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Key Economic Indicators Continued

[Millions of U.S. dollars unless otherwise noted]

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Financial Services
Other Services

Government Health Education
Net Exports of Goods & Services

............
Real Per Capita GDP
Labor Force (000s)

Unemployment Rate (pct.)
Money and Prices (annual percentage growth):

Money Supply (M2)
Base Interest Rate :
Personal Saving Rate
Retail Inflation
Wholesale Inflation
Consumer Price Index

Exchange Rate (USD/TT)
Balance of Payments and Trade:
Total Exports (FOB)4

Exports to U.S.
Total Imports (CIF)

Imports from U.S.
Aid from U.S.
Aid from Other Countries
External Public Debt
Debt Service Payments
Gold and Foreign Exch. Reserves
Trade Balance 4

Balance with U.S.

-6.6 15.50 NA 6.5

0.8 247.0 4.25

5.1 15.50 N/A 10.8

6.3 273.6 5.39

- 1.8 15.50 NA 9.0

3.0 295.3 5.83

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NIA-Not available. 1 1994 figures are all estimates based on available monthly data in October 1994. 2GDP al factor cost. Figures reflect the exchange rates applicable in each year. 1992 exchange rate: US$1.00/TT$4.25. Exchange rate for 1993 is a period average which includes the posl-float devaluation; US$1.00/TT$5.39. Exchange rate for 1994 is an average of the period January-September 1994: US$ 1:00 TT$5.83. Sector indicators: Financial Services includes finance, insurance and real estate; Transport includes transport, storage and communication, and distribution.

a Figures are actual, average annual interest rates, not changes in them. - Merchandise trade. 1. General Policy Framework

The dual-island Republic of Trinidad and Tobago is endowed with rich deposits of oil and natural gas. During the oil boom of the 1970's, Trinidad and Tobago became one of the most prosperous countries in the Western Hemisphere. Oil revenues enabled the nation to invest in state-owned and state-controlled corporations, which became a drain on the nation's resources. The oil wealth also fueled a dramatic in. crease in domestic consumption. The collapse of the oil boom in the 1980's and concurrent decrease in Trinidadian oil production, caused a severe recession from which Trinidad and Tobago is only now beginning to emerge. Prospects for continued economic growth, however, remain closely tied to oil prices and oil and gas production in the short term as the government's structural reforms require time to stimulate growth.

Since January 1992, the Government of Trinidad and Tobago has moved decisively to lay the foundations for private sector based, export-led growth and to me form its state-controlled economy to a market-controlled one. On April 13,

1993, the government removed currency controls, floating the TT dollar. In 1992, it undertook å large scale divestment program and has since divested several previously stateowned companies. In addition, the government began dismantling trade barriers in 1991 eliminating the import licensing requirement for most manufactured goods in July 1992, and for most agricultural goods in September 1994.

The Government of Trinidad and Tobago has aggressively courted foreign in ves. tors and on September 26, 1994, signed a Bilateral Investment Treaty with the United States, which provides national treatment for U.S. investors. New U.S. in

vestment in Trinidad and Tobago increased from US$428 million in 1993 t about US$660 million in 1994.

The Government of Trinidad and Tobago uses a standard array of fiscal and mon. etary policies to in Nuence the economy, including a 15 percent value-added tax (VAT) and relatively high corporate and personal income taxes. Improvements in revenue collection in 1993 and 1994 have boosted VAT, income-tax and customs duty revenues dramatically. Nevertheless, a public sector budget deficit of approxi. mately US$52 million is projected for 1994 because of lower-than-projected oil prices resulting in less revenue from the energy sector. The 1994 budget based oil revenues on a price of US$19/barrel, but prices hit a five-year low in February and have not sufficiently recovered to budget-projected levels.

To protect the exchange rate, which has several times neared the TT $6.00– US$1.00 rate, the Central Bank has attempted to manage liquidity by keeping aggregate demand consistant with balances. The Central Bank continues to rely pri. marily on reserve requirements to control the money supply, despite its stated goal of moving to open market operations as a more market onented means of insluenc. ing the money supply. The Central Bank has raised the reserve requirement for commercial banks twice in 1994, to a current 20 percent. The tight money supply, combined with a weakening of the in Nationary effects of the 1993 Noat, are keeping inflation low. The year-on-year rate of insation was 7.8 percent from June 1993 to June 1994 compared with 11.2 percent in the twelve months preceding June 1993. 2. Exchange Rate Policy

On April 13, 1993, the Government of Trinidad and Tobago removed exchange controls and Noated the TT dollar which had been pegged to the U.S. dollar at the rate of TT$4.25 equals US$1.00 since 1988. The average rate of exchange for the first three quarters of 1994 is TT$5.83 equals US$ 1.00. Foreign currency for imports, profit remittances, and repatriation of capital is freely available. Only a few reporting requirements have been retained to deter money laundering and tax evasion. 3. Structural Policies

Pricing Policies: Generally, the free market determines prices. The government maintains domestic price controls on sugar, schoolbooks, and pharmaceuticals. Con. trols on rice and counter Nour were lined in September 1994 and remaining controls are expected eventually to be eliminated entirely.

Tax Policies: In an effort to curb consumption, the government instituted a 15 percent VAT on January 1, 1990. Corporate tax rates were raised by five percentage points to 45 percent in 1992, but a revision in the 1993 budget allows incremental profits of a company over a given base year to be taxed at 30 percent. The government's 1993 budget included substantial tax breaks for construction activity in 1993 and 1994, as well as for export-oriented venture capital companies. The petroleum tax regime was revised in 1992 to index tax rates to oil prices, and to make Trinidad and Tobago a more competitive location for investment. A tax of 0.25 percent was imposed on business sales on January 1, 1993. Additional taxes in the 1994 budget hit motorists with a five percent gasoline tax for road improvements, a new usedcar transfer tax and an increase in the motor vehicle tax applied to new purchases.

Regulatory Policies: All imports of food and drugs must satisfy prescribed standards. Imports of meat, live animals and plants, a large percentage of which come from the United States, are subject to specific regulations. The import of firearms, ammunition and narcotics are rigidly controlled or prohibited. 4. Debt Management Policies

From 1988 to 1991, the government negotiated International Monetary Fund (IMF) standby agreements, rescheduled Paris Club debt and concluded an agreement for a World Bank structural-adjustment loan. From 1992 to 1994 Trinidad and Tobago's high debt-service payments averaged about US$600 million per annum. The government has met these payments by relying on bond issues, proceeds from the divestiture of state enterprises and the offset effects of substantial loans from the Inter-American Development Bank. The country should emerge in 1995 with a manageable debt burden of approximately US$450 million per annum, and, as of 1996, a debt-service ratio of 15.1 percent down from 27.7 percent in 1994.

Total foreign debt now stands at approximately US$2 billion, or 42 percent of GDP, down from a high of 59 percent in 1989. With the government meeting its debt payments, the elimination of trade barriers and the economy edging toward growth, prospects for increased trade with the United States in the years ahead are excellent.

5. Significant Barriers to U.S. Exports

Trinidad and Tobago is highly import-dependent. Products imported cover a broad range of consumer and industrial goods from its major supplier, the United States, and other developed countries. Only sugar, poultry parts, left-hand drive vehicles, small boats and firearms remain on the Negative List of products requiring import licenses. Current import surcharges and stamp duties required on most manufactured goods will be reduced to zero on January 1, 1995, although Caricom Common External Tariff (CET) rates will continue to apply. Surcharges on agricultural goods removed from the negative list in September 1994, will be phased to zero on Janu. ary 1, 1998.

Liberalizing agricultural trade will eventually open the market for more U.S. commodity exports into Trinidad and Tobago, raising concerns among local farmers that the domestic agricultural sector will suffer from the cheaper foreign products making farming unprofitable. However, the government firmly expects the introduction of competition to result in a more efficient agricultural sector.

The removal of import-licensing requirements has also forced local manufacturers, traditionally, accustomed to producing only for a protected domestic market, to look outward and become more efficient. The government actively encourages export industries and small business development as a means of employment generation. In 1994, government officials championed the role of the private sector in the generation of economic growth. The government now views its role to be more a facilitator than an engine of growth.

Trinidad and Tobago's exports remain concentrated in oil and downstream petrochemical products (chiefly anhydrous ammonia, urea and methanol), and processed iron ore and steel wire rod (both produced using local natural gas and gas-derived electricity). The foat and resultant depreciation of the TT dollar has made local manufactured and agricultural exports more competitive and imported goods more costly for local consumers. As a result, Trinidad and Tobago's overall trade balance has improved. During the first quarter of 1994, Trinidad and Tobago's merchandise trade surplus was US$256.3 million compared with a US$4.5 million deficit in the first quarter of 1993 before the currency was floated. 1994's first quarter surplus was Trinidad and Tobago's fourth consecutive quarterly surplus.

Trinidad and Tobago signed the Uruguay Round Agreement on April 15, 1994 in Marrakech, Morocco.

Foreign ownership of service companies is permitted. Trinidad and Tobago currently has one 100 percent U.S.-owned bank, several U.S.-owned air-courier services, and one U.S. majority-owned insurance company. The government has expressed interest in attracting another U.S. bank.

Standards, labelling, testing and certification, to the extent that they are required, do not hinder U.S. exports. The Trinidad and Tobago Bureau of Standards (TTBS) is responsible for all trade standards except those pertaining to food, drugs and cosmetic items, which the Chemistry, Food and Drug Division of the Ministry of Health monitors. The TTBS uses the ISO 9000 series of standards and is a member of ISONET. Trinidad and Tobago is not a party to the GATT Standards Code.

Foreign direct investment is actively encouraged by the government. Generally speaking there are no de facto restrictions on investment and the government is actívely removing all disincentives to investment. On September

26, 1994 the Government of Trinidad and Tobago signed a Bilateral Investment Treaty with the U.S., granting national treatment to U.S. investors in Trinidad and Tobago on a reciprocal basis. Foreign investment is screened only for eligibility for government incentives, and assessment of its environmental impact. Foreign investors are eligible for tax concessions in the form of tax holidays and concessions in the manufacturing and hotel industries. Both tax and nontax incentives may be negotiated with the government for investments in the manufacturing, tourism, and energy sectors. The repatriation of capital dividends, interest, and other distributions and gains on investment may be freely transacted.

Government procurement practices are generally open and fair, and the government and government-owned companies generally adhere to an open bidding process for procurement of products and services. However, some government entities request prequalification applications from firms, then notify prequalified companies in a selective tender invitation. Trinidad and Tobago is not a member of the GATT Government Procurement Code.

Customs clearance can consume much time because of bureaucratic inefficiency and administrative procedures can be burdensome. Local importers often complain that it takes several working days to get import documents approved and their goods released. In October 1993, the Government of Trinidad and Tobago engaged three full-time U.S. Customs Service consultants for two years to improve efficiency and revenue collection. The Trinidad and Tobago Customs Service has implemented several consultant recommendations. Computerization of the Trinidad and Tobago Customs Serviæ import clearance process is under consideration but no date is set for implementation. 6. Export Subsidies Policies

There is no evidence of directly subsidized exports to the United States. However, the government osers incentives to manufacturers operating in a Free Zone or Ex: port Processing Zone (EPZ) to encourage foreign and domestic investors. Such man. ufacturers are exempt from customs duties on capital goods, spare parts and raw materials imported to construct and equip their premises. They are also exempt from all corporation and withholding taxes on profits from manufacturing and international trading in products or export services.

On January ¡, 1993, the government implemented the five percent CET on all fac. tors of production. Manufacturers that export, however, may reclaim the duty on the re-export of an imported product or receive vouchers, equal in value to the tarills paid, that can be applied against duties owed on further imports. Trinidad and To. bago is not a member of the GATT subsidies code. 7. Protection of U.S. Intellectual Property

Few resources are currently devoted to intellectual property rights, a situation that is expected to change during the two-year phase-in period for compliance with provisions in the Intellectual Property Rights (IPR) agreement, signed with the United States September 26, 1994. The agreement will, in most instances, provide IPR protection equivalent to that in the U.S., and is part of the Trinidad and Tobago government's drive to attract more U.S. investment to Trinidad and Tobago. Failure in law to provide for minimum statutory damages, recovery of legal costs, and criminal penalities for willful infringement undermines the deterrent value of existing legislation.

Trinidad and Tobago is a member of the Universal Copyright Convention; the Universal Copyright Convention, Revised; and the Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication. Trinidad and Tobago is also a party to the Bern Convention, Paris Act of 1971, the Paris Convention for the Protection of Industrial Property, and the Rome Convention for the Protection of Performers, Producers of Phonograms, and Broadcasting Organizations. As a member of the Caribbean Basin Initiative, the government is committed to prohibiting unauthorized broadcasts of U.S. programs.

Current copyright protection is governed by the Copyright Act of 1985, which complies with the revised Bern and Universal copyright conventions. A copyright is valid for a period of fifty years. Although the Act provides for protection of literary, musical and artistic works, computer software, sound recordings, audio-visual works and broadcasts, it is not enforced. Video rental outlets in Trinidad and Tobago are replete with pirated videos and operate openly.

The existing law on patent protection is the Patents and Design Act, which estab. lishes a registration system with no form of examination of patentable subject matter, novelty, inventive step, or industrial applicability. Patents are currently valid for a period of 14 years and may be extended before expiry for any period not exceeding seven years without limit. Infringement of patents is not a discernible problem in Trinidad and Tobago, but the existing law is outdated. A new patent law to provide for new technologies is being drafted.

Trademarks can currently be registered for a period of 14 years, and renewed by application before the expiration of the registration for an unlimited number of 14 year periods. The current Trademark Act is also slated for review. Counterfeiting of trademarks is not a widespread problem in Trinidad and Tobago.

New Technologies: Larger firms in Trinidad and Tobago are scrupulous about obtaining legal computer software while many smaller firms are believed to use wholly or partially pirated software. Licensed cable companies are faced with unlicensed cable operators and satellite owners who connect neighborhoods onto private satellites for a fee. Even licensed cable companies are not exempt from piracy since they regularly provide customers with U.S. “premium” cable channels for which they have not obtained rights.

Given the popularity of U.S. movies and music, and the dominance of the United States in the software market, U.S. copyright holders are the most heavily affected by the lack of copyright enforcement in Trinidad and Tobago, although the market is relatively small. By signing the IPR agreement, the government has acknowledged IPR infringement is a deterrent to additional U.S. investment in Trinidad and Tobago and is committed to improving both legislation and enforcement.

In

8. Worker Rights

a. The Right of Association.—The right of association is respected in law and practice. Approximately 26 labor unions were active in Trinidad and Tobago in 1994. The unions are independent of government or political party control and freely represent their members' interests. There are no excessive or arbitrary registration requirements, nor restrictions on selections of union officers or advisors. Union members are free to choose representatives, publicize their views and determine their own programs and policies. All employees except those in "essential services” have the right to strike.

b. The Right to Organize and Bargain Collectively. The rights of workers to collective bargaining is established in the Industrial Relations Act of 1972. Anti-union discrimination is prohibited by law.

c. Prohibition of Forced or Compulsory Labor.Forced or compulsory labor is not explicitly prohibited by law and is not a problem in EPZs since the same labor laws applied in the country at large are also applied in in EPZs. Some prison inmates sentenced to hard labor are involved in subsistance agriculture and dairy farming and fishing

d. Minimum Age for Employment of Children.—Legislation prohibits the employ. ment of children under the age of 12 years, and children aged 12 to 14 years are permitted to work only in family businesses. General employment is permitted after 14 years.

e. Acceptable Conditions of Work. A minimum wage structure is in place for gas station employees, domestic assistants, retail-sales personnel and hotel workers. These wage rates are adjusted for cost of living increases at regular intervals, every few years. In 1994, the parliament considered legislation which would set a minimum wage for security guards. There is no national or general minimum wage. The standard work week in Trinidad and Tobago is forty hours with no cap on overtime. The Factories and Ordinance Bill of 1948 sets occupational health and safety standards in certain industries; state inspectors monitor conditions in work places and workers who refuse to perform work because of hazardous conditions are protected from retribution under the Industrial Relations Act of 1972.

f. Rights in Sectors with U.S. Investment.-Employee rights and labor laws in sectors with U.S. investment do not differ from those in other sectors.

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Extent of U.S. Investment in Selected Industries.-U.S. Direct
Investment Position Abroad on an Historical Cost Basis-1993

(Millions of U.S. dollars]

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1 Suppressed to avoid disclosing data of individual companies.
Less than $500,000.
Source: U.S. Department of Commerce, Bureau of Economic Analysis

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