Mitchell, Parren J.

NELLCO Consortium Legal Scholarship Repository

Afterword: The Significance for Americans of Trade with the Caribbean Basin

Digital Commons @ UM Law

Maryland Journal of International LawVolume 4 | Issue 1 Article 37Afterword: The Significance for Americans of Tradewith the Caribbean BasinParren J. MitchellFollow this and additional works at: http://digitalcommons.law.umaryland.edu/mjilPart of the International Trade CommonsThis End Matter is brought to you for free and open access by DigitalCommons@UM Carey Law. It has been accepted for inclusion in MarylandJournal of International Law by an authorized administrator of DigitalCommons@UM Carey Law. For more information, please contactsmccarty@law.umaryland.edu.Recommended CitationParren J. Mitchell, Afterword: The Significance for Americans of Trade with the Caribbean Basin, 4 Md. J. Int'l L. 215 (1978).Available at: http://digitalcommons.law.umaryland.edu/mjil/vol4/iss1/37AFTERWORDTHE SIGNIFICANCE FOR AMERICANS OF TRADEWITH THE CARIBBEAN BASINCongressman Parren J. Mitchell*I am honored to participate in a conference on trade between theUnited States and the Caribbean Basin countries because, as you may beaware, I have been an ardent supporter of strengthening our economicties with the developing countries of the world. I also believe that theUnited States will be facing greater international competition for theremainder of this century and the policies to address these pressures mustbe positively correlated with those of other countries, especially thedeveloping countries. During the last five years virtually every country'sdependence on the outside world has increased, which indicates that wemust take greater account of the implications of our growth and tradepolicies.Indeed, to the extent that we strengthen our ties with the variousregions of the world, we demonstrate our commitment to improving theconditions of life in the developing countries, while simultaneouslyincreasing the possibility for both jobs and sustained economic growth inthe United States. Accordingly, as the trade balances of the United Statesand other developed countries have grown, the United States has urgedother industrial nations to emulate its expansionary policies to varyingdegrees for the sake of growth in the world economy. Given theresurgence of protectionist attitudes, the decline in the international valueof our dollar, and the lagging recovery from the worldwide economicrecession, this conference demonstrates the importance of examining oureconomic and trade relations with the Caribbean Basin countries whichwould be more adversely affected by myopic growth policies andprotectionist measures. This conference is unique since there is a definitenexus between the economic prospects for the State of Maryland and thePort of Baltimore, and the U.S. economic and trade policy towarddeveloping regions of the world.This is the first time that a conference of such importance has beenheld in Baltimore on the Caribbean directed toward such a diversifiedcommunity - legal, business, academic, government and diplomatic.Additionally, we as a group share the common view that the CaribbeanBasin countries are as important to the United States as any other regionof the world.* Democratic Representative for Maryland in the U.S. House of Representa-tives.(215)THE INTERNATIONAL TRADE LAW JOURNALToday, my remarks will focus on the question of the implications ofour policies with respect to the Caribbean Basin countries, a group ofcountries with per capita incomes ranging from $170 in Haiti to $2,600 inthe Bahamas. At the outset, however, I think that it would be instructiveto stress the necessity of viewing the policies we implement in terms offacilitating faster long-term growth, greater equity in income distribution,and increased ability to exploit economies of scale in the producing goodscountries.I believe that the restructuring of U.S. foreign policy and a greatersense of economic interdependence among nations of the world hasfocused attention on the economic significance of the Caribbean as aregion which has been grossly underestimated. This attitude can beattributed, in part, to the unique economic, political, and socialcharacteristics of this region. Because of these unique characteristics, theeconomic development of the Caribbean Basin countries differs from thedevelopment process in other parts of the world. But I believe that theuniqueness of this process must provide the basis for furthering ourrelations with this area.Our trade relationship with the Caribbean translates into approxi-mately $6 billion. The United States supplies twenty-five percent of theCaribbean imports - $2 billion - and is the market for seventy percentof the Basin's exports. In addition, direct foreign investment in theCaribbean Basin countries is estimated in excess of $4 billion. Forexample, the U.S. investment in the Dominican Republic alone amountsto more than $500 million and investment in Jamaica is $1 billion.However, only three percent of the U.S. direct foreign investment is in theCaribbean countries. Most of the investment is concentrated in naturalresources extraction, particularly bauxite and petroleum. This is a patternthat must be reexamined to determine whether a broader investmentprogram can be created. To a degree the importance of our investmentdepends upon the various legal impediments or the lack thereof, whichdetermines the bargaining position between ourselves and the CaribbeanBasin countries. Although our investment is expected to diminish in thefuture, I would emphasize that the importance of the Caribbean as aneconomic region will prevail. Thus, greater emphasis must be placed oneliminating the economic and legal impediments to trade.Another important facet of our trade relationship with the Caribbeanis tourism. Approximately two to three million U.S. tourists visit theCaribbean each year providing foreign exchange for trade purposes.There are various instrumentalities of the U.S. economic and tradepolicy toward the developing countries. For the purpose of this conferenceCONFERENCE PROCEEDINGSthe most relevant instrumentalities of this policy toward the Caribbeanare the GSP and the activities of Eximbank.In 1974, the United States became the last developed country to adopta system of international trade preferences. The concept of such a systemas a method of stimulating growth in developing countries grew out of theUnited Nations conference on trade and development sessions in the mid-1960s. Although the program is still in its early stages, the GSP hasemerged as a program of major importance to many developing nations.Central American countries and the Dominican Republic registered mostof their gains under GSP in agricultural and wood products. Freshvegetables increased sharply as the United States importers havepromoted production by small farms. Most Central American countriesshowed substantial increases in a wide range of wood products. However,the Caribbean countries generally showed the least in gains from GSP in1977. In large part, their net decline in GSP shipments was directlyrelated to the problems with sugar. Although there were a few cases inwhich Caribbean countries increased their shipments of other GSPproducts, in general, they have shown very little ability to utilize thetariff advantages to initiate or expand nontraditional exports.In many respects, the underutilization of the GSP has beenprecipitated by the lack of aggressive promotion of the GSP by the UnitedStates. The program has not been publicized among importers or foreignexporters and undoubtedly participation has not been facilitated.Our program must be reexamined to determine whether this form ofpreference is stimulating development in beneficiary countries in theCaribbean. Until we know how much of the duty-free savings are beingpassed through to make the goods more competitive in the U.S. market;how many countries have stimulated development of their industry; whathas been the return to developing countries; and if it is being used to shiftproduction unevenly from the United States to the developing nations, wewill not be able to determine the effectiveness of the GSP.Clearly, the intent of the Congress was to ensure the growth anddevelopment of the nascent economies. In 1980, the President will reportto the Congress on the effectiveness of the GSP, and only then will manyof these questions be answered.During the last fiscal year, the Eximbank was instrumental increating the ad hoc committee on exporting and foreign investment bysmall minority businesses. Other members of the Committee are theSmall Business Administration, the Department of Commerce, and OPIC.The primary purpose of the Committee is to provide the small businesscommunity with the opportunity to enter export markets. Of the 3,000THE INTERNATIONAL TRADE LAW JOURNALUnited States exporters actively using the bank's programs, some forty-two percent of the businesses could be considered small businesses.An excess of 4,600 transactions, supporting more than $3 billion inexports by these small businesses, were active at year end. In addition,many small businesses are subsuppliers to exporters participating in theEximbank's program.There are Eximbank programs that operate in conjunction with otherbanks to support short and medium-term export credit transactions forsmall businesses. They are the export credit insurance, the commercialbank guarantees, discount loans, and the cooperative financing facility.In fiscal year 1977, $4.4 billion was authorized under these four programsand constituted the major activities of the Eximbank.The importance of the Eximbank as an instrumentality of our overalleconomic and trade policy can be reviewed from the perspective of thesmall business community. These businesses are those with annual salesof less than $10 million or a net worth of $5 million or less. It is exactlythese types of businesses that can be instrumental in directly assistingthe developing countries to increase their economic capabilities.In fact, of the fourteen million businesses in the United States today,more than thirteen million of them are small, including some three millionfarms. Together they provide employment for over half of the businesslabor force and account for more than forty-eight percent of the grossbusiness product. I would submit that America's prestige in the worldtoday might never have been achieved in the absence of smallbusinesses. The interaction of American small businesses with similarbusinesses in the Caribbean, if pursued aggressively, would promotemutually beneficial economic returns.I believe that the Caribbean is a region that demands our seriousattention. For some time the Caribbean countries have argued that theinternational economy operates in a manner that precludes rather thanincorporates their desires for a higher standard of living. These countriesneed changes in the international rules of trade and finance, if they are toobtain greater control over their development.Encouragement of economic development is a difficult problem whichrequires a multifaceted solution. The GSP, the Eximbank programs, andbilateral and multilateral assistance can never produce a total solution,but they must provide long-term benefits for the Caribbean, lest we lose asignificant test of our commitment to development and ultimately failourselves.I pledge that I will do everything that is legislatively possible toensure that we fulfill our commitment to the Caribbean.

Afterword: The Significance for Americans of Trade with the Caribbean Basin

Abstract

Similar works

Full text

Available Versions

NELLCO Consortium Legal Scholarship Repository

Digital Commons @ UM Law