VI. TRADE REGULATIONS AND STANDARDS Tariffs and Import Taxes ------------------------ Customs taxes represent the government's third largest source of taxable revenue. In February 1991, the government implemented the new CARICOM Common External Tariff (CET), the first customs union in the Caribbean. Goods originating in a Caricom member state are not subject to the CET in other member countries. Presently, the CET ranges between 5 - 35 percent (an additional 5 percent in the case of agricultural produce). In addition to CET, all items carry a 12.5 percent general consumption tax. Alcoholic beverages and tobacco imports carry an additional stamp duty of 25-50 percent and special consumption tax of 5-38.2 percent. Non-basic, finished goods, and goods competing with those produced in Caricom states carry higher duty rates (within the 5 to 35 percent range). Duty rates will be gradually reduced to a maximum of 20 percent by 1998. Customs Valuation ----------------- Valuation is based on the cif value of the item imported. Import Licenses --------------- There are about 96 items that now require an import licence. These items include milk powder, plants and parts of plants for perfume or pharmaceutical purposes, gum-resins, vegetable saps and extracts, certain chemicals, motor vehicles and parts, arms and ammunition, certain toys such as water pistols, and gaming machines. The Trade Board, under the Ministry of Industry, Tourism, and Commerce, is responsible for granting licenses. Export Controls --------------- Certain items are subject to export licensing. These include ammunition, crocodiles, crocodile eggs, eggs, antique furniture, gold bullion and fully or semi-manufactured gold, minerals and metals including bauxite, alumina, gypsum, antique paintings, pimento, sugar, plasma, lignum vitae and log wood, petroleum products, live animals, and motor vehicles including bodies and auto parts. Import/Export Documentation --------------------------- If an item requires a license, it must be obtained from the Trade Board before effecting the sale. While export licenses are free, import license carry an application fee of jdols 101 for commercial items and jdols 33.75 for personal effects. In addition, a fee of jdols 579.38 is charged for imports valued over jdols 100,000 and jdols 300 for imports valued below jdols 100,000. For customs purposes, required documents other than the import license include a tax compliance certificate, invoice, Business Enterprise Number (BENO), bill of lading or airway bill. In the case of meat imports, and a phyto-sanitary certificate is required. Imports below USD 1000 do not require a formal entry certificate. Temporary Entry --------------- Importers may obtain authorization for temporary admission for a period of three or four months. To claim temporary admission of merchandise, regular import documentation and the C25 form with customs authorization must be presented by the importer upon the arrival of the merchandise. In addition, the importer is required to deposit either full or one and a half times its duty, which is refunded on exit of the merchandise. Labeling/Marking Requirements -------------------------------- The Bureau of Standards administers the Food and Drug Administration Act to ensure that items sold in Jamaica conform to international quality specifications. Prohibited Imports ------------------ The following items are prohibited for import into Jamaica: amusement machines known as "one arm bandits"; dogs for racing; dog racing equipment; tablets containing a combination of methaqualone and diphenhydraine hydrochloride; items originating in or consigned to Haiti; certain brands of crayons from China and Thailand; all items banned under the Customs Act and the Plants Protection from Disease Act; all goods prohibited entry into the United Kingdom under the Anthrax Prevention Act 1919; animals and carcasses of animals prohibited under the Animals Diseases and Importation Act; arms and ammunition, except with the permission of the Commissioner; brandy of a lower strength than thiry degrees per centum under proof, unless it is proven that it has been matured for a period not less than ten years; base or counterfeit imitation coin of any country; coin, silver, or any money not of the established standard in weight and fineness; opium and dangerous drugs; essence of brandy or whisky or flavoring essences except as approved by the minister; indecent or obscene prints, paintings, photographs, books, films, etc.; oil of gin or cognac, except as approved by the minister; rum coloring solutions; spirits and wine, unless specifically reported with casks or other vessels of at least nine gallons content or in glass or stone bottles with each case containing not less than one gallon; fictitious stamps and instruments; and sugar, except under licence. Standards --------- Although no specific safety, technical or other standards are required to export to Jamaica, Jamaica follows U.S. standards in most cases. The quarantine division inspects and determines standards in the case of live animals. Meat imports may be inspected by the Ministry of Health. Free Trade Zones/Warehouses --------------------------- Jamaica is a member of the Export Processing Zone Association (EPZA). Under the Jamaican Free Zones Act, investors are allowed to operate solely with foreign exchange in certain activities such as warehousing and storing, manufacturing, redistribution, processing, refining, assembling, packaging, and service operations such as insurance, banking, and professional services. Incentives offered include a 100- percent tax holiday in perpetuity, no import licensing requirements, and exemption from customs duties on capital goods, raw materials, construction materials, and office equipment. Free zone companies that wish to sell a part of their production on the local market are required to send their request through the Free Zone Administration for approval. Jamaica has three active industrial park/free trade zones -- the Kingston Export Free Zone, the Montego Bay Export Free Zone, and Garmex in Kingston. These free zones are government- owned and -managed. Kingston Free Zone has a total of 790,470 sq. ft of factory space. About 95,000 sq. ft is still available to investors. Factory space is made available in modules of 6,000 sq. ft. at a cost of USD 3.50 per sq. ft. per annum, including services (security, external lighting, maintenance of common areas, and garbage collection and disposal). Montego Bay Free Zone has a total of 397,000 sq. ft. of office and factory space. Factory space is rented to investors in varying sizes but an average-sized unit is 24,000 sq. ft. and rental cost is USD 4.25 per sq. ft. per annum, including services. There are now 25 companies operating in the Montego Bay Freezone. No factory space is currently available. Garmex Free Zone has a total building area of 697,000 sq. ft. Factory space is rented at USD 3.50 per sq. ft. per annum, including services. About 82,000 sq. ft of factory space is still available. Another free zone, "Hayes Free Zone," built in 1989, has remained vacant. It has factory space of 120,000 sq. ft. It is located in the parish of Clarendon, 38 miles from Kingston. The cost is USD 3.50 (negotiable). The government intends to introduce freestanding freezones, i.e., freezones sited in geographic areas other than those close to established ports. Five main areas of production will be targeted for freestanding freezones: data entry and processing, computer aid design, manufacturing, telemarketing and imaging. Membership in Free Trade Arrangements ------------------------------------- Preferential Tariff Arrangements: Jamaica has preferential tariff arrangements with the U.S. under the Caribbean Basin Inititative (CBI), with the countries of the European Union under the LOME Convention, with Canada under CARIBCAN, and with other English-speaking Caribbean states under CARICOM. CBI provides indefinite customs-duty-free entry to qualifying products of Jamaican origin to the United States (excepting textiles, footwear, handbags, luggage, work gloves, leather apparel, tuna fish, petroleum and petroleum products, and watches and watch parts from countries which do not enjoy Most Favored Nation status). An amendment was made to CBI provisions in 1990 (CBI II) allowing 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 35 percent value added in Jamaica, of which U.S. materials may 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 US duty is levied only on the value-added in Jamaica). Under the Interim Trade Program (ITP) for the Caribbean Basin currently being considered by the US Congress, Jamaica could be eligible for additional benefits for textile trade. Because Jamaica has signed a Tax Information Exchange Agreement (TIEA) with the United States, U.S. taxpayers are allowed to deduct legitimate business expenses incurred in attending business meetings and conventions in Jamaica. By signing the TIEA with the U.S., Jamaica also has access to 936 funding for development projects. Under this program, qualifying investors have the opportunity to borrow tax-deferred funds belonging to U.S. corporations which are on deposit with Puerto Rican financial intermediaries and which are generally lendable at below-market rates. Goods of Jamaican origin or those partially produced from extra-regional materials and sufficiently transformed can enter CARICOM markets duty-free. Efforts are being made to boost trade within the region through integration and regional cooperation. The first step was taken in February 1991 when the Common External Tariff was implemented; cross-trading of securities among Jamaica, Trinidad and Tobago, and Barbados started in April 1991. Efforts at integration are being made by the Community in areas such as travel within the region, free movement of skilled labor, common currency, enlarging investment, and coordination for international negotiations. Jamaica exports certain duty-free items to Canada under CARIBCAN. Eligible items must 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 from CARIBCAN. Processed and fresh vegetables have provided most of the trade under CARIBCAN. Alumina is the largest export to Canada (approximately 80 percent), but was already admitted duty-free prior to the establishment of CARIBCAN. Jamaican exports also benefit from either zero or reduced-duty treatment of several products sent to the European Union under the LOME Convention. The system is not a simple one as there are special arrangements for certain agricultural products, and the value-added component varies depending on the type of product. The unification of the single European Market has caused some concern in Jamaica, particularly for Jamaican exports of sugar and bananas. Thus, efforts are being made by private-sector and government representatives to explore and understand the dimensions of future trade in this market.