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Common sense and the Produce and Commodity Act

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by Camillo M. Gonsalves 15.SEP.06

After carefully following the recent debate and fabricated furor in the wake of the Produce and Commodity Act 2006, one thing has become clear: Apart from sugar, the commodity most in need of regulation is common sense. The opposition to the act is full of vitriol, but curiously devoid of logic. Indeed, the opposition ignores the facts and limits itself to consideration of fanciful theoretical possibilities that bear no reflection whatsoever to the real world circumstances of St Vincent and the Grenadines.{{more}}

However, any informed debate on the Produce and Commodity Act must begin with four essential points:

Despite what you may have heard, the provisions of the Produce and Commodity Act have been the law of St Vincent and the Grenadines for 31 years since the passage of the St Vincent and the Grenadines Marketing Corporation Act. These provisions, over the years, have been used for the good of the country through the Cato, Mitchell, Eustace, and Gonsalves administrations.

The substantive provisions of the Produce and Commodity Act exist in similar laws throughout the Caribbean and other free market democracies the world over. Governments around the globe have broad authority over exports and imports, but that authority is used to a greater or lesser degree depending on the circumstances. The trend, in practice, is for the State not to exercise a monopoly in the import and export of commodities but to retain the authority to do so in special circumstances.

In the Caribbean, for example, every CARICOM country has a monopoly on the import and export of a few commodities. As such, in St Lucia and Dominica, the governments have the monopoly on the importation of flour, sugar and rice. In Barbados, the government is the sole importer of chicken back and neck. The list goes on throughout the region.

In SVG, the government has a monopoly on the importation of sugar only. Once upon a time it had the monopoly for importing rice and flour (before the Flour Mill and Rice Mill), milk, cooking oil, chicken back and neck, and so forth. The ULP government has actually reduced the number of specified commodities for its sole importation. State agencies are still the sole exporters of arrowroot starch and bananas. Hitherto, it was the sole exporter of other agricultural commodities, but those have been gradually phased out. In five years, the ULP government has not added a single specified commodity to the list for government’s monopoly.

COMMON SENSE AND FACTS

So there you have it: The provisions of the Act have existed and been used by every independent government in St Vincent and the Grenadines’ history. Other regional and international governments use similar provisions. In five-plus years the ULP government has reduced the number of specified products without attempting to monopolise a single new commodity.

Despite these indisputable facts, some elements in the private sector have unfortunately allowed themselves to be led at the nose by opposition politics. A real issue will arise only if the ULP government adds unreasonably to the list of specified imports and exports. Using the last five years as a guide, it is unlikely to do so. But this does not mean that it ought not to have the authority to do so in specified circumstances as do other democratic governments.

The opposition NDP wants the Government to cease its role as the sole importer of sugar. If this happens, one single private sector entity is likely to monopolise the importation of sugar from GUYSUCO, the state-entity in Guyana that exports sugar. This will not result in more free enterprise; it will simply replace a state-importing monopoly with a private monopoly. Maybe that is the NDP’s aim, as the Prime Minister has contended. But the profits from the state importation of sugar in SVG are used to subsidize agricultural inputs for farmers. Under the NDP formula, the profits would go into the pockets on a single businessperson, and agricultural inputs would get more expensive, making life harder for our hardworking farmers.

The argument that the Act is against the private sector is therefore a fanciful extension of a theory beyond the point of abstraction. Theoretically, every state intervention is against the private interest, but not necessarily against the public good. Thus, not every state intervention is wrong or unreasonable or counter-productive.

ULP AND THE PRIVATE SECTOR

Any argument that the ULP administration is against the private sector is equally nonsensical. Opposition rabblerousing aside, the objective evidence is that the ULP administration has consistently functioned in the interest of the private sector and the poor and working people. Some elements of the private sector and the opposition NDP evidently want to shift the balance more strongly towards the private sector and against the general public at large. That possible rebalancing spells potential disaster, not just for poor and working people, but also for the development of the country as a whole.

Any objective consideration of the following policies and initiatives of the ULP – to name but a few – negates opposition hyperbole and proves that the government is a business-friendly, pro-entrepreneur, supporter of the private sector:

• Reducing taxation on tourism, housing developers, and manufacturing exports.

• Removing residual restraints on the export of capital/foreign currency.

• Improving the regulatory framework for the international financial services sector.

• Reforming and strengthening the state-owned National Commercial Bank, and thus the viability of the financial system.

• Extending concessions for entities such as ECGC and East Caribbean Metals, among others.

• Liberalising telecommunications.

• Boosting, immeasurably, support for micro-entrepreneurs and SME’s (Small and Medium-Sized Enterprises) through the Micro-Enterprises and other special loan portfolios and the transformation of the SEDU into the Centre for Enterprise Development (CED).

• Establishing the National Investments Promotions Incorporated (NIPI) as a modern, highly-effective state agency for attracting investment and promoting investment/investors in SVG.

• The $20 million Private Sector Development programme.

• Investing millions of dollars (so-called “sunken costs”) in productive enterprises and turning them over to the private sector, for example: The Coconut Water Bottling Facility to the DaSilva family of Mountain Top fame; the rebuilt Bequia Fisheries Complex to a company of small businesspersons in Bequia; and the current negotiations to lease the Lauders Root Crop Vacuum-Packaging Plant to ECGC.

By any measure, the ULP’s pro-business bona fides are rock solid. The private sector and the ULP government are complementary partners in wealth-creation and national development. Indeed, given the ULP’s business-friendly policies, and years of economic growth and praise from both regional and international financial bodies, even the staunchest private sector critics of the ULP are forced to admit that the last five years have been good for business.

But the venom spewing forth from narrow opposition quarters of the private sector has nothing to do with diminishing profits. Instead, it is born of diminishing status, both socially and in the backrooms where shadowy power-brokering occurred in more opaque prior administrations. Accountants and profit-and-loss statements cannot measure this diminishing status, but it is acutely felt by those who value such considerations even more than their bottom line.

However, the Produce and Commodity Bill cannot be opposed on the grounds of personal antipathy towards the Prime Minister and his team, or knee-jerk opposition to the ULP’s people-centered policies that benefit the poor and working people of St Vincent and the Grenadines. The debate on this Act should stick to the facts, and, in that regard, a dose of common sense would certainly help!

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