WORLD TRADE  
ORGANIZATION  G/SCM/Q3/JAM/15 
G/SCM/Q4/JAM/8 14 February 2007 
 
(07-0652) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
REQUESTS PURSUANT TO ARTICLE 27.4 OF THE AGREEMENT 
ON SUBSIDIES AND COUNTERVAILING MEASURES 
 
PROCEDURES FOR EXTENSIONS UNDER  
ARTICLE 27.4 OF THE AGREEMENT ON SUBSIDIES  
AND COUNTERVAILING MEASURES 
 
Replies to Follow-Up Questions Posed by the UNITED STATES1 
  
 The following communication, dated 13 February 2007, is being circulated at the request of 
the Delegation of Jamaica.  
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Q1. Are there more specific economic, financia l and development statistics to which Jamaica 
can point that demonstrate that the programmes in questions have had a positive impact and 
will continue to do so into the future? 
 Reply
 
  Jamaica is not able at this point to provide  data on the specific economic, financial and 
developmental contribution of these four (4) progra mmes in addition to the data already provided in 
the annual updating notifications and in the res ponses provided in documents G/SCM/Q4/JAM/6 and 
G/SCM/Q4/JAM/6/Add.1 identifying the socio-econom ic impact of the programmes. Jamaica can, 
however, provide data pointing to the overall impor tance of the manufacturing sector the development 
and expansion of which these four programmes are geared towards. Total exports of manufacturing 
products amounted to US$420.0 m illion for 2005 representing an increase of 16.9 per cent over 
manufactured exports for 2004.  This growth in manuf actured output was largely attributable to total 
earnings from the non-traditional manufacturing sector, including beverages, agro-processing and 
animal feed, which increased by 33.6 per cent. So me of the beneficiaries under the programmes have 
established operations in the non-traditional sectors wh ich have been cited. In terms of employment, 
the sector represented 6.8 per cent of Jamaica’s to tal employed labour force, representing the first 
notable increase in employment in the sector since 1996. There has been an increase of 3.2 per cent in 
the number of females employed in the sector over 2004.  Foreign investment flows to the 
manufacturing sector have continued.  In 2005, tota l capital investment amounted to US$2.02 billion. 
While the bulk of this investment represented fore ign investment in the sector, local investment has 
focused on efforts to re-tool and expand domestic manufacturing enterprises in order to enhance 
export competitiveness.    
                                                     
 
1 G/SCM/Q3/JAM/14-G/SCM/Q4/JAM/7. G/SCM/Q3/JAM/15 
G/SCM/Q4/JAM/8 Page 2 
 
 
   The focus of the government’s policies for the manufacturing sector continues to be to re-tool 
and modernize the sector with a view to enha ncing international competitiveness, productivity, 
efficiency levels and supporting higher output in th e sector and increasing its contribution to gross 
domestic product (GDP). The four (4) programmes w ill continue to play an instrumental role in 
Jamaica’s efforts at economic diversification as Jam aica continues to attract investment and to 
improve export penetratio n and productive capacity. 
 
Q2. Has there been a formal government review of the continued need for the programmes 
in question?  If so, what were the findings? 
 Reply
 
 
 A comprehensive review of Jamaica’s taxation system, including the incentives regime, was 
undertaken during the fiscal years 2003/2004 and 20 04/2005 by the Tax Review Committee appointed 
by the Minister of Finance and Planning.  The Terms of Reference of this Committee provided, inter 
alia, for an examination of the levels of incentives,  exemptions and concessions to ascertain whether 
these could be simplified and tailored to meet the developmental goals of government.  The 
recommendations on the reforms of the taxation syst em are aimed at simplifying tax administration 
and improving compliance. These reforms are being implemented on a phased basis over a 4-year 
period.  The reforms included the modification of  personal and corporate income tax and replacing a 
number of indirect taxes with the value-added tax.  While the work of the Tax Review Committee has 
largely focused on tax administration, the Committee has proposed that an independent study of the 
existing incentives regime be pursued in order to de termine the costs and benefits of the incentives 
provided and to make recommendations for their refo rm as necessary. However, given the context of 
the phased approach with regard to taxation reform , it is anticipated that the examination of the 
incentives regime will be done at some point duri ng this period of phased implementation.   
 
Q3. The notification states the incentives granted under these programmes have terms of 
either 10, 15 years or an indefinite period of time .  If an extension is granted, what steps will 
Jamaica take to ensure that the benefits und er these programmes will not exceed the suggested 
2018 extension request?    
 Reply
 
 
The notification indicates the maximum duratio n for the provision of the incentives under the 
Acts. The Minister of Industry may, however, grant approval for a shorter peri od of time, if deemed 
necessary. The Ministry of Industry, Commerce, Science and Technology, which is the Ministry 
responsible for the administration of the incentives programmes, will consult with the companies to 
ensure that they are advised that the benefits w ould be provided up to the proposed timeframe of 2018 
in accordance with Jamaica’s obligations.   
 
Q4. The notification states that information is  needed from companies to “prove cause for 
extension”.  Please explain what type of informat ion is needed from companies in this regard?  
Have companies been granted extensions before?  If so, what is the duration of the extensions provided?  
Reply
 
 
The extension provisions under the Foreign Sales Corporation Act have not been utilized and 
there are no regulations or procedures governing the granting of extensions.  
  G/SCM/Q3/JAM/15 
 G/SCM/Q4/JAM/8 
 Page 3 
 
 
  Q5. If any additional extension is granted, wo uld new applicants be accepted or would the 
extension period be used to phase out the subsidies for existing beneficiaries?  
 
Reply  
 
Jamaica would continue to provide these incen tives programmes in accordance with its rights 
and obligations under the Agreement on S ubsidies and Countervailing Measures. 
 
Q6. What is the relationship between the four  programmes for which an extension is being 
granted and how do their respective roles in Jam aica’s development strategy specifically differ? 
 
Reply  
 
 The main relationship exists between the E xport Industry Encouragement Act, the Jamaica 
Export Free Zones Act and the Industrial Incentives (Factory Construction) Act in terms of the 
provision of factory space.  Beneficiaries under th e Factory Construction Act are not involved in 
producing goods for export but are required to provide factory space to approved exporters under the 
Export Industry Encouragement Act.  Providers of f actory space in the free zone s can also receive the 
same level of benefits as provided under the Factory Construction Act, i.e. in come tax benefits for a 
15-year period.  
 The four (4) programmes basically share the same objectives as they aim to facilitate and 
encourage investment in the manufacturing sector and to facilitate the growth and diversification of 
exports. Specifically, the Export Industry Encourag ement Act seeks to attract investment in non-
traditional manufacturing activities and to encourag e exports to third country markets thereby 
facilitating export product and expor t market diversification. Th e Jamaica Export Free Zones Act 
seeks to induce investments in manufacturing and co mmerce and to encourage exports in tradeable 
goods and services.  The Industrial Incentives (F actory Construction) Act seeks to facilitate 
investment in the manufacturing sector through the provision of factor and office space. This is an important element in the export promotion stra tegy as the Act seeks to address the issue of 
infrastructural development in the export sector.  These three (3) acts also contribute to rural 
development as some beneficiaries have located th eir operations in the rural areas of Jamaica. The 
Foreign Sales Corporation Act allows compan ies which have been designated foreign sales 
corporations in the United States to establish operations  in Jamaica and to export their products to the 
United States.  This programme has served to facilitate exports to the United States which is one of 
Jamaica’s traditional export markets.  Export Industry Encouragement Act
 
 Q7. Jamaica states that this programme is d esigned for exports to third country markets 
and CARICOM is a regional market, hence would not qualify for benefits under this programme.  However, Jamaica also states that und er the Acts that it requests an extension for, 
there is no legal obstacle to companies export ing to CARICOM being denied benefits under the 
Acts.  Please explain the reason for differen tiating among exporters to CARICOM members 
and other exporters.   
 
Reply
 
 
 Under the Export Industry Encouragement Act expor ts are destined for th ird country markets, 
i.e. for markets outside of CARICOM. The main objective behind this was largely to encourage the 
diversification of export markets.  In practice, the beneficiaries under the Jamaica Export Free Zones 
Act have traditionally been exporters to third c ountries, i.e. countries outside the CARICOM region. G/SCM/Q3/JAM/15 
G/SCM/Q4/JAM/8 Page 4 
 
 
  There is nothing in the Act that would prevent companies exporting to CARICOM from obtaining the 
benefits provided under the Act. It  should be borne in mind that beneficiaries under the Industrial 
Incentives (Factory Construction) Act are not involv ed in export production but provide factory space 
for those companies which benefit from the Export Industry Encouragement Act. Companies from 
other CARICOM countries may access the benefits pr ovided under the Factory Construction Act once 
they have been incorporated or registered in Jama ica. With regard to the Foreign Sales Corporation 
Act, CARICOM countries are not eligible for be nefits under the Act as they are given only to 
designated offshore companies from the United States.     
 
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