St Lucia-based cement importer Rock Hard Distribution Limited (RHDL) and its local distributor have lost their lawsuit against the Ministry of Trade and Industry over the Government’s move to introduce a quota and licensing regime for the importation of cement.
Delivering a draft judgment on Monday, High Court Judge Jacqueline Wilson dismissed the companies’ lawsuit over the issue.
The companies filed the lawsuit earlier this year in response to a decision taken by the ministry in November last year, to cap the annual importation of cement at 75,000 tonnes.
The Government also wrote to Caricom’s Council for Trade and Economic Development (COTED) seeking the further suspension of the five per cent Common External Tariff (CET) for hydraulic cement and indicated its intention to apply a 50 per cent duty.
The quota, a new import licensing registration system and the increased taxes took effect on January 1.
In the lawsuit, the companies were claiming that the Government sought to implement the measures without proper consultation.
Attached to the lawsuit was an affidavit from Rock Hard’s executive chairman Mark Maloney, who sought to explain the dire impact on the company, which imports its hydraulic cement from Turkey.
According to Maloney, prior to Rock Hard’s entry into the regional cement market almost four years ago, Mexican-owned Trinidad Cement Limited (TCL) had a monopoly due to the high tariffs on Portland cement.
“Within the first six to 12 months of the entry of Rock Hard Cement into the market, the price of cement dropped by about 35 to 40 per cent and that drop has been sustained over the past four years,” Maloney said.
He claimed that for the company to remain viable, it had to import approximately 300,000 tonnes in the region annually, as it started with a zero per cent CET and already absorbed a five per cent increase.
“Even a temporary implementation of the second decision would likely destroy the business of both RHDL and RHTT, because the absence from the market of Rock Hard cement even temporarily would irrevocably damage the goodwill, brand recognition and association of the business,” Maloney said.
He said that the closure of the company would directly lead to a substantial increase in cement prices.
Shortly after filing the lawsuit against the ministry, which was dealt with by Justice Wilson, Rock Hard filed a separate lawsuit before the Caribbean Court of Justice (CCJ) over the move to increase the duty on cement.
The CCJ granted an order barring the increase pending the determination of the lawsuit before it. The final decision, in that case, is still pending.
The case is the most recent in a series of lawsuits that arose since Rock Hard entered the regional cement market that was previously dominated by TCL and its subsidiaries.
In 2001, Barbados sought an exemption on the tariff, set by COTED, in an effort to give regional producers an advantage over foreign imports with a 60 per cent tax.
In 2015, TCL’s Barbados subsidiary Arawak Cement filed one claim when Barbados sought to reintroduce a CET of five per cent on hydraulic cement.
In 2018, the CCJ delivered judgment in favour of the Barbados government and Rock Hard, as it ruled that it was permitted to make the change.
As part of the ruling, the CCJ stated that a member state must give adequate notice of such a decision to ensure that regional businesses “enjoy transparency, certainty, and predictability of tax structures.”
TCL brought a separate case calling on the CCJ to decide if COTED had the authority to classify Rock Hard’s product in T&T.
The CCJ ruled that COTED had the competence to make the determination.
TCL and this country’s Government then brought another case challenging COTED’s decision to classify Rock Hard’s product as hydraulic cement as opposed to Portland, which attracts a higher tariff.
The CCJ eventually upheld COTED’s decision.
Rock Hard was represented by Ian Benjamin, SC, Jagdeo Singh, and Justin Phelps, while Deborah Peake, SC, Tamara Toolsie, and Brent James represented the State.