CRS Reports on Limitations of Caribbean Trade Preference Programs
The Congressional Research Service has issued a report entitled “U.S. Trade Policy and the Caribbean: from Trade Preferences to Free Trade Agreements.”
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
Caribbean Programs Include CBI/CBERA, CBTPA, HOPE
The Caribbean Basin has multiple preferential trade arrangements, the first being the Caribbean Basin Initiative (CBI), passed by Congress in the Caribbean Basin Economic Recovery Act of 1983 (CBERA).
Other programs include the Caribbean Basin Trade Partnership Act (CBTPA) of 2000, which provides tariff preferences for imports of apparel products, and the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 (amended in 2008 and in 2010 by the Haiti Economic Lift Program (HELP) Act), which gives even more generous preferences to imports of Haitian apparel.
Benefits Concentrated in Few Countries/Products, Replaced by FTAs
Since the CBI, CBTPA, and HOPE Act preferences have been implemented, U.S.-Caribbean trade has grown, but evaluations of the early programs suggest that their effects were not as robust as originally hoped. Benefits tended to be concentrated in a few countries and products, limiting export promotion and deterring product diversification.
Over time, benefits have been "eroded" by multilateral trade liberalization and other regional U.S. preference programs. Bilateral free trade agreements, particularly the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA), have actually replaced unilateral preferences with permanent, more attractive tariff reductions and trade rules for former CBI countries such as the Dominican Republic and Central American countries. As the main exporters of apparel in the Caribbean Basin, they were among the primary beneficiaries of the Caribbean trade preference programs.
CBTPA, HOPE Not Effective for Services, Energy-Based Economies
CRS states that although the most effective trade preferences appear to be the apparel provisions provided under the CBTPA and the HOPE Act, they are not well suited to the services- and energy-based economies of the smaller Eastern Caribbean countries. There is a reluctance by these countries to make the transition to an FTA without some guarantee of a "development component" to the agreement. These concerns persist, despite the promise of permanent market access and increased investment that an FTA holds out.
According to CRS, broader regional integration may be difficult to reconcile with the needs of very small developing countries, which are highly vulnerable to the vicissitudes of global economic trends and may require new and creative solutions, particularly if U.S. policy is still driven by the historical focus on development and regional security issues in addition to trade liberalization.
(See ITT’s Online Archives or 08/10/10 news, 10081018, for BP summary of a CRS report on improvements made by the HOPE and HELP Acts.
See ITT’s Online Archives or 05/26/10 news, 10052663, for BP summary of the President signing the HELP Act into law, extending HOPE and CBTPA benefits.
See ITT’s Online Archives or 01/07/10 news, 10010725, for BP summary of USTR’s biennial report on n CBERA/CBTPA and its beneficiaries.)
(Report dated 06/22/10)