Elizabeth Morgan | Marking the 250th anniversary of US Independence

On Saturday, July 4, the USA will mark its 250th anniversary of independence since 1776. The following article, updated, was first published in The Gleaner of June 12, 2019.

CARICOM-US relations: A chequered trade history

BRITISH COLONIES
AND INDEPENDENT REPUBLIC

Besides the United Kingdom (UK/Britain) and Canada, the United States of America (USA) is the oldest trading partner of the British West Indies (BWI)/Commonwealth Caribbean/Caribbean Community (CARICOM) countries.

From 1607-1776, there were 13 British American colonies. With the American Revolution, they declared their independence on July 4, 1776. Prior to this, trade between these colonies and the BWI was vibrant due to the British mercantilist system of preferences and their proximity.

With US independence, up to 1822, the British discouraged or prevented trade with the USA, considered a foreign power. A black market, however, still flourished between the BWI and USA.

By 1830, trade between both territories formally resumed. BWI sugar was facing competition in the UK market after 1846 and thus began the export of its sugar to the USA.

The Jamaica-US banana trade commenced after 1868, initiated by American Captain Lorenzo Dow Baker. However, after the 1898 Spanish-American War, which saw the US gaining control in Cuba and Puerto Rico, the US focused on trade with those countries and other Latin American countries. US sugar and banana imports from the BWI waned. Note that tourism grew out of the banana trade.

BWI sugar exports did not resume until after the 1959 Cuban Revolution. Countries, like Jamaica, received large quotas. From 1933, Jamaica began to export bananas exclusively to Britain under its preferential scheme. The US’s United Fruit Company remained involved in the BWI banana trade, but the British market was reserved for BWI bananas. This fuelled a dispute over access to that market with US companies, including United Fruit and its successor (Chiquita Brands), and their Latin American banana producers that would not be resolved until 2009 in the World Trade Organization (WTO), which superseded the General Agreement on Tariffs and Trade (GATT), established in 1948. This banana case was resolved 60 years later in the US’s favour. In dispute settlement, recall also the 2003-2007 gambling case in which the US ignored the WTO’s ruling favouring Antigua and Barbuda.

By 1907, oil drilling and export began in Trinidad and Tobago with US involvement. By the 1950s, US companies were mining and exporting bauxite and gypsum from Guyana and Jamaica. Jamaica and other territories were also developing manufacturing, with textiles and clothing being an important sector. With increasing trade, by the 1960s, the USA became the principal trading partner of Jamaica and other Commonwealth Caribbean territories.

NEGATIVE IMPACT
OF US TRADE POLICY MEASURES

Concerned about the loss of jobs and protecting its domestic industries in the 1960s, the US imposed high tariffs on textiles and clothing imports. This policy led to the demise of the industry in Jamaica and elsewhere just when these Caribbean countries were becoming independent.

Caribbean sugar exports to the USA also declined from the 1980s, as the US further supported its domestic producers through subsidies and quotas limiting imports of sugar. GATT dispute settlement and the use of domestic high fructose corn syrup as a sweetener further reduced sugar exports to the USA.

After the 1970s, Jamaica also lost its position as a major bauxite/alumina producer. Production shifted away from the Caribbean to Australia and Africa. Discovery Bauxite Partners is the only US company still operating in Jamaica, today.

BENEFITING FROM US PREFERENTIAL TRADE ARRANGEMENTS

The Commonwealth Caribbean/CARICOM did not export to the US under a preferential scheme until the US implemented the GATT/UNCTAD Generalized System of Preferences (GSP) through its 1974 Trade Act. The US GSP expired in 2020 and was not renewed.

The Caribbean Basin Initiative (the Caribbean Basin Economic Recovery Act (CBERA) arrived in 1983, providing non-reciprocal, duty-free access into the US market for a wide range of products originating in Central American and Caribbean beneficiary countries.

CONTINUING UNCERTAINTY IN
US INVESTMENTS
AND POLICIES

Through bilateral agreements with the USA, the textiles and clothing industry (807) was revived in Jamaica in the 1980s, employing at its peak about 40,000 women. After 1994, that sector again declined as the US entered into the North American Free Trade Agreement (NAFTA) and Mexican producers got better US market access. By the time NAFTA-parity was granted in 2000 under the Caribbean Basin Trade Partnership Act (CBTPA), the Caribbean textile and clothing industry was surviving only in Haiti.

The California-based Intel Corporation, a semiconductor manufacturer, had established a subsidiary in Barbados and was a large employer, but suddenly announced its closure in 1986.

Ethanol exports from Jamaica and other Caribbean countries to the USA also grew under CBERA/CBPTA. Ethanol exports, too, evaporated as the US quota disappeared. By 2015, most companies had exited the trade.

With increasing migrants from the Caribbean, exports of Caribbean non-traditional products expanded. A key source of trade and investment is now business process outsourcing (BPOs), or global digital services. The US continues to be the primary source of tourist arrivals for the region.

In the 21st century, the US remains the principal trading partner of CARICOM countries, possibly in both goods and services with online shopping increasing. The US continues to have a trade surplus with them, except for Trinidad and Tobago, and Guyana, which, in the last decade, started to produce and export oil through a US company.

Since 2025, the US Trump administration has imposed tariffs on goods imported from CARICOM countries, overriding the CBERA/CBPTA.

With proximity, size, and the diaspora, the trade relationship between CARICOM countries and the USA will retain its importance as history demonstrates. In spite of recent US trade policy changes and the reason posited for them, that the US is being disadvantaged, that country remains the principal beneficiary in this trade relationship with CARICOM countries, having a trade in goods surplus of US$7 billion in 2025. US policies remain unreliable and its interests are paramount.