[Congressional Record Volume 141, Number 204 (Tuesday, December 19, 1995)]
[Senate]
[Pages S18921-S18922]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         SENATE RESOLUTION 200--RELATIVE TO TRINIDAD AND TOBAGO

  Mr. LUGAR submitted the following resolution; which was referred to 
the Committee on Finance:

                              S. Res. 200

       Whereas the Republic of Trinidad and Tobago meets the 
     requirements for accession to the North American Free Trade 
     Agreement (hereafter referred to as the ``NAFTA'');
       Whereas the Republic of Trinidad and Tobago has 
     successfully implemented programs to liberalize the country's 
     economy and trade regime, particularly by lowering tariffs, 
     divesting its holdings in the production sector, and 
     promoting private sector development;
       Whereas the Republic of Trinidad and Tobago has entered 
     into a Bilateral Investment Treaty and an Intellectual 
     Property Rights Agreement with the United States;
       Whereas the Republic of Trinidad and Tobago has expressed 
     an active interest in entering into negotiations for 
     accession to the NAFTA;
       Whereas the Republic of Trinidad and Tobago seeks to ensure 
     that the markets of North America and the markets of Trinidad 
     and Tobago are open to each others; products and services on 
     a reciprocal basis;
       Whereas major United States-based multinational companies 
     and successfully operating in the Republic of Trinidad and 
     Tobago and access to the NAFTA would afford these companies 
     enhanced investment security as well as a more comprehensive 
     legal framework for their operations in Trinidad and Tobago;
       Whereas the Republic of Trinidad and Tobago is a small but 
     significant non-OPEC producer of oil and gas and has 
     continually and significantly contributed to the energy 
     security of the Western Hemisphere;
       Whereas several United States energy companies have 
     substantial investments in the petrochemical and hydrocarbon 
     sectors of the economy of Trinidad and Tobago; and
       Whereas many members of the Congress and the Administration 
     have applauded the fiscal discipline which has led to the 
     continued liberalization of the economy of the Republic of 
     Trinidad and Tobago and have expressed interest in including 
     the Republic of Trinidad and Tobago in the NAFTA: Now, 
     therefore, be it.
       Resolved, That it is the sense of the Senate that the 
     Republic of Trinidad and Tobago should be deemed ready, 
     willing, and able to undertake all of the general obligations 
     imposed by the North American Free Trade Agreement and that 
     the President should consider favorably the request of the 
     Republic of Trinidad and Tobago to commence negotiations for 
     accession to the NAFTA as soon as comparable negotiations 
     with the Government of Chile are concluded.

  Mr. LUGAR. Mr. President, I submit a sense-of-the-Senate resolution 
urging Trinidad and Tobago's accession to the North American Free Trade 
Agreement [NAFTA]. Trinidad and Tobago's admission to the NAFTA between 
the United States, Mexico and Canada is essential to ensuring continued 
growth and prosperity. Participation in the NAFTA and the contemplated 
Free Trade Agreement of the Americas will promote sustained economic 
development and increased commercial activity between Trinidad and 
Tobago and its hemisphere neighbors. Indeed, free trade in the western 
hemisphere would be in the common economic interest because it would be 
wealth-maximizing for all members.
  Trinidad and Tobago is well prepared to undertake the obligations of 
NAFTA. As one of the most advanced economies in the Caribbean, the 
island nation has successfully implemented economic reforms that have 
deregulated industry, lowered tariff barriers, and promoted investment. 
Its achievements are in keeping with criteria for NAFTA eligibility 
that the Administration has laid out in negotiations with Chile.
  Trinidad and Tobago has enjoyed good relations with the United States 
through the years. The two countries share a fundamental commitment to 
civil liberties and human rights. In recent years cooperation has 
included working to curtail illegal drug shipments and money laundering 
in the hemisphere and sharing information relating to customs 
modernization and reorganization. Trinidad and Tobago and the United 
States have long enjoyed cordial diplomatic relations as well as strong 
economic ties arising from the investment of United States companies in 
the energy sector of Trinidad and Tobago. Both countries have dedicated 
significant resources to the full restoration of democracy and free 
market development in nearby Haiti and Cuba.
  The end of the cold war has altered the nature of the U.S. interest 
in the Caribbean. Apart from geographic proximity, the flow of people, 
commodities, culture, and a shared interest in combatting drug 
trafficking, protection of economic interests and fragile ecosystems 
have bound the hemispheric together as never before. As with United 
States-Mexico relations, United States-Caribbean relations dramatically 
demonstrate the inseparability of foreign and domestic issues.
  The opportunities for growth and investment for U.S. companies are 
increasing. The Trinidad and Tobago oil and gas industry is growing 
steadily, spurring growth in an increasingly diversified economy. This 
presents excellent opportunities for United States companies interested 
in conducting operations in the Caribbean as a nexus for trade with 
South America and the Pacific Rim through the Panama canal.
  Sustainable growth can be most readily achieved in Trinidad and 
Tobago by its integration into the regional trade framework. Trade 
between Caribbean countries accounts for a mere 4 percent of their 
exports, and investment between the countries of the region is 
negligible. Trinidad and Tobago is an economic leader within CARICOM, 
provides most of the current investment and is major creditor in the 
region. The economies are small; domestic markets and intra-Caribbean 
markets cannot absorb production and therefore cannot foster meaningful 
trade expansion. Future economic prosperity for Trinidad and Tobago 
lies in its rapid integration into the North American market.
  Economic Reform. Over the past several years, Trinidad and Tobago has 
created a solid macroeconomic climate through a strong governmental 
commitment to private-sector-led expansion and export growth. Trinidad 
and Tobago has had an aggressive program of divestment of public 
holdings in commercial companies. Fifteen companies have been divested 
over the past 3 years, including the generation division of the 
national electric company, the national airline and the iron and steel 
company. Divestment procedures are in progress for another 13 
companies.
  Trinidad and Tobago's aggressive economic reform policy decisions, 
rigorously implemented, have yielded positive results and created 
allies out of many skeptics in the business community. Despite the 
support for high labor standards and protection of workers' rights and 
despite actual reductions in unemployment--currently about 18 percent--
the macro-economic reforms cannot by themselves reduce unemployment to 
acceptable levels.
  Trinidad and Tobago's Government accounts are now tractable. The 
fiscal deficit, which averaged 7.2 percent in 1986-88, has been reduced 
to 1.7 percent over the last 5 years. In 1994, the government closed 
the year with a small 

[[Page S18922]]
fiscal surplus and expects a similar result again in 1995.
  The balance of payments in Trinidad and Tobago has also begun to 
demonstrate a new robustness. Following 11 years of continuous deficit, 
for the past 2 years the external accounts were in surplus. A 
supportive monetary policy is in place, aimed at restraining exchange 
reserves. As a result, inflation is moderate and falling. The inflation 
rate from September 1993 to September 1994 was only 6.4 percent. The 
government floated the Trinidad dollar in 1993 and has now fully 
absorbed the devaluation occasioned by that flotation. The exchange 
rate has held remarkably firm. Consequently, the inflation rate is 
expected to fall under 5 percent this year.
  The external debt service payments have been onerous--well over a 
half a billion U.S. dollars last year. Nevertheless, the government has 
reduced the debt significantly and it now represents barely 30 percent 
of GDP--this down from 42 percent in 1992.
  Trinidad and Tobago has instituted a major structural adjustment away 
from import substitution and is vigorously pursuing a policy of export 
led growth. Almost overnight, the old tariff structure has been 
dismantled. In 1991, 40 percent of the items were removed from the 
import negative list. In 1995, the temporary surcharge imposed 
subsequent to the removal of items from the negative list, was reduced 
to zero.
  In 1994, the majority of agricultural items were removed from the 
negative list. Nevertheless, total output in this sector increased by 
almost 12 percent. Consistent with the obligations within CARICOM, the 
existing maximum tariff of 30 percent will be phased down to 20 percent 
by 1998. It is important to note, however, that a more accurate 
reflection of the openness of the trade regime is that average tariff 
rates are now less than 6 percent for imports from the United States.
  Favorable Investment Climate. The best proof of the success in 
creating a favorable investment climate is evidenced by the surge of 
direct investment. In 1995, the Government of Trinidad and Tobago 
reduced the corporate tax rate for foreign investors from 45 to 38 
percent. In 1994, investment flows from the U.S. reached almost $700 
million and for 1995, the country has commitments for $1.2 billion. 
Trinidad and Tobago will easily surpass all other countries in the 
hemisphere in attracting foreign investment.
  Trinidad and Tobago will, as a member of the NAFTA, maintain United 
States environmental, health and safety workplace standards. Trinidad 
and Tobago's Government procurement provisions guarantee United States 
firms the ability to compete for government contracts. Tariffs on most 
U.S. exports have been eliminated in the computer, oil refining 
equipment, special industrial machinery, pharmaceutical, 
telecommunications and photographic equipment and sectors. In addition, 
Trinidad and Tobago has signed both a Bilateral Investment Treaty [BIT] 
and Agreement on Intellectual Property Rights with the United States.
  Hemispheric Energy Security. Trinidad and Tobago is a major oil-
producing country. Trinidad's 10.6 trillion cubic feet of natural gas 
reserves represents a 45-year reserves life index. The economy is based 
largely on its plentiful reserves of petroleum and natural gas. As a 
result, Trinidad and Tobago has developed good relationships with 
United States oil companies involved in oil and gas development and 
extraction. The strategic geographic location of the islands has 
favored the establishment of large oil refineries and other facilities 
designed to promote energy research and to produce natural gas and 
petroleum by-products such as methanol and ammonia fertilizer.
  Trinidad and Tobago is the world's second largest exporter of 
nitrogenous ammonia fertilizer, a natural gas by-product. One-third of 
the United States 3 million tons of ammonia imports come from Trinidad 
and Tobago annually, valued at $240 million in 1994, according to U.S. 
Commerce Department figures. This is equal to about 5 percent of U.S. 
ammonia fertilizer usage annually.
  The United States currently imports 80 MBD of crude oil and petroleum 
products from Trinidad and Tobago valued at over $500 million a year in 
1994, or 1 percent of the Nation's oil imports.
  Cooperation on Drug Trafficking. Trinidad and Tobago has modernized 
its customs operations. It has introduced the automated system for the 
collection of customs data, which is now operational in most of the 
country. Officials expect that this critical element in the 
administrative reform of the Customs department will be extended to 
Tobago and to the industrial estate at Point Lisas during 1995.
  Trinidad and Tobago is not a major producer, consumer or trafficker 
of illegal drugs, precursor chemicals, or money laundering. The 
Government and the people of Trinidad and Tobago recognize that illegal 
drugs are disruptive to public health, safety, and the social fabric. 
Business people contend that money laundering undermines legitimate 
economic activities. The effects of illegal drug related activity are 
likely to increase, particularly if economies suffer and drug related 
work is seen as one of the few income producing opportunities 
available.
  Passage of the Dangerous Drugs Amendment in November 1994 brought the 
laws of Trinidad and Tobago into conformity with the requirements of 
the 1988 United Nations Convention. The new law prohibits activities 
regarding the manufacture of precursor chemicals, money laundering 
activities, assets forfeiture, and removal of impediments to effective 
prosecution.
  Since 1992, local Trinidad and Tobago banks have voluntarily reported 
large deposits to the police department's Office of Strategic Services 
[OSS], a special unit built to diminish the availability of banking 
services to traffickers. OSS collects intelligence on financial 
transactions and in 1994 published a money laundering information 
pamphlet for local financial institutions.
  Conclusion. Mr. President, the Republic of Trinidad and Tobago 
deserves consideration as the next country to accede to NAFTA, 
following Chile. It has successfully undertaken economic reforms that 
have attracted foreign investment, reduced debt, and expanded the 
private sector. In order to further expand its economy, Trinidad and 
Tobago needs greater access to the larger markets of the hemisphere. 
The reality is that Caribbean economies are small. Domestic markets and 
intra-Caribbean markets alone, cannot absorb production and therefore 
cannot foster meaningful trade expansion. Future economic prosperity 
for Trinidad and Tobago--as well as for other eligible countries--lies 
in its rapid integration into the North American market. In submitting 
this resolution, I hope Trinidad and Tobago can soon be considered for 
membership in the NAFTA.

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