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The Caribbean Basin Initiative is not a trade agreement. Rather, it is a non-reciprocal grant, by statute of a cold war “anti-communism” commercial program which was extended in 1999 through the “CBI NAFTA parity” Act, providing special duty-free access to the U.S. market for textiles, apparel and other goods made in the 24-country CBI region. The CBI region includes the Central American countries of Belize, Costa Rica, El Salvador, Guatemala, Guyana, Honduras, Nicaragua and Panama, as well as the following Caribbean island nations: Antigua, Aruba, the Bahamas, Barbados, British Virgin Islands, Dominica, Dominican Republic, Grenada, Haiti, Jamaica, Montserrat, Netherlands Antilles, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, and Trinidad and Tobago.
In 1982, President Ronald Reagan created the program as a perk for nations which sided with the U.S. in Cold War politics and demonstrated commitment to “free market” principles. Because the 1994 NAFTA gave Mexico access to the U.S. market on terms yet more favorable than CBI, after NAFTA’s passage a U.S. business coalition led by clothing manufacturers who had relocated to Haiti and Guatemala to avoid unions and pay rock-bottom wages demanded parity to NAFTA for their imports from CBI countries. To qualify for the CBI program and obtain duty-free access to the U.S. market, countries are reviewed on several criteria, including basic compliance with some labor rights established by the International Labor Organization.
Given CBI’s grant of non-reciprocal, favorable market access, many Caribbean countries were not enthused about the 1994 proposal to expand NAFTA throughout the hemisphere. The proposed Free Trade Area of the Americas would require all signatories to adopt a package of one-size-fits-all policies based on NAFTA and grant reciprocal access for the U.S. and 32 other countries to the signatory countries’ market, a requirement many small island nations fear would wreak havoc on their local economies.