CARICOM
There are various trade agreements that CARICOM has negotiated bi-laterally. The various trade agreements between CARICOM and its regional counterparts all mark another step in the widening process of trade and economic relations between CARICOM and the countries in the wider Caribbean and Central America. It is an essential element of the response of the Region to the trend towards greater trade liberalization and the conclusion of bilateral trade agreements within the hemisphere.
Nonetheless, members of the private sector are the productive drivers of the economy and the expectation is that there is much to benefit from the expansion in trade regionally. In most instances, Belize has been accorded special treatment in the regional trade agreements. Specifically, the agreements provide for duty free exports from CARICOM Less Developed Countries such as Belize.
The table below provides the value of trade and third countries under the CARICOM bilateral trade Agreements between 2003-2009. The data depicts that Belize has a positive trade balance with the Dominican Republic and a negative trade balance with Cuba, Costa Rica, Venezuela and Colombia.
Table: Belize’s Trade with Countries within CARICOM bi-lateral Agreements (US$ 000)
Source: Statistical Institute of Belize
Below are the bi-lateral CARICOM-Trade Agreements and a synopsis of the main provisions.
CARICOM-Columbia Free Trade Agreement
The CARICOM-Columbia Free Trade Agreement (FTA) was signed on 24th July 1994 between CARICOM and Columbia. (View Agreement) The Agreement is one of the first in accelerating the Caribbean and Latin American integration process. It contains key provisions on trade and economic cooperation between CARICOM and Columbia.
Market Access
CARICOM Exports to Columbia
Colombia agreed to grant products originating in CARICOM Member States free access to its market for some products and also gradual elimination of non-tariff barriers and for the elimination of tariffs as set out in Annex-i and Annex-ii of the FTA. Those tariffs (duties) on goods listed in Annex-i are eliminated on the entry into force of the Agreement. This means that no duties will be charged on Belize’s exports. Some of those goods found in Annex-i that Belize may have an export interest are: preserved fruits, nuts, jams/fruit jellies, coffee (whether or not roasted), papayas, fresh and dried bananas, cashew nuts, coconuts, fish fillets (frozen), lobster, fish meat (minced or frozen), pepper sauce, red kidney beans, other sauces, condiments (excluding tomato ketchup and mayonnaise), ice cream, bottled purified water, aerated beverages, beer and stout, rum, bitters, other alcoholic preparations, dolomite (whether or not calcinated and not agglomerated, crude petroleum oils, chlorine, essential oils, wood in the rough and sawn, non-coniferous wood, wooden statuettes, wooden handcrafts, baskets and articles of basket work, wicker work, garments knitted or crocheted for textile materials, wooden furniture of a kind used in offices and kitchens.
The Agreement specifies that the tariffs on the products listed in Annex-ii will be eliminated through three equal annual reductions commencing on the date of the entry into force of this Agreement. Most Favored Nation treatment will be applied to products listed in Annex III; this means that the duties will still be charged on these products. The agreement allows for further flexibility since there is an additional list of products chosen from CARICOM’s exportable offer, which may receive preferential treatment in Colombia beginning in the fourth year after the entry into force of the Agreement, following negotiations between the Parties.
Imports from Columbia into CARICOM
The agreement provides for the More Developed Countries (MDCs) of CARICOM such as Barbados, Guyana, Jamaica and Trinidad and Tobago, to introduce a programme to eliminate or reduce tariffs on an agreed list of products of export interest to Colombia, commencing at the beginning of the fourth year after the entry into force of the Agreement.
CARICOM Less Developed Countries such as Belize are not required to grant tariff concessions (reduce duties) on imports from Columbia.
Rules of Origin
Rules of Origin is based on the general principle of change of customs classification heading, whenever this involves a substantial transformation process. The establishment of specific requirements by product may be necessary. The origin regime allows for cumulative origin, which allows Member States in CARICOM to source inputs into production from the region and still meet the criteria of originating.
Regarding goods produced in the territories which contain inputs from third countries, the c.i.f. value of materials or products from third countries utilized in the process of production should not exceed 60% of the f.o.b. price of the goods produced or the regional content should not be less than 40% of the f.o.b. price of the goods produced.
CARICOM-Venezuela Free Trade Agreement
CARICOM has signed a bilateral trade agreement with Venezuela in October 1992 which became effective on 1 January 1993 (View Agreement). The objective of the agreement outlined in Article 1 provides for the promotion and expansion of the sale of goods originating in CARICOM through one-way duty-free access to the Venezuelan market, the stimulation of investments and strengthening of the Parties’ competitiveness in world trade, the facilitation of the creation and operation of regional joint ventures and the encouragement of mechanisms for the promotion and protection of investments by nationals of the Parties.
Market Access
Regarding CARICOM exports to Venezuela, the Agreement provides for duty-free treatment.The list of goods is provided in Annex-i of the Agreement. Some goods that are potential exports from Belize included in Annex-i are: slips and cuttings of citrus and ornamental plants, trees, shrubs and plants of edible fruits, rose bushes, live orchid, citrus, and coffee plants, pepper neither crushed nor ground, and crushed and ground, ginger, nutmeg, and ice-cream and similar products.
Specifically,The CARICOM Exportable Offer has the following treatment:
(i)Immediate duty-free access for products set out in Annex-i;
(ii)Phased reduction of the duties applicable on products set out in Annex-ii as
follows:
(a) starting 1 January 1993 – 75 percent of the MFN rate of duty will apply;
(b) starting 1 January 1994 – 50 percent of the MFN rate of duty will apply;
(c) starting 1 January 1995 – 25 percent of the MFN rate of duty will apply;
(d) starting 1 January 1996 – duty-free treatment will apply;
Regarding CARICOM imports from Venezuela, CARICOM member states are to grant most-favored-nation treatment in the application of the Customs Tariff in respect of all importsfrom Venezuela, that is, the same duties that are charged to imports from the rest of the world are similarly charged to Venezuelan products. Hence,Venezuela is not given a concession from CARICOM since the country is not treated any differently.
Rules of Origin
The following are considered as originating in CARICOM Member Countries:
(a) The following items included in Appendix-i of the Agreement that is produced in the territory:
i) Mineral, vegetable and animal products (including those from hunting and fishing) extracted, harvested or gathered, born in its territory or territorial waters and exclusive economic zones; and
ii) Products of the sea extracted beyond its territorial waters and exclusive economic zones, by ships of its own flag or leased by enterprises which are legally established in its territory.
(b) Items wholly produced in the territories of CARICOM Member Countries, when such items are exclusively produced with materials from any of said Countries.
(c) Items manufactured using materials from third countries provided that they result from a process of substantial transformation, carried out in the territory of CARICOM Member Countries, which create a different product characterized by the fact of being classified within the Harmonized Commodity Description and Coding System in a heading different from that of such materials.
(d) Items that are the result of assembly operations which constitute a process of substantial transformation, carried out in the territory of a CARICOM Member Country and in the production of which materials from such countries, from Venezuela and from third countries are used, when the destination port c.i.f. value or the maritime port c.i.f. value of the materials from third countries does not exceed 50 per cent of the f.o.b. export value of such products.
(e) Items that, besides being produced in the territories of CARICOM Member Countries, comply with the specific origin requirements established in Appendix 2 of the Agreement.
The Certificate of Origin is valid for 180 days and should be provided by an authorized agent.
CARICOM-Dominican Republic Free Trade Agreement
The CARICOM-Dominican Republic Free Trade Agreement provisionally entered into force in December 2001 (View Agreement). The Protocol, together with the Framework Agreement (View Framework Agreement) which was signed on 22 August 1998, represent the most ambitious and far-reaching FTA that CARICOM has signed with a regional counterpart.
Unlike other bilateral agreements between CARICOM and regional countries, the CARICOM-DR FTA is based on reciprocity or two-way trade with the five CARICOM More Developed Countries (MDCs) and non-reciprocity with the Less Developed Countries (LDCs) until 2005. This means that CARICOM LDCs such as Belize were given asymmetrical or special treatment to export the goods covered under the agreement on a duty free basis. Further, the goods exported by the Dominican Republic to LDCs will have to pay the same duties that other countries pay (Most Favored Nation rate).
The Agreement contains provisions to further expand the terms and conditions of the agreement. Negotiations of Intellectual Property Rights and Trade and Services have been deferred until after the completion of negotiations for a Trade Agreement between CARICOM and Canada.
Market Access
The Protocol (view) specifies the tariff treatment which would be extended to goods that would be traded between CARICOM and the Dominican Republic. The Protocol provides for duty-free trade for about ninety percent of the goods traded between the Dominican Republic and the More Developed Countries (MDCs) of CARICOM -Barbados, Guyana, Jamaica, Suriname and Trinidad and Tobago.
For those products not eligible for duty free treatment, the Protocol provides for phased reduction of duties by 2004, and the Most Favorable Nation treatment for the remainder.
In consonance with promoting agricultural diversification, the Protocol takes into consideration the interests of the farming community and provides for Special Trading Arrangements for Selected Agricultural Products. Those arrangements allow for a selected list of agricultural products which would normally be traded duty-free to be subject to duty (the most favored nation rate) in times of glut. These special arrangements relate to trade only between the Dominican Republic and the CARICOM More Developed Countries. CARICOM Less Developed Countries such as Belize are not required to grant duty-free treatment to any imports from the Dominican Republic even though their exports would benefit from such preferential (duty free) treatment upon entry into the Dominican Republic market.
Rules of Origin
The Protocol also sets out the Rules of Origin for each tariff heading of goods.
In addition, it provides an agreed timetable for negotiating a Trade in Services regime and commits the Parties to doing the same for Reciprocal Promotion and Protection of Investment and for Government Procurement.
Investments
The Protocol contains special provisions for the reciprocal promotion and protection of investments and allows for the Temporary Entry of Business Persons into the countries of the Contracting Parties.
Belize has not ratified this agreement.
CARICOM-Costa Rica Free Trade Agreement
The CARICOM-Costa Rica Free Trade Agreement is the most recently concluded bilateral agreement between CARICOM and a third country within the Central Americas (View Agreement). Signed on March 15, 2003, the Agreement provides for free trade or preferential access for a wide range of products. Some sensitive products have been excluded. A special list of products will be granted differentiated market access between Costa Rica and each of the CARICOM MDCs.
Market Access
CARICOM less developed countries (LDCs) such as Belize and those in the Organization of Eastern Caribbean States (OECS) benefit from duty free access for exports to Costa Rica and are not required to grant similar access to Costa Rican products. CARICOM More Developed Countries (MDCs) such as Barbados, Guyana, Jamaica, Suriname and Trinidad and Tobago, in turn, provide duty free access to most products from Costa Rica. A limited number of products continue to attract duty when traded under the Agreement. Initially, the Agreement had called for some duties to be phased by January 1, 2007.
CARICOM products covered by the Region’s Oils and Fats Agreement will continue to be protected and will not be subject to free trade.
The Agreement contains provisions for the Settlement of Disputes, the application of Anti-Dumping Measures and for the Parties to enhance their Sanitary and Phyto-sanitary Measures. The agreement also provides for a review of the trade agreement by Parties to consider inclusion of provisions on Trade in Services, Investment, Competition Policy and Government Procurement.
Vet Drugs Registration (Application Form)
The Caribbean Basin Initiative (CBI) is a programme created between the United States and countries in the Caribbean Basin to facilitate the economic development and export diversification in the Caribbean region. The CBI was originally launched in 1983 through the Caribbean Basin Economic Recovery Act (CBERA), and later expanded in 2000 through the U.S.-Caribbean Basin Trade Partnership Act (CBTPA).
On March 24, 2009, the World Trade Organization (WTO) approved the long standing waiver request from the United States (US) on the Caribbean Basin Economic Recovery Act (CBERA). The approval of the waiver, which will remain valid until 2014, provides the legal authorization for CARICOM, including Belize, to export goods covered under CBERA to the US duty-free.
The CBTPA entered into force on October 1, 2000, and will continue in effect until September 30, 2010.
Prospects for a free trade agreement between CARICOM and US are still in exploratory discussions among CARICOM Heads of Government. It is expected that when CARICOM completes its negotiations with Canada, negotiations with the US for a FTA will commence.
Market Access
The CBI is not a trade agreement, but rather, a non-reciprocal grant of preferences (one way trade) in which most of its beneficiaries including Belize export duty free. Access to the U.S. market for most goods includes textiles, apparel andother goods made in the 24-country CBI region.
Belize’s exports under the CBI programme amounted to over $26.4 million. The leading foreign exchange earners are petroleum, frozen orange juice, papayas, and shrimp. Table provides a snap shot of Belize’s main exports to the US by volume and revenue. (View table).
Rules of Origin
CBI Rules of Origin require that importers wishing to take advantage of CBI market access preferences meet one of the following criteria:
- The imported product must be wholly grown, produced, or manufactured in one or more countries of the region; OR
- The import must be a “new or different” article made from substantially transformed non-CBI inputs, and with the cost or value of CBI materials and direct costs of processing totaling at least 35% of the appraised customs value at the time of entry.
Imports into export processing zones and commercial free zones do not require a license. Licenses are automatic for the importation of furniture in non-commercial quantities, and for “unique wooden articles” for the tourism industry.
Belize is a member of the Caribbean-Canada Trade Agreement (CARIBCAN) which is a Canadian government programme, established in 1986 between Canada and Governments of the Commonwealth Caribbean. Canada has requested a waiver under the CARIBCAN. The CARIBCAN had expired 31st December 2013. The waiver will be for 10 years, up to 2023. This will grant Belizean goods like rock lobster prerferential treatment into the Canadian market. The objective of the agreement is to promote trade, investment and provide industrial cooperation through the preferential access of goods from the countries of the Commonwealth-Caribbean to the Canadian market. (View Agreement).
Market Access
Approximately 98% of total CARICOM merchandise exports currently enter Canada duty free under MFN, CARIBCAN (CCT) or General Preferential Tariff (GPT). The CARIBCAN agreement does not cover duty-free access for the following items: Textiles and apparel, footwear, luggage and handbags, leather garments, lubricating oils and methanol. The table below illustrates select dutiable CARICOM exports to Canada.
| Dutiable 25 Top CARICOM Exports to Canada | ||||
| HS Code | Description | MFN | GPT | CCCT |
| 21039020/90 | Mixed Condiments and seasonings including Pepper Sauce | 8% or 9.5% | 5% or 9.5% | 0 |
| 22021000 | Aerated Beverages | 11 | 5 | 0 |
| 22084010 | Rum and Tafia in Bottles | 24.56¢/litre | 0 | 0 |
| 22084090 | Other Rum and Tafia | 12.28¢/litre | 0 | 0 |
| 22087000 | Liqueurs and Cordial | 12.28¢/litre | 0 | 0 |
| 29051100 | Methanol | 5.5 | 3 | 0 |
| 73269090 | Other Articles of Iron or Steel | 6.5 | 3 | 0 |
| Source: CARICOM Secretariat | ||||
CARICOM exports to Canada accounted for only 4% of regional exports over the period 2004-2006. These exports comprised of a narrow range of primary goods and basic manufactures such as Alumina, Gold, Rum, Roots and Tubers, Beer, Bakery products; Liqueurs, Sauces and Condiments; Nutmeg, Frozen Fish. (View Data).
Belize’s exports to Canada are negligible and are mainly sugar, essential oils of citrus (orange and grapefruit), frozen orange juice, lobster, black eye peas and sugar. (View List).
Protocol on Rum
More importantly, the Protocol on Rum calls for national treatment of rum with respect to measures affecting the listing,distilling, distribution, mark-up of distilled spirit. The Protocol, signed in 2000, was only valid for five years. It will be important for CARICOM to secure that rum is treated with duty free access and that special consideration is given to that sector during the current CARICOM-Canada FTA.
CARIBCAN preferences have been in existence for over twenty years and have been extended under a new WTO waiver until December30, 2011. A new free trade agreement that will replace the CARIBCAN Agreement is currently in negotiations between CARICOM and Canada. The new trade arrangement will be based on reciprocal (two way) trade in which the tariffs charged on goods imported from CARICOM will be reduced significantly. Similarly, access to the Canadian market will be expanded for CARICOM exports, hopefully at preferential rates.
Importantly, the new agreement will not be limited to only trade in goods similar to the CARIBCAN, but it will also include trade in services and access for Canadian companies to the Caribbean market and vice-versa.
Rules of Origin
Goods are eligible for duty-free status if they can be certified as being grown, manufactured or produced within the Commonwealth-Caribbean or Canada. The definition to be designated as Caribbean as its origin is; ‘having a minimum input of 60 percent of the ex-factory price of the goods (including overhead and reasonable profits) originating within any of the Commonwealth Caribbean countries (or Canada). The goods must also be exported directly from the Caribbean to Canada with no other work.
The Cotonou Agreement is a “Partnership” Agreement between the members of the African, Caribbean and Pacific (ACP) Group of States (of which Belize is a member) and members of the European Community. (View Agreement) The Cotonou Partnership Agreement (CPA) was signed on 23 June2000 in Cotonou, Bénin – hence the name “ACP-EC Partnership Agreement” or “Cotonou Agreement”. It was concluded for a twenty-year period from March 2000 to February 2020, and entered into force in April 2003. It was for the first time revised in June 2005, with the revision entering into force on 1 July 2008.
The CPA promotes cooperation and development between the ACP Group and the European Union in three complementary pillars: development cooperation, economic and trade cooperation, and the political dimension.
Market Access
Under the pillar of economic and trade cooperation, a number of Belize’s goods enter the EU market on a preferential rate—sugar, citrus, bananas and fishery products. Sugar and bananas are considered below.
Sugar
Background
As party to the Sugar Protocol (SP) under theACP-EU Cotonou Partnership Agreement, Belize exports a fixed quota of 40,348 tonnes to the EU market on a preferential basis. The EU adopted the EU Sugar Regime reform regulation which imposed a drastic price cut of 36 percent over four years beginning in 2006. The final price cut for2008/2009 crop year is projected to fall by 16.5% to Bz $46.08 per long ton, or,(from €496.80 to €448.80).
In 2006 the EU introduced, as a temporary measure, an additional quantity known as Complimentary Quota (CQ) for ACP suppliers to help meet import requirements of the European sugar refiners. A formula was finally adopted in Papua New Guinea. Under this formula Belize exported an additional 15,000 tonnes to the EU for the 2006/2007 marketing year.
Sugar and the EPA
With the conclusion of the EPA negotiations between the ACP and the EU, as of 2009 Belize will continue to export its sugar to theEU on a duty free and quota free basis. Sugar, similar to other products that were granted duty free and quota free access to the EU market. However, the terms of trade have changed significantly as the EU has liberalized its market for sugar and this former ”preference” that was only given to the ACP under the Cotonou Partnership Agreement is now being extended to all Latin American exporters of sugar in the world that are more competitive in the market. In effect, with more trade in sugar on the market will create a downward pressure on prices.
Bananas
Background
Belize’s exports of Bananas to the EU under the rubric of the CPA have been under tremendous pressure from Latin American exporters. As a result, in January 2006, the EC introduced a new element of a tariff only to its banana regime. The new tariff level was 176 Euros per ton for most favored nations (MFN) suppliers such as the Latin American suppliers (for example, Chiquita Bananas). The EU had to set this tariff to be in compliance with its WTO obligations. This new change meant that 60% of the ACP quota entered the EU on the basis of a First Come/First Served (FCFS) system, that is, those countries that can export their bananas in the early crop season get access;, and the other 40% on the basis of licenses granted to market operators based on past trade. Despite strong resistance from Belize and some CARICOM countries, this formula was further amended so that from 1 January 2007, 81% of the ACP quota entered on a FCFS basis of licenses and 19% under licenses. These changes adversely affected the income of growers. In effect, Belize actually had to pay over US$1.5 million to access the EU’s market.
Bananas and the EPA
A Declaration on Bananas is enshrined in theEconomic Partnership Agreement between the ACP Group and the European Union (EU). By virtue of that declaration Belize’s bananas continue to be exported to the EU on a duty free quota free basis along with other Latin American competitors. With more competition of bananas on the market, similar to trade in sugar with the EU, the effect on prices is negative.
The CARIFORUM (CARICOM Member States and the Dominican Republic) have completed negotiations for an Economic Partnership Agreement (EPA) with the European Union (EU) in December 2007. (View EPA) Negotiations had commenced in April 2004. The EPA is fundamentally different from the Cotonou Partnership Agreement since it represents reciprocal (two-way) trade between the two regions instead of one-way preferences that was previously granted to CARIFORUM by the EU.
Furthermore, what differentiates this Agreement from other trade agreements is its development dimension. While the agreement contains provisions on market access of goods and services between the two regions, it also contains key provisionson development in which the EU has committed to assisting the CARIFORUM economies in areas of technical assistance and capacity building so that the developing economies can have better access to the European market.
Market Access
The EU has granted CARIFORUM economies great concessions in market access in both goods and services. However, it must be noted that “market access” does not translate into “market presence.” Members of the private sector in Belize will need to take advantage of the provisions of the agreement so as to use the opportunity to invest and expand in its exports of goods and services.
Goods
With respect to trade in goods, the EU has granted CARIFORUM Member States including Belize, duty free and quota free access to the European market. On the contrary, CARIFORUM has agreed to eliminate 82.7% of imports from the EU by2033. (View Schedule for Tariff Liberalization for CARIFORUM Countries).
Services
CARIFORUM has committed to opening 75% of its service sectors to the EU service providers for More Developed Countries (Jamaica, Suriname, Trinidad & Tobago, Barbados and the Dominican Republic) and 75% for Less Developed Countries (LDCs) such as Belize in respect to commercial presence. (View List of Commitments in Investment and Trade in Services).
Belize made commitments in Professional services, Communication services, Construction and Related Engineering services, Distribution services, Environmental services, Financial services, Health related and Social services, Tourism and Travel related services, Recreational, Cultural and Sporting services, and Transport services. Click here to view Belize’s Services Schedule.
Development
While it is exceptional that CARIFORUM negotiators were able to weave development in core chapters in the EPA Agreement, many of the references do not bind the EU by a time-table for implementation. Thus, this leaves a great window of opportunity for the European Council (EC) to decide what to support, when and how much to inject into CARIFORUM economies without any legal recourse available for CARIFORUM countries to refute.
More disturbingly, the EC did not commit any new funds for EPA implementation during the negotiations. Not surprisingly, it has signaled that the priority use of the European Development Fund (EDF) under the rubric of the Cotonou Partnership Agreement will be used for the EPA implementation. A meager sum of €165 million under the 10th EDF which amounted to approximately €2.2 million per country per year is certainly inadequate to address the development needs of countries such as Belize to achieve economies of scale and become competitive.
For other annexes and protocols to the EPA click here.
For further information on EPA Implications for Belize click here.
Contact us at the The Belize Chamber of Commerce and Industry office or submit a inquiry online.
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Tel: +501-223-5330 / 5331