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Caribbean Basin Economic Recovery Act: Impact on U.S

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Caribbean Basin Economic Recovery Act: Impact on U.S United States International Trade Commission Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers and on Beneficiary Countries 22nd Report 2013-14 September 2015 Publication Number: 4567 Investigation Number: 332-227 Commissioners Meredith M. Broadbent, Chairman Dean A. Pinkert, Vice Chairman Irving A. Williamson David S. Johanson F. Scott Kieff Rhonda K. Schmidtlein Catherine B. DeFilippo Director, Office of Operations William Powers Acting Director, Office of Economics Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers and on Beneficiary Countries 22nd Report 2013-14 September 2015 Publication Number: 4567 Investigation Number: 332-227 This report was prepared principally by: Project Leader Justino De La Cruz, Office of Economics Deputy Project Leader Wen Jin Yuan, Office of Economics Office of Economics Justino De La Cruz, William Greene, Darren Sheets, Edward Wilson, and Wen Jin Yuan Office of Industries Lesley Ahmed, Brian Allen, and Laura Rodriguez Office of Tariff Affairs and Trade Agreements Naomi Freeman and Jan Summers Office of Analysis and Research Services Robert Bauchspies, Russell Duncan, and Peg Hausman Content Reviewer Christopher Robinson Office of the General Counsel William W. Gearhart Special Assistance Phyllis Boon, Shala Ewing, Louise Gillen and Veronica Robinson Under the direction of Arona Butcher, Division Chief Country and Regional Analysis Division Caribbean Basin Economic Recovery Act: 22nd Report Preface Section 215 of the Caribbean Basin Economic Recovery Act (CBERA or the Act), as amended (19 U.S.C. 2704), requires the U.S. International Trade Commission (Commission) to provide biennial reports in odd-numbered years to the Congress and the President on the economic impact of the Act on U.S. industries and consumers and on the economy of beneficiary Caribbean Basin countries. This report constitutes the Commission’s report for 2015. CBERA was originally enacted on August 5, 1983 (Public Law 98-67, 97 Stat. 384, 19 U.S.C. 2701 et seq.). It authorized the President to proclaim duty-free treatment or other preferential treatment for eligible articles from designated beneficiary countries. The Act has been amended several times, including by the United States Caribbean Trade Partnership Act (CBTPA) in 2000, the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 (HOPE I), the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2008 (HOPE II), and the Haiti Economic Lift Program Act of 2010 (HELP Act). Among other things, the CBTPA amended section 215 of CBERA to change the frequency of Commission reports from annual reports to the current biennial reports in odd-numbered years. This is the Commission’s 22nd report under CBERA and the 8th report since the 2000 amendments. While it encompasses the period 2013–14, it focuses mainly on developments in calendar year 2014. The report covers the 17 CBERA beneficiary countries of Antigua and Barbuda, Aruba, The Bahamas, Barbados, Belize, Curaçao, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago, and the British Virgin Islands. This report covers fewer Caribbean Basin countries than earlier reports, as a number of former CBERA countries have concluded free trade agreements with the United States and are no longer eligible for the CBERA program. The most recent, Panama, ceased to be a CBERA beneficiary country after the entry into force of the U.S.-Panama Trade Promotion Agreement on October 31, 2012. As in previous reports, trade data for countries entering into free trade agreements during the reporting period are included through the last month when the countries were eligible for the CBERA program. The information provided in this report is for the purpose of this report only. Nothing in it should be construed as indicating what the Commission’s findings or determination would be in an investigation involving the same or similar subject matter conducted under another statutory authority. U.S. International Trade Commission | 1 Caribbean Basin Economic Recovery Act: 22nd Report Abstract This report is the 22nd in a series of reports prepared by the U.S. International Trade Commission (Commission) under section 215 of the Caribbean Basin Economic Recovery Act (CBERA) of 1983 (19 U.S.C. 2704). This report covers the period 2013–14. Section 215 requires the Commission to submit to Congress and the President biennial reports on the economic impact of CBERA on U.S. industries and consumers, and on the economy of the beneficiary countries. As part of its report the Commission is required, first, to assess CBERA’s actual effect, during the period covered by the report, on the U.S. economy generally, as well as on specific domestic industries which produce articles that are like or directly competitive with articles being imported into the United States from beneficiary countries. Second, the Commission is required to assess the probable future effect that CBERA will have on the U.S. economy generally, as well as on the relevant domestic industries, before the provisions of CBERA terminate. CBERA authorizes the President to grant preferential treatment (duty-free or reduced-duty treatment) to most products that may be imported into the United States from CBERA beneficiary countries (which numbered 17 during most of the period covered). Some of these products can receive tariff preferences only under CBERA provisions; these goods are referred to as CBERA-exclusive imports. The Commission found that the overall effect of CBERA- exclusive imports on the U.S. economy generally and on U.S. industries and consumers continued to be negligible in 2014. U.S. industries supplying garment pieces, yarn, and fabric to CBERA apparel producers benefit from enhancements to CBERA, such as the Caribbean Basin Trade Partnership Act. U.S. imports of the leading CBERA-exclusive items all produced small net welfare gains for U.S. consumers in 2014. On the other hand, the Commission identified one U.S. industry—methanol—that might face significant negative effects due to competition from CBERA-exclusive imports. The probable future effect of CBERA on the United States should also be minimal for most products, as CBERA countries generally are small suppliers relative to the U.S. market. This assessment is based on an examination of overall trends in investment, especially export- oriented investment in these countries. Both investment and production in most CBERA countries have yet to recover significantly from the 2008–09 global economic downturn. Moreover, investment in CBERA countries increasingly targets export-oriented services, such as tourism, finance, and telecommunications, rather than the manufacturing of CBERA-eligible U.S. International Trade Commission | 3 Abstract export goods. Investment rose significantly in Haiti’s export-oriented apparel sector, but Haiti is—and will likely remain—a small U.S. apparel supplier compared to globally competitive producers in Central America and Asia. 4 | www.usitc.gov Caribbean Basin Economic Recovery Act: 22nd Report Table of Contents Preface ............................................................................................................... 1 Abstract .............................................................................................................. 3 Abbreviations and Acronyms ............................................................................ 11 Definitions of Frequently Used Terms ............................................................... 13 Executive Summary .......................................................................................... 15 Chapter 1 Introduction ...................................................................................... 23 Organization of the Report ....................................................................................................... 24 Summary of the CBERA Program .............................................................................................. 24 Beneficiaries .......................................................................................................................... 26 Trade Benefits under CBERA ................................................................................................. 27 Qualifying Rules .................................................................................................................... 29 CBERA and GSP ..................................................................................................................... 30 Caribbean Basin Trade Partnership Act ................................................................................ 31 HOPE and HELP Acts.............................................................................................................. 32 Analytical Approach .................................................................................................................. 37 Data Sources ............................................................................................................................. 39 Chapter 2 U.S. Imports from CBERA Countries .................................................. 41 Key Findings .............................................................................................................................
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