NAFTA PARITY: CERTAIN RESTRICTIONS APPLYThe Greater Caribbean This Week Norman Girvan In 2000 the US Congress finally enacted the Caribbean Basin Trade
Partnership Act (CBTPA), known as the Nafta Parity Bill, after years of
lobbying by Central American and Caricom countries and the US apparel
industry. The CBTPA extended Nafta-type benefits to apparel and to certain other
products that had been excluded from the original Caribbean Basin Economic
Recovery Act (CBERA), of 1983. US imports under CBERA had fallen from $3.2
billion in 1998 to $2.6 billion in 2000; or from 19 percent to 12 percent
of all US imports from Caribbean Basin countries. The goal of CBTPA was to
reverse this trend. 2001 was the first full year of operation of CBTPA and a recent report to
the US Congress by the Office of the US Trade Representative (USTR)
provides an opportunity to evaluate its impact so far. It is clear that exporters from the region are making extensive use of
CBTPA provisions. In the first 8 months of 2001 CBTPA shipments to the US
were running at about twice the rate of the previous year under CBERA,
about 24 percent of all US imports from Caribbean Basin countries. But the USTR Report attributes much of this to the shifting of existing
exports of apparel from previously excluded to the new trade preference
categories. It notes that the overall volume of U.S. apparel imports from
the Caribbean Basin actually declined in the first 8 months of 2001. One reason for this is the product eligibility criteria of the CBTPA. To
qualify for the new duty-free and quota-free provisions, apparel exported
from the region must be made from US fabrics formed from US yarns and cut
in the US. If cut into parts
in the region, the fabric must be of US origin and must be sewn together
from US thread. Regionally manufactrured fabric can also be eligible, but only if
manufactured from US yarn and these products are subject to a growth
limitation of 16 percent per annum. In other words, certain restrictions apply. As a result, some
Caribbean-Basin apparel exporters have merely been re-sourcing their
fabric imports to the US to qualify for CBTPA treatment. Another restriction is the requirement that Caribbean Basin countries
adopt Nafta-type customs procedures in the processing of exports,
resulting in problems in «the application of certain statutory provisions
in the technical rules governing imports », to quote the Report. Up
to late 2001 there were still 10 countries out of 24 that had not yet been
designated as fully eligible under CBTPA. The USTR Report shows that the Dominican Republic and the five Central
American countries accounted for 82 percent of CBERA/CBTPA exports to the
US in the first 8 months of 2001. Within Caricom Trinidad and Tobago is the leading CBERA/CBPTA exporter,
with methanol as the principal product. Rapid growth has continued, with
exports totalling $445 million
(US) in the first eight months of 2001, more than in all of 2000. Jamaica, with its apparel exports, is the only other significant Caricom
exporter. But it is not clear whether use of the CBTPA by Jamaican
exporters has stimulated the desired revival of the garment sector. This pattern helps to
explain the interest of Central America and the Dominican Republic in a
free trade agreement with the US and the relatively limited impact of the
CBERA on the region’s exports so far.
Professor Norman Girvan is Secretary General of
the Association of Caribbean States. The views expressed are not
necessarily the official views of the ACS. Feedback can be sent to mail@acs-aec.org. (ends) March
22, 2002
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