Magazine article Foreign Policy in Focus

Problems with Current U.S. Policy

Magazine article Foreign Policy in Focus

Problems with Current U.S. Policy

Article excerpt

The U.S. move to replace preferential trade treatment with tariff reciprocity as the foundation of its Caribbean policy faces the same problems that have bedeviled the CBI from its outset. Efforts to grant NAFTA parity to Caricom and other CBI countries repeatedly stalled in Congress. The sticking point has consistently been duty-free treatment for textile products, blocked by continuing opposition from fair trade groups, labor unions, and portions of the textile industry.

In May 2000, however, congressional leaders reached agreement on such legislation as part of the Africa-CBI trade bill. The legislation, which the president has signed, provides immediate tariff reduction to NAFTA levels for imports excluded under CBI, specifically some apparel, which received not only duty-free but also quota-free treatment. The new dispensation will be maintained until 2008, or until the FTAA or another relevant trade agreement enters force, if that date is earlier. The legislation is saddled with a number of conditions that could prevent the Caribbean from fully utilizing its benefits.

Another sticking point in U.S.-Caribbean economic relations is Caricom's longstanding request for an overall Caricom sugar quota (the amount of sugar the U.S. agrees to import annually at a rate above the prevailing world price). An overall quota would replace the country quotas and could then be reallocated among Caricom members in the event of a special need or export shortfall.

A related concern is the sharp decline in sugar quotas for Caribbean countries. Compounding this problem are Mexico's efforts to increase its sugar exports to the U.S. market at a faster rate than originally established in the side agreement accompanying NAFTA. Unless Mexico's request can be accommodated without a reduction in the quota currently allocated to the Caricom countries, the additional loss in preferential access to the U.S. market could have severe socio-economic consequences.

At the heart of the problematic character of U.S.-Caribbean economic relations is a differing approach to the global economy. As a rule, the U.S. holds to the neoliberal view that all countries should compete equally in the international market. For their part, the Caribbean nations, while eager to integrate into the global market, note that their small size, lower level of development, and primitive export structures undermine their capacity to participate effectively in global trade liberalization without special preferences, or at least their phased withdrawal. During the preparatory FTAA meetings, the U.S. did not appreciate these concerns. Caribbean negotiators also have not received any indication that the issue of smaller economies would be given adequate attention during the ongoing FTAA negotiations.

As the banana issue indicates, U.S. trade policy in the Caribbean makes little allowance for the development concerns of small economies. Caribbean countries predict that the U.S. effort to end preferential access to the EU market will ruin the economies of the banana producing countries, and they warn that, as a result, there will be more illegal migration of Caribbean job seekers to the U.S., increased marijuana cultivation for export, and an upsurge in drug trafficking. …

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