RESTRICTEDWORLD TRADE
ORGANIZATIONG/VAL/W/60
25 February 2000
(00-0699)
Committee on Customs Valuation Original:  English
COMMUNICATION FROM JAMAICA CONCERNING PARAGRAPH 1
OF ANNEX III OF TH E AGREEMENT ON IMPLEMENTATION
OF ARTICLE VII OF THE GENERAL AGREEMENT
ON TARIFFS AND TRADE 1994
The following communication, dated 14 February 2000, has been received from the
Permanent Mission of Jamaica.
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As provided under Article 20 and Annex III:1 of the Agreement on Implementation of
Article VII of the GATT 1994, Jamaica is hereby submitting a request for an extension of the
transition period for an additional period of one year.  Jamaica is also seeking an extension of the use
of minimum price/reference prices on a very limited number of items for a period of 24 months afterimplementation of the Agreement.
Jamaica also wishes to continue to benefit from the reservations made pertaining to
paragraphs 3 and 4 of Annex III, as notified to the WTO on 28 April 1995, and to benefit from the
concessions available under Article 20.2.G/VAL/W/60
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Request for extension of implementation date of the Valuation Agreement
(GATT Article VII) to 10 March 2001
The Government of Jamaica hereby requests an extension of the transitional period available
to developing countries to implement the Customs Valuation Agreement (Article VII of the General
Agreement on Tariffs and Trade) for a period of one year.
Jamaica also wishes to continue to benefit from:
- the concessions available under Article 20.2 (delay in the application of paragraph 2(b)(3) of
Article 1 and Article 6 for a period not exceeding three years following application of allother provisions of the Customs Valuation Agreement);
- Annex III, paragraph 3 (reversal of the sequential order of Articles 5 and 6);  and
- Annex III, paragraph 4 (application of paragraph 2 of Article 5 whether or not the importer so
requests).
Jamaica also requests an extension of the use of minimum price/reference prices on a very
limited number of items for a period of 24 months after implementation of the Agreement.
The Government of Jamaica has made a concerted effort to honour its obligation to
implement the Agreement on Customs Valuation by 9 March 2000, but regrets to advise that it will beunable to meet this deadline due to a multiplicity of factors and is therefore forced to seek an
extension of the transitional period for one year to 10 March 2001.
Action taken by Jamaica during the transitional period
In addition to the reduction in rates of the Common External Tariff which Jamaica has
introduced as a member of CARICOM, the Government  has taken several steps to facilitate trade, as
well as to improve the efficiency and effectiveness of its tax administration in preparation for the
anticipated fall-out in revenue due to implementation of the Agreement, as well as increasing
demands on its financial resources.
Tax Administration Reform Project
A Tax Administration Reform Project (TAXARP) funded by the World Bank was started in
1995 and is now just being completed.  This five-year  Project has resulted in a reorganization of the
revenue departments (other than Customs) w ithin the Ministry of Finance and Planning.
The main effect of this Project has been:
- re-engineering of the major tax administration functions;
- new placement of staff (organizational and geographical);  and
- amendments, repeal and passage of legislation to permit the execution of revised functions by
the Revenue Services Department.
The revenue departments are now structured along essentially functional lines and
reorganization is intended to provide economies of scale, limit the number of regulatory interventions
that a taxpayer has to confront for the various types of tax, and offer more convenient points ofservices throughout Jamaica.G/VAL/W/60
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Customs Modernization Project
The Jamaican Government, in recognition of the fact that a well-functioning, modern
Customs Department is indispensable to Jamaica's economic and social well-being, and to Jamaica's
ability to participate fully in modern global trade, has embarked upon a Customs ModernizationProject.  Implementation of this Project is scheduled to come in March 2000 and to cover a period of
three years.
This Project is expected to improve the overall effectiveness and efficiency of the Customs
Department (as is the case of the other Revenue Departments under TAXARP) by the use of six
interdependent strategies:
- focussing and streamlining;
- managing for results;
- improving processes and automating;
- revitalizing the workforce;
- controlling imports;  and- enhancing voluntary compliance and enforcing the law.
Requests for WTO mission to Jamaica
In its attempt to meet the deadline for implementation in March 2000, a WTO mission was
invited to Jamaica in August 1999.  Recommendations made by the mission have been implemented
including the appointment of a Project Manager/Coordinator.
Factors creating delay in implementation
Despite the activities identified above or in a way because of some of these activities, it will
be impossible to meet the implementation date of March 2000.
Coinciding implementation dates/periods
The implementation of both the TAXARP and more so the Customs Modernization Project
will greatly facilitate implementation of the Customs Valuation Agreement.  However, thesimultaneous implementation of the two projects and that of the Agreement create certain difficulties.
The Customs Modernization Project calls for major structural changes in the Customs Department and
the recruitment and deployment of staff incl uding the Commissioner/CEO.  Synchronization of
implementation of the Agreement and the modernization process is therefore crucial.
In order to ensure a smooth implementation of both the above and to avoid duplication of
efforts, waste of resources and confusion of staff and public, there is the need to ensure that the new
Executive Management is in place and that training and placement of staff required for the Customs
Valuation Agreement Project coincide with the larger Modernization Project.
Limited human resources
Preparation for implementation of the Agreement has been adversely affected by a shortage of
skilled personnel and the number of other duties and obligations which the limited staff must
undertake.  Although a project manager was appointed in November 1999, this did not address thedifficulties faced by the other persons with the requisite skills, who tried to satisfy competing
demands on their time.  The result of the above has been that some activities have been occurring
sequentially rather than simultaneously.G/VAL/W/60
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Delay in the drafting of the legislation
The completion of the draft legislation has been delayed due to the reasons cited above and
the fact that Jamaica has to ensure that the country benefits from the experience of other developing
states which have already implemented the Agreement.  Considerable time has therefore been spent inensuring that the national legislation not only supports the spirit of the Agreement but the provisions
are in place to ensure that the Customs will be able to safeguard the revenue.  This issue has been one
of major concern to Jamaica where Customs currently collects 22-25 per cent of all tax revenue.
The completion of the draft legislation and its eventual passage by Parliament determines
when the administrative procedures and training can be completed.  It also impacts on the timing for
the publicity campaign.  These activities have therefore been set back.
Budgetary constraints and potential loss of revenue
Jamaica has been subject to severe budgetary constraints during the current financial year and
this is expected to continue during the new financial year 2000/2001.  Even more careful attention hastherefore had to be given to the potential fall-out in revenue resulting from the implementation of the
Customs Valuation Agreement than would ordinarily have been the case.
In addition, the structure of the distributive trade in Jamaica places the revenue at greater risk
because of the high number of unincorporated persons (businesses) who import goods into Jamaica,including used motor vehicles as well as a high number of:
- one-time importers;
- importers utilising barrels and baggage of passengers;  and
- use of individuals by established businesses to import their goods.
It is therefore imperative that a database should be in place that will, while satisfying the
terms of the Customs Valuation Agreement, at the same time place the customs administration in a
position to assess the validity of information presented to them.
The required database is not yet in place and computerization of the Customs Department
which will facilitate modernization and implementation of the Agreement is still being re-engineered.
Retention of minimum values/reference prices
As indicated in the WTO Trade Policy Review of Jamaica conducted in 1998, minimum
prices are not used per se  for valuation purposes.  However, reference prices are used in the case of
chicken leg quarters, fresh fruits and vegetables.  This action has been taken because of the high
incidence of fraudulent invoices and the lack of invoices in the case of edible products, and because of
the high level of duties earned on used motor vehicles, lack of invoices, as well as the difficulty in
accessing data from Japan, the major source of these used vehicles.
During 1999 customs duties collected on used motor vehicles was estimated at
J$874.57 million while General Consumption Tax collected by customs accounted for
J$518.4 million.
During the same period the value of chicken leg quarters imported was J$474.87 million,
fresh fruits was J$92.19 million and fresh vegetables was J$160.27 million of total imports of
J$104,040 million.G/VAL/W/60
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Jamaica wishes to continue to use these minimum prices/reference prices for a period of 24
months after implementation of the other areas of the Agreement.
This concession is intended to slow down the revenue fall-out from motor vehicles and to
ensure that the sensitive agricultural sector is not subjected to unfair competition until proficiency inrisk management and verification is fully developed by the customs.
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