The overall effect of imports under the Caribbean Basin Economic Recovery Act (CBERA) on the U.S. economy and consumers continued to be negligible in 2001-2002, reports the U.S. International Trade Commission in its publication The Impact of the Caribbean Basin Economic Recovery Act, Sixteenth Report 2001-2002.

But given recent changes in the preference program with Central American and Caribbean trading partners, future effects in the textiles and apparel sector could be significant, according to the report.

The ITC, an independent, nonpartisan, factfinding federal agency, recently issued the report, which monitors imports under the program. The CBERA program, operative since January 1, 1984, affords preferential tariff treatment to most products of 24 designated Caribbean, Central American, and South American countries.

The ITC report covers the impact of the CBERA on the United States, with particular emphasis on calendar year 2002. The CBERA requires the Commission to prepare a biennial report assessing both the actual and the probable future effects of the CBERA on the U.S. economy generally, on U.S. industries, and on U.S. consumers. The CBERA was amended in 2000 by the Caribbean Basin Trade Partnership Act (CBTPA), which broadened the scope of products eligible for the tariff preferences, and in 2002 by the Trade Act of 2002, which clarified and modified the CBTPA. The CBTPA also instructed the Commission to report on the impact of the overall preference program on the beneficiary countries themselves. Following are highlights of the report:

• Total U.S. imports from CBERA beneficiary countries amounted to $21.3 billion in 2002, of which $10 billion (47 percent) entered under CBERA preferences. While the introduction of CBTPA resulted in a $7.2 billion increase in the value of U.S. imports under the CBERA program from 2000 to 2002, total imports from CBERA countries (all goods, regardless of duty treatment) actually decreased 4.1 percent during the same period, in line with the decrease in total U.S. imports from all countries during the same period. Four countries the Dominican Republic, Honduras, Trinidad and Tobago, and Costa Rica accounted for 70 percent of all U.S. imports under the CBERA program.

• The composition of leading U.S. imports under the CBERA program changed significantly because CBTPA opened preferential treatment to apparel and petroleum products. While the total value of apparel imported from CBERA countries decreased 1.1 percent from 2000 to 2002, that portion of apparel imports entering under the CBERA program increased significantly. Apparel accounted for only 8.3 percent of total imports under the CBERA program in 2000, but it accounted for 61 percent of the total in 2002. While the total value of mineral fuels imported from CBERA countries decreased 7.5 percent from 2000 to 2002, imports of mineral fuels under the CBERA program increased from zero in 2000 to 10 percent of total imports under the program in 2002.

• Of the 20 leading import items entering under the CBERA program in 2002, 11 were apparel items. The largest apparel imports under the CBERA program included knit cotton t-shirts, men's or boy's woven cotton trousers and shorts, knit cotton tops, men's or boys' knit cotton underpants, brassieres, women's or girls' woven cotton trousers and shorts, men's or boys' woven man-made fiber trousers and shorts, and women's or girls' cotton knit panties. Other large import items under the CBERA program, classified by 8- digit HTS provision, included crude oil, cigars, precious metal jewelry, methanol, fuel oil, and fresh pineapples.

• The enhanced preferences granted under the CBTPA in 2000, together with the investment induced by those preferences, will be the main source of future effects of the CBERA on the United States. Imports of apparel under the CBERA program expanded significantly (up 34.8 percent) in the 2001-2002 period. However, the CBTPA enhanced preferences did not result in an overall increase in imports of apparel from the region. Rather, CBTPA prompted importers to switch from using the production sharing program to using the new preferences.

• A number of beneficiary countries consistently maintain that the outcome of the ongoing negotiations toward a Central American Free Trade Agreement with the United States will be a greater determinant of future trading relationships in the increasingly significant textile/apparel sector than any unilateral preference program of the United States.

The Impact of the Caribbean Basin Economic Recovery Act, Sixteenth Report 2001-2002 (Inv. No. 332-227, USITC Publication No. 3636, September 2003) will be available on the ITC's Internet site at www.usitc.gov. The publication will also be available at federal depository libraries in the United States and on a future edition of the Department of Commerce's National Trade Data Bank. A printed or CD-ROM version may be requested by calling 202-205-1809 or by writing to the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Requests may also be faxed to 202-205-2104.

ITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the Senate Committee on Finance, or the House Committee on Ways and Means. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the ITC submits its findings and analyses to the requestor. General factfinding investigation reports are subsequently released to the public, unless they are classified by the requestor for national security reasons.