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Imports Under Caribbean Preference Program Down Again but Apparel from Haiti Sees Increase

Friday, October 02, 2015
Sandler, Travis & Rosenberg Trade Report

In its biennial report on the impact of the Caribbean Basin Economic Recovery Act (as modified by the Caribbean Basin Trade Partnership Act and the Haiti HOPE and HELP acts) the International Trade Commission found that in 2013 and 2014 the overall effect of this trade preference program on the U.S. economy continued to be negligible while the effect on beneficiary countries was small but positive. CBERA has been in operation since Jan. 1, 1984, and affords preferential tariff treatment to most products of 17 Caribbean and South American countries, including Curaçao, which was added effective Jan. 1, 2014.

Total Imports. According to the report, total U.S imports from CBERA countries (with and without trade preferences) declined from $12.0 billion in 2012 to $8.9 billion in 2013 to $8.5 billion in 2014, mainly due to a sharp drop in the value of imports of crude petroleum and refined petroleum products. The five leading categories of U.S. imports from CBERA countries in 2014 – mineral fuels, inorganic chemicals, organic chemicals, iron and steel, and knitted apparel – together accounted for 72.5 percent of the total. Trinidad and Tobago, Haiti, The Bahamas and Guyana were the leading sources, jointly accounting for 89.1 percent of the total value in 2014.

Imports Under CBERA. U.S imports under CBERA totaled $2.0 billion in 2014 (90 percent of which could not have received tariff preferences under any other program), down 16.8 percent from $2.4 billion in 2013. Energy products accounted for 62.0 percent of this total, 97.3 percent of which were supplied by Trinidad and Tobago. Textiles and apparel, supplied mainly by Haiti, accounted for another 19.8 percent, followed by other mining and manufacturing products at 10.7 percent and agricultural products at 7.6 percent.

Effects on Beneficiaries. CBERA has had some positive effects in beneficiary countries, the report states. Several have developed niche exports to the U.S., including polystyrene from The Bahamas, fruits and fruit juices from Belize, and electronic products from St. Kitts and Nevis. In addition, U.S. imports of textiles and apparel from Haiti rose 10 percent to $843.2 million in 2014, attributed in large part to new apparel manufacturing facilities built to take advantage of the trade preference program established by the HOPE and HELP acts. However, the ITC anticipates that Haiti will remain a small U.S. apparel supplier compared to globally competitive producers in Central America and Asia because economic factors such as low port capacity and inadequate infrastructure limit its ability to expand production significantly.

Effects on U.S. The report concludes that the overall effect of imports that could receive tariff preferences only under CBERA on the U.S. economy generally and on U.S. industries and consumers continued to be negligible in 2014. Both investment and production in most CBERA countries have yet to recover significantly from the 2008-09 global economic downturn. In addition, investment in CBERA countries increasingly targets export-oriented services, such as tourism, finance and telecommunications, rather than the manufacturing of CBERA-eligible export goods. Moreover, exporting such goods is a challenge for many beneficiaries because of supply-side constraints such as inadequate infrastructure, shortages of skilled workers, high production, energy and telecommunications costs, inadequate access to investment financing, low levels of innovation, and often an underdeveloped private sector.

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