RESTRICTED

WORLD TRADE WT/TPR/S/238

29 September 2010
ORGANIZATION
(10-4837)

Trade Policy Review Body

TRADE POLICY REVIEW

Report by the Secretariat

Belize

This report, prepared for the second Trade Policy Review of Belize, 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 Belize on its trade policies and
practices.

Any technical questions arising from this report may be addressed to

Ms. Katie Waters (tel: 022.739 5067) or Mr. John Finn (tel: 022 739 5081) or
Mr. Willy Alfaro (tel: 022 739 5372).

Document WT/TPR/G/238 contains the policy statement submitted by Belize.

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 Belize.
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CONTENTS

Page

SUMMARY vii

I. ECONOMIC ENVIRONMENT 1
(1) INTRODUCTION 1
(2) RECENT ECONOMIC DEVELOPMENTS 2
(i) Structure of the economy 2
(ii) Fiscal policy 4
(iii) Monetary and exchange rate policy 6
(iv) Balance of payments and external debt 8
(3) MERCHANDISE TRADE AND INVESTMENT FLOWS 9
(i) Composition and geographical distribution of trade 9
(ii) Foreign direct investment 12
(4) OUTLOOK 12

II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 14

(1) INTRODUCTION 14
(2) GENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK 14
(3) DEVELOPMENT AND ADMINISTRATION OF TRADE POLICY 15
(4) TRADE AGREEMENTS AND ARRANGEMENTS 16
(i) Multilateral agreements 16
(ii) CARICOM 18
(iii) Bilateral agreements 19
(iv) Foreign investment regime 20
(5) DOING BUSINESS 20
(i) Setting up a business 20
(ii) Taxes and ease of doing business 21
(6) AID FOR TRADE 22
(i) Overview 22
(ii) Mainstreaming trade into national development strategies 23
(iii) Supply side and infrastructure constraints 24
(iv) Aid-for-trade support to Belize 27
(v) Outlook for Aid-for-trade in Belize 31

III. TRADE POLICIES AND PRACTICES BY MEASURE 33

(1) INTRODUCTION 33
(2) MEASURES DIRECTLY AFFECTING IMPORTS 34
(i) Customs procedures 34
(ii) Customs valuation 37
(iii) Rules of origin 38
(iv) Tariffs 39
(v) Other charges affecting imports 43
(vi) Import prohibitions, restrictions, and licensing 48
(vii) Contingency measures 53
(viii) Standards and other technical requirements 54
(ix) Sanitary and phytosanitary measures 57
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Page
(3) MEASURES DIRECTLY AFFECTING EXPORTS 59
(i) Procedures 59
(ii) Export taxes, charges and levies 59
(iii) Export prohibitions, restrictions, and licensing 60
(iv) Duty and tax concessions 61
(v) Export finance, insurance, and guarantees 62
(vi) Export promotion and marketing assistance 63
(4) MEASURES AFFECTING PRODUCTION AND TRADE 63
(i) Competition policy and price controls 63
(ii) State trading, state-owned enterprises, and privatization 64
(iii) Incentives and other government assistance 65
(iv) Government procurement 66
(v) Intellectual property rights 68

IV. TRADE POLICIES BY SECTOR 71

(1) INTRODUCTION 71
(2) AGRICULTURE 72
(i) Features 72
(ii) Public policy 75
(iii) Fisheries 77
(3) MANUFACTURING (PETROLEUM, MANUFACTURED GOODS, AND MINING AND QUARRYING) 79
(4) SERVICES 80
(i) Main features 80
(ii) Banking and insurance 82
(iii) Telecommunications 86
(iv) Air transport 89
(v) Maritime transport services 91
(vi) Tourism services 92

REFERENCES 95

APPENDIX TABLES 97
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CHARTS
Page

I. ECONOMIC ENVIRONMENT

I.1 Structure of merchandise trade, 2003 and 2008 10

I.2 Direction of merchandise trade, 2003 and 2008 11

II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES

II.1 Main donors 30

II.2 Amount and value of Papaya exports 31

IV. TRADE POLICIES BY SECTOR

IV.1 Export of agriculture, and fisheries products, and other commodities, 2000-08 73
IV.2 Agriculture exports by product group, 2000-08 74
IV.3 Weighted average interest rates in Belize, 2002-09 85

TABLES

I. ECONOMIC ENVIRONMENT

I.1 Basic economic indicators, 2003-09 1

I.2 Structure of GDP, 2003-09 2
I.3 Government revenue and expenditure by fiscal year, 2004-10 5
I.4 Public sector external debt outstanding by source, 31 December, 2004-09 6
I.5 Main monetary indicators, 2003-09 7
I.6 Balance of Payments, 2003-09 8
I.7 Foreign direct investment, 2003-09 12

II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES

II.1 Notifications to the WTO, January 2004-June 2010 17

II.2 Key legal requirements to establish a business in Belize, 2010 20
II.3 Doing business in Belize and selected countries, 2010 22
II.4 Official development assistance to Belize, 2006-08 27
II.5 Sector-specific breakdown of aid-for-trade commitments for Belize, 2002-08 27
II.6 Donor operations 29

III. TRADE POLICIES AND PRACTICES BY MEASURE

III.1 Preferential rules of origin 38

III.2 Structure of tariff schedule in Belize, 2004 and 2010 40
III.3 Summary analysis of Belize MFN tariff, 2010 40
III.4 Products subject to revenue replacement duty (RRD), 2010 43
III.5 GST exempt and zero-rated items, 2010 46
III.6 Excise taxes, March 2010 48
III.7 Import prohibitions, May 2010 48
III.8 Products subject to import licensing requirements under the Supplies
Control (Import/Export) Regulations 50
III.9 Products subject to import permit and licensing requirements under the Prohibited
Goods Order and the Customs Regulation (Prohibited and Restricted Goods) (Consolidation)
Order 52
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Page

III.10 Declared National Standards 55

III.11 Export prohibitions and licensing, May 2010 60
III.12 Legislation governing incentives and other assistance in Belize, July 2010 65
III.13 Tendering procedures under the Finance and Audit (Reform) Act, 2010 67

IV. TRADE POLICIES BY SECTOR

IV.1 Production of selected agricultural products, 1996-2008 73

IV.2 Producer prices for selected commodities and countries, 2000-07 76
IV.3 Fisheries Production, 2004-08 78
IV.4 High seas fisheries production, 2000-08 79
IV.5 Manufacturing production, 2004-08 79
IV.6 Summary of Belize's specific commitments in individual service sectors for Modes 1, 2, and 3 81
IV.7 Overview of the domestic banking and insurance sector, 2010 82
IV.8 Licensed telecommunications operators, July 2010 87
IV.9 Selected telecommunications indicators, 2004-09 88

APPENDIX - TABLES

I. ECONOMIC ENVIRONMENT

AI.1 Merchandise exports and re-exports by group of products, 2002-08 99

AI.2 Merchandise imports by groups of product, 2002-08 100
AI.3 Merchandise exports and re-exports by trading partner, 2002-08 102
AI.4 Merchandise imports by trading partner, 2002-08 103

III. TRADE POLICIES AND PRACTICES BY MEASURE

AIII.1 Products subject to price controls, July 2010 104

IV. TRADE POLICIES BY SECTOR

AIV.1 Selected features of the Acts governing the banking and insurance sectors in Belize 105
Belize
SUMMARY
1. Belize has a small relatively open
economy and is the only member of
CARICOM geographically situated in Central
America. Belize has few barriers to
investment. Services industries make the
biggest contribution to GDP and employment.
Agriculture is important, particularly since it
provides inputs to Belize's agri-processing
industries, which comprise the bulk of Belize's
manufacturing base. In addition, agriculture
accounts for most of Belize's exports. Sugar
and bananas are exported to the EU under the
CARIFORUM-EU Economic Partnership
Agreement, and citrus juice and papaya are
exported to the United States under the
Caribbean Basin Initiative. High quality crude
oil has been discovered and, since 2006, has
been commercially exploited. Belize also has
an active offshore sector for business and
financial services companies as well as an
international maritime registry.
2. In spite of its vulnerability to severe
weather conditions, Belize has significant
natural advantages and the potential to develop
them further. It has untapped productive
agricultural land, the world's second largest
coral reef, unspoilt forests, and ancient ruins,
and is only a short flight from some major
tourist markets. Many Belizeans are fluent in
both English and Spanish, an added advantage
given Belize's geographical location.
3. Since independence, economic
performance has been cyclical and driven by
government spending. High levels of
government spending have lead to high growth
periods, but also to unsustainable levels of
government debt, with the result that reduced
public spending has meant lower growth.
Thus, the Government's fiscal policy options
have been limited by its debt levels. In
addition, following restructuring of its
commercial debt in 2007, the Government’s
borrowing options have been restricted to
bilateral sources and international
organizations. The use of monetary policy is
constrained by its fixed exchange rate with the
U.S. dollar.
WT/TPR/S/238
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4. As a result, the Government may need to
concentrate its efforts on developing and
supporting a competitive, and efficient private
sector as the key driver of economic growth.
This is becoming more urgent given the reality
of preference erosion. In this regard, trade
policy, and trade policy-related reforms have a
crucial role to play, supported by targeted aid-
for-trade assistance.
5. Belize's trade regime remains similar to
that in place at the time of its previous TPR in
2004. It faces the dilemma of continued
reliance on taxes on international trade as a
key source of government revenue; a
perceived need to protect domestic producers;
as well as a need to ensure the affordability of
basic necessities for consumers. This has led
to a complex mix of policies, some of which
are at odds with each other. For example, the
impact of border protection, which raises the
prices of goods for producers and investors, is
then offset by an array of tax exemptions and
price controls intended to reduce prices for
consumers.
6. Belize's main instruments of border
protection are tariffs and a non-automatic
import licensing system applied mainly to
agricultural products and processed foods.
The significant binding overhang between
applied and bound tariffs, as well as the
apparently arbitrary and non-transparent nature
of the licensing system, make Belize's trading
regime less predictable. As an unintended
consequence of these policies, the productive
capacity of domestic manufacturing industries
may be undermined by limiting their access to
either affordable or available inputs.
Protection afforded to domestic producers
gives them no incentive to operate more
efficiently, and also raises prices for
consumers and investors.
7. There is scope for tax reform and
simplification. Belize levies three internal
taxes on goods and services: a General Sales
Tax (which functions like a VAT), at a general
rate of 12.5%; excise duties, which are levied
at varying specific rates on certain locally
produced goods; and a revenue replacement
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duty (RRD), levied on 219 tariff lines (imports
and locally produced goods, with the
exception of locally produced goods already
subject to excise duties). Belize charges a 2%
environmental tax on imports only. The
corporate tax system, with a choice between
business and income taxes, could be
simplified. Exemptions from some of these
taxes are in place to ensure the affordability of
basic necessities, some of these are applied on
a discriminatory basis.
8. Tax breaks are also used as a main
incentive to producers and investors: Customs
duty exemptions are available to targeted
sectors under Customs and Fiscal Incentives
laws. Broader tax incentives are provided to
promote exports through export processing
zone and commercial free zone programmes.
However, the revenue implications of these
incentive programmes are not clear, nor the
distortions they might introduce in the
economy. Belize's obligation to phase out the
export subsidy elements of its incentive
programmes by 2015 could provide an
opportunity for a closer look at the costs and
benefits its tax incentives.
9. While Belize's economy is largely in the
hands of the private sector, its small size may
not naturally lead to price competition.
Indeed, there is some evidence of a lack of
competition in some areas. For example, there
have been complaints from industry regarding
high port charges, and telecommunications
tariffs are higher than in most neighbouring
countries. In this regard, Belize's objective of
enacting competition legislation would be a
positive and necessary step. Likewise, it is
crucial that the Public Utilities Commission is
able to effectively regulate the
telecommunications and utilities sectors,
where there are a limited number of players.
10. Trade facilitation is another area where
improvements can continue to be made. For
example, customs processing is presently
manual and cumbersome. A Customs Reform
and Modernization Project, which is in train,
should see the gradual introduction of
ASYCUDA World at Belize's customs entry
points, which will allow electronic submission
Trade Policy Review
of customs documentation. The creation of a
Customs Tariff Board to deal with valuation
and classification disputes, which is also
foreseen, should give a better structure to
dispute resolution.
11. Increased transparency, centralization and
uniformity in procurement practices could help
making effective use of scarce public money
and engender greater competition among
suppliers.. This is being considered by the
authorities. While recent reforms have
importantly introduced clearer procurement
rules and stronger oversight by the National
Assembly through the Contractor-General's
office, the experience of decentralized
procurement decision-making has not been so
positive.
12. Aid for trade could have a significant role
to play in assisting Belize to develop. Despite
the relatively small AfT assistance Belize has
received so far, this has already had positive
impacts on its ability to expand export
opportunities, particularly with respect to
tropical fruit, through the expansion of
productive capacity and the enhancement of
SPS facilities. Aid For Trade could be pivotal
in alleviating several bottlenecks to trade that
have been identified by the private sector.
Access to finance on reasonable terms is one:
in the absence of any governmental support in
the form of trade finance, insurance, and
guarantees, loans have to be drawn from
commercial banks and the cost of borrowing is
extremely high. There are deficiencies in
trade-related infrastructure, with investments
needed to replace and build bridges, improve
highway networks, improve drainage and
feeder roads, and develop solid waste
management. Upgrades to the international
airport and a cruise ship docking facility could
help develop the tourist industry. Likewise,
the agriculture sector, for example, would
benefit from better storage facilities and
investments in the agri-processing and
aquaculture sectors to develop new products.