CBERA Continues to Have a Small but Positive Effect on Beneficiary Countries, Says USITC

According to a report released Monday by the United States International Trade Commission, the overall effect of the Caribbean Basin Economic Recovery Act ("CBERA") on the U.S. economy continues to be negligible while the effect on U.S. consumers and beneficiary countries is small but positive, reports the U.S. International Trade Commission ("USITC").

The USITC, an independent, nonpartisan, factfinding federal agency, recently issued its 21st in a series of biennial reports monitoring imports under CBERA. The CBERA program, operative since January 1, 1984, affords preferential tariff treatment to most products of the 16 designated Caribbean and South American countries that received CBERA benefits during the period covered in the report. A seventeenth country, Panama, was a CBERA member until October of 2012 when the US-Panama FTA went into effect.

The USITC report covers the impact of CBERA, as modified, on the United States, with particular emphasis on calendar year 2012. CBERA requires the Commission to prepare a biennial report assessing both the actual and the probable future effect of CBERA on the U.S. economy generally, on U.S. industries, and on U.S. consumers. The report also covers the impact of the preference program on the beneficiary countries themselves. Following are highlights of the 2011-12 report.

Imports benefiting from CBERA rose strongly in 2011. The sharp increase in CBERA imports in 2011 can be mostly attributed to the U.S. recovery from the economic recession and its effects on the demand for imports and commodity prices, according to the report. Additionally, U.S. imports of textiles and apparel from Haiti increased sharply in 2011 as Haiti rebounded from its devastating earthquake in 2010. The decline in imports benefiting from CBERA in 2012 reflected slower growth in commodity prices and a decline in U.S. demand for energy imports, among other factors.

• The overall effect of CBERA-exclusive imports (imports that could receive tariff preferences only under CBERA provisions) on the U.S. economy generally and on U.S. industries and consumers continued to be negligible in 2012. The Commission did identify one U.S. industry-methanol-that might face significant negative effects due to competition from CBERA-exclusive imports.

• Imports under the CBERA program fell from $3.6 billion in 2011 to $3.1 billion in 2012, reflecting a decline in U.S. demand for energy imports, slower growth in commodity prices, the exit of Panama from the CBERA in October 2012 upon the entry into force of the U.S.-Panama FTA, and other factors, such as changes in the U.S. ethanol program on December 31, 2011, that ended certain preferential treatment under CBERA.

• CBERA has encouraged several beneficiary countries to develop niche exports to the United States, including polystyrene from The Bahamas, fruits and fruit juices from Belize, and electronic products from St. Kitts and Nevis.

• The Commission finds that investment for the near-term production and export of CBERA-eligible products is not likely to result in imports that would have a measurable economic impact on the U.S. economy generally and on U.S. producers. Although investment in Haiti's export-oriented apparel sector increased significantly in 2011-2012, Haiti will likely remain a small U.S. apparel supplier.

• Exporting CBERA-eligible goods is a challenge for many CBERA beneficiaries because of supply-side constraints, including inadequate infrastructure. However, special CBERA provisions for Haiti have had a strong, positive effect on export earnings and job creation in Haiti's apparel sector.

Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers and on Beneficiary Countries, Twenty-first Report, 2011-12 (Inv. No. 332-227, USITC Publication No. 4428, September 2013) is available at http://www.usitc.gov/publications/332/pub4428.pdf.