RESTRICTED

WORLD TRADE WT/TPR/S/XX/Rev.1

12 October 2005
ORGANIZATION
(05-4655)

Trade Policy Review Body

TRADE POLICY REVIEW

Trinidad and Tobago

Report by the Secretariat

Revision

This report, prepared for the second Trade Policy Review of Trinidad and
Tobago, has been drawn up by the WTO Secretariat on its own responsibility.
The Secretariat has, as required by the Agreement establishing the Trade Policy
Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the
World Trade Organization), sought clarification from Trinidad and Tobago on its
trade policies and practices.

Any technical questions arising from this report may be addressed to Mr. Angelo
Silvy (tel. 022 739 5249), and Mr. Raymundo Valdés (tel. 022 739 5346).

Document WT/TPR/G/151 contains the policy statement submitted by

Trinidad and Tobago.

Note: This report is subject to restricted circulation and press embargo until the end of the first
session of the meeting of the Trade Policy Review Body on Trinidad and Tobago.
Trinidad and Tobago WT/TPR/S/151/Rev.1
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CONTENTS
Page

SUMMARY OBSERVATIONS vii

(1) INTRODUCTION vii
(2) ECONOMIC ENVIRONMENT vii
(3) TRADE AND INVESTMENT POLICY FRAMEWORK vii
(4) MARKET ACCESS IN GOODS viii
(5) OTHER MEASURES AFFECTING TRADE ix
(6) SECTORAL POLICIES ix

I. ECONOMIC ENVIRONMENT 1
(1) OVERVIEW 1
(2) MACROECONOMIC DEVELOPMENTS 1
(i) Economic structure 1
(ii) Production and employment 3
(iii) Monetary and exchange rate policy 4
(iv) Fiscal policy 7
(v) Balance of payments 9
(3) TRADE AND INVESTMENT FLOWS 11
(i) Developments in merchandise trade 11
(ii) Trade in services 12
(iii) Foreign direct investment 12
(4) OUTLOOK 13

II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 14

(1) OVERVIEW 14
(2) TRADE POLICY FORMULATION AND IMPLEMENTATION 14
(i) General constitutional and legal framework 14
(ii) Trade and investment policy objectives 15
(iii) Trade policy formulation and implementation 16
(3) FOREIGN INVESTMENT REGIME 17
(4) INTERNATIONAL RELATIONS 19
(i) World Trade Organization 19
(ii) CARICOM and related agreements 20
(iii) Non-reciprocal arrangements 23
(iv) Other agreements and negotiations 25
(5) TRADE-RELATED TECHNICAL ASSISTANCE 25

III. TRADE POLICIES AND PRACTICES BY MEASURE 27

(1) OVERVIEW 27
(2) MEASURES AFFECTING IMPORTS 28
(i) Customs procedures 28
(ii) Rules of origin 29
(iii) Customs valuation 30
(iv) Tariffs 31
(v) Other duties and taxes 41
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Page
(vi) Import prohibitions and licensing 42
(vii) Quantitative restrictions 45
(viii) Anti-dumping and countervailing duties 45
(ix) Safeguards 48
(x) Standards and technical regulations 49
(xi) Sanitary and phytosanitary measures 51
(3) MEASURES AFFECTING EXPORTS 53
(i) Export procedures 53
(ii) Export taxes 54
(iii) Export licensing 54
(iv) Export tax and duty concessions, including free zones 55
(v) Export financing and credit insurance 57
(vi) Export promotion 59
(4) MEASURES AFFECTING PRODUCTION AND TRADE 59
(i) Legal framework for businesses including taxation 59
(ii) Competition policy and price controls 60
(iii) Incentives and other government assistance 62
(iv) State-trading and other state-owned enterprises 66
(v) Government procurement 67
(vi) Trade-related intellectual property rights 70

IV. TRADE POLICIES BY SECTOR 75

(1) OVERVIEW 75
(2) AGRICULTURE 76
(i) Features and market developments 76
(ii) Policy objectives and administration 77
(iii) Policy instruments 78
(3) HYDROCARBONS 83
(i) Features 83
(ii) Policy objectives 86
(iii) Legal framework and incentives 86
(4) OTHER MANUFACTURING 89
(i) Features 89
(ii) Policy considerations 90
(5) ELECTRICITY 90
(6) SERVICES 92
(i) Overview 92
(ii) Financial services 93
(iii) Telecommunications 102
(iv) Maritime transport and ports 105
(v) Civil aviation and airports 106
(vi) Tourism 108

REFERENCES 111

APPENDIX TABLES 113

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CHARTS

III. TRADE POLICIES AND PRACTICES BY MEASURE

III.1 Frequency distribution of MFN tariff rates, 2004 34

TABLES

I. ECONOMIC ENVIRONMENT

I.1 Sectoral composition of GDP, at current market prices, 1999-04 2

I.2 Basic economic indicators, 1999-04 3
I.3 Main monetary indicators, 1999-04 6
I.4 Financial accounts of the Central Government, 1998-04 8
I.5 Balance of payments, 1999-04 10
I.6 Trade in services, 1999-03 12
I.7 FDI stock, 1980-03 12

III. TRADE POLICIES AND PRACTICES BY MEASURE

III.1 CARICOM rules of origin 30

III.2 Tariff structure, 2004 32
III.3 Summary analysis of Trinidad and Tobago's MFN tariff, 2004 32
III.4 Specific duties, 2004 34
III.5 Import surcharges, 1999-05 35
III.6 Items for which the applied MFN tariff (2004) exceeds the final bound rate 37
III.7 Excise duties, 2004 42
III.8 Import licensing requirements, 2004 43
III.9 Anti-dumping investigations initiated 1998 to May 2005 47
III.10 Exports requiring a licence 54
III.11 Direct economic impact of free-zone activities, 1999-04 57
III.12 Trinidad and Tobago's membership in international agreements on intellectual property rights 70

IV. TRADE POLICIES BY SECTOR

IV.1 Price support programme: guaranteed prices, 2005 79

IV.2 Price and input support, 1999-04 79
IV.3 Domestic support to agriculture, 1999-03 80
IV.4 Incentives to the agriculture sector 81
IV.5 Agricultural Development Bank approvals and disbursements, 1998-04 82
IV.6 Crude oil and natural gas production, 1999-04 84
IV.7 Petroleum taxation in Trinidad and Tobago 88
IV.8 Production and exports of steel products and cement, 1999-03 89
IV.9 Summary of electricity rates, January, 2005 92
IV.10 The financial system in Trinidad and Tobago, 2004 94
IV.11 Commercial bank performance indicators, 1999-03 97
IV.12 Selected indicators of stock market activity, 1998-03 100
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APPENDIX TABLES

I. ECONOMIC ENVIRONMENT

AI.1 Merchandise exports and re-exports by group of products, 1998-03 115

AI.2 Merchandise imports by group of products, 1998-03 116
AI.3 Merchandise exports and re-exports by trading partner, 1998-03 117
AI.4 Merchandise imports by trading partner, 1998-03 118

II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES

AII.1 Summary of Trinidad and Tobago's notifications to the WTO, 1998 to February 2005 119

IV. TRADE POLICIES BY SECTOR

AIV.1 Summary of Trinidad and Tobago's specific commitments in individual service sectors 121
Trinidad and Tobago
SUMMARY OBSERVATIONS
(1) INTRODUCTION
1. Since Trinidad and Tobago's last
Review, in 1998, trade has played a crucial
role in supporting rapid economic growth.
Structural and circumstantial factors underpin
this, notably Trinidad and Tobago's rich
natural endowments, its attractiveness as an
investment destination, and favourable
developments in world markets. At the same
time, changes in trade policy have been
measured. Thus, although the use of import
surcharges has been reduced, the average
applied MFN tariff remains at 9.1%. Non-
tariff trade barriers appear low but non-
automatic licensing is still applied and the use
of anti-dumping measures has increased.
Investment incentives and official support to
extra-CARICOM exports continue to be key
policy instruments, although net benefits to the
economy as a whole are yet to be empirically
assessed.
2. The hydrocarbons sector continues to
be the mainstay of the economy, and Trinidad
and Tobago is an important supplier of energy
and petrochemical products to the world
market. In contrast, the support given to
agriculture has not halted its decline while
raising domestic prices. In services, reforms
have had the greatest impact on financial
services and telecommunications but are being
extended to other activities. Further reform
and implementation efforts in areas such as
telecommunications, port administration, and
financial services are crucial for Trinidad and
Tobago to achieve its ambitious objectives of
becoming a knowledge-based economy and a
regional economic hub. Progress in recent
years bodes well for Trinidad and Tobago's
ability to further improve resource allocation
and diversify its production base, thus
ensuring the sustainability of economic
growth.
(2) ECONOMIC ENVIRONMENT
3. During the period under review,
Trinidad and Tobago's economy has
WT/TPR/S/151/Rev.1
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undergone strong growth, largely on account
of developments in the hydrocarbons sector.
Over the 1999-04 period, real GDP expanded
at an annual average rate of 7.7%, and per
capita income increased to over US$8,800 in
2004. As a result of the fast growth, the
unemployment rate has fallen, although at
8.3% in 2004 it remains relatively high.
Labour productivity has risen at a rapid pace,
above real wage growth, partly reflecting the
strong growth in capital intensive industries.
4. The overall fiscal situation has
improved, and current expenditure has been
kept under control; the Central Government
has been posting current account surpluses
since FY 1999/00. An important development
was the creation in 2000 of a stabilization
fund where the Government deposits
additional revenues from the petroleum sector,
when prices exceed a determined base price.
The fund is intended to act as a cushion
against any unexpected drop in petroleum
prices and to strengthen the public sector
savings effort.
5. Growth in domestic prices has been
contained although inflationary pressures
have built up since early 2004, particularly
triggered by higher food prices. The
appreciation of the real effective exchange
rate during the period under review may have
helped to constrain inflation, but may have
also tended to erode external competitiveness.
Fed by developments in the energy sector,
total merchandise trade expanded rapidly,
with merchandise exports growing at an
annual average rate of 18.3% over 1999-03,
while imports grew at an average of 5.5% a
year. Trinidad and Tobago is an attractive
investment destination, with the foreign direct
investment stock almost matching GDP.
(3) TRADE AND INVESTMENT POLICY
FRAMEWORK
6. Trinidad and Tobago's main policy
objectives are to position itself as a regional
economic hub and to achieve full integration
into the Latin American economy while
perfecting the Caribbean Community and
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Page viii
Common Market (CARICOM). To attain these
goals Trinidad and Tobago is seeking, among
other things, to lower the cost of doing
business in the country, to promote investment
in human capital, and to improve overall
economic efficiency.
7. Trinidad and Tobago has not been a
complainant in any WTO dispute; it has been
involved as a respondent in a single case at
the consultation stage. Trinidad and Tobago
made commitments in the extended GATS
negotiations on telecommunications, and has
ratified the Fourth Protocol, but did not
participate in the extended negotiations on
financial services. In the context of the Doha
Development Agenda, Trinidad and Tobago
has supported efforts to promote special and
differential treatment for developing countries,
the principle of "less than full reciprocity" in
the formulation of the modalities for tariff
reduction, and the need to ensure that the
negotiations on trade in services facilitate the
increasing participation of developing
countries. It has also maintained an active
programme of notifications to the WTO.
8. Trinidad and Tobago is a member of
CARICOM and implements the Revised Treaty
of Chaguaramas, which forms the legal basis
for the establishment of the CARICOM Single
Market and Economy. The Single Market is
expected to be implemented by participating
CARICOM members by 31 December 2005.
Through its participation in CARICOM,
Trinidad and Tobago has concluded
preferential trade agreements with Venezuela,
Colombia, the Dominican Republic, Cuba,
and Costa Rica, the latter three since 1998.
Trinidad and Tobago's exports also benefit
from preferential market access under non-
reciprocal preferential trade agreements
offered by a number of developed countries.
9. Trinidad and Tobago's investment
regime is generally open to foreign investors
although only CARICOM citizens and
companies are guaranteed national treatment.
In addition, Trinidad and Tobago has signed a
series of bilateral investment treaties offering
national treatment to foreign investors. On
Trade Policy Review
the other hand, approval is required for the
acquisition by foreigners of commercial and
residential land over a certain limit, and
foreign investors wishing to own more than
30% of the share capital of a local public
company must obtain a licence.
(4) MARKET ACCESS IN GOODS
10. As in 1998, the average applied MFN
tariff was 9.1% in 2004 (excluding specific
duties); including tariff surcharges the
average increases to 9.2%. Tariff protection
for agricultural products (17.1% or 17.9%
including surcharges) is significantly higher
than for non-agricultural products (7.6%). An
important step during the period under review
has been the elimination or reduction of most
import surcharges. However, at mid 2005
remaining surcharges on poultry (40% and
86%) and sugar (60% and 75%), exceed
Trinidad and Tobago's bound rate for other
duties and charges (15%). Except for a small
number of tariff lines, customs duties are all
ad valorem. All imports from other
CARICOM members enter Trinidad and
Tobago duty free if they meet rules of origin
criteria.
11. Trinidad and Tobago has bound its
entire tariff in the WTO. This increases the
predictability of the trade regime, although
the gap between applied and bound rates is
wide. The bound rate for almost all
agricultural goods is 100%, while most
industrial products have been bound at 50%,
with certain exceptions at 70%. For 44 tariff
lines bound prior to the Uruguay Round, MFN
duties in 2004 were higher than bound rates.
12. A number of products are subject to
automatic or non-automatic import licensing
requirements, mainly for sanitary, health or
safety reasons. For some goods, non-
automatic licensing is applied to MFN imports
while automatic licensing applies to imports
from CARICOM countries. Standards may be
declared voluntary or compulsory (technical
regulations) by the Trinidad and Tobago
Bureau of Standards after recommendations
by technical committees. Because of resource
Trinidad and Tobago
constraints, compliance with technical
regulations is monitored for only some
products.
13. Trinidad and Tobago has made more
active use of anti-dumping measures during
the period under review. Since the inception
of the WTO and as at May 2005, the Anti-
Dumping Authority had initiated 11 AD
investigations and had made nine final
determinations. There are five AD orders in
force. Trinidad and Tobago has not made use
of other contingency measures during the
period under review. There is no safeguard
legislation but the authorities are in the
process of drafting such legislation.
(5) OTHER MEASURES AFFECTING TRADE
14. A limited number of products require
export licences, including goods benefiting
from domestic support measures. A tax credit
granted to export firms was eliminated in
2000. However, other forms of support to
extra-CARICOM exports remain, including
assistance to enter new markets and for
industries producing exclusively for export to
countries outside the CARICOM region. A
free-trade zone regime is in place to attract
export-oriented investment.
15. Trinidad and Tobago applies a range
of incentives to promote investment, including
duty concessions, tax exemptions and
holidays, loss write-offs, and training support.
In certain cases, the length of tax holidays
depends on the degree of local value added.
Sector-specific investment incentives are also
available. Given the importance attached to
export and investment incentives, it would be
useful to establish empirically whether their
benefits, notably their capacity to generate
exports and investment opportunities,
outweigh their costs, both fiscal and in terms
of distortions due to incentives. Trinidad and
Tobago has notified the WTO that it maintains
no subsidies within the meaning of Articles 1
and 2 of the Agreement on Subsidies and
Countervailing Measures, and that it
maintains no laws and regulations
inconsistent with the TRIMs Agreement.
WT/TPR/S/151/Rev.1
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16. Trinidad and Tobago has no
comprehensive legislation on competition
policy, but certain business practices are
prohibited and competition policy issues are
covered as part of sectoral legislation. A few
goods and services remain subject to mark-up
limits. State-owned enterprises continue to
represent a large share of the economy;
through them, the State is involved in a wide
range of activities, including petroleum and
natural gas, chemicals, electricity, and
telecommunications.
17. Trinidad and Tobago is not a party to
the Plurilateral Agreement on Government
Procurement. Competitive tenders are
increasingly becoming the norm; they are
open to potential suppliers without reference
to nationality. In certain cases, if tenders go
to foreigners a local agent may be required.
No preferential margin is granted to local
suppliers but consideration is being given to
the development of a policy to encourage
participation of small businesses. Other
reforms of the government procurement
system, are also under consideration.
18. Domestic laws on intellectual
property rights have continued to be updated
during the period under review in order to
bring existing legislation into conformity with
the TRIPS Agreement and other international
engagements.
(6) SECTORAL POLICIES
19. Since 1998 the structure of the
economy has shifted towards the sectors
where Trinidad and Tobago enjoys
comparative advantage. As a result, and
despite trade policies and incentives schemes
having been used to promote other activities,
Trinidad and Tobago has increased its
reliance on the hydrocarbons sector
(petroleum, natural gas, and petrochemicals).
The sector generates directly over one third of
GDP and two thirds of merchandise exports,
having benefited in recent years from higher
prices and production. Large
international companies dominate
the sector but there is also strong
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state participation. Most of Trinidad and
Tobago's energy production is exported.
20. Although the contribution of
agriculture to GDP has fallen, the
Government plays an active role in supporting
the sector, which is considered vital for
diversification, and income and employment
growth. With the exception of the sugar
industry and a few other products,
agricultural production is largely geared
towards the domestic market. Agricultural
policy has become more open, as witnessed by
the reduction in the scope and rates of the
import surcharges, the partial reform of the
sugar industry, and the divestment in state-
owned enterprises. However, incentive
schemes still include guaranteed prices for
certain commodities, subsidies for the
acquisition of equipment, and preferential
credit. Domestic support accounted for
between 12% and 15% of agricultural GDP
during the 1999-03 period.
21. Manufacturing activity is closely
linked to the hydrocarbons sector, and partly
due to its natural resources and geographical
situation, Trinidad and Tobago has become an
important producer of petrochemical
products. Most non-petroleum manufacturing
consists of iron and steel and cement, wood
products, paper, printing, and publishing. A
number of incentive schemes are available for
manufacturers, including tariff concessions
for imports of machinery, equipment, and
materials for approved activities; corporate
tax relief to approved enterprises; and
accelerated depreciation allowances.
22. The main activities in the services
sector are financial services, distribution,
transportation, telecommunications, and
government services. Trinidad and Tobago is
seeking to make service activities more
Trade Policy Review
23. competitive by reforming and
modernizing the regulatory environment.
Recent liberalization and reform efforts have
had the greatest impact on financial services
and telecommunications, while in other
subsectors the Government is in the process of
reviewing the legislation. Reform in the
financial services sector has included
enhanced prudential regulations and steps to
consolidate supervision but the Government
has identified the need for further reforms,
including: updating the legislative
framework; implementing international
standards for information disclosure and
reporting, throughout the financial system;
and improving corporate governance and
reporting standards.
24. In telecommunications, new
legislation was introduced in 2001 to
transform the industry from a virtual
monopoly to a competitive environment. The
required legislation was completely
promulgated in June 2004, with liberalization
scheduled as from July 2005. In maritime
transport, the Government is seeking to
restructure the Port Authority and
commercialize operations to increase
efficiency and reduce costs.
25. In the Uruguay Round, Trinidad and
Tobago made sector-specific commitments
with respect to eight of the twelve sectors
identified in the classification prepared by the
WTO Secretariat. Trinidad and Tobago
participated and undertook commitments in
the WTO extended negotiations on
telecommunications, but did not make
commitments in the extended negotiations on
Financial Services. As a result, the only
financial services area in which it has made
GATS commitments is reinsurance.
Trinidad and Tobago submitted an initial
services offer in the negotiations on services
under the Doha Development Agenda in June
2005.