Caribbean Basin Initiative I & II (CBI I & CBI II)

The Caribbean Basin Initiative consists of a multitude of programs contained in the Caribbean Basin Economic Recovery Act of 1983 ("CBI I"), as amended and supplemented in 1990 ("CBI II"). On a smaller geographic scale than the Enterprise for ASEAN Initiative (EAI), the CBI aims to foster development by providing greater access to the U.S. market for many goods of designated countries, stimulating U.S. investment in their economies and encouraging liberalization. The core of the CBI is codified in 19 U.S.C 2701 to 2706.

Conditions for CBI qualification are set so as to promote U.S. trade, foster anti-narcotics efforts, and advance U.S. foreign policy objectives. 19 U.S.C. 2702(b). Over two dozen countries reap CBI benefits. While CBI I was set to expire in 1995, CBI II made permanent the initiative's programs and preferences.

a. Duty-free entry into the U.S. of eligible products from CBI countries
Under Harmonized Trade Schedule Item 9802, a wide variety of products from CBI designated countries receive duty-free entry into the U.S. market, including most agricultural and manufactured goods. Products excluded from duty-free treatment but assembled in CBI countries from American components receive reduced tariffs. Duty-free entry of sugar and beef into the quota-regulated U.S. market is covered by special rules. Detailed regulations address the question whether a product made with components from non-CBI countries has been transformed sufficiently to receive duty-free treatment. 19 U.S.C. 2701, 2703; 19 C.F.R. 10.

b. Guaranteed Access Levels for Apparel
For access to the protected U.S. textile and apparel market, the CBI offers designated countries the opportunity to negotiate Guaranteed Access Levels for textile and apparel products made of U.S. formed and cut fabric. This program provides incentive to U.S. manufacturers to locate part of their operations in CBI countries by combining the reduced costs of production in the low-wage Caribbean economies with a relatively high level of access to the U.S. market.

c. Bilateral Investment Treaties
As a precursor to the free trade agreements pursued under the EAI, the CBI encouraged the negotiation of Bilateral Investment Treaties ("BITs") with Caribbean governments. BITs establish certain basic economic rights for U.S. investors in the signatory country, such as protection against uncompensated expropriation, and rights of profit repatriation. While ostensibly two-way guarantees of investment rights, BITs are essentially economic self-help measures for emerging economies, and typically contain liberalizing reforms and incentives for attracting U.S. direct investment.

d. U.S. Government Procurement of CBI-Country Goods
In 1986, the U.S. Trade Representative's office waived for CBI countries certain restrictions on U.S. government procurement of foreign products.Under the Trade Agreements Act of 1979, bids for U.S. government procurement contracts could not be made by the seller of a foreign product unless the country of origin had also lowered its own restrictions on government procurement of U.S. products. 19 U.S.C. 2511. The U.S. Trade Representative's action waived this reciprocity requirement for CBI countries, thus enhancing the ability of Caribbean countries to market their products to the U.S. government -- the largest single purchaser of goods and services in the United States.

e. Special Treatment in Enforcement of U.S. Trade Laws
A subtle preference is given to CBI countries under a new trade law enforcement provision enacted in CBI II. In an investigation to determine if foreign trade practices violate anti-dumping and countervailing duty laws, imports from two or more countries are usually aggregated to determine if material injury to a U.S. industry has occurred. Under CBI II, imports from CBI countries will no longer be aggregated with those of non-CBI countries. 19 U.S.C. 1677(7)(C)(iv)(II). The possibility of small CBI countries being penalized by countervailing duties principally brought on by the actions of large, non-CBI countries is thus reduced.

General Agreement on Tariffs and Trade (GATT)

The General Agreement on Tariffs and Trade (GATT) was first signed in 1947. The agreement was designed to provide an international forum that encouraged free trade between member states by regulating and reducing tariffs on traded goods and by providing a common mechanism for resolving trade disputes. GATT membership now includes more than 110 countries.

The GATT covers international trade in goods. The workings of the GATT agreement are the responsibility of the Council for Trade in Goods (Goods Council) which is made up of representatives from all WTO member countries.

Consideration of GATT's relationship to environmental policy is an emerging concern in trade and environmental policy circles. Until the Uruguay Round of GATT negotiations, the word environment did not appear in the GATT text. Several provisions and sections of GATT may be relevant to environmental issues, however.

North-America Free Trade Agreement (NAFTA)

The North America Free Trade Agreement (NAFTA) is a trilateral agreement between Canada, Mexico and the United States of America, which took place on January 1st, 1994. Through the implementation of this agreement, tariffs and duties on products originated or produced on any of these countries (or combination of any such countries) and that were to be exported among such countries, were considerably reduced, to promote the exportation / exchange of the merchandise among the three markets.

This reduction on tariffs was projected on three phases; at five, ten and fifteen years from the date of establishment of the agreement. Some tariffs, such as tariffs on telecommunication equipment, medical devices and computer technology, were eliminated since the date of implementation.

Puerto Rico and the NAFTA

Puerto Rico, as a Commonwealth of the United States, participates of the NAFTA as the US. In order to import into Puerto Rico merchandise manufactured under NAFTA provisions, it is necessary to render a Certificate of Origin Bona Fide to the US Customs at time of importation.

For more information on any of these or other preferential program, do not hesitate to contact us at info@nreyes.com. We will be glad to assist you in all matters necessary to ensure your trade success.

back«