the local private sector, to a suggestion by a regional private sector body, that the Guyana’s local content law may be in violation of the Revised Treaty of Chaguaramas, is nothing short of paranoid. One representative of a local private sector organisation is reported to have said that if the laws are indeed in contravention of the Treaty, then Guyana should withdraw from the CSME. A representative of another representative body is reported to have found the idea, of the law being in contravention of the Treaty, to be amusing.
We will eventually know who has the last laugh as Guyana did on two previous occasions before the Caribbean Court of Justice (CCJ). Guyana was twice taken to the CCJ over violations of the Revised Treaty. On both occasions it lost – in one instance, it was spared having to pay compensation; in the second case, the APNU+AFC paid compensation to the aggrieved party.
In the second instance, a Surinamese company named Rudisa Beverages and Juices challenged the environmental levy, which it paid on imported beverages manufactured in Suriname, a member state of the CARICOM. The company contended that the environmental tax should be regarded as an import tax, which would make it in violation of the Revised Treaty. Guyana admitted that the environmental levy was in violation of the Revised Treaty. The Court concurred.
In the first instance, Guyana had waived the duty on extra-regional cement. This decision was challenged as being in violation of the Treaty. Guyana also conceded in that case. Guyana therefore is fully aware of the implications of being in violation of the Revised Treaty.
Guyana recently tabled local content legislation. In the discussions on local content legislation, there were concerns, including in this column, that were there to be differential treatment between local companies and regional companies, the laws would be in violation of the Revised Treaty.
In a letter published in this newspaper on September 9, 2021, Lynn Nichols noted the comments attributed to Vice President where he is alleged to have said that when it comes to local content for the oil subsectors, there will be areas carved out only for Guyanese companies including “transportation, logistics, cleaning services, food supplies, rentals, landscaping, among others.”
The writer also referred to statements reportedly made by President Irfaan Ali who is reported to have made a comment making reference to local content laws applicable to Guyanese and Surinamese companies. Nichols pointed out, correctly, that “under the revised Treaty of Chaguaramas, Member States are required to ensure that nationals of one Member State have on a non-discriminatory basis, access to land, buildings and other property situated in the territory of another Member State for purposes directly related to the provision of services…”
The writer noted that, “There is nothing to stop a Trinidadian from buying land here, building apartments and renting to oil and gas workers. Nor can transportation companies from the same country be restricted from offering logistical services to the oil sector, as is the case for three entities already here. Any local content legislation or even policy position must comply with the CSME. This would preclude such proposals as the requirement that Caribbean companies engage in joint ventures with Guyanese to conduct activities in the oil and gas sector.”
In a presentation entitled, the Caribbean Court of Justice and the Caricom Single Market and Economy, “the Hon. Justice Rolston Nelson, then a judge of the CCJ had noted in 2005 the following: “As regards the Single Market, the Revised Treaty provides for the removal of all restrictions on the free movement of goods, services, capital and the establishment of businesses. These freedoms are to be complemented by what is now a limited freedom of movement of persons.” To support his contention, he cited Articles 79; 33 and 34; 36 and 37; 39 and 40; 45 and 46.
Those who are unable to find any instance in which the Treat can be violated by local content laws may wish to refer to those sections and to the presentation by the learned Justice.
The fact that Guyana is hoping to set aside certain sectors for 100% or even 70% exclusive local participation and the fact that by local means Guyanese companies, would suggest that the provisions which impose these restrictions are in violation of the Revised Treaty of Chaguaramas.
Also any requirement that regional firms must partner with local companies to participate in certain prescribed activities of the oil and gas sector can be considered restrictive to the free movement of capital and services and, therefore, equally in violation of the Revised Treaty of Chaguaramas.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

---

---