The overall effect of imports under the Caribbean Basin Economic Recovery Act (CBERA) on the U.S. economy and consumers continued to be negligible in 2003-2004, reports the U.S. International Trade Commission (ITC) in its report The Impact of the Caribbean Basin Economic Recovery Act, Seventeenth Report, 2003-2004.

The ITC, an independent, nonpartisan, factfinding federal agency, recently issued its seventeenth report in a series monitoring imports under CBERA. The CBERA program affords preferential tariff treatment to most products of 24 designated Caribbean, Central American, and South American countries.

The ITC report covers the impact of the CBERA on the United States, with particular emphasis on calendar year 2004. The CBERA requires the Commission to prepare a biennial report assessing both the actual and the probable future effects of the CBERA on the U.S. economy generally, on U.S. industries, and on U.S. consumers. The CBERA was amended in 2000 by the Caribbean Basin Trade Partnership Act (CBTPA), which broadened the scope of products eligible for the tariff preferences, and in 2002 by the Trade Act of 2002, which clarified and modified the CBTPA. The CBTPA also instructed the Commission to report on the impact of the overall preference program on the beneficiary countries themselves. Following are highlights of the report.

• The overall effect of CBERA-exclusive imports (imports that could receive tariff preferences only under CBERA provisions) on the U.S. economy and on U.S. industries and consumers continued to be negligible in 2004. In 2004, the value of all U.S. imports under CBERA preferences was less than 0.10 percent of U.S. gross domestic product. The value of total U.S. imports from CBERA countries was 1.9 percent of total U.S. imports.

• Total U.S. imports from CBERA beneficiary countries amounted to $27.6 billion in 2004, of which $10.9 billion entered under CBERA preferences. The value of U.S. imports under CBERA preferences increased 4.9 percent in 2004. In contrast, total imports from CBERA countries (all goods, regardless of duty treatment) increased 12.5 percent in 2004, while total U.S. imports from all countries increased 16.8 percent during the same period. Four countries the Dominican Republic, Honduras, Trinidad and Tobago, and Guatemala accounted for 71 percent of all U.S. imports entering under CBERA preferences in 2004.

• Of the 20 leading import items entered under CBERA in 2004, 12 were apparel items. The largest apparel imports under CBERA included knitted cotton t-shirts, knitted cotton tops, men's or boys' woven cotton trousers and shorts, men's or boys' knitted cotton underpants, brassieres, men's or boys' woven manmade fiber trousers and shorts, women's or girls' woven cotton trousers and shorts, and knitted manmade fiber tops. Other leading import items under CBERA included crude oil, methanol, higher priced cigars, fuel oil, precious metal jewelry, raw cane sugar, and naphthas.

• Based on recent foreign direct investment (FDI) trends, the probable future effect of CBERA on the United States is expected to be minimal in most economic sectors. The Commission identified new FDI during 2004 to increase production and export capacity in the oil, gas, and petrochemicals sectors of Trinidad and Tobago, and the fuel-grade ethanol sector of Jamaica. Despite the pressure of increasing international competition from lower- cost producers, some CBERA countries reported new FDI in the textile and apparel sector during 2004.

• President Bush signed implementing legislation for the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) on August 2, 2005. When the agreement enters into force, the Dominican Republic and five Central American countries Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua will no longer be designated beneficiary countries under CBERA and CBTPA. In 2004, the CAFTA-DR countries supplied 79 percent of U.S. imports under CBERA. In the same year, Trinidad and Tobago, Haiti, and Jamaica supplied 90 percent of U.S. imports under CBERA from non-CAFTA-DR countries.

The Impact of the Caribbean Basin Economic Recovery Act, Seventeenth Report, 2003-2004 (Inv. No. 332-227, USITC Publication No. 3804, September 2005) will be available on the ITC's Internet server at www.usitc.gov. The publication will also be available at federal depository libraries in the United States. A CD-ROM or printed copy of the report may be requested by calling 202-205-1809 or by writing to the Office of the Secretary, U.S. International Trade Commission, 500 E Street, SW, Washington, DC 20436. Requests may also be faxed to 202-205-2104.

ITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the Senate Committee on Finance, or the House Committee on Ways and Means. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the ITC submits its findings and analyses to the requestor. General factfinding investigation reports are subsequently released to the public, unless they are classified by the requestor for national security reasons.