Caribbean Basin Struggles in NAFTA's Shadow

10 February 1997

While the tide of exports between Canada, the U.S. and Mexico is high, Caribbean industries are struggling to stay afloat in NAFTA's wake. The Caribbean Basin, not included in the trade pact, has lost jobs, markets and income as a result of NAFTA. Caribbean officials say that investment needed for future growth in the region is being diverted to Mexico.

Since Mexico can now export products to the U.S. duty-free, says Jamaica's Minister of Foreign Affairs Seymour Mullings, it is more profitable for producers to operate from there. Mullings worries that this trend will do "untold damage" to the manufacturing sector and the region as a whole. Caribbean Basin exporters plan to renew requests to Canada, Mexico and the U.S. for "NAFTA parity." Before NAFTA's passage in 1993, the U.S. had suggested that it would try and ease the anticipated devastating effects of NAFTA on the Caribbean by extending similar trade preferences, or "NAFTA parity," to the region. Since then, efforts toward "NAFTA parity" have failed in the U.S. Congress, and any new efforts towards that end face an uncertain future as the U.S. struggles with mixed feelings about free-trade agreements.

The World Bank estimates that more than a third of the Caribbean's annual $12.5 billion in exports to the U.S. could shift to Mexico if the existing trade rules remain in effect. Job-creation in Jamaica since NAFTA was implemented has stopped, and unemployment has risen to 16% from 9.5%. The textile industry has been particularly hard hit, with a reported 150 apparel plants closed. The unemployment rate among women in the apparel sector is now greater than 33%. Skeptical U.S. officials contend, however, that Jamaica and other Caribbean countries are using NAFTA as a scapegoat for deeper economic problems that would exist even if "NAFTA parity" were in place.

"Caribbean Garment Makers' NAFTA Fear," FINANCIAL TIMES, February 6, 1997; "Caribbean Reels in NAFTA's Wake," INTERNATIONAL HERALD TRIBUNE, January 31, 1997.

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