Identifier
Created
Classification
Origin
09KINGSTON770
2009-09-30 14:12:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Kingston
Cable title:  

JAMAICA: OPERATION OF THE CARIBBEAN BASIN ECONOMIC RECOVERY

Tags:  ECON ENRG EFIN EINV ETRD PGOV PREL IADB IBRD IMF TRGY 
pdf how-to read a cable
VZCZCXRO8030
OO RUEHGR
DE RUEHKG #0770/01 2731413
ZNR UUUUU ZZH
O 301412Z SEP 09
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0080
INFO EC CARICOM COLLECTIVE IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHINGTON DC IMMEDIATE
UNCLAS SECTION 01 OF 07 KINGSTON 000770 

SENSITIVE
SIPDIS
STATE FOR WHA/CAR (RALVARADO)(VDEPIRRO)(WSMITH)
WHA/EPSC (MROONEY) (FCORNEILLE)
EEB/IFD/OMA
WHA/PPC (JGONZALEZ)
INR/RES (RWARNER)
INR/I (SMCCORMICK)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW
EXPORT IMPORT BANK FOR ANNETTE MARESH
USTR FOR KENT SHIGETOMI

E.O. 12958: N/A
TAGS: ECON ENRG EFIN EINV ETRD PGOV PREL IADB IBRD IMF TRGY
JM, XL
SUBJECT: JAMAICA: OPERATION OF THE CARIBBEAN BASIN ECONOMIC RECOVERY
ACT (2009)

TRADE OBLIGATIONS

-----------------



UNCLAS SECTION 01 OF 07 KINGSTON 000770

SENSITIVE
SIPDIS
STATE FOR WHA/CAR (RALVARADO)(VDEPIRRO)(WSMITH)
WHA/EPSC (MROONEY) (FCORNEILLE)
EEB/IFD/OMA
WHA/PPC (JGONZALEZ)
INR/RES (RWARNER)
INR/I (SMCCORMICK)
SANTO DOMINGO FOR FCS AND FAS
TREASURY FOR ERIN NEPHEW
EXPORT IMPORT BANK FOR ANNETTE MARESH
USTR FOR KENT SHIGETOMI

E.O. 12958: N/A
TAGS: ECON ENRG EFIN EINV ETRD PGOV PREL IADB IBRD IMF TRGY
JM, XL
SUBJECT: JAMAICA: OPERATION OF THE CARIBBEAN BASIN ECONOMIC RECOVERY
ACT (2009)

TRADE OBLIGATIONS

--------------




1. Jamaica is a signatory to the WTO Agreement and has generally
demonstrated a commitment to undertaking its obligations. While
the Golding administration, reeling under the effects of the global
economic crisis, has championed the need for the country to replace
particularly agricultural imports, it has maintained that this has
to be done under the auspices of current trade agreements.
Agriculture and manufacturing interests have also blamed the
country's gargantuan trade deficit on its "so called" liberal
trading arrangements. The country was committed to the completion
of the Free Trade Area of the Americas, but its efforts were
stymied by smaller CARICOM members, who were concerned about the
impact of such an agreement on their vulnerable economies in the
absence of special and preferential treatment.




2. The current view coming out of CARICOM is that the stakeholder
community has reservations about a free trade agreement with the
U.S. at this time. However, the Council for Trade and Economic
Development has cleared Trinidad and Tobago to embark on
discussions with the U.S. on a product specific agreement. Jamaica
appears to be more interested in the revival of the Trade and
Investment Council (TIC) and a discussion of a draft Trade and
Investment Framework Agreement (TIFA) submitted by CARICOM. Chief
among the concerns for discussion is Jamaica's huge trade deficit

with the U.S. Jamaican officials posit that although market access
might exist, there are serious supply side constraints which
require external intervention. However, a member of the former
Caribbean Regional Negotiating Machinery is of the opinion that
CARICOM is distracted by upcoming negotiations with Canada. Even
more important is the view that CARICOM already has ample market
access, including the recently signed Economic Partnership
Agreement with the EU.




3. Jamaica remains the largest recipient of CARICOM goods, which
increased by 30.4 percent in 2008 to USD 1.7 billion. With the
country exporting less than USD 100 million to other CARICOM
states, this translated into a trade deficit of over USD 1.6
billion. This imbalance has placed Jamaica at odds with some of
its partners in CARICOM, with many in the GOJ increasingly
skeptical as to whether CARICOM membership has been beneficial to
Jamaica's economic interests. Recent developments suggest an
absence within CARICOM of a shared vision of the future, and a
region splintering into new interregional relationships, driven by
differing levels of development among CARICOM states and growing
signs of protectionism and insularity in response to the global
economic crisis.



INTELLECTUAL PROPERTY RIGHTS PROTECTION

--------------




4. In addition to being a member of the World Intellectual
Property Organization and a signatory of the Bern Convention,
Jamaica and the U.S. have an Intellectual Property Rights Agreement
and a Bilateral Investment Treaty, which provide assurances to
protect intellectual property. Although Jamaica remains a Special
301 "Watch List" country because the patent law is not TRIPS
compliant, work is advanced on a new Patent & Designs Bill, which
could be tabled this legislative year. A Geographical Indications
Act was passed in 2004 and general law provides protection for
Trade Secrets. The Copyright Act of 1993, as amended, complies
with the TRIPS Agreement and adheres to the principles of the Bern

KINGSTON 00000770 002 OF 007


Convention, and covers works ranging from books and music to
computer programs. The Act needs to be amended to give effect to
the provisions of the WIPO WCT and WPPT (Internet) Treaties to
which Jamaica acceded in 2002.




5. The Trademark Act of 1999 is also compliant with the TRIPS
Agreement and provides the owner of registered trademarks exclusive
rights for up to ten years, renewable. It provides for the
protection of "well-known" marks under the Paris Convention. A
TRIPS compliant Layout Designs Act has also been in effect since
June 1999. The Act provides protection for layout-designs for
integrated circuits and gives the rights owner the exclusive right
to reproduce, import, sell or otherwise commercially exploit the
layout-design. Enforcement of IP rights has improved significantly
in recent times with the police becoming more active in pursuing
breaches. The Jamaica Intellectual Property Office has also been
working with stakeholder interests to ensure that there is full
compliance with IP laws.



WORKER RIGHTS

--------------




6. Jamaica has ratified the following ILO Conventions:



(I) Right of Association (Agriculture) Convention 1921 - ratified
July 8, 1963; Freedom of Association and Protection of the Right to
Organize Convention, 1948 - ratified December 26, 1962



(II) Right to Organize and Collective Bargaining Convention, 1949
- ratified December 26, 1962



(III) Forced Labor Convention (29) - ratified in 1962; Abolition
of Forced Labor Convention (105) - ratified in 1962



(IV) Minimum Age for Employment Convention (138) - ratified in
2003: Children must be at least 15 years of age to engage in any
form of gainful employment. However, children should not work at
nights and should not be taken out of schools for employment
purposes. The Worst Forms of Child Labor Convention was ratified
in 2003.




7. Worker rights in Jamaica are defined and protected under the
Labor Relations and Industrial Disputes Act, with the Industrial
Disputes Tribunal (IDT) hearing collective bargaining cases.
Workers generally enjoy full rights of association, as well as the
right to organize and bargain collectively. However, unionized
workers have frequently been laid off and then rehired as
contractors with reduced remuneration. This issue was the subject
of litigation for a number of years and in July 2009 the Court of
Appeals upheld a 2005 decision by the IDT, in favor of a
representational rights poll for contract workers. Jamaican labor
law neither authorizes nor prohibits strikes. However, workers in
the "essential services" are prohibited from striking. The general
minimum wage is $46 for a 40-hour week, including at least one day
of rest. Employees are expected to work for eight hours per day,
with any additional time remunerated at times and a half or twice
the regular rate.

KINGSTON 00000770 003 OF 007


CHILD LABOR

--------------




8. Jamaica ratified ILO Convention 182 in 2003, and in March 2004
passed the Child Care and Protection Act (CCPA). The CCPA
implements the Government of Jamaica's strategy to eliminate the
worst forms of child labor, and establishes a framework within
which all forms of child abuse may be proscribed. It includes a
prohibition on employing a child under the age of 13 in any form of
work, and restricts both the type of employment and hours of work
permitted for children between the ages of 13 and 15. The formal
institutional mechanism for investigation into allegations of the
mistreatment of children is the Child Development Agency, which
operates under the auspices of the Ministry of Health.




9. Additionally, Jamaica cooperates with non-governmental
organizations such as Children First to prevent child labor. It
signed a Memorandum of Understanding with ILO-IPEC, and has
established a National Steering Committee for the Protection of
Children in conjunction with ILO-IPEC. While Jamaica continues to
make significant efforts to address child labor issues, it is often
constrained by poor enforcement mechanisms. Additionally, the law
does not specifically prohibit forced or compulsory labor,
including by children, and there were reports of child prostitution
and of children trafficked into domestic servitude and forced
labor.



COUNTER-NARCOTICS EFFORTS AND EXTRADITION TREATY

-------------- ---




10. Jamaica continues to be a major transit point for South
American cocaine, and remains the largest Caribbean producer and
exporter of marijuana. While Jamaica is listed in the 2008
Presidential Determination as a major illicit drug-producing or
drug-transit country, it has worked with the U.S. to combat drug
trafficking and, therefore, has not been identified by the
President as having failed to comply with the criteria in the FRAA.
Jamaica is a signatory to both a Mutual Legal Assistance Treaty and
an Extradition Treaty regarding U.S. citizens, Jamaicans, and
third-country nationals.



CORRUPTION

--------------




11. Jamaica has a Corruption Prevention Act which, among other
things receives and examines the statutory declarations of public
sector workers and if necessary investigates complaints regarding
corruption. To date there has been no enforcement, as the
Commission lacks the capacity to enforce the filing of
declarations. Jamaica is a signatory of the OECD Anti-Bribery
Convention and has ratified the Inter-American Convention Against
Corruption. However, Jamaica is not a signatory to the UN
Anticorruption Convention. Jamaica prosecutors continue to take
part in regional anti-corruption conferences, with one such
conference developed by the United States Department of Justice.
The new government has also publicly advocated for the adoption of
whistle blower legislation and the establishment of a Special
Prosecutor for Anti-Corruption to improve transparency and reduce

KINGSTON 00000770 004 OF 007


public corruption. A senior police officer and a former Minister
of Government are currently before the courts on corruption
matters.

GOVERNMENT PROCUREMENT

--------------




12. The GOJ has comprehensive public procurement procedures, which
are vigorously enforced by the Contractor General. Government
procurement is generally done through open tenders, direct
advertising, or by invitation to registered suppliers. U.S. firms
are eligible to bid. The range of manufactured goods produced
locally is relatively small, so there are few instances of foreign
goods competing with domestic manufacturers. Companies interested
in supplying office supplies to the government must register with
the Financial Management Division of the Ministry of Finance.



PROPERTY RIGHTS

--------------




13. Property rights are protected under Section 18 of the Jamaican
Constitution. Expropriation of land may take place under the Land
Acquisition Act, which provides for compensation on the basis of
market value. Expropriation can take place before compensation is
paid, but in this case interest for the period between the
expropriation and the compensation settlement must be paid.
According to the law, the purpose of any expropriation must be
transparent and compensation for expropriated property must be
adequate. If informal negotiations on compensation fail, the
investor has recourse to the courts. Jamaica has signed bilateral
agreements for the reciprocal promotion and protection of
investments with a number of countries, including the United
States. The Embassy is not aware of any litigation between the
Jamaican government and any private individual or company based on
expropriation or on compensation for expropriation.



ARBITRAL AWARDS

--------------




14. Jamaica, a signatory to the International Center for the
Settlement of Investment Disputes (ICSID) since 1965, accepts
international arbitration of investment disputes between Jamaicans
and foreign investors. Local courts also recognize and enforce
foreign arbitral awards. International arbitration is also
accepted as a means for settling investment disputes between
private parties. However, acting in its role as an international
tribunal, the Caribbean Court of Justice interprets and applies the
Revised Treaty of Chaguaramas. There is no formal domestic
arbitration body in Jamaica, but disputing parties can use
arbitration proceedings to settle their disputes. These
proceedings would be guided by the Arbitration Act which sets out
the procedures disputing parties would follow once they agree on
arbitration and is read in conjunction with the Arbitration Clauses
Protocol Act, which in turn makes reference to how foreign arbitral
awards will be addressed. If a foreign investor's country has a
BIT with Jamaica then the rules of this treaty would apply. Other
foreign investors are given national treatment and civil procedures
would apply. Disputes between enterprises are handled in the local
courts, but foreign investors can refer cases to ICSID. There have
been cases of trademark infringements in which U.S. firms took
action and were granted restitution in the local courts.

KINGSTON 00000770 005 OF 007


PREFERENTIAL TREATMENT AND COPYRIGHT ISSUES

--------------




15. Jamaica does not provide preferential treatment to the
products of any developed countries. However, CARICOM recently
signed an Economic Partnership Agreement with the European Union to
establish a WTO compatible trading arrangement. Jamaica has a very
strong copyright regime, which adheres to the principles of the
Bern Convention, and covers works ranging from books and music to
computer programs. The government has actively enforced this Act,
but in recent times the rights holder for HBO in Jamaica has
complained about broadcast breaches in Jamaica. However, in
response, JIPO said it has always sought to collaborate with the
Motion Picture Association of America on an enforcement and public
education program. The office says it remains ready and willing to
work with US-based interests to ensure full IP compliance in the
Jamaican market.



ECONOMIC OVERVIEW

--------------




16. Jamaica's already moribund economy has plunged further into
recession on the back of the global economic crisis. Real GDP has
been declining by up to four percent, as the economy reels from the
fallout in the real sector, and in particular bauxite and
construction. Three of the island's four alumina plants have been
forced to halt production as external demand wanes. The falling
external demand has also resulted in a slump in foreign exchange
earnings, although tourism earnings have remained flat.
Remittances, the second largest foreign exchange earner, have
declined by almost 20 percent for the year to date. The imbalance
in the country's external position led to a steep depreciation in
the local currency, prompting the central bank to effect a number
of demand management measures, led by record high interest rates.




17. These measures have had some success, as the currency
stabilized and the stock of Net International Reserves (NIR)
leveled off at USD 1.6 billion. Inflation also moderated to four
percent for the first half of 2009. But these gains have come at a
significant cost to the fiscal accounts. The weakening fiscal
dynamics combined with talk of a debt concession triggered a second
downgrade in Jamaica's credit rating to CCC+ by Standard & Poor's.
The fiscal crisis also forced the government into action; in
addition to speeding up negotiations with the IMF for a USD 1.2
billion Stand-by Agreement, the GOJ made some changes at the
technical level in the Ministry of Finance. The GOJ has also had
to revise the budget it presented only five months ago. The first
supplementary budget tabled in September 2009, increased
expenditure and by extent the fiscal deficit by almost USD 70
million on the back of higher than budgeted interest cost. The
central bank received USD 303.4 million in special drawing rights
(SDRs) from the Fund at the end of August 2009, pushing the stock
of NIR to nearly USD 2 billion. The GOJ also received a USD 40
million grant from the European Union for budgetary support.



MARKET ACCESS AND TRADE DISTORTIONS

--------------

KINGSTON 00000770 006 OF 007



18. There have been a few instances where U.S. agricultural
products have been the subject of increased scrutiny by the local
Veterinary Division due to what they consider the absence of
accompanying health certification attesting to the wholesomeness of
the products. However, this is not a general problem as over 50
percent of food consumed by Jamaicans is imported from the U.S.
Additionally, the U.S. continues to be Jamaica's largest trading
accounting for almost 40 percent of total trade in 2008. Imports
from the U.S. to Jamaica amounted to USD 3.2 billion, while exports
were a less flattering USD 1.2 billion, translating into a trade
deficit of USD 2 billion. There are currently no performance
requirements imposed as a condition for investing in Jamaica.
However, investments that expand employment opportunities are
favorably considered. There is no requirement that investors
purchase from local sources or export a certain percentage of
output. However, "Free Zone" type incentives require companies to
export at least 85 percent of their output. Jamaica's perennially
dire fiscal situation makes it almost impossible for the government
to provide export subsidies.



LOCAL TRADE POLICIES AND THE CBI REGION

--------------




19. Jamaica has always been a major proponent of regional economic
integration. Most CARICOM countries look to Jamaica for leadership
and the country was among the first to reduce duties on goods from
CARICOM countries and has been spearheading efforts to get the
CARICOM Single Market and Economy and the Caribbean Court of
Justice on track. Jamaica currently runs large trade deficits with
Trinidad and Tobago and Barbados and a number of regional firms,
including financial institutions and manufacturing entities, have a
physical presence in the country. However, there is a feeling
among Jamaicans that there is no reciprocity, as when they try to
do business in these markets they are met with resistance.



PROMOTION OF ECONOMIC DEVELOPMENT

--------------




20. Jamaica has embarked upon the preparation of a 25-year National
Development Plan - Vision 2030 Jamaica, which is expected to put
the country on a path to achieve developed country status by the
year 2030. With export growth less than impressive, the GOJ and the
JEA are also collaborating on a National Export Strategy to expand
exports in the next 2 to 3 years. Technical support is being
provided by the Geneva-based International Trade Council (ITC).
The ITC is providing Jamaica with a template, which will be
customized to fit the local context. The aim is to concentrate on
9 sectors including agro-processing, mining and quarrying, fashion,
apparel and jewelry. There is also a view that Jamaica cannot
compete on volume and as such the country has to concentrate on
niche markets and value addition through intellectual property and
diversification. The JEA is therefore working with JIPO to
establish geographical indicators (GI) for products like coffee.
The JEA is also embarking on a Brand Jamaica Initiative, which will
include registered certification marks to gain indigenous status.



ADMINISTRATION OF CBERA

--------------




21. The Trade Board is the agency responsible for administering

KINGSTON 00000770 007 OF 007


the CBERA/CBTPA programs in Jamaica. The agency has been and
remains willing to promote the program. Trade Board officials are,
however, concerned about the underutilization of the program and
attribute this to the general lack of competitiveness of a number
of firms as well as the demand constraints associated with the
global economic crisis.



PARNELL
Parnell