Enhancing and placing Caricom-US trade relations on a more permanent and predictable footing could be achieved by the US locking-in the Caribbean Basin Trade Partnership Act (CBPTA) preferences into permanent legislation and including all Caricom states as beneficiaries.
The CBPTA preferences will expire in September this year.
At present only seven member states are beneficiaries under the CBPTA which entered into force in 2000 and allowed duty-free entry to designated products from those Caricom member states.
The Caribbean Basin Economic Recovery Act (CBERA) formalized Caricom-US trade relations in 1984, after being adopted by the US Congress in an effort to stimulate increased trade with the Caribbean by granting duty-free access for a range of goods to the US market.
In a statement presented by Assistant Secretary-General, Trade and Economic Integration, Ambassador Irwin LaRocque at a hearing of the United States International Trade Commission (USITC) on the ‘Caricom Region: Review of Economic Growth and Development’ on January 29, he reaffirmed the June 2007 request by Caricom Heads of Government to the US President to extend the CBPTA to all Caricom member states and to make permanent the preferences available under the act.
The hearing was a direct result of the Conference on the Caribbean which was held in Washington last June.
There were also testimonies from Barbados, Haiti, Jamaica, St Kitts-Nevis and Trinidad and Tobago; Secretary-General of the Organisation of American States (OAS) Jose Miguel Insulza as well as representatives of the Caribbean Hotel Association (CHA) and the United States private sector.
US House of Representatives Ways and Means Committee Chairman, Congressman Charles Rangel requested the hearing.
According to a press statement on its website, the USITC will submit its report to the Ways and Means Committee by May 7, 2008. The USITC, a fact-finding federal agency, will provide an in-depth description of the current level of economic development in the Caribbean basin at the regional level and the country level.
The country level overview will include country profiles of the 18 CBERA countries that are not part of the Central American Free Trade Agree-ment, including the Domini-can Republic (CAFTA-DR).
Apart from the oral submissions, the Caricom Secretariat subsequently presented a written submission to the USITC.
LaRocque in his oral submission also outlined four other main areas which could be considered as elements for a more mature CARICOM/ US trade and economic relationship, including the US broadening the categories of Caricom products eligible for preferential access to its markets.
He argued that Caricom exporters could also benefit from more flexible rules of origin for exports to the US with the preservation and strengthening of the ‘cumulation principle’. This would enable enterprises to combine inputs from eligible countries in the region in the production of goods and services.
The services sector, he said, was the fastest growing in the region, contributing between 60 to 90 per cent of the economic output and needed to be provided for in any future Caricom-US trade relations.
He stated further that there was a role for the US as one of the region’s long standing partners as Caricom sought to promote the transformation of its economies through their access to the resources and technical assistance to be provided by the Caricom Development Fund (CDF); that capacity-building assistance to allow regional industries to capitalise on export opportunities was another area in which the US could be supportive of CARICOM and include training and technical assistance to address sanitary and phytosanitary requirements and other technical regulations and standards applied by the US.
LaRocque added that any new and enhanced trading relationship between Caricom and the US should take into account the differences in the level of development between the two parties and among Caricom countries themselves.
He told the panel that the revitalised Caricom-US Trade and Investment Council was expected to play an important part in the furthering of the enhanced trade and economic relationship. The Caricom-USITC is scheduled to meet later this year.
In his presentation on the necessity for the renewal and expansion of the CBPTA as an essential mechanism in the continued growth and economic viability of the remaining beneficiary countries under the CBERA, the OAS Secretary General said that over the past two decades the Caribbean countries used the Caribbean Basin Initiative (CBI) to move beyond the export of primary products.
He said that while the results varied the picture has been a positive one. However, the Caribbean has some of the most vulnerable economies in the world trading system due to natural disasters, including hurricanes, open economies, high dependence on external tariffs, high input costs, dependence on very few export markets, low competitiveness, economic rigidity with high adjustment costs, difficulties in attracting foreign investments, lack of adequate market access opportunities to place their few export products and high export and transit costs.
In light of these limitations he noted that the CBI becomes even more decisive in enabling the small econo-mies to access the US market and enhance their export potential.
With the passage of the Central America/Dominican Republic Free Trade Agree-ment CAFTA/DR, Insulza noted that the Central American countries were the main beneficiaries under the CBI and of which they would no longer be eligible.
Merchandise trade constitutes a rapidly diminishing share of the total export of Caricom and the arrangement should be expanded to include trade in services which, he said, has enormous potential for the region’s growth and development.
Other areas which hold possibilities include the promotion of health tourism and health care services and the financial services sector.
