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IV. SECTORAL TRADE POLICIES (1) 1. Jamaica Continues to Use Trade

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IV. SECTORAL TRADE POLICIES (1) 1. Jamaica Continues to Use Trade WT/TPR/S/42 Trade Policies Review Page 84 IV. SECTORAL TRADE POLICIES (1) OVERVIEW 1. Jamaica continues to use trade policies and incentive schemes geared at promoting specific sectors. The National Industrial Policy identifies these sectors, focusing on activities where a comparative advantage is perceived to exist, such as tourism and on identifying others where it could be developed through policy actions, such as data processing and systems development. 2. Traditionally, Jamaica's endowments led to the development of activities linked to certain agricultural crops and minerals. Although agriculture and mining remain important, both sectors have lost GDP share to services and manufacturing. A number of incentives promote activity in manufacturing, including income tax exemptions, and import duty concessions for production for export outside of CARICOM. The main exporter in manufacturing is the textiles and clothing subsector, although the industry has been suffering from a loss of competitiveness and inability to fill bilateral export quotas in the past few years. A substantial part of the garment industry is located in free zones. 3. Jamaica's tariff structure offers higher levels of protection to goods with high value added and to agricultural products (Chart IV.1). Goods used as inputs are generally granted duty-free access. 4. The services sector is the largest and fastest growing in the Jamaican economy. Among services, tourism is the main earner of foreign exchange, generating around US$1.13 billion in 1997. After a period of privatization and reform, activities in the services sector have been largely liberalized, few restrictions remain and national treatment is prevalent. Financial services and telecommunications have undergone major reforms in recent years. In the case of the financial sector, this has led to a relatively liberal business environment, with a strengthened regulatory framework. In telecommunications, privatization has led to a temporary monopoly in the provision of basic telephony services, which is expected to be dismantled by 2013. (2) AGRICULTURE AND FOOD PRODUCTS 5. Value added in the agriculture sector (excluding food products) was J$16.9 billion in 1996, equivalent to 8.4% of GDP. Its contribution to GDP declined to 7.4% in 1997 (J$17.6 billion), reflecting in large measure the effects of a severe drought. Including food processing, beverages and tobacco, agriculture represented 16.5% of GDP in 1996, and 15% in 1997 (Chart IV.2). Agriculture is labour intensive and employs 22% of the total labour force. It comprises three main subsectors: traditional agriculture, non-traditional agricultural products, and food processing, beverages and tobacco. Traditional agriculture includes products that have been grown at scale for a long period, namely: sugar, bananas and coffee. Non-traditional products include a variety of tubers, spices, herbs, fruit and vegetables, horticultural products, chicken, beef, pork, and goat's flesh. 6. Agricultural exports are dominated by traditional products, especially sugar, bananas, coffee, cocoa, citrus and other fresh fruit and vegetables (Chart IV.3). They accounted for almost 16% of Jamaica's total merchandise exports in 1997. Exports of processed foods, beverages and tobacco accounted for an additional 14% of exports of goods. Jamaica WT/TPR/S/42 Page 87 7. Jamaica is a net importer of agricultural products, with imports almost one third higher than exports in 1996 (Table IV.1). The main imported agricultural products are cereals and preparations of cereals, dairy products and eggs, meat, sugar and sugar products, beverages and spirits, vegetable oils and fats, and fish. With the exception of sugar, Jamaica is a net importer of all the above-mentioned products. A substantial proportion of imported sugar is used as an input in domestic production of refined sugar and other products. Jamaica is a net exporter of vegetables and fruit, coffee, and beverages and spirits. Products of export interest to Jamaica are generally subject to import tariffs rates above the average for the sector. A wide range of fruit and vegetables are subject to additional stamp duties, while beverages and spirits are also subject to a special consumption tax (Chapter III.(2)(iv)). Table IV.1 Trade and tariff data for agricultural products, 1997 (Per cent and US$ '000) Tariff (MFN) Imports Exports HS Description Average (%) Minimum (%) Maximum (%) (US$ '000) (US$ '000) 01-24 Agricultural products 20.2 0 40 436,916.7 339,700.0 01 Live animals 22.9 0 40 1,148.2 50.0 02 Meat and edible meat offal 26.2 0 40 43,165.1 511.9 03 Fish & crustaceans, molluscs & 25.5 0 40 28,636.3 19,498.9 other aquatic invertebrate 04 Dairy products; birds eggs; natural 20.4 0 40 44,533.3 3,953.5 honey; edible prod. nes 05 Products of animal origin, nes or 0.0 0 0 1,498.8 - included 06 Live tree & other plant; bulb, root; 26.7 0 40 670.8 2,045.4 cut flowers etc. 07 Edible vegetables and certain roots 26.5 0 40 7,102.3 16,219.9 and tubers 08 Edible fruit and nuts; peel of citrus 35.2 0 40 1,992.3 59,330.9 fruit or melons 09 Coffee, tea, mate and spices 22.8 0 40 4,621.8 36,891.0 10 Cereals 14.3 0 40 75,211.9 - 11 Prod mill industry; malt; starches; 8.5 0 40 10,550.1 28.4 inulin; wheat gluten 12 Oil seed, oleagi. fruit; miscell. 3.7 0 40 4,013.7 518.0 grain, seed, fruit, etc. 13 Lac; gums, resins & other 3.3 0 20 692.7 5.2 vegetable saps & extracts 14 Vegetable plaiting materials; 0.0 0 0 85.7 3.9 vegetable products nes. 15 Animal/veg. fats & oils & their 21.7 0 40 29,687.8 33.4 cleavage products; etc. 16 Prep. of meat, fish or crustaceans, 20.0 0 25 19,970.6 671.9 molluscs etc. 17 Sugars and sugar confectionery 26.5 0 40 38,280.5 109,308.9 18 Cocoa and cocoa preparations 9.1 0 25 3,990.5 3,482.3 19 Prep. of cereal, flour, starch/milk 16.9 0 25 30,657.4 8,318.4 20 Prep. of vegetable, fruit, nuts or 17.9 0 40 13,959.4 6,327.4 other parts of plants 21 Misc. edible preparations 20.8 0 25 15,005.2 11,750.8 22 Beverages, spirits and vinegar 26.3 0 30 30,150.3 49,432.2 23 Residues & waste from the food 6.5 0 25 21,617.5 1,256.7 industry; prep. animal fodder 24 Tobacco and manufactured tobacco 20.0 0 30 9,674.6 10,061.2 substitutes Note: Trade data applies to 1996. Source: WTO calculations based on data provided by the Jamaican authorities. WT/TPR/S/42 Trade Policies Review Page 88 8. Producers of non-traditional products are hampered by high capital costs, inadequate infrastructure and a lack of research and development. In principle, loans for investment in the agriculture sector are not subsidized, although farmers may have access to some programmes with concessionary terms (Chapter III.(4)(iv)). 9. Agricultural production declined by 16.5% in volume terms in 1997, after increasing by 5.5% in 1996 (Chart IV.4). Agricultural GDP contracted by 4% in 1997, after expanding by 3.1% in 1996 (3.4% including food and beverages). Over the 1986-96 period, agricultural production of unprocessed goods increased by 54.5%: production for the domestic market rose by 70% and exports by 52%. Export crops outperformed domestic crops in 1996 and 1997. 1 Chart IV.4 Agriculture production index, 1990-97 1986=100 200 180 Exports Domestic Meat and poultry Fisheries Total 160 140 120 100 80 60 40 20 0 1990 1991 1992 1993 1994 1995 1996 1997 a a Estimates. Source: Planning Institute of Jamaica (1998), Economic and Social Survey, Jamaica, 1997. 10. In livestock, self-sufficiency ratios are high for beef and veal, and close to 100% for whole chickens. Jamaica is, however, a large importer of certain livestock items, including chicken necks, mutton and goat meat. Imports of mutton and goat meat are not subject to additional stamp duties unlike beef and veal, pork meat, and some chicken cuts. 11. Although the fish harvest was over 50 million kilos in 1996, Jamaica remains a net importer of fish and seafood. Imports of fish are subject to an average tariff of about 26%. 1 Export crops increased by 7.2% in 1996 compared to 5.7% for domestic crops. This was due to an exceptional increase in the production of bananas, sugar cane and coffee. In 1997, production for export declined by less (10.1%) than production for domestic consumption (21.2%). Jamaica WT/TPR/S/42 Page 89 12. One of the main concerns of exporters of agricultural goods is access to the U.S. market. Access is facilitated by the existence of a preshipment clearance facility operated by the United States in Jamaica. 13. Until the mid 1980s, Commodity Marketing Boards acted as single buyer and seller of a number of crops, including cocoa, coffee, bananas, coconut and sugar. Deregulation broke the monopoly of the Boards, allowing producers to sell to alternative outlets which then competed with the Boards in the marketing of products. 14. Government policy in agriculture is geared at increasing production and productivity to expand exports, reducing reliance on food imports, and encouraging agro-industrial development. The sector is expected to provide the inputs required for this development. Policy is also aimed at lowering the unemployment rate and pursuing development strategies to achieve long-term environmental objectives.
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