Freeport's Polymers wants government to sign onto Euro trade deal:
By MINDELL SMALL, Guardian Senior Reporter -
Nassau, Bahamas:


Polymers International Ltd is making one last appeal to the government to sign on to the new Economic Partnership Agreement with Europe (EPA) — an effort to protect an estimated 15 percent of profits generated from that continent.

CEO of the Grand Bahama-based company Greg Ebelhar said the proposed EPA, now heading toward settlement, is of significant importance to the plant's future success.

"We have the potential for losing about 10 to 15 percent of our business because it would make us non-competitive with Dart Container Corporation, the company that we compete with out of the US for business that's in the UK," Ebelhar said in an interview with The Guardian yesterday.

The EPA is aimed at replacing the Cotonou Agreement, which expires on December 31. That unilateral pact grants trade preferences to former European colonies in Africa, the Caribbean and the Pacific (collectively referred to as ACP countries). The Bahamas is allowed duty-free access to virtually all EU markets under Cotonou.

Ebelhar said he was disappointed that Polymers was not contacted by any government official on the impact of the expiring Cotonou agreement until late last year. In January, the government then met with Polymers and two other companies (Bacardi and Paradise Fisheries) that profit from the trade relationship. Polymers also had talks with the present government but the company's COO said based on the discussions with Minister of State for Finance Zhivargo Laing, the EPA is unlikely to be signed within the next six months.

"He said that in 6 to 8 months they would have a structure that would allow them to start reviewing these agreements. But there wasn't a timeframe when they would sign them," Ebelhar said. "Minister Laing knows my sentiments and where we stand on this, and that is, time is of the essence, not only on this but on the Caribbean Basin Initiative.

"That's the big one that could very well be the death-knell for Polymers."

The Caribbean Basin Initiative (CBI) currently provides 24 beneficiary countries, including The Bahamas, with duty-free access to the U.S. market for most goods. The initiative, which expires on Sep. 30, 2008, is intended to facilitate the economic development and export diversification of the Caribbean Basin economies. Last summer President George Bush suggested that agreement would be extended to help Caribbean countries until bilateral arrangements could be fully developed as a replacement satisfying WTO requirements.

Ebelhar said without CBI, the cost of operations at Polymers would most likely send the company under, "Because I would end up having to pay 6 to 6 1/2 percent, which would be a tax added on to everything we ship out of here," he noted. "And about 80 percent of our production goes to the United States right now duty-free.

"If the CBI is not replaced - because we have a low profit margin item - it would be almost too much to overcome."

But first there's the question of whether the government will ultimately protect Polymer's European market for its styrofoam cups and related products.

Former Minister of Foreign Affairs Fred Mitchell said he supported the signing of the EPA and cautioned the Ingraham government about the threat of Polymers having to shut down its operations in the absence of the European duty-free concession. Current Minister of Foreign Affairs Brent Symonette was out of the country Thursday and could not be reached for comment.

However, Minister of State for Finance Zhivargo Laing stressed that the EPA is still being negotiated and remains a tough sell for all of the countries involved. "The EPA is a comprehensive text agreement," he said Thursday. "It is an agreement being negotiated with 70 countries; none have agreed to sign to date, none."

He argues that there is great uncertainty as to whether a signing will take place by the Dec. 31 deadline.

"Even the European Union now is making enormous concessions because Asian countries, the African countries and the Caribbean countries are not at all in a position at this point to sign," said the Minister. "We are all still negotiating."

He maintains that over the past five years, The Bahamas did less work to prepare for the signing of the agreement than most of the countries involved in the process. "Now if The Bahamas has done less than most of the countries negotiating, and numerous countries are not comfortable about signing yet, why should we be any more comfortable?" he asked, rhetorically.

When asked if part of the reason the government was not now prepared to sign the agreement was because of Bacardi's recent announcement to pull out of the country in less than two years, Laing said nothing could be further from the truth.

"Bacardi would tell you, as they told me and the Prime Minster, that the EPA had nothing to do with their decision on leaving The Bahamas," he explained. "It was a business decision and it could not have had anything to do with the EPA because they're closing plants in Europe as well."

The existing Cotonou Agreement proved very beneficial for Bacardi Company Ltd which has been shipping to Europe from The Bahamas since 1965. Bacardi announced on August 23 that it was planning to transfer its business to its principal rum production site in Catano, Puerto Rico, and other facilities in the Americas. The company plans to leave The Bahamas in early 2009, and in a statement, it said only that the move was not based on any problems with the workforce in Nassau but rather "the best business decision to make for the long-term growth and competitiveness of the company."

It will, in fact, enjoy the same preferential tax treatment in Europe when shipping from Puerto Rico as it stood to have in a EPA-commited Bahamas.

Laing said he understood the concerns of Ebelhar, whose exports to Europe are much smaller than the $60 million worth of seafood shipped from this country and also hanging in the balance. Still, Laing added that in the meeting he had with the company, he pointed out that is the government's responsibility to make decisions that are in the best interest of the economy of the entire Bahamas.

Polymers International Ltd. manufactures expandable polystyrene used in foam cups. Dart Container Corporation is its only customer. Dart takes the manufactured goods from Polymers and distributes them to its other plants in US as well as to other companies in Canada, Mexico, Argentina, UK and Australia. Polymers has been operating in The Bahamas for 10 years, breaking ground in Freeport in 1995 and producing its first product in 1997.

10/27/07