The Government for its part strongly supported the initiative

and put several support mechanisms in place to assist local exporters

and encourage foreign investors. As a demonstration of its determination

to derive maximum benefit from the CBI, the Government has organised several investment missions from the United States to Trinidad and Tobago. At the invitation of the Government, some thirty US business executives participated in investment missions to Trinidad and Tobago in 1985. They were received by the Prime Minister and senior government ministers and officials and had special meetings with members of the local business community who had been thoroughly briefed and advised beforehand of their interests. Visits to the industrial estates, to factories and factory sites were arranged.

Since then, several of the participants have returned to Trinidad and Tobago on their own for follow-up discussions. Two have since is finalised arrangements for manufacturing operations and it anticipated that negotiations on other joint ventures may be concluded this year.

The Prime Minister of Trinidad and Tobago himself led a Mission July and of Trinidad and Tobago businessmen to Europe and the Far East in/August, 1985 seeking both new investment opportunities and markets for Trinidad and Tobago products. There was considerable interest in Trinidad and Tobago as a location for new investment and follow-up negotiations in Trindiad and Tobago have since taken place.

The Government encouraged the participation by the local business community in investment conferences in Miami and elsewhere and facilitated their participation in product specific trade fairs in New York, Los Angeles, Miami and Atlanta.

Following the CBI Conference in Miami in November, 1985, the Departments of Commerce of various states including Michigan, Florida, Ohio, New York/New Jersey have expressed an interest in organising investment missions to Trinidad and Tobago in 1986. These activities are expected to result in an increased flow of investment from the United States to Trinidad and Tobago.

There is no doubt that the CBI has contributed to spurring efforts in search of investment in the United States and elsewhere and to

encouraging the Trinidad and Tobago private sector to find export markets in the United States and elsewhere.

Trinidad and Tobago and the U.S.A. have a Double Taxation Agreement of many years' standing, which was re-negotiated just last year. Moreover, Trinidad and Tobago was certified by the U.S. Treasury as being an eligible site for FSC's, under the revised FSC programme. Such certifiction is evidence that the U.S. Treasury is fully satisfied that the Government of Trinidad and Tobago has met its commitments under the exchange of information provisions of the Double Taxation Treaty.

Nevertheless, the Government of Trinidad and Tobago is interested in the benefits to be gained under a CBI TIEA, and has already held exploratory talks with the U.S. Treasury about negotiating such an agreement. Unfortunaately, however, the exchange of information required under the CBI-TIEA's would constitute a violation of Trinidad and Tobago's own Constitution. Under our own laws, even the Government of Trinidad and Tobago may not require the Trinidad and Tobago Commissioner of

Inland Revenue to divulge certain tax information and could not, therefore, agree to provide it to a foreign government.

10. What Do You Hope to Accomplish in the Remaining Ten Years of the CBI?

The Government of Trinidad and Tobago and the private sector share a commitment to diversify the economy and to make it more resilient, to attract a significant amount of new investment and to significantly boost exports. To this end, relevant machinery in government is being reorganised and the processes used in business modernised. It is hoped that within twelve to eighteen months all these processes will have coalesced to produce a more vigorous export-oriented

economy.

Its

Notwithstanding these efforts to diversify into non-traditional areas of activity, the fact remains that Trinidad and Tobago's economy has been, and will continue to be, dominated by the energy sector. exports of petroleum products, petro-chemcials and other energy-based products must continue to form the basis of the country's export earnings. Any actions taken to restrict or otherwise deny access to the U.S. market of these products would have severe adverse consequences for Trinidad and Tobago. The immediate damage caused to the economy by such restrictions could well jeopardize Trinidad and Tobago's whole development effort and nullify the very purpose of the Caribbean Basin Economic Recovery Act.

Report Language for Congressman Schulze on CBI

During oversight hearings on the Caribbean Basin Initiative (CBI), it became evident that tourism is a major source of revenue for our Caribbean friends and neighbors. In my view, this fact was not adequately recognized during the discussion or drafting of CBI legislation.

As an

example of what tourism means to various Caribbean economies,

the Ministry of Tourism for the Bahamas estimates that 75% of the Bahamian national income is derived from the tourism industry, while Jamaica estimates that 40% of its national income is derived from tourism. In light of this and other statistics, I believe that any measure the full Committee might take with regard to the development of tourism would be worthwhile. Tourism is a labor intensive segment of most island economies and must compensate for shortages of natural resources and export products. Because of the decline in sugar, banana, bauxite and other basic industries in these island economies, tourism has become of even greater importance.

One industry which testified before the Oversight Subcommittee represents a tremendous infusion of tourist dollars to many nations of the Caribbean. In 1985, the passenger ship industry took 1.2 million passengers to 18 of the 21 countries included in the Caribbean Basin Initiative. These cruise passengers made 4.2 million island visits.

With a very conservative estimate of $50 expenditure per

passenger in each port, these port visits represented a total of more than $200 million in revenues to Caribbean countries

in 1985.

In regard to specific islands, cruise passengers poured $65 million into Jamaica; $12 million into the Caymans and $114 million into the U.S. Virgin Islands in 1985. In addition, many of the passenger lines employ hundreds of Caribbean nationals who might earn as little as $2 per day or less in their respective countries. When employed by the passenger lines, these same nationals earn from $12,000 to $35,000 per year and are provided medical coverage, room and board, and liberal vacation policies. They are also protected by strong international unions. In 1985, just three cruise lines operating in the Caribbean employed 2,100 Caribbean nationals. One line that testified before the Oversight Subcommittee estimates that the 1,000 West Indians employed on its ships in 1985 alone returned $20 million to their families back home.

Four cruise lines operating out of Miami, Florida operate villages on various Caribbean islands. All of these operations have added employment opportunities as well as additional economic benefits for islands in the Caribbean. One cruise line recently spent $2.5 million on infrastructure in a Haitian village with a population of only 1100 people. This line employs 100 Haitians at that village and estimates it will spend $18,000 per month in operating expenses, with a total operating budget for 1986 of $500,000. This cruise

line also provided the village with a sewage system, water system and other facilities. Two other cruise lines spent $3 million and $5 million respectively to create other

island villages.

These villages create an environment of

economic growth by providing island infrastructures, jobs, increased development and added tourism.

I believe the full Committee must do what it can to increase the number of cruise passengers to the Caribbean Basin. One way we can do this is to reinstate the tax deduction for conventions held aboard passenger vessels only with respect to those vessels serving the Caribbean Basin.

However,

A tax deduction for conventions held at land-based hotels in the Caribbean is presently allowed. many island nations do not have the infrastructure (hotels, airports, etc.) to host conventions of any significant size. Passenger vessels make little or no demand on island infrastructures and can serve conventions of up to 500 people, taking those groups to many islands of the Caribbean which would otherwise be incapable of hosting convention groups. It should be noted that most hotels in the Caribbean only enjoy a large influx of tourists during the winter months from December through February. Forty passenger ships currently serving the Caribbean take passengers to island nations 52 weeks per year, every year.

The current prohibition of tax deductions for conven