Although U.S. interests in the Caribbean were both economic and military during most of the 19th century and the first half of the 20th century, the balance took a turn toward economic interests after the end of World War II. At the same time, the prolonged presence of a communist government in Cuba since 1959 also gave U.S. foreign policy toward the region a notable pro-capitalist and anti-Soviet tone, which has had important implications for the region’s economies. During the second half of the 20th century, economic measures were adopted to combat poverty and unemployment, and as a means of promoting an anti-Soviet policy. These policies impacted U.S. possessions in the Caribbean, mainly Puerto Rico (a possession since 1898) and the U.S. Virgin Islands (a possession since 1917) first and most directly. Later, in response to the resurgence of leftist movements in the region, the United States created (in 1983) the Caribbean Basin Initiative (CBI), a free trade zone with customs benefits that were equal to those of Mexico and Canada under the Free Trade Agreement. This had an impact on the economic development of at least 24 countries in the Caribbean region. CBI was the name given to a collection of U.S. legislative acts that allowed the creation of a preferential trade agreement with Central American and Caribbean nations for the purpose of alleviating poverty in the region and, as a result, combating communism. Among the most important pieces of specific legislation are the Caribbean Basin Economic Recovery Act of 1983 (CBERA), the Caribbean Basin Economic Recovery Expansion Act of 1990 (commonly known as the Expansion Act), and the Caribbean Basin Trade Partnership Act of 2000 (CBTPA). To take advantage of the customs benefits under CBERA, countries had to meet certain conditions: countries with de facto communist governments or the appearance of one and countries that had expropriated property belonging to the United States or to U.S. corporations were excluded from potential benefits. By 2000, the number of members had risen to 24. Anguilla, the Cayman Islands, Suriname and the Turks and Caicos never requested membership.
On August 5, 2004, the United States signed the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR), a pact that included the Dominican Republic and five Central American countries: Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. At the time that CAFTA-DR took effect, these six countries automatically ceased to be part of the CBI. With the implementation of CAFTA-DR in 2004, the number of members fell to 18.
The United States is the main importer of Caribbean products. The largest exports to the United States are petroleum and natural gas. It is estimated that 80% of the total production of crude oil and gas is destined for the U.S. market. But the reverse is also true and the Caribbean is an importer of products from the United States, particularly food products. It is estimated that 40% of the food products imported from the United States to the Caribbean region is meant to meet the demands of tourists, most of whom are U.S. travelers.
Finally, another important economic tie between the U.S. and Caribbean economies has arisen due to the numerous migratory movements of Caribbean populations to the United States. These migrants send financial remittances to relatives in their countries of origin. The leading country in remittances is Cuba, where the amount is estimated to reach between $800 million and $1 billion per year (in an $18 billion a year economy). Most of these remittances come from relatives in the United States who are allowed, by U.S. law, to send up to $1,200 each year. This provides nearly 60% of the Cuban population with access to U.S. dollars.
Author: Luis Galanes
Published: May 16, 2012.
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