Time for US to Show Commitment to Caribbean outside Support and Initiative Can Help Keep the Islands from Drifting into Instability and Decay

Article excerpt

The economic interests of the United States and the Caribbean are closely tied.

A vibrant Caribbean economy favors low immigration levels to the US and a stalwart ally for America by its island neighbors. President Clinton shouldn't miss the opportunity to use this month's visit to Barbados, where he'll meet with the heads of government of the Caribbean Community (Caricom), to review aspects of economic relations between the the US and the Caribbean.

More important, the trip is an opportunity to clarify issues that have been clouding relations between the two for some time. Mr. Clinton's May visit is the second such opportunity - the first was at the White House in August 1994. That discussion left Caribbean leaders feeling optimistic that the US would quickly and vigorously tackle problems vital to regional development. Yet there have been few results, despite the 1994 Miami summit, which spawned a Plan of Action for hemispheric cooperation. The central feature of the Miami Plan was to create a Free Trade Area of the Americas (FTAA) by 2005. In developing this proposal, attention was to be paid to the special situation of the smaller and less-developed countries in the hemisphere. To the contrary, there's been little evidence that the problems of the smaller countries have received significant attention. Without consideration of the Caribbean's special concerns, the work on the Miami plan is focused on trade and, to a certain extent, on financial flows. Trade and investment Since 1990, Caricom's merchandise trade balance with the US has declined from a deficit of approximately $426 million to $1.4 billion, and Caricom's imports now support more than an estimated 60,000 jobs in the US. While this imbalance is offset by earnings from US tourists and from the remittances of Caricom nationals living and working in the US, larger deficits may be forthcoming as a result of trading trends among NAFTA partners. In particular, Caribbean apparel exports are under pressure from Mexican exports, which enter the US market freely. Already, Caribbean export earnings have slowed, and jobs have been cut. Because most apparel factories employ female heads of households, the result is economic hardship and social distress. While a deficit in current transactions can be offset by a surplus in capital transactions from inflows of development assistance and private investment, US development assistance to the Caribbean has not been forthcoming. Instead, development assistance has dropped from $226 million in 1985 to $24 million in 1994, where it remains today. Similarly, US legislation for private investment incentives has been discontinued. The US also is hampering trade relations with the Caribbean's European partners. For centuries, many Caribbean countries have had important trade relations with Europe, principally in bananas, sugar, and rum. The banana trade has been put at risk by the US challenge at the World Trade Organization of European preference for Caribbean bananas over supplies from Central and South America. The Caribbean argues that it represents less than 3 percent of the world's total banana production and that a majority of the region's producers are poor, small farmers laboring under difficult conditions. Despite the Caribbean's burden, it would appear that free trade holds greater importance than special accommodations to the poor and vulnerable. …