-6 In These individuals are usually very influencial f.) Regarding the exchange of information section of Pressure by the United States government on Costa Rican Foreign Minister Carlos Jose Gutierrez should finalize the agreement. Any other information will be provided upon request. Respectully submitted, Mark A. Turken Chairman MAT: mg Chairman PICKLE. Now, Mr. Riojas, would you make your presentation? STATEMENT OF RAIMUNDO RIOJAS, PRESIDENT, AGRO-QUIMICAS DE GUATEMALA, S.A. Mr. RIOJAS. Thank you, Mr. Chairman, members of the subcommittee. My name is Raimundo Riojas. I am president and chief executive officer of Agro-Quimicas de Guatemala, a Guatemalan company whose offices are located in Guatemala City. First, let me thank you for giving me the opportunity to testify on a matter of economical and political importance to both countries. Agro-Quimicas was founded in 1963, building the first pesticide formulating plant in Guatemala. At that time operations were limited to supplying the Guatemalan farmers with locally formulated quality products and technical service to assure proper use of the same. In 1965, under the Incentive Laws of the Central American Common Market, production facilities were expanded to include manufacturing agricultural emulsifiers to supply its own needs and those of pesticide formulators in all of Central America. The main crops being supplied at the time were cotton, coffee, and bananas. The rapid growth of these crops allowed our company to vertically integrate and produce basic materials for the formulation of herbicides and insecticides. This also required the construction of another plant along the Guatemalan and Mexican border. The political unrest in Central America in the late 1970's marked a downturn in the economic boom of the early 1970's. The company therefore focused its efforts toward maintaining our Guatemalan and Central American customer base and to exporting out of the area. The enactment of the CBI in 1983 gave the company an important opportunity. The promotion of nontraditional crops for export, such as off-season vegetables, created a diversified internal market for our products that has become increasingly important. Also, with spare capacity, the U.S. market became a possibility. Presently the company directly employs hundreds of people in Guatemala, Honduras, and El Salvador. Chemical engineers, chemists, and agronomists comprise the bulk of the professional staff. In addition, the activities of our company indirectly foster jobs in other sectors of the economy. The efforts made by this committee and the Reagan administration in enacting CBI should be complimented by all people interested in promoting the self-help concept of the countries of Central America and the Caribbean Basin. Although the centerpiece of this program consists of duty-free entry of certain products, the overall program spirit of mutual cooperation is of key concern and importance. CBI has been a determining factor in accomplishing our company's goals and in promoting economic development in our region. I would like to share with this committee an example of such coop eration with benefits accruing to both Guatemala and the United States. Agro-Quimicas, in conjunction with its affiliated company, Retzloff Delta Co., located in Houston, TX, desired in 1985 to manufacture propanil in Guatemala and import it into the United States for distribution. Propanil is a herbicide used by American rice farmers in the production of their crop. Agro-Quimicas produces a quality product at very competitive prices. Without being required to pay duties on our products, the CBI helps in enhancing the economic attractiveness of our product. Since the number of manufacturers of propanil in the United States is limited, a strong demand for our product existed. In order to import pesticide chemicals into the United States, not only U.S. Customs Service requirements must be met, but also the EPA requirements as well. In that regard, at the time of the propanil importation into the United States, at the initiative of our good competitors, EPA staff advised our company that there were certain paperwork problems associated with our company's registration which might delay the importation of the chemical beyond the growing season. This would have effectively kept us out of the U.S. market for 1985. Once the company was advised of the technical paperwork problems, it immediately furnished the necessary paperwork to EPA. However, a number of EPA staff persons indicated that while the paperwork was now probably in order, they would not be able to review the paperwork until after the growing season. This shipment was to be one of the largest ever made under CBI. It can be reported that ultimately the importance of the CBI Program was recognized by the chief policy officials at EPA. Needless to say, the efforts of the State Department, U.S. Trade Representative, the White House, and our people, EPA became aware of the need to modify its own internal process to expedite the review of the information which we supplied. In the end, the paperwork was reviewed and approved and the chemical was imported for the 1985 season, to the benefit of the American rice farmer, and ourselves. Today there is additional information being reviewed. We hope that a similar action on this information is taken. The continuation of CBI is of vital importance to us and Guatemala. Resources have been committed and efforts are being expended in order to fulfil CBI's goals and our own goals. For CBI has created among business people big and small in Guatemala and the area, the incentive to become more creative and efficient and in the process improve the lot of its fellow men and our country. There is always room for improvement. Adequate guidance and cooperation is always needed from the Federal regulatory agencies that are involved. Information on the program and encouragement to investors to take advantage of the program still has to be improved, along with information to the banking community, so that they may be prepared to offer needed financing required for projects being developed under the program. It may be helpful if the President would issue an Executive order to Federal agencies advising them of the goals of CBI and urging that CBI-designated countries and products be assisted in the regu latory process. In addition, U.S. Embassies should be of more assistance in providing continued information on CBI and on helping to identify ways of making CBI work on a practical level within the U.S. Government. Agency decisions and the timeliness of such decisions can often make the difference as to whether a program such as CBI works. Let me thank you again for the privilege and opportunity to express my thoughts on CBI, and I would be glad to entertain any questions. Thank you, Mr. Chairman. [The prepared statement follows:] STATEMENT OF RAIMUNDO RIOJAS, PRESIDENT, AGRO-QUIMICAS DE GUATEMALA, S.A. My name is Raimundo Riojas. I am President and Chief Executive Officer of AgroQuimicas De Guatemala, S.A., a Guatemalan company whose offices are located on Ave. Reforma 13-70, Zona 9 Guatemala City, Guatemala. I come before this committee to present our experiences and feelings about the Caribbean Basin Initiative (CBI). Agro-Quimicas De Guatemala, S.A. was founded in 1963, building the first pesticide formulating plant in Guatemala. At the time operations were limited to supplying the Guatemalan farmers with locally formulated quality products and technical service to assure proper use of the products. In 1986 under the Incentive Laws of the Central American Common Market, production facilities were expanded to include manufacturing agricultural emulsifiers to supply its own needs and those of pesticide formulators in Central America. The main crops being supplied at the time were cotton, coffee, and bananas. The rapid growth of these crops allowed our company to vertically integrate and produce basic materials for the formulation of herbicides and insecticides. This also required the construction of another plant along the Guatemalan-Mexican border. The political unrest of Central America in the late 1970's marked a downturn in the economic boom of the early 1970's. The company therefore focused its efforts towards maintaining our Guatemalan and Central American customer base as well as exporting out of the area. The enactment of the CBI in 1983 gave the company an important opportunity. The promotion of non-traditional products for export to the U.S. created a market that became increasingly important and gave our company an additional opportunity to fully utilize the capacities of our plants. Presently the company directly employs hundreds of people in Guatemala, Honduras and El Salvador. Chemical engineers, chemists and agronomists comprise the bulk of the professional staff. In addition the activities of our company indirectly fosters jobs in other sectors of the economy. The efforts made by this Committee and the Reagan Administration in enacting CBI should be complimented by all people interested in promoting the self-help concept for the countries of Central America. The U.S. Congress took action on CBI after lengthy consideration with a view toward promoting economic revitalization and facilitating expansion of economic opportunities on the Caribbean Basin Regions. Guatemala, along with other Caribbean nations were made eligible for trade concessions with regard to certain products exported to the United States. It is understood that CBI is intended to be a program of economic cooperation between the United States and designated Caribbean Basin countries. This Committee in its report (dated June 4, 1983-H. Rept.98-266) aptly described CBI as "integrated, mutually reinforcing measures in the fields of trade, investment, and financial assistance to address both emergency problems and long range economic development. The program is designed to foster self-reliance and its success rests primarily on implementation through local and foreign private sector initiative." Although the "centerpiece" of this program consists of duty-free entry of certain products, the overall program spirit of mutual cooperation is of key concern and importance. CBI has been a determining factor in accomplishing our company goals and in promoting economic development in the region. I would like to share with this committee an example of such cooperation with benefits accruing to both Guatemala and the United States. Agro-Quimicas, in conjunction with its affiliated company Retzloff Delta Company, located in Houston, Texas desired in 1985 to manufacture propanil in Guatema la and import it into the United States for distribution. Propanil is a pesticide used by American rice farmers in the production of their crop. Agro-Quimicas produces a quality product at a very competitive price. Without being required to pay duties on our products, the CBI helps in enhancing the economic attractiveness of our product. Since the number of manufacturers of Propanil in the United States are limited, a strong demand for our product existed. However, the domestic purchasers also had to be assured that the contracted for supplies would be delivered in a timely manner. In order to import pesticide chemicals into the U.S., not only U.S. Customs Service requirements must be met, but also the Environmental Protection Agency ("EPA") requirements as well. In that regard, at the time of the propanil importation into the United States, EPA staff advised our company that there were certain paperwork problems associated with our company's registration which might delay the importation of the chemical beyond the growing season. This would have effectively kept us out of the United States market for 1985. Once the company was advised of the technical paperwork problems, it immediately furnished to EPA the necessary information. However, a number of EPA staff persons indicated that while the paperwork was now probably in order, they would not be able to review the paperwork until after the growing season. This shipment was to be one of the largest ever made under the CBI. It can be reported that ultimately the importance of the CBI program was recognized by the chief policy officials at EPA. Through the efforts of the State Department, U.S. Trade Representatives, The White House and others, the EPA became aware of the need to modify its own internal review process to expedite the review of the information which we supplied. In the end, the paperwork was reviewed and approved and the chemical was imported for the 1985 growing season. The continuation of CBI is of vital importance to us and Guatemala. Resources have been committed and efforts are being expended in order to fulfil CBI's goals and our own goals. For CBI has created among business people big and small in Guatemala and the area, the incentive to become more creative and efficient and in the process improve the lot of its fellow men and our country. There is always room for improvement. Adequate guidance and cooperation is always needed from the Federal regulatory Agencies that are involved. Information on the program and encouragement to investors to take advantage of the program still has to be improved, along with information to the banking community, so that they may be prepared to offer needed financing required for projects being developed under CBI. It may be helpful if the President would issue an Executive Order to federal agencies advising them of the goals of CBI and urging that CBI designated countries and products be assisted in the regulatory process. In addition U.S. embassies should be of more assistance in providing continued information on CBI and on helping to identify ways of making CBI work on a practical level within the U.S. government. Agency decisions and the timeliness of such decisions can often make the difference as to whether a program such as CBI works. Let me thank you again for the privilege and opportunity to express my thoughts on CBI and I would be pleased to respond to any questions. Chairman PICKLE. Thank you, Mr. Riojas. Gentlemen, we all have several questions. I am going to start it off by asking the gentleman who is interested primarily in tourism this question: Did the existence of the CBI Programs influence your decisions to invest in either hotels or other tourism operations? Mr. SALOMONE. No, Mr. Chairman. In the case of the La Belle Creole, that hotel, about 180 rooms, started some 20 years, believe it or not, by a gentleman by the name of Claudius Phillipe in New York City along with some French associates. It went into bankruptcy. A group out of California, entrepreneurs, picked it up. We basically came in as a management company. We are there as a management company, as we are all over the Caribbean, to answer your question. Chairman PICKLE. My question specifically is: Did CBI influence your tourism business in those countries? Apparently you have |