of the Central Bank of The Bahamas Act, 1974 and The Bank and Trust Companies Regulation (Amendment) Act, 1980. The latter law requires persons who acquire information relating to the identity, assets, liabilities, transactions or accounts of any customer of a bank, or information regarding any application for a bank or trust license not to disclose the information to anyone without the express or implied consent of the customer. Violators subject to criminal penalties. Exceptions to the secrecy are requirement apply under both laws, such as for a disclosure under the compulsion of a Bahamian court, in the performance of certain duties or with the customer's consent. I have seen no estimate of the potential convention business for The Bahamas if it signs the exchange of information agreement. Some private sector persons in that country are not completely adverse to such an agreement. This exploring the possibilities provides some opening. MULTILATERAL COORDINATION OF RULES OF ORIGIN Finally, some consideration should be given to coordinating the United States rule of origin with the rule used by other countries such as the European Community and Canada which have or are considering preferential arrangements with the Caribbean. Such coordination could contribute the ability of the exporters to opportunities in several markets. The Third Convention of Lome to simplicity, certainty and plan to take advantage of the should be examined in this regard. The Convention was signed in Togo in December 1985. It links the European Economic Community and sixty five countries of Africa, the Caribbean and the Pacific (ACP) in a negotiated, one-way trade, financing, aid, technical assistance and investment arrangement. Protocol 1 to the Convention relates to the definition of the concept of originating products. Under the Convention an originating product may be one manufactured in an ACP state which using non-originating products. The non-originating products must undergo "sufficient working or processing". Fifty percent of the value of the products, parts or components used in the manufacture must originate in an ACP country, with a tolerance of 5 percent. There are various means of complying with the requirement. The primary test is to determine whether the goods obtained from the working/processing are classified under a new tariff heading. The working/processing requirement concerns only the non originating materials used. A material which has acquired originating status and is used in further manufacture is not subject to the change of tariff heading requirement. Another means of complying with the requirement is inclusion on a list of products with the changes that are follows, recognized. An example is as Working or processing of non-originating materials that Manufacture from roughly shaped blocks Finished products - Golf club heads of wood or other materials (ex 97.06) and Smoking pipes, pipe bowls of 60 662 0 - 86 - 23 wood, root or other material (ex 98.11) Certain operations always are insufficient working or processing to confer originating product status, even if there is a change in tariff heading. These exclusions are similar to those in the CBI legislation. with Derogations from the Protocol, valid for three to five years annual extensions possible, may be adopted "where the development of existing industries or the creation of new industries justifies them." The derogation must be granted when the value added to the non-originating product in the ACP state(s) is at least 60 percent of the value of the finished product, provided there is no serious injury to an economic sector. Certain products are excluded temporarily from the Protocol. They include certain waxes, prepared additives for lubricants, and hydrocarbons for use as power or heating oil. The complexity of rules of origin make it reasonable to consider coordination with other countries which provide benefits to the countries of the Caribbean. This cooperation would be in keeping with the notion of encouraging stronger international efforts to coordinate development measures. Thank you, Mr. Chairman and members of the Subcommittee, for allowing me to testify and for your interest Basin Initiative. in the Caribbean Chairman PICKLE. We thank you, and we appreciate your testimony. I'm sure it will be helpful. I'm sorry we have to limit you, but I appreciate your remarks, particularly your thoughts about the rules-of-origin requirements under the CBI. Now we have one other witness on this panel, Bennett Marsh, president of the Trade Advisory Services. Mr. Marsh. STATEMENT OF BENNETT MARSH, ATTORNEY, SANDLER & TRAVIS Mr. MARSH. Mr. Chairman and members of the subcommittee, my name is Bennett Marsh, and actually I'm with the law firm of Sandler & Travis based in Miami, FL. Sandler & Travis is a law firm specializing in trade and customs matters, and from its very first day of existence, it has been representing companies with business in the Caribbean. During the past year, we represented firms doing the following types of trade and investment in the Caribbean: Caribbean king crabs, oil country tubular goods, work gloves, children's apparel, leather products such as handbags and casual footwear, and ceramic tiles. From its initial inception, the Caribbean Basin Initiative was designed as an instrument of economic diplomacy. It had very specific and easily understandable objectives which had the full support of all intended beneficiary nations. The CBI was, is, and must continue to be a means of fostering economic and commercial friendships which had long been neglected. Under the CBI, the United States made significant new promises to the beneficiary countries. These were trade-related commitments and were meant to reassure prospective investors, whether they were from the United States, the region itself, or the rest of the world, that there would be a place in the U.S. market for goods. manufactured in the Caribbean Basin. We told the countries of the Caribbean that the trade element of the CBI would be clear and unambiguous in terms of the access that it was providing. When the administration came before this committee I guess 2 years ago and was asked how the CBI improved upon existing preference schemes like GSP, the administration said that the major difference was the security of access that would be provided under the Caribbean Basin Economic Recovery Act. In lobbying for passage of the Caribbean Basin Economic Recovery Act, the administration repeatedly said that security access was the key. So 2 years after enactment, we have to look carefully at whether that security has actually been provided. The focus of this statement is on one aspect of the CBI duty-free benefits, and that relates to rules of origin. That section, section 213 of the act, accounts for less than one page of text, and yet most people would tell this committee that that is the most difficult part of the entire CBI for an investor or an attorney to understand. So far, the trade community's experience with section 213 shows that the security of access that it had been promised has not been provided by the language in the act. The committee should note that the Customs Service took 5 months after the date of passage of the Caribbean Basin Economic Recovery Act before it promulgated interim rules on rules of origin. That means the CBI actually took effect 5 days before interim regulations on rules of origin were promulgated. Then another year passed before a final rule was adopted by the Customs Service. In other words, the Ways and Means Committee and the Congress promised the CBI 12 years of existence, and, in fact, it's already lost a year. The final country of origin regulations promulgated were supposed to be clearer and less ambiguous. I think the testimony you heard the other day from John Simpson of the Customs Service clearly demonstrated that, in fact, that clearer, less ambiguous regulation was not able to be promulgated. The question relates to passthrough. What is passthrough? The AFL-CIO raged against the CBI because they said it would be a means of passthrough of goods from third countries to avoid tariffs in the United States. Frankly, most Customs attorneys can't define passthrough. They don't know themselves. Is passthrough the conversion of hydrous alcohol in Jamaica into 199 proof ethyl, which employs only 20 workers in a plant that can turn out several thousand gallons of ethyl alcohol a day? Or is passthrough the attachment of microprocessor chips to a circuit board? At one time, the Customs Service said that was a passthrough, despite the fact that that operation would employ 200 or 300 Caribbean Basin nationals in plants in the Caribbean. This uncertainty regarding rules of origin, we do not believe is what the President intended when he introduced this act. We don't think it's what Chairman Rostenkowski had in mind when the bill went before the House of Representatives. It is our belief that courts cannot determine what should be a product of the Caribbean, if this act is going to work properly. I see that my time is up, Mr. Chairman, and let me stop right here. [The prepared statement of follows:] |