The New York Times
January 30, 1997
Backlash From Nafta Batters Economies of Caribbean

          By LARRY ROHTER

               KINGSTON, Jamaica -- Three years after the United States, Canada
               and Mexico agreed to become a single market as part of the North
               American Free Trade Agreement, their exports to each other are
          booming. But here in the Caribbean, the economies of the United States'
          much smaller neighbors are reeling from the impact of that success and
          finding it nearly impossible to compete.

          From the apparel plants of Jamaica to the sugar-cane fields of Trinidad,
          NAFTA has already resulted in the loss of jobs, markets and income for the
          vulnerable island nations of the region. The capital and investment projects
          that are vitally needed for future growth, officials say, are increasingly
          flowing out of the Caribbean Basin and into Mexico.

          "The stark reality is that Mexico can now export its products to the United
          States free of duty, which makes it more profitable for producers to operate
          from there," Seymour Mullings, Jamaica's minister of foreign affairs and
          foreign trade, said in an interview here. "Putting it very simply, if that is not
          stemmed, it could do untold damage to our manufacturing sector and
          economy as a whole."

          NAFTA's devastating effect on the Caribbean was widely forecast before
          the treaty's passage in 1993 and Washington suggested it would cushion the
          blow by extending similar trade preferences to the island nations.

          However, the Clinton administration's proposals to give the Caribbean
          "NAFTA parity" have twice foundered in Congress in election years and
          now face an uncertain future in a new Congress that has decidedly mixed
          feelings about the benefits of free-trade agreements.

          The Caribbean now exports more than $12.5 billion worth of goods to the
          United States annually, and a recent study by the World Bank estimates
          that more than one-third of that total could be shifted to Mexico if the
          existing trade rules remain in effect.

          The region's once-flourishing apparel sector has been hard hit, officials say.
          In the last two years, more than 150 apparel plants closed in the Caribbean
          and 123,000 jobs have been lost "as a direct result of trade and investment
          diversion to Mexico," according to the Caribbean Textile and Apparel
          Institute, which is located here.

          Textile manufacturing had been one of the Caribbean's few economic
          bright spots. Between 1980 and 1995, Jamaica's garment exports, primarily
          underwear and hosiery, rose from less than $10 million a year to nearly
          $600 million annually, an average annual growth rate of 28 percent.

          Since NAFTA took effect in 1994, Mexican textile exports have grown at a
          rate three times those of the Caribbean as a whole. In 1996, the Caribbean
          Textile and Apparel Institute estimates, Jamaica's garment exports fell by 7
          percent, with 7,000 jobs eliminated.

          Similar or even larger decreases were recorded in Guyana, Belize and tiny
          St. Lucia.

          More than 600 people, about 95 percent of them women, felt the effects of
          NAFTA when the Youngone Garment factory on Marcus Garvey Drive
          here closed just before Christmas. The plant had been making T-shirts for
          export to the United States. But a Mexican factory took the business away
          with a lower bid, prompting the Korean company to shut down operations in
          Jamaica and send its employees home. The company then shipped its
          equipment off to Bangladesh.

          "I lost my job back in '95 and haven't been able to find another one since,"
          said Beryl Davidson, 26, a former textile worker and single mother of three
          small children. "I couldn't pay my rent, and I couldn't feed my kids, so I've
          had to move back in with my parents to survive."

          "But my cousin in Brooklyn tells me there's plenty of work there, so maybe
          I will join her," she said.

          Since NAFTA went into effect, the creation of new jobs in this nation of
          2.3 million people has stopped altogether and overall unemployment has
          risen to 16 percent from 9.5 percent, according to the Statistical Institute of
          Jamaica. Among women working in the apparel sector, the unemployment
          rate is now more than 33 percent.

          Worse yet, the loss of jobs and U.S. support occurs as the pro-U.S.
          government here, with an election due sometime in the next year, is
          completing an economic retrenchment that had been strongly urged by
          Washington. Over the past decade, Jamaica has sold off state companies,
          reduced the budget deficit and increased foreign reserves, but at a high
          social cost.

          "We have no safety net here, no welfare, no Medicare," said Anthony
          Gomes, director of a large trading company. "So when people go to the
          street, it has a serious ripple effect. The way things are going, jobs are very
          difficult to get, and that is not helping our crime rate."

          U.S. officials, however, argue that Jamaica and other Caribbean nations are
          blaming NAFTA for deeper-rooted economic difficulties that will remain
          even if trade rules are eventually eased. In the case of Jamaica, they
          maintain, those include a revaluation of the currency that increased its value
          by 12.5 percent last year, making the country's products more expensive,
          and a host of regulatory obstacles.

          "The main problem here is government bureaucracy," one official said. "It is
          darn near impossible to collect the licenses and approvals you need to get a
          business off the ground."

          Ironically, Jamaica's initial export surge was the result of another U.S.
          program, the Caribbean Basin Initiative, which the Reagan administration
          put in place 15 years ago. A package of aid, trade and investment
          incentives aimed at the private sector, the program was intended to
          introduce the Caribbean to what President Ronald Reagan called "the
          magic of the marketplace," and had Jamaica as its centerpiece.

          But that arrangement has also benefited the United States. U.S. exports to
          the region rose 160 percent in the decade ending in 1995, to more than $15
          billion a year. The Caribbean is the only part of the world where
          Washington recorded a favorable balance of trade every year during that

          The Caribbean Basin Initiative still exists, but places either duties or quotas
          on those products in which Caribbean nations enjoy a competitive
          advantage, such as sugar, textiles and footwear.

          "All we are asking is to be put on a level playing field with Mexico," said
          Paul Robertson, Jamaica's minister of industry, investment and commerce.
          "We are not seeking a handout, but only the opportunity not to be prevented
          from taking full advantage of the North American market."