WTO Trade Policy Review of Jamaica

WTO-TPRStatement of the U.S. Representative
Delivered by Ambassador Michael Punke

18 January 2011

As Delivered

Thank you Mr. Chairman. We welcome Deputy Prime Minister and Minister of Foreign Affairs and Foreign Trade, Dr. Kenneth Baugh, and your delegation to the WTO’s third Trade Policy Review of Jamaica, and the first TPR of 2011. I would like to take this opportunity to wish you and your delegation a happy, healthy new year, and to wish all Members of the WTO a year filled with peace and prosperity. I would like to commend Dr. Baugh for his opening statement, and for the materials that the government of Jamaica provided for this third review. I also want to thank the Secretariat for its comprehensive report. Both reports provide important insights into Jamaica’s economic and trade policy since its previous review in 2005. We have submitted a short list of questions about specific issues in Jamaica’s trade policy regime. You have responded to most of these questions. We look forward to reviewing and discussing all of your responses during the course of this review. Finally, we would like to thank the discussant, Ambassador Luis Manuel Piantini Munnigh, for facilitating these deliberations and for helping to ensure that Jamaica’s Trade Policy Review is thorough and constructive.

The United States values its strong partnership with Jamaica. The United States is Jamaica’s largest trading partner, accounting for just under half of Jamaica’s exports and approximately 37 percent of Jamaica’s imports. Over a million Americans visit Jamaica annually. The United States is home to one of the largest Jamaican communities outside Jamaica; approximately one million people of Jamaican descent call the United States home.

As Jamaica’s largest trading partner, the United States’ commercial relationship with that country remains vibrant. Our total two-way goods trade grew steadily during the second half of the last decade. It reached $3.4 billion in 2008, before dropping to $1.9 billion in 2009. In 2009, U.S. goods exports to Jamaica were $1.4 billion and U.S. goods imports from that country equaled $468 million. Despite the recent U.S. and global economic downturn, U.S. imports from Jamaica since its 2005 TPR have grown an average of nearly 6 percent per year. Approximately 46 percent of U.S. total imports from Jamaica enter the United States duty free under the Caribbean Basin Initiative (CBI). Over 90 percent of Jamaica’s exports to the United States enter our market duty-free, either through the CBI or the Generalized System of Preferences, or because the MFN duty is zero. We encourage Jamaica to benefit from these preference programs to the greatest extent possible.

As a small island economy that depends on international trade for its economic growth, Jamaica has unfortunately been unable to improve its economic performance, including its export performance during the period of this TPR. The Secretariat tells us that underlying Jamaica’s weak performance over the last decade are significant structural disadvantages. These include, the Secretariat observes, such factors as the excessive cost of electricity, which adversely affects the economy’s competitiveness; relatively high security costs for businesses, low productivity and limited productive capacity; and inadequate economic and trade-related infrastructure. The Jamaican economy’s lack of competitiveness, the Secretariat advises, is sometimes cited as the main contributor to its weak export performance and the relatively weak economic growth performance overall. In its analysis of factors expected to create a business environment that supports competitiveness, the Planning Institute of Jamaica, the Secretariat tells us, believes that considerably more remains to be done to enhance the business climate and the global competitiveness of Jamaica’s merchandise export sectors. In the reports circulated for this TPR meeting, we read with interest about the steps that the government is considering and those that it is taking to try to improve Jamaica’s export and overall growth performance and competitiveness. Since Jamaica depends on exports and imports of goods and services, which have averaged more than 90 percent of GDP since 2005, we would be interested to hear the government’s current thinking on how it plans to address these issues.

As both the report from the Secretariat and the Government of Jamaica note, the services sector continues to play an important role in the economy. The sector contributes over 75 percent to GDP and employs 65 percent of the national labor force and has been credited with helping to offset Jamaica’s overall trade imbalance.

Jamaica’s merchandise export base remains limited mainly to alumina/bauxite and some non-traditional exports. However, we are heartened by the Secretariat’s report that Jamaica has continued to work to diversify its exports with exports of non-traditional products (e.g., processed foods and mineral fuels) now accounting for 57 percent of total exports. We encourage Jamaica to continue its work to diversify its exports as well as its economy. We look forward to learning more about these efforts during this review.

We welcome the government’s plans to enhance competitiveness through the Vision 2030 Jamaica – National Development Plan. The plan’s emphasis on results-based management that establishes targets and measures performance should prove useful. One of the key ways to enhance competitiveness is to promote respect for intellectual property, which includes good laws and effective enforcement. In this regard, we hope to hear from the Jamaican delegation that the revised Patents and Designs Act, which has been pending since before the last trade policy review, is well on its way to enactment. If this is not the case, we would like to hear about the status of Jamaica’s efforts.

As for the cost of doing business in Jamaica, we appreciate that tariffs and other duties and charges on imports remain Jamaica’s main trade policy instrument and that these generate a substantial share of the government’s central revenue. However, the Secretariat raised the question of whether excessive import taxation may be hindering Jamaica’s competitiveness. We believe that the Jamaican government should reflect on the costs of its tariffs and numerous other duties and charges on imports. During the course of this TPR, we would also appreciate hearing Jamaica’s thoughts on this subject.

According to the Secretariat report, Jamaica’s telecommunications sector is among the sectors in which liberalization has advanced the fastest in recent years. This has led to greater investment, an increase in the number of service providers, and lower costs. Unfortunately, there is no mention of Jamaica’s universal service surcharge in either of the reports issued for this TPR. The United States supports efforts to ensure universal telecommunications service; however, Jamaica’s WTO Reference Paper obligations require it to ensure that universal service obligations are administered in a transparent, non-discriminatory manner, and that they be no more burdensome than necessary to achieve its universal service goals. Levying a surcharge solely on international calls not only places an unwarranted burden on foreign operators and consumers but also adds to the cost of doing business in Jamaica; a cost that Jamaica cannot afford. We therefore especially look forward to learning more about Jamaica’s plan to eliminate this surcharge currently imposed solely on international calls.

Jamaica is well-known for its lovely beaches, warm hospitality, and vibrant culture, all of which contribute to the tourism industry. In this regard, we encourage Jamaica to consider policies that keep its hotels and resorts attractive to foreign visitors, such as maintaining science-based SPS measures that allow access to high-quality agricultural products, while maintaining protection for consumers. For example, Jamaica currently bans imports of U.S. pork due to concerns about a viral disease that can affect swine. As the United States has explained to Jamaica, this disease has been eliminated in commercial production in the United States since 2004. We will, therefore, be interested to hear from Jamaica about its plans to remove its ban on imports of U.S. pork. We hope that this Trade Policy Review will encourage Jamaica to focus on the importance of consistently implementing science-based sanitary and phytosanitary measures as a critical component of its competitiveness strategy.

In closing, the United States will continue to work with Jamaica and the other CARICOM members to strengthen and to deepen our relationship. We also look forward to working with Jamaica and other CARICOM members to achieve an ambitious result in the Doha negotiations. The United States believes that developing countries, such as Jamaica, have much to gain from a balanced and ambitious result in the Doha negotiations that include meaningful new market access for all. Such a result could further enhance opportunities for the nation’s trade and investment growth and, hence, help Jamaica achieve the country’s economic growth and competitiveness aspirations. Further enhancing opportunities for Jamaica to broaden its exports and its export markets is essential. The United States looks forward to our work together to bring the Round to a successful conclusion. And we offer all good wishes to the government of Jamaica for a successful Trade Policy Review.

Thank you.