Trade facilitation is investment facilitation
By: Ainsley Brown
Tags: Trade, Economic Development, Investment, Jamaica, Export

Photo by chuttersnap on Unsplash

The WTO’s Trade Facilitation Agreement and Jamaica’s Special Economic Zone Authority

It goes without saying that trade facilitation is important to the effective functioning of special economic zones (SEZ) in Jamaica or anywhere else in the world for that matter. For Jamaica’s Special Economic Zone Authority trade facilitation is investment facilitation.

A special economic zone, according to the world bank is:

A geographically delimited area, usually physically secured (fenced-in); single management/administration; eligibility for benefits based upon physical location within the zone; separate customs area (duty-free benefits) and streamlined procedures. Special economic zone : performance, lessons learned, and implication for zone development by Akinci, Gokhan; Crittle, James. Washington DC: World Bank, 2008

SEZs come in a variety of forms, names and functions — free trade zones, free zones, export processing zones, enterprise zones, etc — that reflect a Government’s priorities and positioning of its economy. However, what unifies them all is that they are development tools used by governments to attract and facilitate investments that act as catalysts to diversify whole or targeted segments of their economies.

SEZ are a critical part of Jamaica’s growth agenda. The Jamaica Special Economic Zone Authority (JSEZA) was created to foster investments in Jamaica’s “ Special Economic Zones — where globally competitive firms thrive, driving unprecedented growth and development for all in a logistics-centred Jamaican economy.” The SEZs are a major policy tool being used to connect Jamaica to the the world. As such SEZs should be viewed as export platforms for local businesses that facilitate the reduction of the associated logistics, transport and administrative costs of trading across borders. The SEZs while physically located in Jamaica are an ‘international space’ and are a captive export market for local producers to engage global value chains without leaving the geographic boundaries of Jamaica

A nation’s development and prosperity are increasingly joined to its connectedness to the rest of the world. In today’s world of globalization it is not sufficient to simply have market access, the ability to turn that access into market presence is a necessity. Trade policies have been traditional guided by the concept of selling of goods in the global market place; however, with the rise of global value chains, a new type of thinking is required to reflect current business realities. This new reality is one where the global trading system is based on the production and inter-connectivity. Barriers to trade (tariff or non-tariff) therefore take on a whole new dimension for policy makers when examined from this angle.

For small island developing countries like Jamaica we have long had a ‘export or die’ mindset. However, in today’s globalized world, with its complex of supply and global value chains, its not simply about exporting any more. It is about trade. It cannot be over stated the importance of trade especially for small island developing states. In a globalized world for Jamaica it is now facilitate or die. Trade facilitation is a must. And the SEZs have their role to play.

The Jamaica Special Economic Zone Authority (JSEZA) is an agency of the Government of Jamaica responsible for facilitating the development of and promoting investments in Special Economic Zones (SEZs) in Jamaica. The JSEZA was established in 2016 under the Special Economic Zones Act. The mandate of the JSEZA as the regulator of SEZs in Jamaica is far reaching having the responsibility of development, regulation, construction, supervision, management and control of Special Economic Zones in Jamaica.

Under Jamaica’s roadmap for the implementation of its commitments under the World Trade Organizations Trade Facilitation Agreement the JSEZA is charged with implementation of Output 5.1.

Output 5.1 is designed to:

enhance the value addition and efficiency of the country’s trade support services to support Jamaica’s positioning as a logistics and transshipment hub. Jamaica’s Trade Facilitation Implementation Roadmap

In this regard some of the JSEZA’s areas of focus are:

Design and develop a Special Economic Zone (SEZ) trading environment and platform which includes trade in services that uses pro-competitive domestic regulations, international cooperation and technological solutions to connect global and local logistics networks.

Map market access requirements, and particularly the market treatment of goods originating from SEZs, for Jamaica’s existing trade agreements and for target markets.

Design mechanisms to allow the seamless movement of goods under customs control (eg. From ports to SEZ or SEZ to SEZ).

Map market access requirements for goods produced in Jamaica to enter other global markets.

These and other areas of Output 5.1 are in progress and are in various states of completion.

The WTO’s Trade Facilitation Agreement (TFA) entered into force on February 22 2017 and is aimed at improving the ease and speed of trade. The TFA “looks at how procedures and controls governing the movement of goods across national borders can be improved to reduce associated cost burdens and maximise efficiency while safeguarding legitimate regulatory objectives.” In other words the TFA is about the ease and speed of trade — the ease and speed of business.

The TFA mandates that member states commit to specific measures to “expedite the movement, release and clearance of goods, including goods in transit.”

Jamaica under its National TFA Committee has been making steady progress in the implementation of its programme with more to come. To monitor Jamaica’s achievements and progress please click here.