Revamped Trade Act to amplify services
Against the backdrop of an expanding trade gap with the rest of the world and the search for comparative advantage, Jamaica will be revising its Trade Act that predated Independence – a time when the nation heavily traded goods and not services.
The updated law will include rules about trade in services, as well the appointment of management at the Trade Board Limited.
A consultant is now being recruited by the Planning Institute of Jamaica for the project to repeal and replace the law.
Last year, Jamaica imported $7.73 billion worth of goods, but only sold US$1.9 billion worth of merchandise to other countries. Imports rose by 29.5 per cent, while exports grew at a slower pace of 28.4 per cent.
Consequently, Jamaica’s trade deficit with the world reached a new high of US$5.8 billion, having worsened by 30 per cent from US$4.49 billion in 2021.
The gap factors only the trade in merchandise.
Services account for roughly 38 per cent of Jamaica’s total economic output or gross domestic product, and it is now seen as crucial for the industry to be captured within the new legislation. At market prices, that’s nearly $1 trillion in a local economy that was estimated at $2.62 trillion at year ending December 2022.
The merchandise trade deficit has expanded by 65 per cent since the pandemic, according to data from the Statistical Institute of Jamaica. There was an initial dip in the deficit to US$3.5 billion in 2020 from US$4.75 billion in 2019, but thereafter imports rapidly outpaced exports to the current level. For the two months of data available so far for 2023, January and February, the deficit continued to climb. Statin estimated the gap at US$868 million, up from US$846.5 million a year earlier.
Since its inception in 1955, the Trade Act, which focused on import pricing, has undergone minimal amendments, failing to adapt to the dynamic and challenging international trading environment, the largest development being the formation of the World Trade Organization in 1995, which developed rules of trade among nations under the purview of liberalisation and the removal of non-tariff barriers, the PIOJ procurement document noted.
The repeal and replacement of the Trade Act is intended to align Jamaica’s trade policies with international standards and foster economic growth.
The trade law project falls under the Foundations for Competitiveness and Growth Project, financed by the World Bank.
Under the expanded US$50 million loan facility, with an additional financing of US$10 million from the World Bank and a commitment of US$5 million from the Government of Jamaica, the Competitiveness Project aims to improve the business climate and enable private sector competitiveness, with its primary focus being on productivity, growth and trade.
In regard to the trade of goods under the new act, agriculture and the agro-industry are viewed as key drivers for growth.
Otherwise, the revisions will address the regulation and appointment of Trade Board officials, “including the trade administrator, chairman, board of directors, deputy trade administrator, and other officers and servants”; and address operational matters, including management of the Jamaica Trade Information Portal and the board’s certification responsibilities for ‘rules of origin’ for traded goods and motor vehicle dealers.
Bids for the consultancy are due by Friday, July 14.
“The purpose of this consultancy is to research, assess and recommend global best practices in trade law to inform development of legislative proposals towards the repeal and replacement of Jamaica’s Trade Act, 1955 and all ancillary regulations,” said the PIOJ document.