Curaçao and the Caribbean Basin Trade Partnership Act

In cooperation with the Curaçao Chamber of Commerce and the Ministry of Economical Development, the U.S. Consulate General in Curaçao organized an information session on September 12th, 2019 regarding the U.S. Trade Preference Program. The presentation was given by Magaly Garcia, Regional Director of the Office of the U.S. Trade Representative. She visited Curaçao on September 12th and 13th to provide an overview of the trade preference program, the Caribbean Basin Trade Partnership Act (CBTPA) and to describe the program benefits.

ROLE OF THE OFFICE OF THE U.S.  TRADE REPRESENTATIVE (USTR) The USTR is the cabinet-level agency, which coordinates the U.S. Trade Policy. It acts as a lead negotiator, administrator of prefer­ence programs and it represents the U.S. at the World Trade Organization (WTO). Currently, the USTR is led by Ambassador Robert Lighthizer. The Office of the Western Hemisphere administers the Caribbean Basin Economic Recovery Act (CBERA) and CBTPA.

CARIBBEAN BASIN INITIATIVE For the U.S., the trade programs known collectively as the Caribbean Basin Initiative (CBI) remain important elements of the economic relations with neighbors in the Caribbean. CBI aims to facilitate the devel­opment of stable Caribbean Basin econ­omies by providing beneficiary countries with duty-free access for most goods into the U.S. market.

The CBI was launched in 1983 through CBERA and expanded in 2000 when the Trade and Development Act of 2000 was signed, which also included Title II, referred to as the CBTPA. The CBI expanded again in 2002 by the Trade Act of 2002. Additional benefits were created for Haiti by amending the CBERA to include the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 (HOPE), the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2008 (HOPE II) and the Haiti Economic Lift Program of 2010 (HELP). HOPE established new rules of origin that made Haiti eligible for new trade benefits on apparel imports and enhanced sourcing flexibility for apparel pro­ducers in Haiti. HOPE II modified the existing trade preference programs under HOPE and HELP provided duty-free treatment for addi­tional textile and apparel products from Haiti. These preference programs are scheduled to expire on September 30th, 2025.

On a bi-annual basis, the USTR is required to submit a report to Congress regarding the results of the general CBI eligibility criteria. This report provides an important opportu­nity to evaluate the effects of these expan­sions on CBI trade preferences. The latest CBI report is available on the USTR website. On an annual basis, the USTR is required to submit a report to Congress regarding the implementation of HOPE II. The latest HOPE II report is also available on the USTR website.

CBERA AND CBTPA PROGRAM OVERVIEW CBERA was implemented on January 1st, 1984 and has no set expiration date. The CBTPA was implemented on October 5th, 2000 in order to reach parity with North American Free Trade Agreement (NAFTA) benefits. Both in 2008 and 2010, the CBTPA was renewed with bipartisan support. CBTPA is currently authorized until September 30th, 2020. U.S. Representatives introduced legislation to reauthorize CBTPA until 2030, but an act of Congress and a waiver approved by the WTO are needed to extend the program. The USTR is currently preparing a report due to Congress at the end of this year on the operation of CBI.

The CBI, in which CBTPA countries are a sub­set of the CBERA countries, provides enhanced access to the U.S. market by providing duty-free treatment to originating goods of partner countries and territories. Currently, there are approximately 5,800 products that are covered under CBERA and CBTPA. In 2018, U.S. total goods trade with CBTPA beneficiary countries was estimated at $16.7 billion, with a U.S. sur­plus of $3.3 billion. Curaçao is one of the part­ner nations of the program and therefore may potentially benefit from CBTPA through duty-free access for most goods into the U.S. market.

THE CBTPA PROGRAM BENEFITS For apparel made in the Caribbean, CBTPA has significantly expanded their preferential treat­ment. An example of this preferential treatment is duty- and quota-free import for apparel and fabrics made in the CBI. However, the rules of origin should be taken into account. CBTPA ben­eficiary countries are also exempted from paying the merchandise processing fee collected by the U.S. Customs Border Protection for all imports. Exporters should fill in the needed paperwork when sending their goods and mark CBTPA-beneficiary on it.

CBTPA also provides a NAFTA-equivalent tariff treatment for certain items previously excluded from duty-free treatment under the CBI pro­gram. Examples of these items are, among other things, footwear, canned tuna, petroleum prod­ucts, watches and certain leather-related goods.

RULES OF ORIGIN CBPTA provides preferential tariff treatment to eligible products if those products meet the rules of origin. These rules specify how goods must be processed in order to qualify as originating. Most rules of origin are expressed in two ways: change of tariff classification or regional value content. Rules of origin for mineral fuels are dif­ferent, as they require certain kinds of processes to take place in a CBTPA country.

DEFINITION OF ORIGINATING GOODS

• The good is wholly obtained or produced entirely in the territory of one or more of the CBTPA countries from exclusively originat­ing materials. • Non-originating materials used as parts of the production of the good undergo an applicable change in tariff classification as a result of production occurring entirely in the territory of one or more of the CBTPA countries.

• The good is produced entirely in the territory of one or more of the CBTPA countries but where one or more of the non-originating materials provided for as parts used in the production of the good does not undergo a change in tariff classification, the regional value content of the good is not less than 60% of the transaction value.

• For mineral fuel products, chemical reaction and processing rules apply. For instance, diluents from a non-CBTPA country may be used for heavy oil dilution in order to facilitate the transportation between CBTPA countries, provided that the diluents con­stitute no more than 40% by volume of the good.

INCREASING DUTY-FREE EXPORTS TO THE U.S. Over half of U.S. imports of chemical and related products, energy-related products, textiles and apparel and just under half of agriculture products eligible for duty-free treatment under CBERA and CBTPA are paying duties. Agriculture exports are increasing under CBERA and could represent further increases under both prefer­ence programs.

CBERA & CBTPA COUNTRIES There are currently 17 CBERA beneficiary countries of which 8 are also beneficiaries under CBTPA.
CBERA beneficiary countries:
1. Antigua and Barbuda
2. Aruba
3. The Bahamas
4. Barbados
5. Belize
6. British Virgin Islands
7. Curaçao
8. Dominica
9. Grenada
10. Guyana
11. Haiti
12. Jamaica
13. Montserrat
14. St. Kitts and Nevis
15. St. Lucia
16. St. Vincent and the Grenadines
17. Trinidad and Tobago

CBTPA beneficiary countries:
1. Barbados
2. Belize
3. Curaçao
4. Guyana
5. Haiti
6. Jamaica
7. St. Lucia
8. Trinidad and Tobago

In 2018, most of Curaçao’s exports entered the U.S. under no program. Curaçao’s exports under CBERA were mostly rum and organic skin cleanser products. Curaçao’s energy-re­lated product exports eligible under CBERA and CBTPA are being exported to other markets at Most Favored Nation (MFN) rates; these rates are higher than the CBTPA rates. Currently, Curaçao may not be taking full advantage of the pro­gram, but with further informational seminars for all businesses that export their products to the U.S., the rate taking advantage of the CBPTA program should improve.
More information about exporting products duty-free under CBERA and CBTPA can be found on the website of the USTR