Friday, April 12, 2024

Barbados, US at the trade crossroards


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THE UNITED STATES (US) is Barbados’ top trading partner. Moreover, Barbados is a beneficiary of the US Caribbean Basin Initiative (CBI), which aims to facilitate the economic development and export diversification of the Caribbean and specific Latin American economies by providing countries with duty-free access to the US market for most goods, inter alia. The CBI is made up of two pieces of legislation; these are the Caribbean Basin Economic Recovery Act (CBERA) and the Caribbean Trade Partnership Act (CBTPA).

CBERA was enacted in 1984 and formed the basis of the CBI programme. However, this act exempted certain products, in which the Caribbean was highly competitive, from liberalisation by the US.

The CBTPA which followed at the turn of the millennium expanded the preferences granted in the first act by increasing the list of goods which were eligible to receive duty free treatment on import to the US.

It also extended North American Free Trade Area (NAFTA) to specific countries. Currently, Barbados, Belize, Guyana, Haiti, Jamaica, St Lucia and Trinidad and Tobago are the only CARICOM countries benefitting from this arrangement. In 2012, The Bahamas, Dominica, Grenada, Montserrat, St Kitts and Nevis, St Vincent and the Grenadines and Suriname applied for beneficiary treatment.

Together, both acts allow for:

1. Duty-free entry into the US for a wide range of products grown and manufactured in CBI countries as an incentive for investment and expanded export production, and other special tariff statuses.

2. CBI textile programme: under the CPTPA, apparel manufactured in eligible CBI countries from US yarns and fabric, as well as non-textile products excluded from earlier CBI legislation, will enter the US free of quota and duty.

3. CBI government procurement: national treatment for producers in CBI countries in bidding for certain types of US government procurement opportunities.

4. Exemption for CBI exports to the US from US import merchandise process fees, a fee based on a per cent of value-based customs duty surcharge levied on incoming godos to cover costs of US customs operations.

5. A wide range of government and private sector business development programmes, including trade and investment financing, business missions, and technical assistance programmes partially supported through US foreign economic assistance.

The longevity of the CBI programme is in question. The CBTPA is scheduled to expire in 2020. On the other hand, the CBERA has no set expiry date.

The longevity of the programme, as with all unilateral preference programmes, is dependent upon the grant of a waiver by the WTO’s general council. In addition, the US has not undertaken any binding commitments and as such at any point may unilaterially withdraw the programme.

There has been a negative trade balance between Barbados and the US over the entire ten-year period of review; US exports to Barbados were greater than Barbados’ exports to the US.

In addition, total trade has fluctuated. However, total trade reached its peak in 2008, with an increase in both imports and exports. Moreover, despite the economic difficulties during the 2008 global financial crisis, US goods imports from Barbados rebounded quickly from the decreases in trade recorded in 2009 to 2011.

By 2012, Barbados’ exports to the US had increased 100 per cent from their low in 2011, totalling US$149 [million]. Between 2013 and 2014 exports to the US remained steady despite a decline.

Exports from Barbados to the US under the CBI programme, increased steadily between 2005 and 2008. There was a decline in exports in 2009.

Generally, between 2010 and 2014, exports have remained steady, with some small fluctuations. The main products exported by the local private sector to the US, under the CBI, on a continual basis are: condiments, beverages, biscuits, labels, electronics, sails and margarine.

On a smaller scale, Barbados exports to the US: furniture, chocolate, lenses and trowel plastics. The metal industry is also a huge export industry for Barbados, as it pertains to trade with the US.

The Doing Business Report 2015 indicates that it takes five days at a cost of US$1 315 to import a standard 20-foot container into the US through its port in New York. There are five documents which are required to complete the process. In addition, there are also measures which Barbadian exporters, along with their American distributors or importers must satisfy before the product can gain entry into that market.

These non tariff measures come in the form of licensing, quotas on specific products, labelling and sanitary and phytosanitary (SPS) requirements.

As a result there are some administrative complications. For example, different agricultural commodities fall under separate import regimes. Cheese products are subject to quota arrangement by the US Department of Agriculture (USDA).

On the contrary, milk and cream products are not subject to any quota arrangements but require import permits from the US Food and Drug Administration (FDA).

Products such as fresh vegetables and fruits are required to be inspected and issued with a certificate by the USDA in order to be imported into the US. These products must pass all requirements relating to size, maturity, grade and quality before being issued with a certificate.

Furthermore, meat products must undergo certain quarantine and testing requirements before being issued entry into the market. In relation to consumer goods and other manufactured goods there are energy efficiency and labelling requirements which are necessary for the products to be accepted into the US.

The main challenges being faced by Barbadian exporters as it relates to entry into the US market are: SPS requirements, lack of modern legislation in Barbados, lack of modern laboratory facilities, serviced-focused economies, CBI does not cover trade in services, supply side constraints, inadequate infrastructure, high energy and production costs, inadequate access to financing, US policy, and CARICOM states already benefitting from the CPTPA might be jeopardised where intellectual property rights are viewed as not being adequately protected.

The above information was captured from a recent Barbados Private Sector Trade (BPST) team analysis on Barbados’ trade relations with the United States. The BPST is a division of the Barbados Private Sector Association.  


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