The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Caribbean Bottling’s $500,000 investment in the July launch of a new juice drink line has been jeopardised by the Government’s Budget tariff cuts, its top executive said yesterday.

Walter Wells, its president and chief executive, told Tribune Business that while the last-minute tariff revision announced on Tuesday evening was “better than it being zero”, manufacturers like himself required continued policy support.

The Minnis administration, following push back from Caribbean Bottling and other local juice drink manufacturers, made a partial retreat from plans to eliminate the 60 per cent duty rate on imports. It instead sought a ‘happy medium’ by cutting the rate in half to 30 per cent.

Mr Wells emphasised that the Bahamas had to decide whether it wanted to support local manufacturers, and the hundreds of jobs they provide, given the “unique challenges” they faced in comparison to foreign rivals.

Describing Caribbean Bottling’s plant as being “as efficient and modern as any in the world”, Mr Wells explained that the Bahamas’ relatively high cost base and small market were ever-present obstacles to competing on a ‘level playing field’ with foreign competitors who enjoyed greater economies of scale.

He argued that raising the World Trade Organisation (WTO), and the Bahamas’ entry into liberalised, rules-based trading regimes as justification for the tariff reductions was ‘a red herring’ designed to distract from the real issue - creating a policy framework to enable local manufacturers to be competitive.

Mr Wells pointed out that all WTO members, including the likes of the US and Canada, imposed protectionist measures to safeguard certain industries, and the Bahamas had the ability to likewise.

Revealing that there had been no consultation or warning from the Government over the proposed juice drink tariff elimination, the Caribbean Bottling chief disclosed that it would have had an immediate negative impact on his expansion plans.

“We are launching what we call Fruit Coolers next month,” he told Tribune Business. “Minute Maid Fruit Coolers; four flavours. We had already invested around $500,000 to launch this.

“For me, it’s [the tariff cut] a bid deal. I haven’t produced the first can yet, but we expect to be producing by the middle of July.”

Asked about the Government’s partial retreat to a 30 per cent tariff, Mr Wells added: “That, I guess, is better than being zero, but the reality is that every country around the world protects its manufacturing base, the US and Canada included.

“It seems that the US is the country that stands to benefit most from this [reduction] down the road, but it makes it very difficult for local companies to survive. We can talk about self-sufficiency in manufacturing and the need to be competitive, but the reality is that US companies do not have the same cost base as manufacturers in the Bahamas.

“There are significant costs we have to pay and cover before we put a single bottle or can on the shelf in the Bahamas.”

Mr Wells said energy costs and reliability; the level of taxation; bureaucracy and ‘red tape’; and the favourable state and federal incentives on offer in the US were all factors that placed Bahamian manufacturers at a disadvantage.

He then questioned reliance on the WTO and rules-based trading regimes as justification for the Government’s desire to reduce or eliminate import tariffs that supported domestic Bahamian industries.

“It’s a known fact that every country has plans in place to secure its own,” Mr Wells told Tribune Business. “I don’t fully understand how the Bahamas is much better than the US and Canada, who have been in business much longer than we have been.

“If you’re talking about productivity and efficiency, we have manufacturers here that are foreign-owned that are heavily-reliant on the duty regime for their existence.

“It’s not a question of efficiency, as our plant is as efficient and modern as any in the world, but there are challenges that are unique to the Bahamas that require us to have the support.”

Mr Wells said Caribbean Bottling employed 200 persons, and suggested that other manufacturers had workforces of similar size. He questioned whether the Bahamas wanted to lose these jobs, and the money locally-produced products kept in the economy, through ill-considered government policy.

Pointing out that all WTO members, including the largest, engaged in protectionism, Mr Wells said he understood that Canada’s tariffs on imported milk were as high as 300 per cent.

“If that is not protectionism, I don’t know what is,” he added. The Caribbean Bottling chief also pointed to the Bahamas’ Caribbean neighbours, all WTO members, who still employed tariff rates of over 100 per cent to protect their manufacturers.

“I don’t think WTO is the issue,” Mr Wells concluded.