The Caribbean Basin Economic Recovery Act, a program to boost trade from the Caribbean to the United States yielded “small but positive” effects in 2016, according to a recent report by the U.S. International Trade Commission.
A program to boost trade from the Caribbean to the United States yielded “small but positive” effects in 2016, according to a recent report by the U.S. International Trade Commission (ITC).
The Caribbean Basin Economic Recovery Act (CBERA) program, which has been in effect since Jan. 1, 1984, grants preferential tariff treatment to most products from 17 designated Caribbean countries. CBERA was enhanced by the 2000 Caribbean Basin Trade Partnership Act (CBTPA), and the HOPE and HELP Acts.
The ITC found that U.S. imports receiving preferential treatment under CBERA totaled $875.5 million in 2016, a decline of 43.2 percent from $1.5 billion in 2015. “The decline was driven primarily by declining imports of energy products, specifically crude petroleum and methanol, from Trinidad and Tobago,” the commission explained in a statement related to its Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers and on Beneficiary Countries, Twenty-third Report, 2015-16.
Energy products accounted for 39.3 percent of total imports under CBERA in 2016, with Trinidad and Tobago supplying 99.9 percent of those U.S. imports.
U.S. agricultural imports under CBERA, as well as mining and manufacturing products, fell to 14.4 percent and 11.4 percent, respectively, for the program’s total 2016 imports. Textiles and apparel, supplied mainly by Haiti (not including imports under HOPE/HELP), accounted for 34.9 percent of CBERA imports last year.
“CBERA has encouraged several beneficiary countries to develop niche exports to the United States, including polystyrene from the Bahamas, fruits and fruit juices from Belize, and electronic products from St. Kitts and Nevis,” the ITC noted.
“Exporting CBERA-eligible goods is a challenge for many CBERA beneficiaries because of supply-side constraints, including inadequate infrastructure and an increasing focus on the export of services,” the commission added. “However, special CBERA provisions for Haiti have had a strong, positive effect on export earnings and job creation in Haiti’s apparel sector.”
However, after eight years, the ITC found that the Earned Import Allowance Program (EIAP) has failed to provide enough incentives to boost apparel exports from the Dominican Republic to the U.S. market, as intended.
EIAP allows Dominican apparel manufacturers who use U.S. fabric to produce certain apparel to earn a credit that can be then used to ship eligible apparel made with non-U.S.-produced fabric into the United States duty free.
Of the 12 registered firms, only 5 firms are currently using the program, the same number reported in the sixth and seventh annual reviews.
The ITC highlighted in its eighth annual review of the trade program that U.S. imports of woven cotton bottoms from the Dominican Republic in 2016 plummeted 57 percent by value to $3.5 million from $8.2 million in 2015 and dropped 61 percent by quantity to 745,000 square meters from 1.9 million square meters in 2015.
“U.S. government sources and a user of the program in the Dominican Republic attributed the decline in U.S. imports under the EIAP to increased imports from Haiti and increased competition from other Western Hemisphere suppliers. Haiti offers lower labor costs and trade preferences under the HOPE/HELP programs that provide more sourcing flexibility and coverage for a wider range of products than the EIAP as well as a tariff preference level (TPL) for woven apparel from Haiti that allows the use of third-country fabric up to a specified level,” the ITC said.
To give EIAP a boost, the commission continues to recommend lowering the 2-for-1 ration of U.S. to foreign fabric to a 1-for-1 ratio, expanding the program to allow other fabric types and apparel items, and changing the requirement that dyeing and finishing eligible fabrics occur in the United States.
ITC: U.S. trade programs for Caribbean have negligible impact
