US embassy cable - 05KINGSTON2397

UNCLAS SECTION 01 OF 03 KINGSTON 002397 
 
SIPDIS 
 
DEPT PASS TO USTR (RUSSELL SMITH), STATE FOR WHA/CAR (WBENT) 
 
E.O. 12958: N/A 
TAGS: ECON, JM 
SUBJECT: RESPONSE TO USTR REQUEST FOR INFORMATION FOR CBERA 
REPORT 
 
REF: STATE 188288 
 
The following information is provided in response to reftel. 
Responses are keyed to the format in paragraphs six and 
seven of reftel. 
 
1.  Jamaica is in the process of implementing all of its WTO 
obligations, but the GOJ does not plan to implement any of 
those obligations ahead of schedule.  Patent Law must be 
updated to be in compliance under the Trade Related Aspects 
of Intellectual Property Rights (TRIPS) Agreement, but this 
has fallen from the legislative agenda due to a recent 
emphasis on toughening criminal law.  As a member of 
CARICOM, Jamaica will continue to participate in 
negotiations toward the establishment of the Free Trade Area 
of the Americas (FTAA).  Jamaica, however, has always argued 
that smaller and more vulnerable economies should receive 
special protection. 
 
2.  Jamaica is a member of the World Intellectual Property 
Organization (WIPO) and is a signatory of the Bern 
Convention.  Jamaica and the United States have an 
Intellectual Property Rights Agreement and a Bilateral 
Investment Treaty, both of which provide assurances to 
protect intellectual property.  Nonetheless, Jamaica remains 
on the Special 301 "Watch List," primarily because current 
patent law is not TRIPS-compliant.  In 2004, GOJ passed the 
Geographical Indications (GI) Act, which protects products 
that originate from certain localities, where quality or 
reputation arises from geographical origin. 
 
3.  Jamaica has an estimated labor force of approximately 
1.2 million, with an estimated 20 percent engaged in the 
country's strong trade union movement.  While both political 
parties arose out of the trade union movement, it appears 
that labor is considerably weaker now than has traditionally 
been the case, due to a sluggish economy, as well as the 
private sector strategy of hiring contract workers, which is 
not prohibited under current labor regulations. 
Nevertheless, worker rights in Jamaica are defined and 
protected under the Labor Relations and Industrial Disputes 
Act (LRIDA).  Workers enjoy full rights of association, as 
well as the right to organize and bargain collectively.  An 
independent Industrial Disputes Tribunal (IDT) hears 
collective bargaining cases.  Strikes do occur: of 129 
disputes reported to the Ministry of Labor in 2004, 16 
resulted in stoppages, an overall decline from previous 
years.  The Jamaican Constitution does not specifically 
prohibit forced or bonded labor by either adults or 
children, but there are no reported incidents.  The Child 
Care and Protection Act of 2004 states that "no person shall 
employ a child under the age of thirteen" in any form of 
work, and employment of children aged thirteen to fifteen is 
restricted in both type of employment and hours of work 
permitted.  The government sets the minimum wage in 
consultation with the National Minimum Wage Advisory 
Commission.  Currently, the minimum wage is set at USD 40 
for a 40-hour work week (it is USD 1.5 per hour for security 
guards), but most employers pay workers above this amount. 
Employers must, under the Labor Act, compensate workers at 
overtime rates - time-and-a-half - for work over 40 hours 
per week or eight hours per day, and double time for public 
holidays.  The Ministry of Labor's Industrial Safety 
Division sets and enforces industrial health and safety 
standards.  Industrial accident rates remain low. 
 
4.  The Child Care and Protection Act is the key mechanism 
used in eliminating the worst forms of child labor.  Passed 
in March 2004, CCPA sets the framework to proscribe all 
forms of child abuse.  It is too early to say whether the 
enforcement mechanisms of CCPA are adequate, as the system 
has yet to be tested.  The formal institutional mechanism 
for investigation into allegations is the Child Development 
Agency, which operates under the auspices of the Ministry of 
Health.  Additionally, GOJ cooperates with NGOs such as 
`Children First' to prevent child labor.  Historically, 
authorities have been well-meaning but constrained by poor 
enforcement mechanisms, and it seems that this continues to 
be the case.  Nonetheless, a positive indication of GOJ 
efforts was the ratification of ILO Convention 182, in 2003. 
It was this that paved the way for the passage of CCPA, in 
order to bring Jamaica into compliance. 
 
5.  Jamaica is a major transit point for South American 
cocaine, as well as being the largest Caribbean producer and 
exporter of marijuana.  Jamaica is included in the 2005 
Presidential Determination listing it as a major illicit 
drug-producing or drug-transit countries.  Jamaica continues 
to cooperate with the United States on our shared counter- 
narcotics and law enforcement goals.  However, GOJ must 
continue these efforts and take additional steps to 
intensify and focus its law enforcement efforts and enhance 
international cooperation in order to dismantle drug 
trafficking organizations and disrupt drug trafficking 
throughout Jamaica. 
 
6.  Jamaica is a signatory to the OECD Anti-Bribery 
Convention and completed ratification of the Inter-American 
Convention Against Corruption in March 2001.  The Corruption 
Prevention Act became operational in 2003.  Under this Act, 
public servants can be imprisoned for up to 10 years and 
fined up to JMD 10 million (USD 160,000) if convicted of 
engaging in acts of bribery.  Jamaican individuals and 
companies are also criminally liable if they bribe foreign 
public officials, facing the same penalties as public 
servants.  The Act also contains provision for the 
extradition of Jamaican citizens for crimes of corruption. 
On October 26, 2005, the Jamaican Constabulary Force (JCF) 
will unveil a new strategy to combat corruption within the 
police force.  Transparency International's Corruption 
Perception Index for Jamaica in 2005 was 3.6, indicating the 
need to continue to take this problem very seriously. 
 
7.  Government procurement is generally done through open 
tenders, direct advertising, or by invitation to registered 
suppliers.  U.S. firms are eligible to bid.  The range of 
manufactured goods produced locally is relatively small, so 
there are few instances of foreign goods competing with 
domestic manufacturers.  Companies interested in supplying 
office supplies to the government must register with the 
Financial Management Division of the Ministry of Finance. 
Companies interested in supplying other equipment or 
materials contact the relevant agency directly. 
 
8.  There are no known cases of property expropriated from 
U.S. citizens.  Property rights are protected under Section 
18 of the Jamaican Constitution.  Expropriation of land by 
the government may take place under the Land Acquisition 
Act, which provides for compensation on the basis of market 
value.  Expropriation may take place before compensation is 
paid, but on this case interest for the period between the 
expropriation and the compensation settlement must be paid. 
According to this law, the purpose of any expropriation must 
be transparent and compensation must be adequate.  If 
informal negotiation for compensation fails, the investor 
has recourse to the courts.  Jamaica's legal system is based 
on English common law principles and the rules in relation 
to the enforceability of contracts are therefore based on 
the English common law. The Jamaican judicial system 
recognizes and upholds the sanctity of contracts.  Jamaica 
has signed bilateral agreements for the reciprocal promotion 
and protection of investments with a number of countries, 
including the United States. 
 
9.  If not resolved in the local courts, arbitration of 
investment disputes between Jamaican and nonresident 
investors may be referred to the International Center for 
the Settlement of Investment Disputes (ICSID), of which 
Jamaica is a member.  Awards from ICSID are enforceable by 
the Jamaican courts.  Jamaica enforces property and 
contractual rights through four statutes, under which the 
judgments of foreign courts are accepted and enforced in all 
cases where there is a reciprocal enforcement of judgment 
treaty with the relevant foreign nation.  In the past 2 
years, there have been no known cases involving U.S. firms 
in arbitration. 
 
10.  Embassy is not aware of any developed country being 
afforded preferential treatment. 
 
11.  Government-owned entities do not broadcast copyrighted 
material belonging to U.S. copyright-holders without their 
express consent.  The Copyright Act of 1993, as amended, 
complies with the TRIPS Agreement and adheres to the 
principles of the Bern Convention, and covers works ranging 
from books and music to computer programs.  Amendments in 
June 1999 make explicit the provision of copyright 
protection on compilations of works such as databases and 
make it an offense for a person to manufacture or trade in 
decoders of encrypted transmissions.  It also gives persons 
having rights in encrypted transmissions or in broadcasting 
or cable program services a right of action against persons 
who infringe their rights.  In one example of GOJ's 
commitment to these issues, in 2004 Polcouns attended a 
public destruction, hosted by the Minister for Commerce, 
Science and Technology, of pirated CDs and DVDs. 
 
12.  Jamaica is a signatory to both a Mutual Legal 
Assistance Treaty and an Extradition Treaty regarding U.S. 
citizens, Jamaicans, and third-country nationals. 
 
13.  The Jamaican economy recorded its sixth consecutive year of 
growth during 2004, with real GDP increasing by 1.2 percent.  This 
result represents a slowing in the growth momentum due to the 
impact of Hurricane Ivan, as output for the first six months of the 
year expanded by 2.7 percent.  The total cost of the damages caused 
by the hurricane was estimated at just under USD 600 million, with 
63 percent representing damage to assets.  The impact of the 
hurricane and rising oil prices combined to affect other areas of 
macroeconomic performance during the year.  In particular, 
inflation for 2004 was 13.7 percent, the second consecutive year of 
double-digit inflation.  Inflationary impulses stemmed from supply 
shocks, reflecting the shortage of locally-produced food following 
the hurricane, increased oil and grain prices, and higher utilities 
costs.  The higher commodity prices combined with the increased 
importation of goods for reconstruction fuelled deterioration in 
the balance of payments.  However, the net international reserves 
jumped by USD 700 million to USD 1.9 billion on the back of higher 
foreign direct investment in the mining, tourism and 
telecommunications sectors.  Central Government's operations also 
generated a reduced fiscal deficit of USD 480 million, USD 80 
million below the result for last year.  Despite the moderation in 
the fiscal deficit, debt and debt servicing continues to take a 
heavy toll on the economy. 
 
14.  By being a signatory to the WTO Agreement, Jamaica has in 
principle agreed to provide equitable and reasonable access to 
goods from the U.S. and other members of the WTO.  In fact, the 
United States is Jamaica's primary trading partner.  Based on 
preliminary data for 2004, merchandise imports to Jamaica from the 
U.S. amounted to USD 1.7 billion or 44 percent of total imports, 
compared with USD 1.6 billion or 44.4 percent in 2003. 
 
15.  There are currently no performance requirements imposed as a 
condition for investing in Jamaica.  However, investments that 
attract hard currency and expand employment opportunities are 
favorably considered.  There is no requirement that investors 
purchase from local sources or export a certain percentage of 
output.  However, "Free Zone" type incentives require companies to 
export at least 85 percent of their output. 
 
16.  Since the late 1980s, Jamaica has been a major proponent of 
regional economic integration.  Most CARICOM countries look to 
Jamaica for leadership and the country was among the first to 
reduce duties on goods from CARICOM countries and has been 
spearheading efforts to get the CARICOM Single Market and Economy 
and the Caribbean Court of Justice on track.  Since the late 1980s, 
Jamaica has engaged in significant trade with CARICOM members. 
Jamaica currently runs large trade deficits with Trinidad and 
Tobago and Barbados. 
 
17.  Although economic performance continues to be moderately 
positive, the rate of expansion has been insufficient to raise per 
capita income.  The sluggish economic performance is largely due 
to structural bottlenecks like the country's archaic labor laws, a 
weak educational system, and inefficiencies in customs.  Economic 
performance also remains vulnerable to shocks in general and 
natural disasters in particular as was evident during 2004 when 
the country was on track to post economic growth of over three 
percent until Hurricane Ivan blew the targets off track. 
Notwithstanding, the GOJ has been making some of the structural 
adjustments necessary to improve economic growth.  In this regard, 
the GOJ established a Ministry of Development in 2002 to address 
some of the red tape facing both local and foreign investors.  The 
GOJ has also transferred USD 80 million from the National Housing 
Trust to transform the educational system.  To date there has been 
some tangible output, as the country has seen an influx of FDI 
particularly in the tourism, mining and telecommunications 
sectors.  The GOJ has also initiated a port expansion project as 
well as an ambitious Highway Project that is now two-thirds 
completed along the North Coast.  These developments combined with 
the divestment and modernization of the two international airports 
is expected to boost economic expansion. 
 
18.  The Trade Board is the agency responsible for administering 
the CBERA/CBTPA programs in Jamaica.  The agency has been and 
remains willing to promote the program.  Trade Board officials 
are, however, concerned about the underutilization of the program 
and attribute this to a lack of competitiveness of a number of 
firms. 
 
19.  Embassy Kingston Econoff, John Morgan, is the primary point 
of contact for CBERA/CBTPA issues and for this report.  Contact 
information: Tel. (876) 935-6028, Fax: (876) 935-6029, e-mail: 
morganjs@state.gov. 
 
TIGHE