Guyana playing wrong and strong!

Jan 16, 2022 Features / Columnists, Peeping Tom

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Kaieteur News – The local private sector is being myopic when it comes to the conflict between Guyana’s local content policies and law and the country’s obligations under the Revised Treaty of Chaguaramas (RTC). Those representative private sector organisations which have railed against criticisms of Guyana’s local content laws have failed to appreciate the importance of regional integration towards local firms’ participation through local content policies.
Isabelle Ramdoo, a Senior Investment and Linkages Advisor at the African Minerals Development Centre, has expounded on the importance of a regional approach to the success of local content policies. While noting that many local content policies stand in conflict with goals of regional integration, she said that was in the main because such policies focused on national interests.
This approach, she said, can potentially jeopardise regional integration efforts. She urged a coherent and coordinated approach “not only to preserve the regional integration agenda but also to tap market opportunities from neighbouring countries and make use of their comparative advantage to complement national efforts.”
The framers of Guyana’s local content law seems to have missed, entirely, this script even though there was debate in the media about the potential conflict between local content laws and the RTC. The framers of Guyana’s local content law should now explain what consultations they undertook and what expertise they sought to ensure that the recently assented Local Content Act was in conformity with the RTC.
They may not have considered also the extent to which Guyana’s local content law is in violation of the General Agreement on Tariffs and Trade (GATT) or the Trade-Related Investment Measures (TRIMs). In both respects, Guyana’s local content law is defective.
Guyana’s local content law provides for 75 percent of food for the oil and gas sector to be sourced domestically. This is in clear violation of GATT but it is not likely to be challenged given the relative small size of the food imports destined for the oil and gas sector.
Local content policies have long been criticised as protectionist. They reduce the benefits of international competitiveness and international economies of scale. As such, they impose unnecessary higher costs to investors and can justly be deemed as a trade distorting measure in respect to investment.
Guyana’s Local Content law stands in violation of TRIMs. The measures under this agreement outline, “the purchase or use by an enterprise of domestic origin or from any domestic source, whether specified in terms of particular products, in terms of volume of value of products, or in terms of the proportion or value of its local production.” But here again no challenge is likely.
Where the challenge is likely to emanate is in respect to the RTC. The government has not given any indication of being open to dialogue and its sidekicks are behaving like bullies, seeking to attack Trinidadian enterprises rather than address the genuine concerns about the local content legislation.
At present, Trinidad has now become the scapegoat of the government and its cheerleaders. One Ministerial advisor has gone as far as accusing an official of a Trinidadian company of being disrespectful to Guyanese. He described the contention, that Guyana’s local content law as conflicting with the RTC, as vexatious and provocative. He called on the official to apologise.
But it is this Ministerial advisor who should be apologising. Instead of trying to make the Trinidadians the culprit over the conflict between the RTC and Guyana’s local content laws, the government and the private sector should be defending the local content law and establishing how it is consistent with the RTC.
But both the government and the private sector are unable to do this. They have so far been unable to counter the charge against the country’s local content law. And so they have resorted to weak-kneed tactic of attacking the Trinidadians.
It is an utter disgrace to witness the attacks which are taking place against Trinidad and its incorporated companies. But it is not only Trinidad that is affected and that is likely to challenge Guyana’s local content law.
There is operating in Guyana’s financial sector a Surinamese company which offers financial services. Guyana’s local content laws provide for 100 percent local participation in the provision of insurance services. It means that the Surinamese insurance company will be disadvantaged by the local content law.
As such, it has cause, if it so wishes, to challenge Guyana Local Content law before the Caribbean Court of Justice. Now that is something which the Surinamese President may wish to speak about when he arrives in Guyana for an oil conference next month.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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