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TITLE:  JAMAICA ECONOMIC POLICY AND TRADE PRACTICES
DATE:  FEBRUARY 1994
AUTHOR:  U.S. DEPARTMENT OF STATE

                             JAMAICA

                     Key Economic Indicators
   (Millions of Jamaican dollars (J$), unless otherwise noted)

                                  1991      1992      1993e 
Income, Production,
 and Employment

Real GDP (1986 Base Year)         17,458    17,667    17,844
Real GDP Growth Rate                0.3       1.2       1.0
GDP (at current prices)           44,128    72,983      n/a
By Sector:
  Agric., Forestry, & Fishing      3,073     5,777      n/a
  Mining and Quarrying             4,817     6,845      n/a
  Manufacturing                    8,436    14,399      n/a
  Construction                     5,565     9,382      n/a
  Retail Trade                     9,299    18,194      n/a
  Transportation, Storage
   and Communication               3,538     5,582      n/a
  Real Estate and
   Business Services               2,173     2,963      n/a
 Government Services & Other       3,446     4,408      n/a
Real GDP Per Capita (1986 prices)  7,155     7,182    7,195
Labor Force (000's)               1,072.5   1,074.9     n/a
Unemployment Rate (avg.)           15.4      15.7       n/a


Money and Prices
 (annual pct. growth)

Money Supply (M2) J$ millions     17,467    27,817    34,898 /1
Commercial Interest Rate           40.1      46.4      57 
Personal Savings rate              15-21     15-28.8   15-27
Retail Inflation                   80.2      40.2      25
Consumer Price Index (Dec.-Dec.)  299       417       521
Exchange Rate (J$ per U.S.$)      12.0      23.0      25.0


Balance of Payments and Trade
 (Millions of U.S. dollars)

Total Exports FOB                 1,150.7   1,052.8   1,112
  Exports to U.S.                   342.0     386.3     400
Total Imports CIF                 1,828.6   1,692.8   1,960
  Imports from U.S.                 934.2     882.7   1,019
Aid from U.S. (FY91, FY92, FY93)     80.0      66.6      47.8
External Public Debt              3,874.3   3,678.0   3,680.0 /1
  Debt Service Payments (actual)    620.6     637.9     578.6
Net Official Reserves (year-end)   -443.0     -67.4      14.3 /3
Trade Balance                      -677.9    -640.0    -848.0
  Trade Balance with U.S.          -592.2    -496.4    -619



Notes:

1/  As of July 1993
2/  As of August 1993
3/  As of June 1993


1.  General Policy Framework

    Economic Structure:  Jamaica is an import-oriented economy
with imports accounting for about 51 percent of gross domestic
product (GDP).  Tourism and the bauxite/alumina industry are
the two major pillars sustaining the economy.  In 1992, these
two industries accounted for approximately two-thirds (or
U.S.$1,387.6 million) of the country's foreign exchange
earnings.  Hence, both GDP and foreign exchange inflows are
extremely sensitive to external economic factors.  Agriculture
employs 27 percent of the work force, and contributes about
seven percent of GDP.  The relatively small size of the
Jamaican economy, and relatively high costs of production
(interest rates, duties on capital inputs, shortage of foreign
exchange for importing inputs) has reduced the contribution of
the manufacturing sector over the last several years to about
20 percent in 1992.  However, the Government of Jamaica has
made progress in promoting investment in export-oriented
manufacturing enterprises (especially the garment industry) in
recent years.  About 54 percent of Jamaica's work force is
employed in the services sector, contributing 55 percent of GDP.

    Economic Policies:  The Jamaican economy grew by 1.2
percent in 1992, following a modest growth of 0.3 percent in
1991.  The pace of economic growth thus far in 1993 has slowed
somewhat due to tight monetary and fiscal policies, the
devaluation of the Jamaican dollar, and declining real incomes
for the majority of the population.  The government has pursued
its austerity program in an attempt to moderate inflation and
stabilize the Jamaican dollar.  The government has reduced
public sector operations through privatization of certain
public entities and is seeking to divest 30 entities in the
next few years to increase economic efficiency.  Under the
common external tariff, the tariff rate is to be phased down
from the current five to forty percent to five to twenty
percent by 1998.

    Fiscal Policy:  The Jamaican fiscal year (JFY) 1994 budget
calls for J$40.4 billion in outlays, an increase of 54.2
percent over the previous fiscal year's budget.  A major
portion of the increase is in recurrent expenditures.  In
September, the government announced a further increase of J$2.0
billion in expenses due primarily to depreciation of the
Jamaican dollar (upward revision in debt service costs). 
Nearly 40 percent of the budget is allocated for debt
servicing.  For this fiscal year, the government introduced the
largest tax package in Jamaica's history.  This package
includes an increase in the general consumption tax (from ten
percent to 12.5 percent), increased taxation on property, and
increased fees for motor vehicle licenses, drivers licenses,
permits, transfers of property, among others.  Further, in
order to ease the pressure for foreign exchange and to reduce
inflation to the target of 6.5 percent for FY 93/94 (which was
surpassed in the first four months of the fiscal year), the
government has increased the issue of local registered stocks,
treasury bills and certificates of deposits (offering interest
rates as high as 52 percent) to mop up excess liquidity.  In
the past, the Bank of Jamaica's open market operations were a
means by which the Government of Jamaica funded its fiscal
deficit.  The current budget, however, is a departure from the
recent practice of reliance on massive central bank
assistance.  The central government deficit is estimated at 
J$11 billion which is proposed to be financed from external
debt (60 percent of total deficit) and internal debt (40
percent).

    Monetary Policy:  The Bank of Jamaica (BOJ) continued to
reduce spending demand by issuing short-term certificates of
deposit (CDs) and T-bills at very high interest rates (as high
as 52 percent).  Interest payments on the maturing CDs only
served to increase liquidity, necessitating additional CD
offerings.  Funds acquired by the BOJ through issuance of CDs
were generally borrowed by the central government and used to
finance current expenditures.  Some of the instruments used by
the government to control aggregate demand and stabilize the
exchange rate include: increasing the reserve requirements of
financial institutions, increasing the ceiling on Treasury
bills from Jdols. 6.5 billion to J$7.5 billion, and issuing a
U.S. $20 million bond (the first such issuance).  


2.  Exchange Rate Policies

    On September 26, 1991, exchange controls were formally
eliminated to allow for free competition on the foreign
exchange market.  Following a substantial devaluation of the
Jamaican dollar, the Government of Jamaica in 1992 informally
fixed the exchange rate, and only more fully liberalized the
exchange regime in the summer of 1993.  The principal remaining
restriction is that foreign exchange transactions must be
effected through an authorized dealer.  Licenses are
regulated.  In addition, any company or person having payments
to make to the government by agreement or law (such as the levy
and royalty due on bauxite) will continue to make such payments
directly to the BOJ.

    Due to the shortage of foreign exchange, the Jamaican
dollar lost ground by nearly 30 percent in late 1993 to J$28.56
per U.S.$1.00.  Further devaluation of the Jamaican dollar is
likely and could dampen U.S. exports to Jamaica.


3.  Structural Policies

    Pricing policies:  Prices are generally determined by free
market forces.  However, prices of certain items such as
domestic kerosene, dark sugar, and bus fares are under price
controls.  Prices of these items can be changed only after
ministerial approval.  In addition, the profit margins of motor
vehicle dealers is restricted to 12.5 percent of CIF plus
customs duty on motor vehicles, and between 12.5-20 percent on
motor vehicle parts.

    Tax Policies:  Taxation accounts for 89 percent of total
recurrent and capital revenue.  Major revenue from taxes
include personal income tax (42 percent of tax revenue), value
added tax (21 percent), and import duties (14 percent). 
Although no new taxes were imposed during the current fiscal
year, the government proposes to raise additional revenue of
about J$3 billion through an increase in existing taxes.  This
package includes an increase in the general consumption tax
(from ten percent to 12.5 percent), increased taxation on
property, and increased fees for motor vehicle licenses, 
drivers licenses, permits, and transfers of property.  Jamaica
implemented the Caribbean Economic Community (Caricom) Common
External Tariff (CET) on February 15, 1991 in order to enhance
the region's international competitiveness.  Under the CET,
goods produced in Caricom states are not subject to import
duty.  Third-country imports are presently subject to import
duties ranging between five percent and 40 percent, with higher
rates applicable to certain agricultural items, "non-basic" and
finished goods.  The tariff rate is to be phased down from the
current 5-40 percent to 5-20 percent by 1998.  The Government
of Jamaica offers incentives to approved foreign investors,
including income-tax holidays and duty-free importation of
capital goods and raw materials.

    Regulatory policies:  All monopoly rights of the state
Jamaica Commodity Trading Company (JCTC) ceased December 31,
1991.  The Embassy is unaware of any government regulatory
policy that would have a significant discriminatory or adverse
impact on U.S. exports.


4.  Debt Management Policies

    Jamaica's stock of external debt fell to J$3.68 billion in
1992, the lowest since 1986.  About 62 percent of Jamaica's
debt is long term (over 10 years) at concessionary rates. 
Cancellation by official bilateral creditors, conversions on
commercial bank debt, debt servicing, and reduction in
contracting new loans contributed to this debt reduction.  Half
of the public debt is owed to bilateral donors (the United
States is the largest bilateral creditor), 35 percent to
multilateral institutions, 9 percent to commercial banks, and 5
percent to other entities.

    Actual debt servicing during 1992 accounted for 27.1
percent (U.S. $637.9 million) of total goods and services
exports, of which 10.39 percentage points represent interest
payments.  Although the debt per capita decreased by 6.3
percent to U.S. $1,502, debt servicing continues to be a major
burden on the government budget.  Devaluation of the Jamaican
dollar over the last few months has increased the budgetary
cost of debt service.  Jamaica negotiated a new Multi-year
Rescheduling Arrangement (MYRA) with the Paris Club of OECD
creditor countries in 1992.  The agreement provides for
rescheduling of U.S.$281.2 million of principal and interest
for the period October 1992 to September 1995.  In addition,
under a multi-year debt/equity-swap arrangement concluded in
1987 with commercial banks, the Government of Jamaica has been
able to convert U.S.$106 million of foreign commercial debt (or
about 27 percent of the total) to date.


5.  Significant Barriers to U.S. Exports

    Government procurement practices:  Government procurement
is generally effected through open tenders.  U.S. firms are
eligible to bid.  The range of manufactured goods produced
locally is relatively small, so instances of foreign goods
competing with domestic manufacturers are very limited.

    Customs procedures:  There has been some improvement in the
Government of Jamaica's effort to streamline the customs
procedures.  In order to facilitate the movement of goods, the
government simplified the documentation and clearance
requirements for exporters.  Plans to computerize the entire
system are underway.


6.  Export Subsidies Policies

    The Export Industry Encouragement Act allows approved
export manufacturers access to duty-free imported raw materials
and capital goods for a maximum of ten years.  Other benefits
are available from the Jamaican government's EXIM Bank,
including access to preferential financing through the Export
Development Fund, lines of credit, and export credit
insurance.  Jamaica does not adhere to the GATT Subsidies Code.


7.  Protection of U.S. Intellectual Property

    Jamaica is a member of the World Intellectual Property
Organization (WIPO).  The Jamaican Constitution guarantees
property rights and has enacted legislation to protect and
facilitate acquisition and disposition of all property rights,
including intellectual property.  Jamaica is a member of the
Bern Convention (copyright) and intends to adhere to the Paris
Convention for the Protection of Industrial Property (i.e.,
patents and trademarks).  The Government of Jamaica and the
U.S. Government are presently negotiating an intellectual
property agreement.

    Patents:  There are plans to modernize legislation on 
patents, trademarks, and designs.  Under the present
regulations, patent rights in Jamaica are granted for a period
of 14 years with the provision of extension for another seven
years.  The "novelty test" contained in the Jamaican patent law
limits the definition of "novelty of invention" to that which
is novel in Jamaica, without reference to the novelty of the
invention abroad.  Further, patents granted in Jamaica shall
not continue in force after the expiration of the patent
granted elsewhere.  Periods of examination are long; it can
take years for a patent to be issued.

    Copyrights:  The Jamaican Senate passed the Copyright Act
in February 1993, and it came into force September 1, 1993. 
The new act adheres to the principles of the Berne convention
and covers a wide range of works, including books, music,
broadcasts, computer programs and databases.

    New Technologies:  There is no statute with regard to new
technologies.  Jamaica follows common law principles as
established in England.  Breaches of such laws can result in
either injunction or suit for damages.

    Impact on U.S. Trade:  Piracy of broadcasts and
pre-recorded video cassettes for distribution in the domestic
and regional market is widespread.  Video stores import more
than U.S.$100 million worth of copyright motion pictures and
television programs each year.


8.  Worker Rights

    a.   Right of Association

    The Jamaican Constitution guarantees the rights of assembly
and association, freedom of speech, and protection of private
property.  These rights are widely observed.

    b.   Right to Organize and Bargain Collectively

    Article 23 of the Jamaican Constitution guarantees the
right to form, join and belong to trade unions.  This right is
freely exercised.  Collective bargaining is widely used as a
means of settling disputes.  The Labor Relations and Industrial
Disputes Act (LRIDA) codifies regulations on worker rights. 
About 16 percent of the work force is unionized, and unions
play an important economic and political role in Jamaican
affairs.  In the Kingston Free Zone, none of the 18 factories
are unionized.  Several of Jamaica's largest unions, including
the National Workers' Union, have been unable to organize
workers there over the past several years.

    c.   Prohibition of Forced or Compulsory Labor

    Forced or compulsory labor is not practiced.  Jamaica is a
party to the relevant International Labor Organization (ILO)
conventions.

    d.   Minimum Age for Employment of Children

    The Juvenile Act prohibits child labor, defined as the
employment of children under the age of twelve, except by
parents or guardians in domestic, agricultural, or
horticultural work.  While children are observed peddling goods
and services, the practice of child labor is not widespread.

    e.   Acceptable Conditions of Work

    A 40-hour week with eight-hour days is standard, with
overtime and holiday pay at time-and-a-half and double time,
respectively.  Jamaican law requires all factories to be
registered, inspected and approved by the Ministry of Labor. 
Inspections, however, are limited by scarce resources and a
narrow legal definition of "factory".

    f.   Rights in Sectors With U.S. Investment

    U.S. investment in Jamaica is concentrated in the
bauxite/alumina industry, petroleum products marketing, food
and related products, light manufacturing (mainly in-bond
apparel assembly), banking, tourism, data processing, and
office machine sales and distribution.  Worker rights are
respected in these sectors, and most of the firms involved are
unionized.  There have been no reports of U.S.-related firms
abridging standards of acceptable working conditions.  Wages in
U.S.-owned companies generally exceed the industry average.



         Extent of U.S. Investment in Selected Industries

              U.S. Direct Investment Position Abroad
                on an Historical Cost Basis - 1992
                    (Millions of U.S. dollars)

Category                                    Amount

Petroleum                                                 D
Total Manufacturing                                     748
    Food & Kindred Products                     0
    Chemicals and Allied Products             132
    Metals, Primary & Fabricated                D
    Machinery, except Electrical                0
    Electric & Electronic Equipment             0
    Transportation Equipment                    0
    Other Manufacturing                         D
Wholesale Trade                                          42
Banking                                                   D
Finance and Insurance                                     4
Services                                                 14
Other Industries                                          1

TOTAL ALL INDUSTRIES                                    850


(D)-Suppressed to avoid disclosing data of individual companies

Source:  U.S. Department of Commerce, Bureau of Economic
Analysis.

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