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Blatant Conflict of Interest?

In the ongoing regulatory battle between American Sugar Refining-owned Belize Sugar Industries (ASR/BSI) and the government, has the Minister of Agriculture Hon. Jose Mai—a cane farmer and member of the BSCFA—placed himself in positions a position in which has or could have a conflict of interest?

That is the question the media put to Mai this week. “If it is a conflict of interest because I am a BSCFA [Belize Sugar Cane Farmers Association] farmer, I have been accused of that before,” answered Main. “But the biggest conflict of interest though is being the miller and producer. The prime minister is a member of the BSCFA."

The question is most connected to Section 121 of the Constitution of Belize, which states that no member of the National Assembly shall place “themselves in positions in which they have or could have a conflict of interest.”

The Supreme Law also says that no member of the National Assembly shall compromise the "fair exercise of their public or official functions and duties," "allow their integrity to be called into question," or "endanger or diminish respect for or confidence in the integrity of the government."

While the language of the “Code of Conduct” is clear, the Constitution, however, is silent on sanctions if indeed the code is violated.

The controversy between BSCFA and ASR/BSI is over Fairtrade premium payments. BSFCA claims that ASR/BSI owes BSCFA farmers millions of dollars for sugar sold under the Fairtrade agreement. This is a matter that BSCFA is taking before the courts.

When asked if he is one of the farmers to whom monies are owed, Minister Mai said, "Yes, and I want it. I am not asking for what is not mine. If they owe me, they owe me."

Mai, however, denied that this played a role in "operationalizing" the Sugar Industry (Licence to Import/Export Sugar) Regulations, 2023, and appointing the Sugar Industry Control Board (SICB) as the entity responsible for issuing import and export licenses for sugar.

When asked if this regulation is specifically targeting ASR/BSI because of the monies reportedly owed to BSCFA farmers, Minister Mai said, "In the case that they have not paid premiums to the farmers, yes. But if you pay the premium to the farmers, everybody has to meet the same conditions." He opined that the regulation is not discriminatory against BSI."

For its part, BSI says that "these new regulations give the government-controlled SICB inordinate and disproportionate power to interfere with the routine operations of a private sector business."

BSI's Finance Director Shawn Chavarria

Finance Director for BSI Shawn Chavarria says that there is a level of ministerial overreach. "If the minister was not a member of the BSCFA, we would still take issue with it because of the mere fact that you have to go to the minister and apply for a license," Chavarria explained. "There are these conditions that you have to meet in order to obtain a license; it just seems very unnecessary. It seems like a massive overreach."

International Trade Rules

While ASR/BSI’s arguments have focused mainly on what they have labeled as “overreach,” it is noteworthy that World Trade Organization (WTO)’s rules explicitly prohibit the use of export licensing, save for very specific circumstances.

Article IX of the General Agreement on Tariff and Trade (GATT) states:

“No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the … exportation or sale for export of any product destined for the territory of any other contracting party.”

During the peak of the COVID “Lockdown Recession,” when several countries were resorting to trade restrictions, the matter of export licence regimes had returned to the forefront. In addressing the matter, the WTO issued a 2020 Information Note, which reminded member states that export licensing regimes are only acceptable in a narrow set of circumstances.

“Export prohibitions and restrictions are generally prohibited in the WTO. Article XI:1 of the GATT 1994 prohibits members from introducing or maintaining any form of export prohibition or restriction other than duties, taxes or other charges. However, certain measures are carved out the scope of this general prohibition, including Article XI:2(a) of the GATT 1994, which allows ‘export prohibitions or restrictions temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting contracting party.’”

The international rules outline other “carve outs” but these exceptions are usually reserved for “legitimate policy objectives.”

The salient question here is whether the matter of Fairtrade premium, identified as the core source of the dispute between the parties, rises to the level of “legitimate policy” objective as envisioned under the international trade regime.

The Opposition

The United Democratic Party weighed in on the matter, calling on the government "to abandon this dubious regulation that is a blatant betrayal of its campaign promise to curtail ministerial control and powers, especially in an instance where the Minister of Agriculture has a clear conflict of interest."

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