[Congressional Record Volume 143, Number 19 (Thursday, February 13, 1997)]
[Extensions of Remarks]
[Pages E288-E289]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




[[Page E288]]



     PROMOTING A TRADE PARTNERSHIP WITH THE CARIBBEAN BASIN REGION

                                 ______
                                 

                          HON. PHILIP M. CRANE

                              of illinois

                    in the house of representatives

                      Thursday, February 13, 1997

  Mr. CRANE. Mr. Speaker, I want to draw my colleagues' attention to 
two articles on United States/Caribbean relations that have appeared in 
the New York Times over the past few months.
  The articles document a gradual erosion of the United States/
Caribbean economic and trade partnership. Over the past few years, in 
focusing our attention on domestic issues and on other foreign policy 
matters, we have inadvertently neglected an area of the world that 
remains critically important to our own strategic and commercial 
interests.
  The Caribbean Basin is our 10th largest export market and one of the 
few regions in the world where our firms consistently post a trade 
surplus. As home to the Panama Canal and to the major access routes for 
ships entering the Gulf of Mexico, the Caribbean is a vital gateway for 
many agricultural and manufactured goods. Finally, sitting astride the 
major transit routes of illicit narcotics from South America to our 
shores, the Caribbean serves as the front line in our defense against 
drug traffickers. As we have seen too many times--even in the last 
decade--destabilization and economic loss in the Caribbean often echoes 
loudly in the United States.
  In recognition of the strategic importance of this region, I expect 
to reintroduce legislation that will aim to restore the vital United 
States/Caribbean economic partnership that was fostered through the 
Caribbean Basin initiative. That legislation will ensure that the 
United States/Caribbean economic relationship is not inadvertently 
diminished by the relationship we are now fostering with Mexico under 
the NAFTA. Moreover, the legislation will provide a roadmap to help 
prepare our Caribbean partners for the challenges in the next century, 
including membership in the planned Free Trade Agreement of the 
Americas (FTAA).
  In the meantime, I would ask my colleagues to take a few moments to 
read these articles to gain a better appreciation of the current state 
of United States/Caribbean relations and a more thorough understanding 
of a substantial problem that the United States must address.

                [From the New York Times, Jan. 30, 1997]

        Backlash From Nafta Batters Economies of the Carribbean

                           (By Larry Rohter)

       Kingston, Jamaica.--Three years after the United States, 
     Canada and Mexico agreed to become a single market as part of 
     the North American Free Trade Agreement, their exports to 
     each other are booming. But here in the Carribbean, the 
     economies of America's much smaller neighbors are reeling 
     from the impact of that success and finding it nearly 
     impossible to compete.
       From the apparel plants of Jamaica to the sugar-cane fields 
     of Trinidad, Nafta has already resulted in the loss of jobs, 
     markets and income for the vulnerable island nations of the 
     region. The capital and investment projects that are vitally 
     needed for future growth, officials say, are increasingly 
     flowing out of the Caribbean Basin and into Mexico.
       ``The stark reality is that Mexico can now export its 
     products to the United states free of duty, which makes it 
     more profitable for producers to operate from there,'' 
     Seymour Mullings, Jamaica's Minister of Foreign Affairs and 
     Foreign Trade, said in an interview here. ``Putting it very 
     simply, if that is not stemmed, it could do untold damage to 
     our manufacturing sector and economy as a whole.''
       Nafta's devastating effect on the Caribbean was widely 
     forecast before the treaty's passage in 1993 and Washington 
     suggested it would cushion the blow by extending similar 
     trade preferences to the island nations.
       However, the Clinton Administration's proposals to give the 
     Caribbean ``Nafta parity'' have twice foundered in Congress 
     in election years and now face an uncertain future in a new 
     Congress that has decidedly mixed feelings about the benefits 
     of free-trade agreements.
       The Caribbean now exports more than $12.5 billion worth of 
     goods to the United States annually, and a recent study by 
     the World Bank estimates that more than one-third of that 
     total could be shifted to Mexico if the existing trade rules 
     remain in effect.
       The region's once-flourishing apparel sector has been hard 
     hit, officials say. In the last two years, more than 150 
     apparel plants closed in the Caribbean and 123,000 jobs have 
     been lost ``as a direct result of trade and investment 
     diversion to Mexico,'' according to the Caribbean Textile and 
     Apparel Institute, which is located here.
       Textile manufacturing had been one of the Caribbean's few 
     economic bright spots. Between 1980 and 1995, Jamaica's 
     garment exports, primarily underwear and hosiery, rose from 
     less than $10 million a year to nearly $600 million annually, 
     an average annual growth rate of 28 percent.
       Since Nafta took effect in 1994, Mexican textile exports 
     have grown at a rate three times those of the Caribbean as a 
     whole. In 1996, the Caribbean Textile and Apparel Institute 
     estimates, Jamaica's garment exports fell by 7 percent, with 
     7,000 jobs eliminated.
       Simnilar or even larger decreases were recorded in Guyana, 
     Belize and tiny St. Lucia.
       More than 600 people, about 95 percent of them women, felt 
     the effects of Nafta when the Youngone Garment factory on 
     Marcus Garvey Drive here closed just before Christmas. The 
     plant had been making T-shirts for export to the United 
     States. But a Mexican factory took the business away with a 
     lower bid, prompting the Korean company to shut down 
     operations in Jamaica and send its employees home. The 
     company then shipped its equipment off to Bangladesh.
       ``I lost my job back in '95 and haven't been able to find 
     another one since,'' said Beryl Davidson, 26, a former 
     textile worker and single mother of three small children. ``I 
     couldn't pay my rent, and I couldn't feed my kids, so I've 
     had to move back in with my parents to survive.''
       ``But my cousin in Brooklyn tells me there's plenty of work 
     there, so maybe I will join her,'' she said.
       Since Nafta went in effect, the creation of new jobs in 
     this nation of 2.3 million people has stopped altogether and 
     overall unemployment has risen to 16 percent from 9.5 
     percent, according to the Statistical Institute of Jamaica. 
     Among women working in the apparel sector, the unemployment 
     rate is now more than 33 percent.
       Worse yet, the loss of jobs and American support occurs as 
     the pro-American Government here, with an election due 
     sometime in the next year, is completing an economic 
     retrenchment that had been strongly urged by Washington. Over 
     the past decade, Jamaica has sold off state companies, 
     reduced the budget deficit and increased foreign reserves, 
     but at a high social cost.
       ``We have no safety net here, no welfare, no Medicare,'' 
     said Anthony Gomes, director of a large trading company. ``So 
     when people go to the street, it has a serious ripple effect. 
     The way things are going, jobs are very difficult to get, and 
     that is not helping our crime rate.
       American officials, however, argue that Jamaica and other 
     Caribbean nations are blaming Nafta for deeper-rooted 
     economic difficulties that will remain even if trade rules 
     are eventually eased. In the case of Jamaica, they maintain, 
     those include a revaluation of the currency that increased 
     its value by 12.5 percent last year, making the country's 
     products more expensive, and a host of regulatory obstacles.
       ``The main problem here is government bureaucracy,'' one 
     official said. ``It is darn near impossible to collect the 
     licenses and approvals you need to get a business off the 
     ground.''
       Ironically, Jamaica's initial export surge was the result 
     of another American program, the Caribbean Basin Initiative, 
     which the Reagan Administration put in place 15 years ago. A 
     package of aid, trade and investment incentives aimed at the 
     private sector, the program was intended to introduce the 
     Caribbean to what Mr. Reagan called ``the magic of the 
     marketplace,'' and had Jamaica as its centerpiece.
       But that arrangement has also benefited the United States. 
     American exports to the region rose 160 percent in the decade 
     ending in 1995, to more than $15 billion a year. The 
     Caribbean is the only part of the world where Washington 
     recorded a favorable balance of trade every year during that 
     time.
       The Caribbean Basin Initiative still exists, but places 
     either duties or quotas on those products in which Caribbean 
     nations enjoy a competitive advantage, such as sugar, 
     textiles and footwear.
       ``All we are asking is to be put on a level playing field 
     with Mexico,'' said Paul Robertson, this country's Minister 
     of Industry, Investment and Commerce. ``We are not seeking a 
     handout, but only the opportunity not to be prevented from 
     taking full advantage of the North American market.''
                                  ____


                [From the New York Times, Oct. 24, 1996]

      Caribbean Nations Find Little Profit in Aiding U.S. Drug War

                           (By Larry Rohter)

       Bridgetown, Barbados.--Hoping for American gratitude and 
     assistance, the English-speaking countries of the eastern 
     Caribbean have in recent years devoted larger portions of 
     their meager budgets to fighting drug trafficking. But now, 
     to the dismay of many in the region, the United States is 
     responding with a policy of economic retrenchment.
       Legislation to give Caribbean countries the same free-trade 
     benefits as Mexico and Canada has been shelved in Congress, 
     and a little-noticed provision of the minimum-wage bill that 
     President Clinton signed in August eliminates Federal tax 
     incentives to encourage low-interest loans to the region. 
     Also, the two sides are in a bitter dispute over export 
     quotas for bananas, the back-bone of most economies in the 
     area.
       ``What is the message being sent?'' Keith Mitchell, the 
     Prime Minister of Grenada, asked. ``It is that our friends 
     are abandoning us, that the rug is being pulled from under 
     us, that we are being told we must sink or float on our 
     own.''
       The scaling back of Washington's economic commitment comes 
     with the region's re-emergence as a favorite transit zone for 
     cocaine and heroin traffickers. Caribbean countries are 
     largely cooperating with antidrug efforts, United States 
     officials say, and

[[Page E289]]

     their leaders are clearly rankled by what they see as a lack 
     of American economic support.
       ``We've surrendered our sovereignty,'' James Mitchell, 
     Prime Minister of St. Vincent and the Grenadines, said at a 
     recent meeting of the Caribbean Americas Business Network in 
     Miami. ``We've given the U.S. all the cooperation in the 
     world. What else do they want?''
       American officials acknowledge some of the complaints, but 
     they also say that eastern Caribbean nations have passed up 
     opportunities through membership in regional lending 
     institutions to ease their economic dependence on 
     Washington.
       For their part, leaders of the 14 nations making up the 
     Caribbean Community, a regional economic association known as 
     Caricom, have been urging the Clinton Administration to grant 
     them trade parity with Mexico and Canada, the United States' 
     partners in the North American Free Trade Agreement.
       But Congress adjourned this month without taking action on 
     the measure, which was intended to supplement the largely 
     moribund Caribbean Basin Initiative created by the Reagan 
     Administration.
       In a report last month, the Council on Hemispheric Affairs, 
     a Washington-based research group, attributed the delay in 
     action to ``partisan and special interest opposition'' in 
     Congress. The council said American legislators were wary of 
     offending fruit lobbyists.
       Caricom leaders say they need access to free trade to help 
     compensate for a drop of nearly 90 percent in American 
     economic assistance to the region over the last decade, from 
     $225 million to $26 million. In August, a provision in the 
     new minimum-wage law ended tax breaks for American 
     corporations doing business in Puerto Rico.
       At the same time, Washington is challenging the traditional 
     system of trade preferences that allows many Caricom nations 
     to export their products to European nations either duty free 
     or at vastly reduced tariff rates. One such proposal, which 
     Caribbean leaders say could cripple the region's banana 
     industry, is now before the World Trade Organization.
       ``It seems shortsighted and baffling,'' said Frank Alleyne 
     of the Institute for Social and Economic Research at the 
     University of the West Indies. ``What about the cost in 
     social unrest? If they succeed, drug cultivation will 
     increase, mark my word. Farmers must find another crop, and 
     that crop is marijuana.''

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