WORLD TRADE
ORGANIZATIONRESTRICTED
WT/TPR/S/134
14 June 2004
(04-2473)
Trade Policy Review Body
TRADE POLICY REVIEW
BELIZE
Report by the Secretariat
This report, prepared for the first Trade Policy Review of Belize, has been drawn
up by the WTO Secretariat on its own responsibility. The Secretariat has, as
required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from the Government of Belize on its trade
policies and practices.
Any technical questions arising from this report may be addressed to
Mr. Karsten Steinfatt (022 739 6759), Mr. Diego Iribarren (tel. 022 739 6392)
and Mr. Raymundo Valdés (tel. 022 739 5346).
Document WT/TPR/G/134 contains the policy statement submitted by the
Government of Belize.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Belize.Belize WT/TPR/S/134
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS vii
(1) I NTRODUCTION vii
(2) E CONOMIC ENVIRONMENT vii
(3) T RADE AND INVESTMENT POLICY FRAMEWORK viii
(4) M ARKET ACCESS IN GOODS viii
(5) O THER MEASURES AFFECTING TRADE ix
(6) S ECTORAL POLICIES ix
I. ECONOMIC ENVIRONMENT 1
(1) O VERVIEW 1
(2) R ECENT ECONOMIC DEVELOPMENTS 1
(i) Structure of the economy 1
(ii) Production and employment 4
(iii) Fiscal policy 4
(iv) Monetary and exchange rate policy 6
(v) Balance of payments and external debt 8
(3) M ERCHANDISE TRADE AND INVESTMENT FLOWS 9
(i) Composition and geographical distribution of trade 9
(ii) Foreign direct investment 12
(4) O UTLOOK 12
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 14
(1) O VERVIEW 14
(2) T RADE POLICY FORMULATION AND IMPLEMENTATION 15
(i) General legal and institutional framework 15
(ii) Trade policy objectives and implementation 17
(3) F OREIGN INVESTMENT REGIME 18
(4) I NTERNATIONAL RELATIONS 19
(i) World Trade Organization 19
(ii) Preferential trade agreements 22
(iii) Preferential trade arrangements 24
(5) T RADE RELATED TECHNICAL ASSISTANCE 25
III. TRADE POLICIES AND PRACTICES BY MEASURE 26
(1) O VERVIEW 26
(2) M EASURES DIRECTLY AFFECTING IMPORTS 27
(i) Procedures 27
(ii) Customs valuation 28
(iii) Tariffs 29
(iv) Other charges affecting imports 35
(v) Rules of origin 37WT/TPR/S/134 Trade Policy Review
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(vi) Import prohibitions 38
(vii) Other import restrictions and licensing 38
(viii) Contingency measures 41
(ix) Standards and technical regulations 41
(x) Sanitary and phytosanitary standards 44
(3) M EASURES DIRECTLY AFFECTING EXPORTS 47
(i) Procedures 47
(ii) Export taxes, charges and levies 48
(iii) Export prohibitions, restrictions, and licensing 48
(iv) Duty and tax concessions 48
(v) Export promotion, credit, insurance, and guarantees 54
(vi) Measures applied in third markets 54
(4) M EASURES AFFECTING PRODUCTION AND TRADE 54
(i) Competition policy 54
(ii) Government procurement 57
(iii) Incentives 59
(iv) State-owned and state trading enterprises, and privatization 60
(v) Intellectual property rights 61
IV. TRADE POLICIES BY SECTOR 66
(1) O VERVIEW 66
(2) A GRICULTURE AND RELATED INDUSTRIES 67
(i) Features 67
(ii) Policy objectives 69
(iii) Key subsectors 70
(3) E NERGY 75
(i) Features 75
(ii) Legal and institutional framework 76
(4) M ANUFACTURING 77
(5) S ERVICES 78
(i) Features 78
(ii) Banking and other financial activities 80
(iii) Telecommunications 84
(iv) Transport 87
(v) Tourism 89
REFERENCES 93
APPENDIX TABLES 95
CHARTS
I. ECONOMIC ENVIRONMENT
I.1 Merchandise trade by product and by partner, 2002 10
I.2 Belize's exports to the United States by preferential agreement and product, 2001 11Belize WT/TPR/S/134
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Page
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Frequency distribution of MFN tariff rates, 2004 31
III.2 Tariff escalation by ISIC 2-digit industry, 2004 32
III.3 Goods subject to licensing requirements by HS section, April 2004 39
TABLES
I. ECONOMIC ENVIRONMENT
I.1 Basic economic indicators, 1997-02 1
I.2 Structure of GDP 1997-03 2
I.3 Small economy indicators, 2000 3
I.4 Financial accounts of the Central Government, 1997-01 5
I.5 Main monetary indicators 1997-02 7
I.6 Balance of payments, 1997-02 9
I.7 Foreign direct investment 1997-02 12
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
II.1 Belize's notifications under the WTO Agreements, February 2004 21
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Summary analysis of Belize’s tariff, March 2004 30
III.2 Products for which the applied MFN tariff rate exceeds the bound rate, March 2004 33
III.3 Excise taxes, March 2004 36
III.4 Goods subject to revenue replacement duty (RRD), March 2004 36
III.5 Prohibited goods, March 2004 38
III.6 Import restrictions, March 2004 40
III.7 Mandatory and voluntary standards, March 2004 43
III.8 Sanitary and phytosanitary requirements for imports, March 2004 44
III.9 Programmes involving export duty and tax concessions, March 2004 49
III.10 Products subject to price controls, March 2004 56
III.11 Principal features of the tender procedure, March 2004 58
III.12 Belize's membership in intellectual property protection treaties, March 2004 61
III.13 Overview of IPR protection, March 2004 62
IV. TRADE POLICIES BY SECTOR
IV.1 Agricultural production in Belize 67
IV.2 Belize's sugar exports 72
IV.3 Artisanal fisheries production 74
IV.4 High seas fisheries 75
IV.5 Summary of Belize's commitments under the GATS 79
IV.6 Selected telecommunication indicators, 1995-00 85
APPENDIX TABLES
AIII.1 Items with specific duties, March 2004 97
AIII.2 Goods subject to licensing requirements, March 2004 98Belize WT/TPR/S/134
Page vii
SUMMARY OBSERVATIONS
(1) INTRODUCTION
1. Belize has taken significant steps to
liberalize most aspects of its trade regime
while seeking to maintain high levels of
protection for a few selected domestic
activities. Legislative reforms have been
implemented to improve market access in both
goods and services. Average applied MFN
tariffs are down to 11.3%, although this
average would be higher if two taxes applied
only to imports were included. However,
Belize subjects certain imports, mostly
agricultural products, to non-automatic
licensing requirements, in some cases
amounting to outright prohibitions. Moreover,
the availability of foreign exchange is subject
to restrictions. Partly to offset the anti-export
bias resulting from its import regime, Belize
offers tax concessions, some granting export
subsidies. The aforementioned measures tend
to distort resource allocation and undermine
the transparency of the trade regime
notwithstanding Belize's clear liberalization
efforts.
2. Trade plays an important role in
Belize's economy, with exports and imports
equivalent to just over 120% of GDP.
Economic growth has been vigorous,
reflecting rising exports and an expansionary
fiscal stance. Fiscal and monetary policies,
however, appear to need further tightening in
view of the substantial current account and
fiscal deficits and the sharp increase in the
public debt. Moreover, market competition in
areas such as financial services and electricity
appears limited. Further structural reforms
are thus needed to consolidate Belize's recent
economic gains so as to ensure sustainable
long-term development. Enhanced
multilateral commitments could play a useful
role in this respect by bolstering the
predictability of reforms for traders and
investors.
(2) ECONOMIC ENVIRONMENT
3. Belize's economy grew at an averagerate of 7.2% a year over 1997-03. This
growth was maintained in spite of repeated
adverse weather, underpinned by export
increases and an expansionary fiscal policy.
The latter has contributed to an increase in the
current account deficit, which was equivalent
to almost 18% of GDP in 2002, the last year
for which data are available. External
borrowing is a significant source of financing
for the current account. As a result, by the
end of 2003, public and publicly guaranteed
external debt stood at the equivalent of some
90% of GDP. This sizeable debt and the
persistent current account deficit creates the
risk of balance-of-payment difficulties.
4. Although fiscal and monetary policies
have been tightened, further fiscal and
structural reforms would help ensure the
sustainability of macroeconomic policies in
the long-run. This would also assist in
lowering the domestic cost of capital, which is
vital as scarce access to long-term financing is
seen as possibly the most important constraint
on Belize's growth and competitiveness in
world markets.
5. The foreign exchange system
comprises the official market, the private
foreign exchange houses (cambios), and a
parallel market. In the official market, the
Central Bank conducts operations with the
public sector and commercial banks at a fixed
exchange rate of two Belizean dollars to one
U.S. dollar. Sales to commercial banks are
limited to private sector transactions deemed
essential and to ad-hoc sales aimed at
preventing the parallel market rate from
depreciating. The fixed exchange rate,
combined with the liberalization of the import
regime, has helped to keep inflation low.
However, Belize's foreign exchange practices
may encourage rent-seeking and constitute a
hidden but significant barrier to trade.
6. Belize's trade balance has been
consistently negative while the services
balance is usually positive, due in large part to
a surplus in tourist-related services. Exports
encompass a relatively wide range of
agricultural products (notably bananas, sugar,WT/TPR/S/134 Trade Policy Review
Page viii
frozen citrus products, and shrimp), which
account for almost 80% of total merchandise
exports. Sugar and banana exports are
largely dependent on the preferential access
granted unilaterally by the European Union
and the United States. The largest export
markets are the United States followed by the
United Kingdom. The United States and
Mexico are the first and second main
suppliers.
(3) TRADE AND INVESTMENT POLICY
FRAMEWORK
7. Since independence in 1981, Belize
has formulated and implemented its trade
policy within a stable legal framework.
Belize's trade and investment policy seeks to
attract investment, deepen regional integration
through participation in the Caribbean
Community and Common Market
(CARICOM), expand trade relations with
other Central American countries and Mexico,
and participate in the multilateral trading
system. To those ends, Belize has undertaken
legislative reforms affecting both its trade and
investment regimes.
8. Belize became a GATT contracting
party in 1983 and is an original Member of the
WTO. In the context of its participation in the
WTO, it has sought specific provisions for
special and differential treatment for
developing countries and the recognition of
the special status and needs of small,
vulnerable, developing economies. Belize took
part in the Negotiating Group on Basic
Telecommunications, and has ratified the
Fourth Protocol to the GATS. Belize has
submitted several notifications to the WTO but
most remain outstanding, thus reducing the
transparency of its trade regime. Belize has
been involved as a third party in two dispute
settlement cases in the WTO. Belize has no
mission in Geneva.
9. Belize's trade policy is influenced by
its participation in CARICOM. As part of
CARICOM, Belize is negotiating or
administering trade agreements at the
bilateral and regional levels. Althoughregional cooperation in some of these
negotiations gives greater weight to Belize's
position and provides a useful lever to its
limited human resource base, the burden of
negotiating and administering a growing
number of preferential agreements is of
concern given Belize's limited institutional
capacity in the area of trade. Belize's trade
capacity has been the subject of various
technical cooperation initiatives, including by
the WTO .
10. Belize's investment regime offers an
extensive programme to promote domestic and
foreign investment. Belize also grants fiscal
and other advantages to entities engaged
exclusively in "international" or export-
oriented activities.
(4) MARKET ACCESS IN GOODS
11. Belize has made strides towards
enhancing market access for goods, although
a few areas remain largely closed to
international competition. Applied tariffs have
fallen in the context of reductions to
CARICOM's Common External Tariff. In
early 2004, Belize's simple average applied
MFN tariff was 11.3%, not taking into account
the specific rates applied to some 46 items.
The average MFN tariff increases if account is
taken of a 1% environmental tax applied to all
imported but not domestically produced
goods, and the revenue replacement duty,
which applies to selected imports only at rates
ranging from 5% to 50%. In contrast, excise
taxes apply to domestically produced but not
imported products.
12. The tariff structure shows escalation,
although in some instances the escalation is
reversed. Most tariffs are bound but at levels
largely exceeding applied rates, which reduces
the predictability of the import regime.
Moreover, applied ad valorem tariffs on a
small number of items exceed their bound
rates; specific applied rates could also exceed
their respective ad valorem bound levels if
prices fell. Most imports originating in
CARICOM enter Belize duty free.Belize WT/TPR/S/134
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13. Largely to protect domestic producers
from external competition, Belize subjects
imports of some 28 product categories to
mostly non-automatic licensing requirements,
in some cases amounting to outright
prohibitions. A public body, the Belize
Marketing and Development Corporation, is
given priority in the allocation of licences for
rice products when domestic shortages arise.
The licensing system distorts incentives and,
thus, resource allocation, while seriously
undermining the transparency of Belize's trade
regime. According to the authorities and
private sector representatives, the degree of
protection afforded to domestic products by
Belize's trade policy measures, particularly
licensing, is significantly reduced as a result
of contraband .
14. Belize has no legislation on
contingency measures and has refrained from
using such measures to protect domestic
producers. Belize has made significant efforts
to implement its international obligations in
the areas of technical regulations and
standards and phytosanitary measures,
including through initiatives to strengthen its
institutional capacity in both areas.
(5) OTHER MEASURES AFFECTING
TRADE
15. Partly to offset the anti-export bias
resulting from its tariff and licensing regimes,
Belize offers qualifying firms duty and tax
concessions through partially overlapping
incentive programmes. Three of these were
notified as export subsidy programmes within
the meaning of the WTO Agreement on
Subsidies and Countervailing Measures.
Belize was granted an extension until
31 December 2004 to eliminate the three
programmes, with the possibility of further
extensions until the end of 2007. The tax
revenue forgone as a result of duty and tax
concessions could be significant, which is an
important consideration in the light of Belize's
fiscal position.
16. Although export taxes remain
specified in some statutes, they are notcurrently being collected. Export prohibitions
and restrictions reflect international
commitments and security considerations,
except in the case of a few agricultural
products, which are subject to non-automatic
export licensing.
17. Belize does not have domestic
competition policy legislation, but is working
towards the adoption of such legislation in the
context of CARICOM. This is an important
initiative in view of the high levels of
concentration in the domestic market, which
could deny consumers the benefits of Belize's
trade liberalization efforts. Price controls are
enforced only with respect to a handful of
goods, although regulations define
administrative prices or mark-ups for several
other products.
18. Belize is not a party to the Plurilateral
Agreement on Government Procurement. Its
main laws in this area date back to the
colonial era. To increase transparency and
accountability in government procurement,
Belize established the Office of the Contractor
General in 1999.
19. Belize has applied the WTO
Agreement on Trade-Related Aspects of
Intellectual Property Rights since 2000, when
it adopted new legislation covering the major
areas referred to in the Agreement.
(6) SECTORAL POLICIES
20. Agriculture is a key contributor to
employment and export earnings. During the
last six years agricultural output has expanded
despite the effects of inclement weather and
shifting market conditions. Domestic support
to agriculture is granted mainly through tariffs
and non-automatic import licensing. The
latter is used to restrict the importation of
products such as fruit and vegetables, peanuts,
sugar, beans, maize, rice, corn, poultry, hams,
milk, beer, and bottled water. The licensing
system has increased the price paid by
Belizean consumers for various basic
foodstuffs, while providing domestic producers
little incentive to increase productivity. TheWT/TPR/S/134 Trade Policy Review
Page x
authorities believe that non-automatic
licensing is required because tariffs alone
could not protect the targeted products against
foreign competition. At the same time, they
consider that the effect on prices and
consumers has been reduced by informal
imports.
21. Electricity is transmitted and
distributed by a single private operator, which
also generates about half of the electricity
required to meet domestic demand, the rest
being met by imports. Electricity rates are
high by regional standards, possibly reflecting
the de facto monopoly in transmission and
distribution. There is no domestic production
or refining of hydrocarbons but there are
provisions in this area that would favour the
purchase of domestically produced goods and
services over imported inputs.
22. The services sector accounts for about
59% of Belize's GDP and a quarter of total
employment, and is the single largest foreign
exchange earner. Belize's Uruguay Round
GATS commitments cover only some
professional services. Belize took part in the
extended GATS negotiations on basic
telecommunications, and adopted the Fourth
Protocol and the Reference Paper in 1997.
23. In the financial sector, foreign service
providers play an important role, and receivenational treatment. There is also an important
international (offshore) sector, which enjoys
several tax exemptions. The domestic banking
sector is small and highly concentrated.
24. The telecommunications sector has
undergone gradual liberalization, but some
services are still provided through monopolies
established by law. Most telecommunication
markets in Belize are supplied by a single
operator, as newly licensed providers are yet
to start functioning. The cost of
telecommunication services appears to be
high.
25. Air and marine transport services are
vital for Belize given the key role of
international trade in its economy. The
operation of Belize's main harbours was
transferred to the private sector in 2002, and
that of its international airport in 2003. New
plans for improved terminal facilities are
under way and are expected to improve
Belize's positioning in the regional tourist
market. Tourism has become the largest
foreign income earner and the authorities
have placed it at the centre of Belize's growth
strategy. There are no restrictions on the
participation of foreign firms in maritime or
air transport services, or in tourism-related
activities.