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In
2000 the US Congress finally enacted the Caribbean Basin Trade Partnership Act (CBTPA),
known as the Nafta Parity Bill, after years of lobbying by Central American and
Caricom countries and the US apparel industry.
 The
CBTPA extended Nafta-type benefits to apparel and to certain other products that
had been excluded from the original Caribbean Basin Economic Recovery Act (CBERA),
of 1983. US imports under CBERA had fallen from $3.2 billion in 1998 to $2.6
billion in 2000; or from 19 percent to 12 percent of all US imports from
Caribbean Basin countries. The goal of CBTPA was to reverse this trend.
2001
was the first full year of operation of CBTPA and a recent report to the US
Congress by the Office of the US Trade Representative (USTR) provides an
opportunity to evaluate its impact so far.
It
is clear that exporters from the region are making extensive use of CBTPA
provisions. In the first 8 months of 2001 CBTPA shipments to the US were running
at about twice the rate of the previous year under CBERA, about 24 percent of
all US imports from Caribbean Basin countries.
But
the USTR Report attributes much of this to the shifting of existing exports of
apparel from previously excluded to the new trade preference categories. It
notes that the overall volume of U.S. apparel imports from the Caribbean Basin
actually declined in the first 8 months of 2001.
One
reason for this is the product eligibility criteria of the CBTPA. To qualify for
the new duty-free and quota-free provisions, apparel exported from the region
must be made from US fabrics formed from US yarns and cut in the US. If cut into parts in the region, the fabric must be of US origin
and must be sewn together from US thread.
Regionally
manufactured fabric can also be eligible, but only if manufactured from US yarn
and these products are subject to a growth limitation of 16 percent per annum.
In
other words, certain restrictions apply. As a result, some Caribbean-Basin
apparel exporters have merely been re-sourcing their fabric imports to the US to
qualify for CBTPA treatment.
 Another
restriction is the requirement that Caribbean Basin countries adopt Nafta-type
customs procedures in the processing of exports, resulting in problems in «the
application of certain statutory provisions in the technical rules governing
imports », to quote the Report. Up to late 2001 there were still 10
countries out of 24 that had not yet been designated as fully eligible under
CBTPA.
The
USTR Report shows that the Dominican Republic and the five Central American
countries accounted for 82 percent of CBERA/CBTPA exports to the US in the first
8 months of 2001.
Within
Caricom Trinidad and Tobago is the leading CBERA/CBPTA exporter, with methanol
as the principal product. Rapid growth has continued, with exports totalling
$445 million (US) in the first
eight months of 2001, more than in all of 2000.
Jamaica,
with its apparel exports, is the only other significant Caricom exporter. But it
is not clear whether use of the CBTPA by Jamaican exporters has stimulated the
desired revival of the garment sector.
This
pattern helps to explain the interest of Central America and the Dominican
Republic in a free trade agreement with the US and the relatively limited impact
of the CBERA on the region’s exports so far.
April
1, 2002
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Professor
Norman Girvan is Secretary General of the Association of Caribbean States.
The
views expressed are not necessarily the official views of the ACS. Feedback
can be sent to mail@acs-aec.org.
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