We were very delighted by the recent visit here of members of your Association, when we were able to discuss matters of mutual concern for the continued development of cruise traffic to The Bahaman. Lant year, 1,136,454 cruise passengers visited The Bahamas and Apent an estimated $65 million. These figures are not only Impressive, I they are very important to the Bahamian economy. An you know, The Bahamas relies very heavily on tourism. In fact, about 75% of our national income is derived from the tourism industry. The continued growth and development of the cruise industry in very important to the economic well being, progress and stability of The Bahaman. Kindest regards. Yours sincerely, Seller. Belie Baltron B. Bethel bcc: Deputy Prime Minister Deputy General Manager, Cruise Industry Chairman PICKLE. Thank you, Mr. Kane. I understand that Mr. John Keller has arrived and since you are on the next list, we will proceed with your testimony. Mr. Keller is president of the Caribbean Holidays, Inc. Mr. Keller. STATEMENT OF JOHN KELLER, PRESIDENT, CARIBBEAN HOLIDAYS, INC. Mr. KELLER. Thank you, Mr. Chairman. I am John Keller, the president and chief executive officer of Caribbean Holidays, a firm founded in 1932, and since then exclusively concerned with Caribbean tourism and therefore America's oldest specialist in the area. Mr. Chairman, members of the Subcommittee on Oversight of the House Ways and Means Committee, thank you for inviting me to testify here this morning on the impact and effectiveness of the Caribbean Basin Initiative. When the CBI became a reality some 2 years ago, scant attention was given to the tourism and travel industry as a very major element of the Caribbean economies. This oversight was, in my view, a major mistake because tourism is for quite a number of the islands the major export industry, employer and foreign exchange earner. Allow me to cite some impressive facts: First, the hotel and guest house industry employs approximately 80,000 people in the islands. Two, the travel industry in toto employs roughly 275,000 people throughout the Bahamas and the Caribbean. Three, the total investment in hotels and facilities in the region is in excess of $5 billion, much of it American owned. Four, the travel industry spends approximately $1.5 billion for purchases of goods and services. A great deal of what is needed and consumed in this connection is bought from the United States with clear benefit to our economy here at home. More and more, though, is produced in the region, such as in Jamaica, Trinidad, Barbados, and other places. Strengthening the manufacturing industry in these countries, both in terms of productivity enhancements and greater quality and variety of goods. They have, as a result, a better chance to succeed under the CBI in the American market. The tourism industry is both labor intensive and exports a renewable resource. After the visitor leaves, the basic attractions of Sun, sand, and sea remain for others who follow to enjoy. The essential God-given elements stay in place and do not require constant reinvestment. The tourism industry was a very major component of the economies of the islands long before the CBI came into being, and will, I believe, continue to be so. But not without some essential help. Specifically-and I quote the Prime Minister of Dominica, whom I serve as an adviser, incidentally, the Honorable M. Eugenia Charles, the area of infrastructural improvements. The tourism industry needs, if it is to grow, better and more roads, more and cheaper electricity, water in growing quantity, help in areas of ecological concern, such as natural parks, wildlife, both in terms of fauna and flora, conservation, sea pollution concerns, underwater sea park conservation, even clean air in areas of urban concentration is now a matter of concern. Training of local citizens at all levels is also very much a matter of need and priority if more and more of these are to have a stake and future in their island countries. As much as anything, though, Mr. Chairman, what is needed is the unequivocal recognition under the CBI that tourism is an important and serious industry. Thank you. Chairman PICKLE. Thank you, Mr. Keller. I appreciate your concise statement. Now we will hear from Mark Turken, president of the Turco Development Corp. Mr. Turken. STATEMENT OF MARK A. TURKEN, CHAIRMAN, TURCO DEVELOPMENT CO. Mr. TURKEN. Thank you, Mr. Chairman. Before I start my testimony, I would like to preface my remarks by saying that in my opinion the Caribbean Basin Initiative is not working as anticipated. I am going to try to follow the format, the question and answer format that you established in your letter to me, and I will start with that. The products that we manufacture or produce in the CBI-our involvement is in three areas: One, we manufacture for exportation a premium coffee liqueur to the United States and the Caribbean markets. We are also involved in a world class health spa that is not involved in CBI, of course. We were involved in an agro-opportunity which was the production and exportation of cut flowers to the United States, but we were forced to abandon that project as a direct result of CBI inefficiency. The only country that we operate in is Costa Rica. The markets for our exports are primarily the United States and secondarily Canada and the Caribbean. The products that we do export are duty-free under CBI. The next question is how long has our company operated in these countries or in the country, which is approximately 2 years, although we have had a relationship with Costa Rica for the past 6 years. The next question, is our company a participant in CBI? If not, what problems prevented our participation. Regarding the liquor product, we are a participant in the CBI. Regarding the agro-opportunity, we are not a participant, as I said before, due to the inefficiency of CBI, summarized as follows. As a direct result of the CBI Program, encouragement from the United States Department of Commerce, both in Costa Rica and the United States, availability of AID funds and numerous positive conversations with OPIC regarding the qualification of our product and ultimate approval from OPIC, the following action was taken: Land was put under contract. Complete engineering and economic feasibility studies were completed, OPIC registration was completed, and a loan commitment for AID funds through Banex was issued. As our project was contingent upon OPIC insurance, which was mainly to cover the convertability of currency risk, we proceeded very carefully in this area. In accordance with a letter from OPIC's application officer, Jacqueline Crumpler, dated March 11, 1985, wherein she requested early discussion regarding availability and qualifications for insurance, and I read from that letter-it says that: Insurance may at times be unavailable or limited as to type or amount of coverage in certain companies. Projects involving industries which have experienced significant losses in employment or sales in the United States, or projects which have other detrimental economic or development effects may also be ineligible for insur ance. Given that, we spoke with Mr. David Cralle, who is the Latin American insurance officer for OPIC. We had a number of conversations with him in May 1985. The results of these conversations were unquestionably that our enterprise qualified for OPIC insurance. The only obstacle to insurance would be time, as the process works slowly. He indicated that the main time delay would be the necessary approvals from the Costa Rican Government. I indicated that I could pull some strings and get these approvals in 2 to 3 weeks, and in return he promised that he would have our approval in a few weeks, although he did not believe that we could get these approvals that normally take 4 to 6 months. By June 5, approximately 3 weeks later, I had the approvals. Based on Mr. Cralle's encouragement, corporate entities were established, well-drilling operations commenced, orders finalized, distribution channels set up, and personnel hired, which involved thousands of dollars of expense and hundreds of hours of executive travel time. On October 2, 1985, we received a rejection from Mr. Cralle for reasons which I think are totally incorrect, and if he did his homework, I would be very surprised, and I read a passage from his letter: After careful research, we have concluded that annual exports from your proposed Costa Rican facility would probably displace domestic production of pompon chrysanthemums by U.S. firms. The anticipated increase in U.S. imports resulting from your project is likely to result in a significant net loss of U.S. jobs. I have done my own research, and the information that I have come up with, with people that I think are as credible as the ones he may or may not have contacted, indicates the complete opposite, and I read very quickly from-I'm going to have to just summarize on this. The letter that I have clearly indicates the complete opposite of what Mr. Cralle said, so if the man didn't do his homework properly, what he did is to completely destroy a project that could have increased employment in Costa Rica, increased employment in the United States, help the balance of payment problem in Costa Rica; all of the objectives that CBI is trying to accomplish would have been satisfied. Unfortunately, this did not take place. Should I continue or should I quit, sir? Chairman PICKLE. No, we will go ahead, but I think in the questioning period, you will have a chance to expand further, because I |