US Caribbean spur a bit blunt
Washington — The Caribbean nation of Antigua, best known in the United States for romantic beaches and clear ocean water, wants to be recognized for other reasons - particularly light manufacturing. A computer manufacturing company took the island up on its offer and in mid-1984 opened an assembly plant, where about 100 people place circuit boards inside personal computers. The labor-intensive plant's product is then shipped duty free to the US.
The personal computer components are able to enter the US under an exemption granted in the Caribbean Basin Initiative, the Reagan administration's two-year-old program that seeks to foster trade and investment between 27 nations and the US.
``Three or four businesses have started in Antigua since CBI,'' says Lionel Hurst, trade and investment promotion officer with the Antigua government. ``But it's difficult to say if it was because of CBI.''
This question and many criticisms of the program were discussed this week at a conference sponsored by the US Commerce Department and the Caribbean and Central American Action Committee.
The CBI ``results are mixed,'' says Larry Theriot, director of the Commerce Department's CBI Information Center.
A recent report by the US International Trade Commission draws similar conclusions, and it does not raise the promise that CBI will increase Caribbean exports to the US in the next few years.
``Growth in Caribbean exports is likely to be slow, because producers in the region face a number of constraints, including high transportation costs, inadequate infrastructure, and lack of experience and marketing channels in the United States,'' the report says.
Many private economists and other experts are highly critical of the administration-sponsored program. ``You have to look very hard to see who has benefited'' from CBI, says Scott MacDonald, an international economist with American Security Bank in Washington.
Mr. MacDonald, who has researched and written extensively on the program and related Caribbean issues, says several countries have actually lost ground since the program started. ``There are more cases of US businesses pulling out than going in,'' he contends.
Two examples: IntelSat's withdrawal from Barbados, at a loss of about 200 jobs, and closure of a major oil refinery closing in Aruba, which accounted for some 30 percent of the island's gross domestic product.
In the summer of 1983, Congress approved the administration's plan to stimulate US investment in 27 Caribbean and Central American nations, fulfilling a promise President Reagan made to those countries in February 1982. Under CBI, many products made in these nations could enter the US duty free.
The list of products not given special treatment is fairly extensive, however, and many of the items are extremely important to the countries. Textiles, petroleum products, footware, and certain leather goods are not given the duty-free treatment. Sugar exports to the US are allowed, but under quotas.
``It's been slow in part because some of the benefits that could have been included had been excised from CBI,'' says Miami-based Mr. Hurst, who hopes to attract more light manufacturing to Antigua.
The International Trade Commission's report says new tariff exemptions have not caused US companies to flock to the Caribbean. ``Whereas the duty-free treatment ... may have been a factor considered by investors, it was not usually the primary motivating factor for such investment in the Caribbean Basin,'' the report says.
Since the program started in January 1984, the overall economic picture in these nations has actually deteriorated. US imports from the basin dropped 23.7 percent between 1983 and 1985, records show. US exports to the region also declined by nearly $400 million.
``On the positive side, CBI has brought modest growth in non-traditional areas, like manufacturing,'' says the Commerce Department's Mr. Theriot.
During the life of CBI, these nontraditional exports to the US increased 6 percent, he says. It is the typical US imports from these countries, such as sugar and oil, that have caused the entire economic picture to look so poor, he says.
Trinidad and Tobago, for example, which rely on petroleum for about 95 percent of their exports, have felt the pinch of low oil prices, Theriot says.
``Economies in the Caribbean and Central America are overly dependent on certain commodities,'' he says. These nations should move away from these items and focus on new ventures.
But nations like the Dominican Republic have been structured to grow and export sugar since the 1870s and do a good job at it, says MacDonald. The Dominican Republic, for example, counts on sugar for about 40 percent of its gross domestic product and cannot immediately shift the focus ot its economy, he notes.
Reagan administration officials say that the program is doing what it was intended to and that critics should let it continue on its course. There is ``the problem of frustration based on realistic expectations,'' Elliott Abrams, assistant secretary of state for inter-American affairs, told the House Ways and Means Committee earlier this year.
Critics say that, expectations aside, there are fundamental problems with the region and the program. Many of these countries still lack much of the necessary infrastructure - such as road and airports - to bring goods to market. In addition, these countries are now competing more among themselves for US development money to enhance their basic services.
Expanding the list of products eligible to receive duty-free entry into the US would be helpful, although one economist says Congress may not do this because perceived harm to the economy.
The trade commissions's report, however, discounts the effects. ``The impact of the [CBI] on US industries and consumers has been minimal,'' it says.