RESTRICTED
WORLD TRADE G/L/25
15September 1995
ORGANIZATION(95-2681)
Original: English COUNCIL FOR TRADE INGOODS
26September 1995
CARIBBEAN BASIN ECONOMIC RECOVERY ACT
Request forRenewal ofWaiver
Thefollowing communication, dated 13September 1995, hasbeenreceived fromthedelegation
oftheUnited States.
_________________
Byaction oftheCONTRACTING PARTIES oftheGATT 1947on15February 1985(L/5779,
BISD 31S/20), theUnited States wasgranted awaiver ofitsobligations under paragraph 1ofArticle
1oftheGATT 1947, fortheprovision ofduty-free treatment toeligible products ofbeneficiary
CaribbeanBasincountriesandterritories,undertheCaribbeanBasinEconomicRecoveryAct(CBERA).
Thiswaiver wasgranted fortheperiod 1January 1984 until30September 1995.
CBERA authorizes thePresident toprovide certain trade andtaxbenefits tocountries located
intheCaribbean Basin. TheCaribbean Basin Initiative (CBI) established under theCBERA promotes
thetrade andeconomic stability ofcountries located intheCaribbean Basin through anumber of
measures: provision ofincreased foreign assistance, provision ofduty-free treatment toimports, and
extension oftheapplicability oftheU.S.convention expense taxdeduction toconventions heldinthe
region toencourage greater tourism andinvestment. In1990, Congress amended theCBItomake
theprogram apermanent partofU.S.lawandtoprovide amodest increase inaccess totheU.S.market
forproducts ofeligible Caribbean Basin countries.
TheUnited States requests thatMembers renew the1985waiver fortenyears, inorder toenable
theUnited States toprovide duty-free access forimports ofeligible articles intotheUnited States from
beneficiary Caribbean countries andterritories, asprovided intheCaribbean Basin Economic Recovery
Act(Public Law98-67 ofAugust 5,1983), asamended bytheCaribbean Basin Economic Recovery
Expansion Actof1990 (Public Law101-418).
Awaiver ofparagraph 1ofArticle IoftheGATT 1994isnecessary sothattheUnited States
canprovide suchduty-free treatment.1Thisrequest ismade inaccordance withtheGuiding Principles
tobefollowed inconsidering applications forwaivers adopted on1November 1956; theUnderstanding
inRespect ofWaivers ofObligations under theGeneral Agreement onTariffs andTrade 1994; and
1ThefinallistofMFN exceptions submitted bytheUnited States under theGeneral Agreement
onTrade inServices indocument GATS/EL/90 includes anexception taken withrespect to“benefits
available under theU.S. Internal Revenue Code withrespect toCaribbean Basin Initiative (CBI)
beneficiary countries ”.G/L/25
Page2
paragraphs 3and4ofArticle IXoftheMarrakesh Agreement Establishing theWorld Trade
Organization. Thepolicy objectives ofCBERA andtheexceptional circumstances justifying awaiver
aredescribed below.
Discussion
TheCaribbeanBasinEconomicRecoveryAct(CBERA)wasenactedon5August1983effective
until30September 1995(P.L. 98-67). Congress thenamended theCBERA inTitleIIoftheCustoms
andTrade Actof1990 (P.L. 101-418), theCaribbean Basin Economic Recovery Expansion Actof
1990, commonly known as“CBIII”.CBIIIimproved theCBERA ’stradeandtaxbenefits andmade
thempermanent.2Trade improvements included a20percent tariffreduction oncertain leather products,
phased inoverfiveyears beginning in1992, butlimited toatotalreduction of2.5percent advalorem ;
duty-free treatment forPuerto Rican products imported from CBIcountries; andduty-free treatment
forimports ofproducts ofbeneficiary countries products made from 100percent U.S.components,
withcertain exceptions. CBIIIalsoexpanded duty-free treatment toinclude twenty-eight additional
tariff categories.
A. Purpose andScope
TheCaribbean Basin Initiative, orCBI,wasdesigned asadevelopment program using trade,
taxandassistance measures tofacilitate theeconomic development andexport diversification ofthe
economies intheCaribbean Basin. These small economies hadbeenseriously affected bydeclining
prices fortheirmajor commodity exports. CBIhelps thesecountries andterritories solve theirproblems
byopening newmarkets forCBIexports, encouraging investment andgrowth ofproductive capacity
intheCBIarea, andassisting tourism andother service sectors.
TheUnited States seeks tocontinue thecenterpiece oftheCBI: non-reciprocal, duty-free access
forimports intotheterritory oftheUnited States from eligible Caribbean countries andterritories.
Duty-free access isprovided forallproducts withtheexception oftextiles andapparel, footwear,
petroleum, leather apparel, watches andcanned tuna. Theprogram places aceiling onduty-free entry
forsugar, aslongastheUnited States maintains adomestic sugar price support program mandated
byCongress. Theprogram provides duty-free access forsome CBIexports notpresently covered
under theU.S.Generalized System ofPreferences (GSP) program. Suchpreferential duty-free access
cannot beprovided consistent withparagraph 1ofArticle IoftheGATT 1994; forthisreason the
United States seeks anextension ofthewaiver granted in1985 bytheCONTRACTING PARTIES
oftheGATT 1947.
TheCBERA statute provides that27countries orterritories areeligible fordesignation asCBI
beneficiaries. Theattachment tothepresent waiver request liststhose countries andliststhecountries
actually designated asbeneficiaries.
B. Effect oftheCaribbean Basin Initiative onother Members
Theduty-free treatment accorded CBIbeneficiary countries hasnotcreated newbarriers or
otherwise impeded thetrade ofMembers because these countries account forasmall portion ofU.S.
imports andtheprogram islimited inscope. In1994theU.S.imported $11.5 billion ofmanufactured
andagricultural goods from CBIbeneficiary countries --1.7percent oftotalU.S. imports. Ofthe
$11.5 billion, 18.5percent or$2.1billion entered under CBI. Hence, only0.3percent oftotalU.S.
2Adiscussion ofthese changes appears intheNovember 1993 U.S. report ontheCBIwaiver,
L/7304.G/L/25
Page3
imports in1994entered under theCBIprogram. Thetradefigures provided inthereports bytheUnited
States ontheusemade ofthe1985 waiver demonstrate thatthepreference given toCBIimports has
notresulted indisplacement oflikeproducts from non-CBI sources.
C. Effect onMFN treatment andGSP
TheCBIprogram isacompletely autonomous program which hasnever involved thebinding
ofmargins ofpreference. Theprogram didnotimpede U.S.tariffnegotiations intheUruguay Round,
inwhich amajor objective wasthezero-for-zero initiative forelimination oftariffs onamost-favoured-
nation basis. TheCBIprogram isalsoindependent oftheU.S.GSPprogram asamatter ofstatute
andamatter ofpolicy.
Although thestatutory authorization fortheU.S. GSPprogram expired on31July1995,
legislation toreauthorize GSPprogram isnowpending inCongress. Provision ofCBIbenefits will
notnegatively affect GSPbenefits.
D. Conclusion
TheUnited States requests thattheMembers oftheWTO giveitsapplication forawaiver
renewal expeditious consideration. TheUnited States willcooperate fully inproviding additional
information about theCBIanddiscussing thespecific terms ofthewaiver.G/L/25
Page4
ANNEX
1. Countries andterritories statutorily eligible fordesignation asCBIbeneficiary countries
Anguilla
Antigua andBarbuda
Bahamas, The
Barbados
Belize
Cayman Islands
Costa Rica
Dominica
Dominican Republic
ElSalvadorGrenada
Guatemala
Guyana
Haiti
Honduras
Jamaica
Montserrat
Netherlands Antilles
Nicaragua
PanamaSt.KittsandNevis
St.Lucia
St.Vincent andthe
Grenadines
Suriname
Trinidad andTobago
Turks andCaicos Islands
Virgin Islands, British
(Source: CBERA §212)
2. Countries orterritories designated asbeneficiary countries forpurposes oftheCBERA
Antigua andBarbuda
Aruba
Bahamas
Barbados
Belize
Costa Rica
Dominica
Dominican Republic
ElSalvadorGrenada
Guatemala
Guyana
Haiti
Honduras
Jamaica
Montserrat
Netherlands AntillesNicaragua
Panama
St.KittsandNevis
St.Lucia
St.Vincent andthe
Grenadines
Trinidad andTobago
Virgin Islands, British
(Source: General Note 7,Harmonized Tariff Schedule oftheUnited States)