Jamaica - Trade AgreementsJamaica - Trade Agreements
Preferential Tariff Arrangements
Jamaica has enjoyed preferential tariff arrangements with: the United States under the Caribbean Basin Economic Recovery Act (CBERA); the European Union under the Economic Partnership Agreement (EPA); with Canada under CARIBCAN (negotiations for a successor agreement has stalled); and with other English-speaking Caribbean states under CARICOM. CARICOM has bilateral trade agreements with Costa Rica, Cuba, Dominican Republic, Colombia, and Venezuela.
CBERA, commonly referred to as the Caribbean Basin Initiative (CBI), provides duty-free entry to the United States to qualifying products of Jamaican origin (except textiles, footwear, handbags, luggage, work gloves, leather apparel, tuna fish, petroleum and petroleum products, and watches and watch parts from countries that do not enjoy Most Favored Nation status). An amendment was made to CBI provisions in 1990 (CBI II) allowing additional duty reduction on certain leather-related products, including handbags, luggage, flat goods, work gloves, and wearing apparel. To meet CBI eligibility standards, products must contain at least 35 percent value added in Jamaica, of which U.S. materials must comprise 15 percent of the value of the finished product. Articles assembled in Jamaica from 100 percent U.S. components are also given duty-free treatment (with certain exceptions, including textiles/apparel for which the U.S. duty is levied only on the value-added in Jamaica).
CBERA was substantially expanded in 2000 through the Caribbean Basin Trade Partnership Act (CBTPA) and further in 2002 through the Trade Act. The changes restore the margin of preferences CBI countries enjoyed prior to the implementation of the North American Free Trade Agreement (NAFTA), as well as improve the range of economic opportunities available to the countries. The Jamaican garment industry has not expanded under CBTPA as predicted due to: (1) the removal of preferential access to key markets following the removal of the quota system; (2) competition from low cost producers; (3) a large untrained labor force; (4) small factories that inhibit the achievement of economies of scale; (5) dependence on a few markets and on imported inputs; and, (6) high overhead costs. Jamaica also signed a Tax Information Exchange Agreement (TIEA) with the United States, allowing U.S. taxpayers to deduct legitimate business expenses incurred in attending business meetings and conventions in Jamaica.
CARICOM and Canada commenced negotiations for a free trade agreement in 2007 to replace the existing non-reciprocal Caribbean-Canada Trade Agreement known as CARIBCAN. However, after seven rounds of negotiations, the parties have not reached an agreement and no further negotiations are planned. Jamaica has been exporting certain items duty-free to Canada once eligible items meet a national-origin standard of 60 percent of the factory price originating in Jamaica, Commonwealth Caribbean countries, or Canada. Textiles, garments, lubricating oils, clothing, footwear, luggage, handbags, and leather garments are excluded. Processed and fresh vegetables comprise most of the trade under CARIBCAN. Alumina, representing approximately 80 percent of all exports to Canada, was already admitted duty-free prior to the establishment of CARIBCAN.
The Economic Partnership Agreement or EPA, a trade partnership required by the Cotonou Agreement to replace the trade component of Lome IV, was signed in January 2008. The EPA is intended to help African, Caribbean and Pacific states, reduce poverty and achieve economic growth through sustainable trade with Europe.
Jamaica has been a leading member of the Caribbean Community (CARICOM) since 1973, when four countries signed the Treaty of Chaguaramas. Over the years membership has grown to 15. There are also five associate members, and The Bahamas is a member of the community, but not the CARICOM Single Market and Economy (CSME). In 1989, the CSME was established to create a single economic space for the free movement of people, goods, services, and capital. To effect the CSME, a Revised Treaty of Chaguaramas was signed in 2002. In January 2006, CARICOM Heads of Government signed the single market aspect of the CSME, although at the time only six member countries had completed the process to bring the CSME into being. Six other countries have subsequently joined the CSME and the economic integration aspect of the CSME commenced in 2008. CARICOM members have not fully implemented the CSME, however, which remains the subject of ongoing discussions in CARICOM forums.
Jamaica Trade Development and Promotion Trade Agreements