CBERA Continues To Have a Negligible Effect on U.S. Imports, Producers, and Consumers and a Small but Positive Impact on Beneficiary Countries; Imports Decreased in 2020, Says USITC

The overall effect of the Caribbean Basin Economic Recovery Act (CBERA) on the U.S. economy generally, and U.S. imports, industries, and consumers continues to be negligible, while the effect on beneficiary countries is small but positive, reports the U.S. International Trade Commission (USITC) in its publication Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers and on Beneficiary Countries, Twenty-fifth Report, 2019-20.

The USITC, an independent, nonpartisan, factfinding federal agency, recently issued its 25th biennial report monitoring U.S. imports under CBERA. The CBERA program, operative since January 1, 1984, affords preferential tariff treatment to most products of the 17 designated Caribbean countries that received CBERA benefits during the period covered in the report.

The latest USITC report covers the impact of CBERA, as modified by the Caribbean Basin Trade Partnership Act of 2000 (CBTPA), and the HOPE and HELP Acts, on the United States, with particular emphasis on calendar year 2020. CBERA requires the USITC 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. imports, industries, and on U.S. consumers. The report also covers the impact of the preference program on the beneficiary countries. The following are highlights from the latest report.

• The overall effect of CBERA imports on the U.S. economy generally and on U.S. imports, industries, and consumers continued to be negligible in 2020. For U.S. industries in particular, the overall effect of the program on domestic production, employment, and operating profits was also negligible. The USITC identified two U.S. industries -- methanol and T-shirts -- that most likely have faced small negative effects due to competition from CBERA imports.


• U.S. imports receiving preferential treatment under CBERA totaled $1.7 billion in 2020, a decline of 4.8 percent from $1.8 billion in 2019.
  • The value of U.S. imports under CBERA increased between 2016 and 2018 but decreased in both 2019 and 2020.
  
  
  • The change in 2020 was driven primarily by decreasing imports of apparel, which accounted for 43.1 percent of total U.S. imports under CBERA. Apparel, supplied mainly by Haiti, decreased by 25.6 percent from $978 million in 2019 to $728 million in 2020, with cotton T-shirts comprising 41.7 percent of those imports.
  
   
• Petroleum-related products, accounting for 40.8 percent of imports under CBERA, increased by 25.2 percent in 2020. Petroleum products were supplied by both Trinidad and Tobago and Guyana.


• Special CBERA provisions for Haiti have had a strong, positive effect on export earnings and job creation in Haiti's apparel sector. Apparel assembly is Haiti's largest manufacturing activity and the country's largest source of manufacturing jobs with a labor force composed mostly of women. CBERA -- enhanced by CBTPA and the HOPE and HELP Acts -- has been an important factor in promoting apparel production in Haiti and apparel exports to the U.S. market.


• 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.


• Investment for the near-term production and export of CBERA-eligible products is expected to have negligible impact on U.S. competitive industries as well as on the U.S. economy.


• Exporting CBERA-eligible goods is a challenge for many CBERA beneficiaries because of supply-side constraints, including inadequate infrastructure and an increasing focus on the export of services. However, under CBERA, exports to the United States of some countries, such as Trinidad and Tobago, have become more diversified, i.e., they began exporting a greater number of products and became less reliant on exports of just a few products. At the same time, there are wide differences in the patterns of diversification among CBERA beneficiaries.


• The future effect of CBERA on the U.S. economy and domestic industries will likely remain small. CBERA countries generally are, and are likely to remain in the near term, small suppliers to the U.S. market. Most of the effect of CBERA on the U.S. economy occurred shortly after the program’s implementation in 1984, as well as after implementation of each major enhancement to CBERA.

Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers and on Beneficiary Countries, Twenty-fifth Report, 2019-20 (Inv. No. 332-227, USITC Publication 5231, September 2021) is available at https://usitc.gov/sites/default/files/publications/332/pub5231.pdf.