Jamaica is a small producer and exporter of a limited range of agricultural commodities in the hemisphere and internationally. Yet, the agricultural sector makes a significant contribution to the economy in terms of employment, foreign exchange earnings, food security, rural development and social cohesion and has important linkages with the service sector, e.g. tourism and transportation. The sector contributes about 8 percent to GDP, but double this amount (16 percent) when food processing, beverages and tobacco are also included. Exports of primary agricultural commodities accounted for about 16 percent of total exports in 1996 and processed agricultural products for an additional 14 percent.
The sector supports an estimated 150 000 rural families and is the country's second largest employer of labour. In 1997 about 22 percent of the labour force was employed in agriculture and about 50 percent of the population lived in rural areas. It is acknowledged that the productivity of labour in agriculture is low and needs to be enhanced through the use of improved technology.
One of the many challenges facing the sector is that of reducing the cost of production and maintaining quality standards in order to compete effectively in the global market. The sector has been dominated for many years by the production of a narrow range of commodities, mainly sugar, bananas, coffee, citrus, cocoa and pimento. More recently there has been a significant increase in the production and export of non-traditional crops such as vegetables, tubers, fruits, ornamental horticulture and fish. Emphasis is also being placed on increasing the production of milk, dairy products, lamb and poultry.
Jamaica is a net agricultural importer, mostly of basic food products. In 1996, agricultural imports were almost one third greater than exports. The country faces many difficulties typical of small open economies with a weak, vulnerable agricultural sector and a large number of small farmers. Jamaica has embraced a liberal trade regime as a matter of policy, but it has to be conscious of the contributions that the agricultural sector makes to employment and social stability, not only in the rural but also in urban areas, and so needs to ensure that the social and economic situation of the farming population is not undermined by trade liberalization.
By the time the UR was concluded, Jamaica had already undertaken a series of structural economic reforms along the lines envisaged in the AoA. The main reforms included: elimination of all quantitative import restrictions; elimination of the use of reference prices as a matter of policy; tariffication of non-tariff barriers in a way that no tariff exceeded 100 percent; lowering of duties from 200 percent in several cases to 40 percent; and a programme of tariff reduction over a period of 3 to7 years according to the Common External Tariff (CET) of the Caribbean Community and Common Market (CARICOM).
In the UR, Jamaica bound all agricultural tariffs at the ceiling rate of 100 percent. Other duties or charges were bound at 15 percent for all agricultural products with the exception of 52 tariff lines and three HS Chapters (bound at 80 percent) and an additional three tariff lines bound at 200 percent (Table 1). The selection of particular products for higher bound rates for other duties or charges is interesting as it reveals the "sensitivity" of the products. For example, almost all fresh vegetables face higher bound rates. Similarly, while only one fresh fruit (fresh grapes) is included in the high-bound category, there are nine processed fruit products in this group.
Jamaica has in the past faced particular difficulties in coping with import surges in meat products, which is reflected in high binding for nine fresh meat products. Some sugar products also belong to the sensitive category, notably sugar other than raw sugar.
Table 1: Jamaica's WTO tariff bindings on agricultural products
Product |
Bound customs duty (percent) |
|
|
All agricultural products, with the following exceptions: 52 tariff lines 1 Meat - HS 02 (9) Dairy products - HS 04 (2) Fresh vegetables - HS 07 (16) Fruit - HS 08 (1) Cereals - HS 10 (1) Cereal preparations - HS 11 (2) Oilseeds - HS 12 (8) Meat preparations - HS 16 (1) Prepared fruit - HS 20 (9) Industry products - HS 23 (3) 3 HS Chapters HS Chapter 15 (veg. oils) HS Chapter 22 (spirits) HS Chapter 24 (tobacco) Sugar Sugar other than raw sugar (1701.9); sugar containing added flavouring or colouring matter (1701.91); and icing sugar (1701.991) |
100 100 100 100 |
15 80 80 200 |
1 Figures in parentheses are the number of tariff lines.
Source: Jamaica's UR tariff Schedule.
For all practical purposes, the WTO bindings of "basic customs tariffs" (the 100 percent rates) have little significance for applied rates because of the adoption of the CARICOM CET, which went into effect in 1991. Under the CET, agricultural imports from CARICOM countries are duty-free, while those from outside face tariffs up to 40 percent. There are also lists of products for national exceptions to the CET.
As a result of both the series of unilateral reform measures undertaken since 1986 and the CARICOM, there are few trade restrictions, and applied rates have fallen considerably. Tariff rates are generally categorized according to criteria such as type of goods (e.g. primary inputs, consumer goods), use (e.g. as raw materials or not) and whether or not they compete with domestic production. Applied rates also reflect this structure. About 55 agricultural tariff lines are classified as "cost of living" goods with low tariffs; 18 of these are duty-free, including wheat and some grains and various infant food products, 15 others face 5 percent duty and the rest a 10 percent rate.
In contrast to these "cost of living" products, several other commodities face "additional stamp duties", on top of the normal tariffs. Since the additional duties are levied on c.i.f. value plus the tariff, total applied rates for these products exceed the CET rates and can reach as high as 90 percent.2
In large part due to the additional stamp duties, there is a wide dispersion of applied tariffs (i.e. the aggregate duty). Of the 24 HS Chapters in agriculture, the simple average of applied tariffs exceeded the 20 percent overall average (for all agricultural products) in ten, was below the average for another ten and was about the average level for the other four.3 The average applied tariff was highest (at 35.2 percent) for fruit (HS Chapter 8), with a peak of 40 percent. Vegetables and live plants also faced relatively high tariffs (26.5 percent and 26.7 percent respectively). Tariffs were also high for sugar and sugar confectionery (26.5 percent on average, with a peak of 40 percent). At the other extreme, cereals faced a 14.3 percent tariff while imports of products of animal origin and vegetable planting materials were duty-free.
Although on the whole Jamaica does not seem to have had any difficulty in "living with" its WTO commitments on market access, the experience in terms of adjusting tariffs to take account of domestic and external factors has not always been smooth, particularly in the case of import-competing products. One example is poultry meat, imports of which have often surged in the past decade, to the detriment of the poultry sector. There have been several calls from the industry for anti-dumping actions. In response, import reference prices were established for customs valuation purposes - in 1993/94, the duties on leg quarters were levied on the basis of the average c.i.f. price of US$0.52 per pound. Similar difficulties were encountered in regulating the import of sugar, where reference import prices had to be set based on five-year moving averages of world market prices, at about US$0.20 per pound initially in 1995 and slightly more in later years.
There have also been incidents with beef imports, when in 1998 the Jamaican beef farmers' association complained that local production was being hurt by imports of ground beef used for McDonald burgers, despite the 40 percent tariff. Farmers complained that the export of the beef was subsidized and called for higher duties. Higher tariffs on fresh fruit and vegetables, ranging from 86 to 90 percent, were sometimes found inadequate to keep out imports altogether, though they did limit the quantity entering. Jamaica also encountered difficulties in rationalizing tariffs on oilseeds and products due to conflicting goals, i.e. establishing a soybean extraction industry and keeping down the consumer price of oils.
These examples, not uncommon to many developing countries, illustrate the nature of practical problems involved in coping with the new trading environment. The difficulties have their roots in both domestic and external factors, such as: lack of import competitiveness when borders are opened suddenly; expectations that the sector will eventually be competitive with some protection and other support measures (infant industry argument); difficulties in detecting and remedying under-invoicing of imports; difficulties in applying general WTO safeguards; and the feeling that exports are subsidized and dumped.
By the time the WTO Agreement came into effect, Jamaica had implemented a number of structural reforms that had eliminated or minimized the types of trade-distorting domestic support measures that are addressed by the AoA. These measures included: removal of most agricultural credit subsidies; removal of other forms of subsidies and controls previously associated with regulation by Commodity Marketing Boards; elimination of food subsidies; and divestment of land and public companies.
In the UR, Jamaica did not submit detailed commitments on domestic support measures, essentially claiming that all such measures belonged to the exempted categories and/or were within the de minimis levels in the case of trade-distorting support measures. Notifications to the WTO for recent years provide information on green box measures, which show that the total outlay has been about US$8 million per annum (Table 2). This is a very small amount compared with an agricultural GDP of roughly US$480 million.
Table 2: Outlays on green box measures (in million US$)
Type of measure |
Specific measure |
Total outlay | ||
1996/97 |
1997/98 |
1998/99 | ||
|
General Services |
Research and development relating to particular products: livestock research and improvement, crop research and plant protection |
1.6 |
2.0 |
2.3 |
Extension and advisory services: primarily to rural farmers |
5.5 |
6.0 |
5.8 | |
There are no other studies available, from either official or other sources, that have measured the full range of support in favour of producers. This makes it difficult to review Jamaica's situation as regards the general AoA rules and its own commitments. Perhaps reflecting the limited information provided in these notifications, there has also been no discussion in the WTO CoA on Jamaica's support measures. What follows, therefore, will discuss some issues in this area of a more general nature based on other sources.
As regards trade-distorting measures (the amber box measures), developing countries are permitted to grant subsidies to farmers up to 10 percent of the value of production of particular crops and up to 10 percent of the total value of total agricultural production in the case of non-product-specific support measures, e.g. fertilizers. Computations for other countries show that the sums involved are generally large, indicating substantial scope for subsidization. In Jamaica's case, for example, the limit to subsidies for banana farmers would be high because the value of production of bananas is very high, but that may not be the case for cocoa. It should be a priority area for analysis by the Government to compute these threshold levels so as to assess whether the AoA disciplines would constrain in any way the implementation of support measures, if and where required. The same applies to non-product-specific support measures.
Should these constraints appear to be binding, Jamaica can still shift a considerable amount of non-product-specific subsidies to the SDT category, as long as they are directed to low-income and resource-poor farmers. As above, the important first step is to compute all these support measures, categorize them under the various "boxes" and report to the WTO, thereby avoiding unnecessary questioning in the CoA.
Overall, complying with the AoA rules (and Jamaica's own commitments) on domestic support measures has not been an issue so far. The remarks made above consequently apply mainly to the future rather than to the past five years.
Some commentators have questioned whether some of the ongoing agricultural development programmes involve subsidization of farmers to an extent that violates Jamaica's commitments. However, that seems highly unlikely. For example, one of the components of the new Banana Support Programme involves the provision of interest subsidies (others being of a green box nature), but the amount involved is unlikely to be more than a fraction of the total value of Jamaica's banana output. Similarly, it is unlikely that some of the current mechanisms under which producer prices are determined involve official subsidies. For example, producer prices of bananas are determined on the basis of export prices and so farm prices can increase sharply in a particular year, but since there is no transfer from the Government the AoA rules are not infringed.
In the UR, Jamaica did not report any subsidies to agricultural products contingent upon exports. Accordingly, it has no commitment to reduce export subsidies and has not the possibility of providing these subsidies in the future. For all practical purposes, that is of little importance because Jamaica can neither afford this practice nor would it be in its interest. It is free under the AoA to provide subsidies to reduce the cost of domestic marketing and international freight and could resort to this measure, if needed, on a limited scale for selected products.
In common with many countries, the Government implements some incentive measures aimed at export promotion, of the nature listed under the Agreement on Subsidies and Countervailing Measures. The overall amount involved is small and it is not clear whether these schemes are compatible with the subsidy rules of the AoA.
Having offered ceiling tariff bindings, Jamaica did not have to open tariff rate quotas (TRQs) as part of the minimum market access commitments and so has no experience of their administration. On the other hand, it benefits from TRQs opened by others, notably for sugar and bananas. At least in these two cases, the quotas are reserved for Jamaica and there were no negative experiences, although Jamaica was not always able to utilize them fully because of its own supply difficulties. For other commodities there is no information to review the experience with regard to global TRQs, i.e. to determine whether or not Jamaica was able to access the global quotas in competition with other WTO members. Collating and reviewing this experience should be part of the preparation for new negotiations.
Since it did not undertake tariffication, Jamaica cannot have recourse to the Special Safeguard (SSG) provision of the AoA. There is some feeling that it was unfair in the UR not to have allowed such safeguards to countries like Jamaica that in fact had "tariffied" all NTBs not long ago in the context of reforms undertaken unilaterally.
As regards the general WTO safeguards, Jamaica has never had recourse to anti-dumping and countervailing measures. Some investigations were initiated on agricultural products, namely dairy products and rice. The investigation on dairy products was initiated because of import surges of milk powder which undermined the domestic milk industry. It resulted in a recommendation to impose an anti-dumping duty (of 136 percent) on milk powder, but the duty was never imposed as the legislation governing these procedures was found to be inconsistent with the WTO anti-dumping rules. The investigation on rice imports was in progress at the time of writing. As for the emergency safeguard under GATT Article XIX, it has never been used.
The lesson learnt was that the procedures involved were complex and expensive to pursue. Small economies are also handicapped in resorting to trade remedy measures against larger ones, the main source of dumping and export subsidies, because they depend on the latter for preferential market access. Jamaica has faced, and continues to face, this dilemma. Countervailing measures are a response to export subsidization by other countries, and so the elimination of this practice would also eliminate the need for countervailing measures.
It is for these reasons, and for the sake of fairness in trade agreements, that smaller countries like Jamaica should be allowed the use of instruments that are realistic for them - in this instance the special safeguards of the AoA. Their use can also be justified in terms of the particular vulnerability of the sector and of the people who depend on it. Having access to simpler instruments like the SSG is on Jamaica's agenda in the new WTO negotiations, at least for a small range of sensitive agricultural products.
The imposition of additional stamp duties was one response to the problem of import surges and low import prices of basic foods. One study on the subject has acknowledged these problems but suggested that it would be more efficient to replace the stamp duties with a variable duty scheme based on reference import prices.4 In view of the past complaints on dumping, it also suggested using the US domestic wholesale prices for reference prices. In the case of milk powder, the suggestion was to use New Zealand export prices (plus transport costs) for reference prices so as to take care of possible export subsidization by both the US and the EU. In each case, higher duties would be charged, on top of the 40 percent CET, if import prices fell below the reference prices. At the same time, domestic measures have to be devised to make these sectors competitive.
Jamaica has made considerable progress, relative to many other developing countries, in strengthening the capability to use general WTO safeguards. Legislation was enacted recently in this regard and necessary institutional arrangements established to facilitate the implementation of anti-dumping and countervailing measures, while similar efforts are under way for emergency safeguards.
Jamaica is classified as a NFIDC in the context of this Decision. On the other hand, the volume of food aid received has fallen from 65 percent of total cereal imports in 1985-87 to 45 percent in 1990-94 and 6 percent in 1995-98, even though food import bills have risen sharply.
Jamaica recognizes the importance of the WTO SPS Agreement for both exports and imports of agricultural products. But like many other developing countries, its SPS standards, laws and institutions need to be modernized in order to comply with the requirements of the Agreement. Some experience has been gained with the SPS/TBT Agreements. Some of the major products that have been affected by the new regulations include fish and conch exports to the EU, as well as cheese exports thereto, while the export of chicken to the United States was completely banned. With respect to imports, Jamaica has stepped up the enforcement of national food safety laws in relation to meat, meat products and poultry.
The Government has instituted several measures as part of a broader strategy to improve export regulations relating to SPS. These initiatives include:
Greater technical assistance from the international community would have been helpful in the implementation of these and other measures, notably in the upgrading of legislation; development of human resources; provision of equipment for laboratories; and institutional reorganization and strengthening. However, the record of assistance in this regard has been poor.
By virtue of its third-party role in the EU-United States dispute on bananas, Jamaica was able to observe closely how the WTO disputes settlement mechanism operates. While it realizes the value of the system, it was able to identify a number of weaknesses from the perspective of a developing country, as follows:
Food products account for a high share of total agricultural imports (82 percent in 1995-98) as well as exports (71 percent). Jamaica had a deficit in trade in food products to the extent of US$107 million in 1995-98, but a surplus in non-food products of US$17 million, yielding an overall deficit of US$90 million for all agricultural products. The main export products are sugar, bananas, rum, coffee and cocoa while the principal imports are cereals, vegetable oils, meat and dairy products.
Figure 1 shows the evolution of agricultural trade during 1985-98 and the trend up to 1994, extrapolated up to 1998. Total agricultural imports increased rapidly during 1985-94, at the linear rate of US$10 million per year. In the post-94 period, they rose sharply (36 percent) in 1995 and continued to rise, by 3-12 percent, in the following years. As a result, the average value of imports in 1995-98 was 50 percent higher than in 1990-94 and still 26 percent higher than the extrapolated trend value, despite the fact that the trend was strongly positive (Table 3).
Table 3. Agricultural trade in 1990-94 and 1995-98 (annual average value, in million US$, and percentage change)
Period |
Imports |
Exports |
Net imports |
|
1990-94 actual (a) 1995-98 actual (b) 1995-98 extrapolated (c) 1
(b) - (a) 2 (b) - (c) 2 |
258 389 309 130 (50%) 80 (26%) |
242 299 294 57 (24%) 5 (2%) |
17 90 15 73 (436%) 75 (514%) |
1 Extrapolated value based on 1985-94 trend. 2 Numbers in parentheses are percentage changes over (a) and (c) respectively. Source: Computed from FAOSTAT data. Agriculture excludes fishery and forestry products. | |||
Figure 1: Agricultural trade, 1985-98 (in million US$; thick lines are actual values, thin lines are trends for 1985-94 extrapolated to 1998)
Source: FAOSTAT
Total agricultural exports also rose strongly during 1985-94, at the linear rate of US$12 million per annum. In 1995 they rose by 19 percent and, following small rises in both 1996 and 1997, fell in 1998. As a result, the average value of exports in 1995-98, at US$299 million, was only 24 percent higher than the average for 1990-94 and about the same as the extrapolated value, i.e. there was no change from the perspective of the 10-year trend. Combining these individual experiences, the overall outcome in terms of net agricultural trade was highly negative for Jamaica. Net agricultural imports in 1995-98 were over five times the level of 1990-94 as well as of the extrapolated trend. In other words, the situation during 1995-98 also worsened relative to the trend.
The rest of this sub-section reviews agricultural trade performance for selected major products (Table 4).
Jamaica exports most of its sugar to the EU and United States markets, under preferential quota schemes at export prices much higher than in world markets. The EU absorbs 70-80 percent of all sugar exports within an annual regular quota of 126 000 tonnes plus a supplementary quota of 30 000 tonnes. The regular quota has been filled every year in recent years while the other quota was often not fully used (two thirds in 1995, one quarter in 1997 but 100 percent in 1996). Thus, taking also into account some exports to free markets, export volumes can fluctuate from year to year. Post-1994 experience has been positive: the 1995-98 average volume of exports was 16 percent higher than in 1990-94, with a similar outcome for export earnings. From the standpoint of the 10-year trend (1985-94), but the experience has been mixed: while volumes were higher by 22 percent, but export prices fell and there was very little gain in export earnings.
As for sugar, bananas are exported almost exclusively to the EU (mostly the United Kingdom) under preferential access terms. Jamaica has a duty-free quota of 105 000 tonnes a year in that market, which does not seem to have been fully utilized in recent years. Since 1994, there has been very little change in export performance: the 1995-98 average volume of exports was 8 percent higher than in 1990-94 but export earnings were only 3 percent higher because export prices fell. In comparison with the extrapolated trend, the performance was negative, with both export volumes and export values 25-30 percent lower than the trend level.
Table 4: Exports and export unit values of major agricultural products, 1990-94 and 1995-98 (annual average)
Actual value |
Trend value1 |
Percentage change | |||||||
1990-94 |
1995-98 |
1995-98 |
(b/a) |
(b/c) | |||||
Product |
Unit |
(a) |
(b) |
(c) |
(d) |
(e) | |||
Sugar |
million US$ |
85 |
101 |
97 |
19.0 |
3.8 | |||
000 tonnes |
143 |
166 |
137 |
16.2 |
21.6 | ||||
US$/tonne |
593 |
609 |
700 |
2.8 |
-13.0 | ||||
Bananas |
million US$ |
42 |
43 |
61 |
2.5 |
-29.8 | |||
000 tonnes |
71 |
77 |
104 |
7.9 |
-26.2 | ||||
US$/tonne |
587 |
559 |
660 |
-4.7 |
-15.3 | ||||
Alcoholic |
million US$ |
23 |
27 |
29 |
19.2 |
-4.8 | |||
beverages |
000 tonnes |
14 |
13 |
15 |
-5.6 |
-13.6 | |||
US$/tonne |
1 839 |
2 109 |
2 146 |
14.7 |
-1.7 | ||||
Coffee |
million US$ |
15 |
28 |
21 |
83.0 |
31.1 | |||
000 tonnes |
1.1 |
1.5 |
1.3 |
35.9 |
15.3 | ||||
US$/tonne |
13 826 |
18 515 |
17 562 |
33.9 |
5.4 | ||||
Cocoa |
million US$ |
5.6 |
3.7 |
4.7 |
-33.9 |
-21.5 | |||
000 tonnes |
2.5 |
1.8 |
2.7 |
-28.4 |
-32.6 | ||||
US$/tonne |
2 267 |
2 078 |
1 798 |
-8.3 |
15.6 | ||||
Yams |
million US$ |
9.5 |
11.0 |
12.7 |
15.3 |
-13.7 | |||
000 tonnes |
10.5 |
10.1 |
12.5 |
-3.8 |
-19.6 | ||||
US$/tonne |
914 |
1 166 |
1 083 |
27.6 |
7.7 | ||||
Sweet |
million US$ |
0.8 |
1.3 |
1.1 |
56.3 |
18.4 | |||
potatoes |
000 tonnes |
1.1 |
1.3 |
1.2 |
22.6 |
3.8 | |||
US$/tonne |
794 |
996 |
909 |
25.4 |
9.5 | ||||
Fruit and |
million US$ |
15.6 |
17.3 |
15.3 |
10.6 |
12.9 | |||
vegetables. |
|||||||||
|
1 See note 1 to Table 3. Source: Computed from FAOSTAT data. | |||||||||
Distilled alcoholic beverages, mainly rum, are also important export products, with an annual export value of US$23 million in 1990-94. Export earning in 1995-98 were 19 percent higher than in 1990-94, entirely due to the rise in export prices, as volumes declined by 6 percent. In comparison to the extrapolated trend figures, the post-94 performance was negative on all three counts, i.e. export volumes and prices and so the values also.
Jamaica produces and exports a special type of coffee that commands premium prices in world markets. Coffee exports have been impressive and also the most rapidly growing export product in recent years, among those shown in Table 4. The 1995-98 value of exports was 83 percent higher than in 1990-94, with prices and volumes contributing fairly equally. One other notable development was the marked improvement in exports of roasted coffee (an increase of 32 percent in volume over 1990-94, and 52 percent in value). By contrast, the experience with coffee extracts was negative. But with 98 percent of all coffee exported in green form in 1995-98, there was very little new in terms of export diversification.
Jamaica is a small producer and exporter of cocoa. Both production and trade tend to fluctuate markedly due to changes in weather and world market prices. The post-94 experience with the export of cocoa bean and products (powder, paste and chocolate) has been negative: the value of exports in 1995-98 was 34 percent lower than in 1990-94, with volumes 28 percent lower and prices 8 percent down. The performance was similar in comparison with the extrapolated trend, with only export prices showing a positive outcome. The combined share of the three processed products fell in value from 54 percent in 1990-94 to 47 percent in 1995-98, an indication that processed exports have indeed fallen in this period.
Yams (yellow and Negro yams) are also important export products, with 1995-98 average export earnings of US$11 million, which was 15 percent higher than in 1990-94. This performance is fully explained by marked increases in export prices while the volume exported declined by 4 percent. From the standpoint of the extrapolated trend, the experience was negative in terms of both volumes and export earnings.
Jamaica both exports and imports a wide range of fruit and vegetables. Among the fresh fruits, the most important product is oranges, followed by mangoes and avocados. Citrus products and various other prepared fruit products account for a large share of the total value of fruit exports. In the vegetables category, sweet potatoes and pumpkin/squash dominate the export basket, followed by prepared vegetables, chillies, peppers and ginger. The annual export value of fruit and vegetables in 1995-98, at about US$17 million, was 11 percent higher than in 1990-94 and 13 percent higher than the extrapolated trend value. There has thus been a clear improvement.
Further analysis would be required to identify particular factors that contributed to the change in imports and exports since 1994. This analysis could be valuable for articulating market access negotiations in the new round.
As noted above, food products dominate Jamaica's agricultural trade (70-80 percent of the total). Hence, the experience with food imports, as well as exports, has been broadly similar to that with agricultural trade. The trend in food imports during 1985-94 was positive, rising at the linear rate of US$8 million per year (Figure 2). Thereafter, food imports surged, by 37 percent in 1995, and by 4-7 percent in the following three years. As a result, imports in 1995-98 were 44 percent higher than in 1990-94 and 22 percent above the extrapolated trend value (Table 5). Food exports also rose during the same ten-year period, at the linear rate of US$10 million per year. Thereafter, they increased by 21 percent in 1995, and after minor changes in the following two years fell by 9 percent in 1998. As a result, exports in 1995-98 exceeded the 1990-94 level by only 16 percent and were 5 percent below the extrapolated trend value.
The overall outcome, in terms of net food trade, was thus highly negative, with the 1995-98 value of net imports 185 percent higher than the 1990-94 level and much the same above the extrapolated trend value.
Figure 2: Food trade, 1985-98 (in million US$; thick lines are actual values, thin lines are trends for 1985-94 extrapolated to 1998)
Source: FAOSTAT
Table 5: Food trade in 1990-94 and 1995-98 (annual average value, in million US$, and percentage change)
Period |
Imports |
Exports |
Net imports | |
|
1990-94 actual (a) 1995-98 actual (b) 1995-98 extrapolated (c) 1
(b) - (a) 2 (b) - (c) 2 |
222 320 262 98 (44%) 58 (22%) |
184 213 224 29 (16%) -11 (-5%) |
37 107 38 69 (185%) 69 (182%) | |
|
1 See note 1 to Table 3. 2 Numbers in parentheses are percentage changes over (a) and (c) respectively. Source: Computed from FAOSTAT data. Food excludes fishery products. | ||||
The rest of this sub-section reviews the post-94 experience with the import of major food products (Table 6). Six groups of products accounted for 81 percent of the total value of food imports in 1985-87: cereals (39 percent); meat (16 percent); dairy products (12 percent); vegetable oils and sugar (each 6 percent); and fruit and vegetables (2 percent). Their combined share has declined slightly, to 73 percent in 1995-98.
The total cereal import bill in 1995-98 was 37 percent (an annual US$25 million) higher than in 1990-94, almost entirely on account of higher prices. Among the cereals, wheat and wheat flour accounted for 44 percent of the increment (fully due to price), rice for 36 percent (due to both volume and price) and maize for 20 percent (entirely due to price). The value of cereal imports in 1995-98 was also 32 percent higher than the extrapolated trend value, entirely due to prices.
The total meat import bill in 1995-98 was 37 percent (an annual $US11 million) higher than in 1990-94, some two thirds being due to increased volume and the remainder due to price. Thirty-six percent of the increment was accounted for by bovine meat, 18 percent by poultry and the remaining 46 percent by other meat. The import of other meats in particular surged in 1995-98 relative to 1990-94 (124 percent higher). Compared with the extrapolated trend, the import bill in 1990-94 was 20 percent higher for total meat, with a relatively marked departure from the trend values for bovine meat and other meats.
Table 6: Imports and import unit values of major food products, 1990-94 and 1995-98 (annual average)
Actual value |
Trend value1 |
Percentage change | ||||||
1990-94 |
1995-98 |
1995-98 |
(b/a) |
(b/c) | ||||
Product |
Unit |
(a) |
(b) |
(c) |
(d) |
(e) | ||
Total cereals |
million US$ |
67 |
92 |
70 |
36.9 |
31.8 | ||
000 tonnes |
393 |
412 |
405 |
4.9 |
1.7 | |||
US$/tonne |
172 |
226 |
173 |
32.0 |
30.8 | |||
Vegetable |
million US$ |
8 |
18 |
6 |
128.9 |
184.1 | ||
oils |
000 tonnes |
9 |
21 |
7 |
120.3 |
216.3 | ||
US$/tonne |
846 |
908 |
904 |
7.3 |
0.4 | |||
Dairy |
million US$ |
27 |
30 |
31 |
12.9 |
-3.3 | ||
products |
000 tonnes |
94 |
82 |
72 |
-12.7 |
14.3 | ||
US$/tonne |
287 |
373 |
366 |
29.9 |
2.0 | |||
Total meat |
million US$ |
31 |
42 |
35 |
37.2 |
20.3 | ||
000 tonnes |
34 |
43 |
37 |
26.6 |
16.3 | |||
US$/tonne |
900 |
1011 |
958 |
12.3 |
5.5 | |||
Fruit and |
million US$ |
10 |
23 |
16 |
117.6 |
44.5 | ||
vegetables |
000 tonnes |
9 |
26 |
14 |
189.8 |
89.6 | ||
US$/tonne |
1203 |
888 |
1239 |
-26.2 |
-28.3 | |||
Sugar |
million US$ |
15 |
28 |
17 |
88.1 |
63.7 | ||
000 tonnes |
45 |
76 |
39 |
68.8 |
95.5 | |||
US$/tonne |
323 |
370 |
403 |
14.4 |
-8.4 | |||
|
1 See note 1 to Table 3. Source: Computed from FAOSTAT data. | ||||||||
Dairy products account for 12 percent of total food imports, but the increase in imports has not been as strong as for cereals and meat. The total import bill in 1995-98 was only 13 percent higher than in 1990-94 and was entirely due to higher prices; the tonnage import fell by 13 percent. By contrast, there was a marked surge against the yardstick of the extrapolated trend value, i.e. there was some acceleration in imports relative to the trend.
The import surge since 1994 has been most pronounced for vegetable oils, imports of which in 1995-98 were more than twice the 1990-94 value. Most of the rise was on account of volume as prices increased very little. The surge was even more marked when measured against the extrapolated trend (184 percent higher), again entirely due to volume.
Although sugar is Jamaica's main export, refined sugar is routinely imported for consumption. Sugar imports surged in 1995-98, to almost 90 percent above the 1990-94 level, mainly on account of the increase in volume, and were also 64 percent higher than the extrapolated trend value, indicating an acceleration in import volumes in recent years.
Finally, imports of fruit and vegetables have been rising rapidly, though they have a small weight in the total food import bill. The 1995-98 value of imports was more than twice that of 1990-94, fully due to volume; it was also 45 percent higher than the trend level.
Figure 3 shows how food imports have varied annually in relation to total agricultural exports. In 1985-87, the ratio was 1.02, i.e. food imports were about equal to agricultural exports. With the exception of 1989, when the ratio shot up to 1.41, the trend in the ratio was negative during 1985-94. Its average value in 1995-98 was 1.07, some 17 percent higher than in 1990-94 (0.92) but 25 percent higher when compared with the trend. In other words, there was a clear and marked deterioration in the balance between total food imports and total agricultural exports during 1995-98 compared with the previous four years, and more so with the extrapolated trend.
Figure 3: Ratio of the value of total food imports to that of total agricultural exports, 1985-98
Source: FAOSTAT.
Jamaica has been preparing for the new negotiations on agriculture through a series of activities which include studies and analyses, and consultations at home among various stakeholders and at the CARICOM level. These preparatory consultations take into account the following long-term objectives that have been set for the agricultural sector:
The question is how to ensure that the international regulatory framework governing agricultural trade does not undermine the attainment of these goals. From a positive and proactive standpoint, the question is what improvements can be made to the regulatory framework itself so that it makes a contribution to the attainment of these goals. The following paragraphs summarize some of the specific issues and concerns that need to be taken up in the new negotiations.
On the whole, Jamaica has not encountered significant problems in complying with the AoA provisions, largely because important reforms were implemented in the agricultural sector prior to 1995. In fact, it is felt that by taking reform measures much further than called for by the AoA, Jamaica did lose some policy flexibility in its commitments. In the UR, Jamaica was not given any "credit" for its unilateral reform, and this is an issue to be raised in the new negotiations.
As regards policy experiences, the review in Section II showed that there has been little experience in the case of domestic support measures and export subsidies. By contrast, there was much to learn in the area of border measures. As summarized in that section, there was no difficulty in complying with the WTO bound tariffs (100 percent) - applied rates were always below the bound rates - primarily because of the lower CARICOM CET rates (typically 40 percent) which are the de facto applied rates for trade. However, several difficulties were encountered in adjusting/adapting tariffs to the new environment and external shocks. One of the lessons learnt from this experience was that Jamaica required almost the full range of the WTO bound rates for the products currently facing additional stamp duties. This experience needs to be taken into account in considering further tariff reductions in the new negotiations.
Other points that came up and on which Jamaica needs to reflect were the need for appropriate mechanisms to manage the supply of a selected list of basic food products (i.e. the "cost of living" products) and the need for an appropriate customs valuation system that will avoid under-invoicing of imports. Finally, Jamaica and many other developing countries in the same situation need to avert at all costs the pressure to commit bindings, e.g. tariffs, at applied rates because applied rates are implemented for particular, short-term reasons whereas WTO bound rates have longer-term implications.
On domestic support measures, Jamaica's exact situation as regards compliance with the AoA rules could not be analyzed because there was no information on trade-distorting support measures subject to reduction. Although current support levels appear to be considerably below the threshold permitted for developing countries, their estimation for both the base period and current years should be a priority area of work. This would make support measures transparent in the context of current notifications to the WTO as well as help in formulating a negotiating position for the new round.
Jamaica feels that the economic transformation required to cope with trade liberalization without heavy social costs cannot be achieved within a short period; accordingly, trade instruments, including safeguards, would have to reflect this reality.
The Government attaches high importance to contingency measures against unfair trade practices, in view of the fairly liberal import regime, particularly in the agricultural sector. Although efforts are under way to put in place necessary legislative and other arrangements for trade remedy measures, the experience of the past five years in dealing with import surges has been that the general WTO measures are complex and that consequently well developed institutions are required if there is to be resort to them. Therefore, access to a simpler safeguard, such as the agricultural SSG, is a matter of high priority for Jamaica, at least for a selected number of sensitive agricultural products, and should be pursued in the new round.
There is considerable concern about the future of preferential trading arrangements such as the Lomé Convention since some of their features go against the general GATT/WTO principles like non-discrimination and reciprocity in trade. Moreover, as MFN tariffs are reduced, potential gains from preferential tariffs are eroded. In this context, Jamaica, along with seven other WTO Members, made a proposal to WTO in 1999 as part of proposals for the new round. This proposal states that it would be necessary to ensure that: i) the Lomé arrangements are allowed to continue under a waiver for a period of 10 years when the present period of waiver expires in February 2000; and ii) the waiver once granted would not be challenged by any Member State during the course of its validity. These proposals indicate that Jamaica and other signatories of the Convention have implicitly or explicitly accepted that these trade arrangements cannot be continued for ever; rather, the main issue addressed is the need for some transition period as the cost of sudden removal of preferences would be very high for these countries. There is every reason to expect that the request for the transition period of 10 years would be acceptable to other WTO Members, For Jamaica in particular, the removal or the erosion of these preferences would have the greatest impact on two commodities, namely sugar and bananas (see below).
The significance of this access is obvious when it is considered that Jamaica received about US$650 per tonne for sugar in the EU market against some US$220 in the world market. In the context of the Lomé Convention, the consensus among sugar analysts is that the sugar quota may be maintained for the foreseeable future but the preferential price may fall gradually. This assessment is based on a number of considerations,: sugar is not mentioned in the EU's Agenda 2000 reform programme; both the EU and the United States have similar sugar regimes and hence are unlikely to challenge each other in the WTO (unlike the situation for bananas), but the threat could come from other exporters, such as Brazil, Thailand and Australia; and that the eastern enlargement of the EU may take longer than previously thought.
In the case of bananas, the lengthy dispute in WTO has not yet come completely to an end, but it has shaken some of the foundations of a non-reciprocal, preferential trade regime that has dominated the bulk of Jamaica's export trade for many years. The dispute has sent a clear message: in the future, trade in bananas must be non-discriminatory and reciprocal. The Jamaican banana industry has therefore been preparing itself to deal with increased competition in the EU market. There is no alternative but to restructure the industry towards greater competitiveness, although the challenge is daunting given that production costs are currently about US$10.50 per box, compared with half that amount in other major producers in Latin America. In the meantime, it can only be hoped that WTO Members will take into account the particular difficulties faced by countries like Jamaica in determining the speed at which the banana trade is liberalized.
Historically, preferential trading arrangements have been the main vehicle for Jamaica's agricultural exports and continue to be so, especially for traditional products like sugar and bananas. But the situation has started to change and the Government recognizes the need for the export trade to be increasingly conducted on the basis of MFN treatment and at the same time to diversify into non-traditional exports. In this context, Jamaica shares the concern of many other countries as regards tariff peaks and tariff escalation, especially as they affect the export of value-added products. These issues will be addressed in the new agricultural negotiations.
Jamaica and other countries made a proposal to the WTO for a special status to be accorded to small island developing countries in the context of the SDT provisions of the various WTO Agreements, particularly the AoA. An informal paper submitted to the CoA by Mauritius provides details on the special difficulties facing these countries in various areas, e.g. the small size of their domestic markets and hence very high reliance on exports, the limited number of products exported, high transaction costs due to the small volume exported, and vulnerability to natural disasters. One proposal is to define such countries in terms of population (not exceeding five million persons) and per capita income (e.g. not exceeding US$2 000). Presenting well-articulated arguments for the recognition of these problems and seeking for a special status for these countries is on their agenda for the new agricultural negotiations.
Developing countries generally feel that various technical assistance promises contained in the WTO Agreements have not been implemented effectively. There are three areas worthy of particular attention in future negotiations. First, there is considerable need for assistance in upgrading sanitary and phytosanitary standards. Second, assistance is required in the formulation and administration of agricultural policies, notably in adapting/adjusting to border measures in the new trading environment. This also includes effective safeguards and a mechanism for monitoring import surges - for Jamaica most appropriately at the CARICOM level. Third, there is need for the effective implementation of the Marrakesh Ministerial Decision on food-related difficulties. Jamaica would like to see firm commitments on technical and financial assistance in the new round and the establishment of a mechanism to monitor their implementation.
1 Based on a background study prepared for the FAO Commodities and Trade Division by Mavis Campbell, Kingston.
2 For example, if the ordinary customs tariff on whole broilers is 40 percent and additional stamp duty is 33 percent, the aggregate duty becomes 86 percent (1.33 times 1.4 = 1.86).
3 Trade Policy Review of Jamaica, 1978, WTO.
4 T. Josling, Assessment of the effects of structural adjustment on the Jamaican agricultural sector: international trade policy component. Consultancy report prepared for FAO, 1995.
5 It should be recalled that FAOSTAT data on food trade exclude fishery products.
