US Rethinking Caribbean Trade

WITH all the hooplah in Congress over America's huge trade deficit, it might surprise some people that lawmakers are considering a bill to promote foreign imports. But that is just what is being discussed in a broad congressional review of the Caribbean Basin Initiative, or CBI. The CBI, conceived in 1984 during the Reagan administration, provided duty-free entry for a range of products from Caribbean manufacturers. The aim: to provide economic stability to the region and solid ground for US-Caribbean relations.

At the crux of the congressional review is a newly proposed CBI enhancement bill that would permit the Bush administration to grant permanent duty-free access to most Caribbean-produced products, including textiles. At risk, US manufacturers say, is what remains of the US textile and apparel industries, and American jobs.

The ``American textile industry is being badly hurt by record import penetration of the US market,'' says Carlos Moore, of the American Textile Manufacturers Institute. It is important, he says, to neutralize CBI to ``prevent further market disruption ... and additional dislocation among American textile workers.''

But at present the Bush administration (via the Agency for International Development, the Departments of Commerce and Agriculture) and Congress each offer a number of opportunities to the 21 qualifying Caribbean countries. CBI is supposed to draw foreign and domestic investment to the region's economies, to help diversify and expand production and export earnings.

And it has worked. According to a Caribbean Basin desk officer at the US Department of Commerce, ``textile export growth has led the Caribbean Basin's nontraditional export growth to the US....''

A move to help US textiles may be included in an expanded CBI bill; although the form is unclear. Florida Sen. Bob Graham (D) endorses legislation that would give 100 percent duty-free access to fabric cut and formed in the US and assembled in the Caribbean.

One Senate aid referring to CBI as a ``mini trade bill,'' says the Senate had originally pledged to pass CBI enhancement legislation before the end of March.

Under duress are US manufacturers represented by the American Textile Manufacturers Institute (ATMI), composed of companies operating in more than 30 states. Collectively they produce 75 percent of all textile fibers consumed by US mills.

They, among other industry leaders, are looking for ways to stem imports and boost textile exports. Textile and apparel imports jumped 9.7 percent in January, over January 1989 figures. The US textile and apparel trade deficit registered more than $2.3 billion in January, ATMI says.

ATMI's Mr. Moore warns that ``opportunities for Caribbean exporters must not come at the expense of the American textile industry and its employees.''

He has urged Texas Sen. Lloyd Bentsen, who chairs the Senate Finance Committee to grant ``duty-free treatment under the ... program to those articles assembled or processed in CBI countries wholly of US components or ingredients.''

``Clearly [ATMI] would like to see US textiles displace Asian production,'' says Richard Rothstein, author of a study on the US apparel industry for the Washington-based Economic Policy Institute. ``They'd much prefer to see their own textiles assembled in the Caribbean and exported to the US duty-free than compete with imports from Hong Kong.''

Mr. Rothstein sees real danger that the CBI, among other US foreign policies, may unduly discourage US textile and apparel makers by giving foreign competitors the upper hand. ``We must reexamine our policy so that US producers who are efficient can play on a level field,'' he says.

Some US investors in Caribbean companies enjoy ``more US help - in the form of government assistance, engineering help, training, marketing and customer matching - than producers in Los Angeles or South Carolina.''

Commerce statistics show US imports of textiles and apparel from CBI-signatories increased in value by over 20 percent a year for six consecutive years. The Dominican Republic is the United States' largest trading partner in the region. By 1989, US imports of textile and apparel from the Dominican Republic were almost 500 percent over 1983.

Congressional and US Commerce proponents of CBI point to marked strides in regional exports - a 28 percent increase from 1988 to 1989 - in US-Caribbean nontextile trade. This ``attests to the region's success in diversifying exports to the United States,'' the commerce official says.

Still, the question of permanent duty-free status remains. As Jamaican Prime Minister Michael Manley recently asked a Caribbean Conference in Miami: ``Will this great country help to open the doors of trade, which are our best guarantee of economic development and success?''

US lawmakers will soon respond to that query.