Current Affairs

Current Affairs



No revenue loss expected from FTAA - Robertson
Observer Reporter
Wednesday, April 30, 2003



DEVELOPMENT Minister Dr Paul Robertson argued Monday that government would not suffer a significant loss of revenue when import duties are slashed once the Free Trade Area of the Americas comes on-stream in 2005.

At the same time, he announced plans to develop a national export strategy in entering upcoming multilateral negotiations in Cancun, Mexico.

Revenues, Robertson said, would not be diminished as the reduction in import duties would be counterbalanced by increased tax netting of the informal sector.

"I think the estimates that we are working on is that there should not to be a shortfall," Robertson told the Observer after his main address to the World Trade Organisation (WTO) Trade and Investment Regional Workshop.

"Part of it will be that need to be more efficient in collection and preventing people from coming from under the net," he added.

The workshop, held at the Jamaica Pegasus Hotel in New Kingston, ended Tuesday.

There is an estimated 43 per cent of the gross domestic product which is said to be wedged in the informal sector. A substantial amount of the informal sector imports goods and services. This means that these businesses operate outside the tax regulatory framework.

"There is the theory that if duties are low there is less of an inclination of businesses to cheat," said Robertson. "So theoretically you might even do better."

The Jamaican government received $10.2 billion from import duties last fiscal year.

In January, tax tsar Clive Nicholas offered a conflicting viewpoint to Robertson's, warning that the island was likely to lose a substantial portion of its import duties -- as much as a 10 per cent of its revenue. Other experts have asserted that the figure could be as high as 24 per cent.

There will also be a drastic reduction in customs rates, moving eventually to zero import duties under the Free Trade of the Americas (FTAA) which takes effect in 2005.

Part of the argued logic for free trade is that in open markets it spurs economic activity on both trading borders, providing revenues which more than compensates for lost import duties.

"There is a feeling that the WTO will systematically marginalise the region by enforcing a one-size-fits-all strategy to development," Robertson continued.

"Certainly, the seminar must dispel of such a notion to development and begin to replace it with one where small island states can design and implement tailor-made development strategies," he added.

Robertson also told the gathering that his ministry was currently developing a national export strategy to present to the Cancun ministers' conference in September.

"The national export strategy is a precursor to this participation and will provide the framework within which all our negotiations will take place," he said.

The focus, he said, would be growth oriented.

In Cancun, ministers will decide the substance of negotiations with the WTO and if negotiations will be done in blocs, individually or some other configuration.

"The workshop's discussions will be useful in shaping the position which is to be taken in the Cancun ministers' conference as to whether there should be a multilateral agreement in negotiations in the WTO," explained Ambassador Gail Mathurin, Under Secretary in the Ministry of Foreign Affairs and Foreign Trade.