 
  WORLD TRADE  
ORGANIZATION  G/SCM/N/114/JAM 
4 August 2004 
 
 (04-3320) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Extension Under SCM Article 27.4 of the Transition Period for the  
Elimination of Export Subsidies Pursuant to the Procedures  
in Document G/SCM/39  
 
Updating Notification  
 
JAMAICA 
 
  The following communication, dated 3 August 2004, is being circulated at the request of the Delegation of Jamaica.  
_______________ 
 
  Pursuant to the decision taken at the 2001 Doha Ministerial Conference concerning the 
extension of the transition period for the elimina tion of certain export s ubsidy programmes provided 
for under Article 27.4 of the SCM Agreement and, as contained in G/SCM/39 and paragraph 10.6 of 
the Decision on Implementation-related Issues a nd Concerns, and the decisions taken by the 
Committee on 22 November 2002 and 3 November 2003 to approve the requests made by Jamaica, 
contained in documents G/SCM/75 and Addenda, G/SCM/78 a nd Addenda, Jamaica
 hereby submits 
its notification to enable the Committee to conduct its annual review of compliance of the standstill 
and transparency requirements as under the decision in G/SCM/39.  
 G/SCM/N/114/JAM 
Page 2  
 
 A. EXPORT INDUSTRY ENCOURAGEMENT ACT 
 
1. Description of Programme
 
  The Export Industry Encouragement Act was esta blished as an incentive framework geared to 
the encouragement of export industries. 
 2. Period Covered by Notification
 
  Programme description is as of 1 September 2003. 
 
3. Policy Objective and/or Purpose of the Subsidy
 
  The objective is to encourage investment a nd growth in export manufacturing industries. 
 
4. Background and authority of the Subsidy
 
  Law 49 of 1956  Law 13 of 1960  Act 11 of 1968  Act 42 of 1969 
 Act 56 of 1974 
 
5. Form of the Subsidy
 
  Companies that export 100 per cent output to  hard currency markets outside of CARICOM 
are exempt from income tax on profits and fu ll exemption from import duties on capital goods and 
raw materials for use by the approved exporter in the production process.   Partial exporters (Companies exporting less th an 100 per cent of output) are entitled to an 
export allowance that may be deducted from taxable income, with the level of tax relief linked to 
exports. 
 
6. To Whom and How the Subsidy is Provided
 
  Any company registered or incorporated in Jamaica and whose products are exclusively for 
sale to hard currency markets outside of CARICOM is  eligible to a tax holiday on profits earned from 
the manufacture of the approved product as well as dut y free importation of raw material and capital 
goods for use in the production process.   The company must be declared an “approved export manufacturer” in relation to an “approved export product” by the Minister of Indus try and Tourism.  Having a product designated an 
approved product and the company an approved export manufacturer entitles the company to income 
tax and duty benefits as outlined above. 
  Partial exporters (companies exporting less th an 100 per cent of output) are entitled to an 
export allowance as described at paragraph 5 above.  To benefit from the allowance a 5 per cent 
threshold of export sales to total sales must apply and exports must be to markets outside of the 
CARICOM region. 
  G/SCM/N/114/JAM 
 Page 3 
 
 
 7. Subsidy Per Unit  
  There are no statistics available which reflect the amount of the subsidy per unit.  However, 
estimated revenue foregone as a result of relie f under the programme was US$2.7 million in 2000, 
US$1.5 million in 1999 and US$1.7 million in 1998. 
 
8. Duration of the Subsidy
 
  By statute tax and duty benefits are allowed for a period of up to ten (10) years.  As stated in 
Notification Communication dated 20 December 2001.  Jamaica was working towards the phase out 
of this incentive regime by the year 2003.  However,  in light of decisions taken regarding extensions 
of the transition period under Article 27.4 of the Agreement on Subsidies and Countervailing 
Measures (SCM) for certain developed countries, Jama ica requests extension of the transition period 
beyond 2003 for this incentive.  
9. Statistical Data on the Impact of the Programme
 
 
Year Exports 
(in Millions of US$) Jamaican Exports 
(in Millions of US$) 
 1998  1999 
 
2000   
193 (2.4) 
 
326 (6.6) 
 
109 (7.1)  
1,316.3 
 
1,245.6 
 
1,300.7 
  
B. JAMAICA EXPORT FREE ZONES ACT 
 
1. Description of the Programme
 
 
 The Jamaica Export Free Zones Act provides an  incentive and regulatory framework for the 
operation of Free Zones in Jamaica.  2. Period Covered by the Notification
 
 
 Programme description is at 1 September 2003. 
 3. Policy Objective and/or Purpose of the Subsidy
 
  The objective is to encourage investment, expor ts and foreign exchange earnings and to create 
employment opportunities. 
 
4. Background and Authority for the Subsidy
 
   Act No. 18 of 1982 
  Act No. 12 of 1985 
  Act No. 16 of 1991 
  Act No. 24 of 1996  G/SCM/N/114/JAM 
Page 4  
 
 5. Form of the Subsidy
 
  Approved Free Zone enterprises are entitled to:  
• duty free importation of capital goods, consum er goods, raw materials or articles for use 
in connection with the approved product; 
 
• duty free treatment of articles for the constructi on, alteration, and repair of equipment of 
premises in the Free Zone; 
 
• total relief from income tax in respect of pr ofits or gains earned from approved activities; 
 
• repatriation of profits (since liberalization of  the foreign exchange market in 1991 there 
are no restrictions on the repatriation of profit);  
 
• exemption from the normal fees payable with respect to work permit. 
 6. To Whom and How is the Subsidy Provided
 
  Companies approved to operate in Free Zones must  be registered or incorporated in Jamaica 
under the Companies Act to carry out an y of the following prescribed activities: 
 
• warehousing and storing 
• manufacturing operations 
• transshipment operations 
• loading and unloading operations 
• exporting 
• importing 
• service operations, including banking, data  processing and telemarketing insurance 
professional services 
• packing and shipping 
• assembling 
• processing, refining, purifying, mixing, merchandising 
 
 Approvals for free zone status are made by  the Minister of Industry and Tourism on the 
recommendation of the Free Zone Council – the regulatory body appointed to supervise the operations of the Free Zones.   By policy decision of April 1997, Free Zone manufacturing entities are allowed to sell up to 
15 per cent of output on the local market.  Free Zone  goods sold into the local market are subject to 
the applicable duties and charges.  7. Subsidy Per Unit
 
  No statistical information is available that reflects the amount of subsidy per unit. However, 
the estimated revenue foregone as a result of relief under this programme was US$315 million in 
2000, US$300 million in 1999, and US$108 million in 1998. 
 8. Duration of the Subsidy
 
 
 Incentives granted to Free Zone entiti es are for an indefinite period. 
  G/SCM/N/114/JAM 
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 9. Statistical Data on the Impact of the Programme  
  
Year Exports 
(in Millions of US$) Total Jamaican Exports  
(in Millions of US$) 
 1998 
 
1999  2000  
115.76 
 
97.12 
 
115.34 
  
1,316.0 
 
1,245.6 
 
1,300.6 
  
C. INDUSTRIAL INCENTIVES (FACTORY CONSTRUCTION) ACT 
 
1. Description of Programme
 
  Provides an enabling framework for the provision of factory space in Jamaica. 
 
2. Period Covered by Notification
 
 
 Programme description is at 1 September 2003. 
 3. Policy objective and Purpose of the Subsidy
 
  To facilitate and encourage the construction of factories in Jamaica. 
 
4.  Background and Authority of the Subsidy
 
 
 Law 9 of 1961 
 Law 30 of 1961  Act 23 of 1972  
5. Form of the Subsidy
 
  An approved builder under the Industrial In centives Factory Construction Act is entitled to: 
 
• duty free importation of items or articles for factory construction; 
 
• enter into an agreement with a recognized  enterprise for the lease of the factory; 
 
• be granted relief from income tax for 15 year s in respect of income from the lease of the 
factory or from profits made upon its sale.   
 
6. To Whom and How the Subsidy is Provided
 
 
 Approved builders are granted Licence by the Mi nister of Industry and Tourism to construct 
factories.  Approved builders providing factory space for companies having recognized status – i.e. 
status under the Export Industry Encouragement Act (EIEA) or the Industrial Incentives Act (IIA) can 
qualify for the incentives mentioned above.  Free Z one developers are also  eligible for incentives 
under the Act. 
 G/SCM/N/114/JAM 
Page 6  
 
 7. Subsidy Per Unit
 
 
 No statistical information is available. 
 8. Duration of the Subsidy
 
 
 Income Tax Relief is available for fifteen (15) years in respect of income from the lease of the 
factory or from profits made upon its sale.  9. Statistical Data on the Impact of the Programme
 
 
 Information on the trade effect of the subsidy is not available. 
  
D. FOREIGN SALES CORPORATION ACT 
 
1. Description of the Programme
 
  A legislative framework for the operation of Fo reign Sales Corporation (FSCs) in Jamaica. 
 2. Period covered by the notification 
 
 
 As at September 2003.  3. Policy Objective and or Purpose of the Subsidy
 
 
 To attract foreign investment into the country  and to promote Jamaica as an attractive FSC 
location. 
 
4. Background and authority for the Subsidy  
  In November 1984 Jamaica was certified as a qualifying Foreign Sales Corporation (FSC) 
jurisdiction and enabling legislation, the Foreign Sa les Corporation Act was passed shortly thereafter. 
 5. Form of Subsidy
 
 
• FSCs are exempt from Jamaican Corporate Income Tax on their foreign trade income as 
long as they remain designated. 
 
• No income tax is imposed in Jamaica on divi dends paid to foreign shareholders by a 
designated FSC. 
 
• Investment income or carrying changes earned by an FSC are relieved from income tax. 
 
• FSC are entitled to import into Jamaica equipment, material and machinery free of all 
import duties. 
 
6. To whom and how the subsidy is provided  
  The Minister of Industry, Commerce and Technology has the authority to grant certificate of designation to FSCs who locate in Jamaica.  Very generous incentives as outlined above are available 
to FSCs.  G/SCM/N/114/JAM 
 Page 7 
 
 
  
7. Subsidy per unit  
  Information on subsidy unit is not available.  
8. Duration of a Subsidy
 
  The life of the certificate is fifteen (15) years,  but this may be renewed for a further fifteen 
(15) years if necessary.  
9. Statistical data on the impact of the programme
 
  Information on the trade effect of the subsidy is not available.  
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