Publication Number: 3954

Report Title: The Impact of the Caribbean Basin Economic Recovery Act: 18th Report, 2005-2006

Author's name(s): Walker Pollard, James Stamps, Justino de la Cruz, William Greene, Laura Rodriguez, Jeffrey Clark

Date Published: September 2007

Report Description/Introductory Text: This report is the eighteenth in a series of reports prepared by the U.S. International Trade Commission pursuant to section 215 of the Caribbean Basin Economic Recovery Act (CBERA) (19 U.S.C. 2704) on the economic impact of the CBERA program on U.S. industries and consumers and on the economy of the beneficiary countries. The current study fulfills the Commission’s reporting requirement under the statute for calendar year 2006.

The overall effect of CBERA-exclusive imports (imports that could receive tariff preferences only under CBERA provisions) on the U.S. economy and consumers continued to be negligible in 2006. Based on the upper estimates and industry analysis, the Commission identified one U.S. industry—methanol—that would face potentially significant negative effects from CBERA-exclusive imports. U.S. industries supplying inputs to CBERA country apparel producers benefit from the CBTPA enhancements. U.S. imports of the 20 leading CBERA-exclusive items all produced net welfare gains for U.S. consumers in 2006 except for imports under one sugar subheading from the Dominican Republic.

The probable future effect of CBERA on the United States, as estimated by an examination of export-oriented investment in the beneficiary countries, is also expected to be minimal for most products, as CBERA countries generally are small suppliers relative to the U.S. market. Some U.S. sources have expressed concerns about increasing ethanol imports from CBERA countries, although increasing ethanol imports under CBERA have been accompanied by higher U.S. domestic ethanol production, making the effect on U.S. producers and consumers uncertain.

The impact of the CBERA program on beneficiary countries is small, but positive. CBERA has played an important role in Haiti’s ability to develop and diversify its export sector, especially for offshore apparel assembly operations. For Jamaica, CBERA preferences provide an important incentive for exports of ethanol to the U.S. market. Excluding ethanol, however, CBERA has become a less important factor with respect to Jamaica’s exports to the United States. For most CBERA countries, recent investment activity has been increasingly focused on export-oriented services, such as tourism, financial, and telecommunications services, rather than on the production of CBERA-eligible exports.



Topics Covered: USITC economic assessment, USITC economic effect, Caribbean, trade preference, CBERA, CBTPA, Caribbean Basin Initiative, CBI

Countries: United States, Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Virgin Islands (British), Costa Rica, Dominica, Dominican Republic, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Montserrat, Netherlands Antilles, Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadi, Trinidad and Tobago

HTS Numbers: 0804.30, 2207, 2709, 2710, 2905.11.20, 61, 62

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