Under the Caribbean Basin Economic Recovery Act (CBERA), Jamaica has benefited from preferential tariff arrangements with the United States; the European Union under the Economic Partnership Agreement (EPA); Canada under CARIBCAN (negotiations for a successor agreement have stalled); and other English-speaking Caribbean states under CARICOM. Costa Rica, Cuba, the Dominican Republic, Colombia, and Venezuela all have bilateral trade agreements with CARICOM.
CBERA, also known as the Caribbean Basin Initiative (CBI), allows qualifying Jamaican-made products to enter the United States duty-free (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). In 1990, the CBI was amended (CBI II), providing for additional duty reductions on certain leather-related products such as purses, luggage, flat goods, work gloves, and clothing. To be eligible for the CBI, items must have at least 35 percent value-added in Jamaica, with U.S. components accounting for 15% of the total value of the finished product. Duty-free treatment is also offered to articles assembled in Jamaica from 100 percent U.S. components (with a few exclusions, such as textiles/apparel, for which the U.S. duty is only charged on the value-added in Jamaica).
The Caribbean Basin Trade Partnership Act (CBTPA) significantly enlarged CBERA in 2000, and the Trade Act significantly expanded it in 2002. The modifications restore the CBI countries’ margin of preference before the introduction of the North American Free Trade Agreement (NAFTA), as well as expand the variety of economic opportunities open to them. Because of: (1) the removal of preferential access to key markets following the removal of the quota system; (2) competition from low-cost producers; (3) small factories that prevent economies of scale; (4) dependence on a few markets and imported inputs; and (5) high overhead costs, including security and energy costs, the Jamaican garment industry has not expanded as predicted under CBTPA. Jamaica also signed a Tax Information Exchange Agreement (TIEA) with the US, allowing US taxpayers to deduct genuine business expenses made in Jamaica when attending business meetings and conferences.
In 2007, CARICOM and Canada began talks on a free trade deal to replace the non-reciprocal Caribbean-Canada Trade Agreement known as CARIBCAN. However, the parties were unable to achieve an agreement after seven rounds of negotiations, and no additional talks are planned. Once qualified commodities meet national-origin criteria of 60% of the manufacturing price originating in Jamaica, Commonwealth Caribbean countries, or Canada, Jamaica has been exporting duty-free to Canada. Textiles, garments, lubricating oils, apparel, footwear, luggage, handbags, and leather garments are not included in this category. The majority of CARIBCAN’s trade is in processed and fresh veggies. Before the creation of CARIBCAN, alumina was allowed duty-free entry.
The Economic Partnership Agreement, or EPA, was signed in January 2008 to replace the trade component of Lome IV, as required by the Cotonou Agreement. Through sustainable commerce with Europe, the EPA aims to assist African, Caribbean, and Pacific countries in reducing poverty and achieving economic progress.
Since 1973, when four countries signed the Treaty of Chaguaramas, Jamaica has been a leading member of the Caribbean Community (CARICOM). The number of members has risen to 15 over the years. The Bahamas is a member of the community, but not of the CARICOM Single Market and Economy, and there are five associate members (CSME). The CSME was founded in 1989 to create a unified economic zone for the free movement of people, products, services, and capital. A Revised Treaty of Chaguaramas was signed in 2002 to implement the CSME. Although just six member nations had completed the process to bring the CSME into being at the time, CARICOM Heads of Government signed the single market portion of the CSME in January 2006. Seven more nations have now joined the CSME, and the CSME’s economic integration phase began in 2008. Members of CARICOM are still working to fully implement the CSME, which is still being debated in CARICOM fora.
