Caribbean Region: Review of Economic Growth and ... - USITC

outside of the domestic market.” 77 The lack of knowledge of export opportunities was alsomentioned in hearing testimony for this study. Irwin LaRocque, Assistant Secretary Generalof CARICOM, described programs supported by the Department of Commerce and the U.S.Department of Agriculture under the CBI. He noted the importance of, and expressed hopefor reestablishment of, programs that disseminated information about Caribbean exportersand U.S. importers to facilitate trade and investment. 78Challenges Posed by International StandardsOverviewThe literature indicates that increased stringency of SPS in developed countries measuresprovides both an opportunity and a difficulty for small island countries. On the one hand, onebenefit of being a small island is that distance and isolation provide a natural barrier againstplant and animal disease. 79 As a result, small islands are relatively more disease free thanlarger landmasses. This could be increasingly beneficial when importers impose stringentSPS measures. Josling suggests that island countries should consider diversifying into highqualityagricultural goods, such as premium and organic products. Hearing testimony for thisstudy supported this conclusion, with a caveat. Irwin LaRocque, Assistant Secretary Generalof CARICOM, stated that islands do have greater control at the border, which is anadvantage, but once introduced, pests and disease may become endemic. 80On the other hand, small producers in these countries are finding it increasingly difficult tocomply with more stringent standards that differ across developed countries. 81 For example,the World Bank notes that Jamaica has successfully increased exports of nontraditional foodproducts, but as SPS standards have evolved and become more stringent, Jamaican suppliershave encountered significant market-access challenges because they lack resources toaddress food safety and plant health management issues. The conclusions from the empiricalliterature on standards show that the difficulty faced by Jamaican exporters is a commonexperience in developing countries. Chen et al. show that standards and regulations increasetrade costs and negatively affect the export performance of firms in developing countries.They find that testing procedures reduce exports by 9 percent, and the effect is even largerfor domestically owned firms and agricultural firms that produce highly perishable goods. 82Complying with international standards also has substantial effects on the exports ofCaribbean service providers. Watson examines difficulties with U.S. standards andregulations for service firms in the Caribbean. 83 He cites surveys that indicate a number ofbarriers to entry, such as local presence requirements for accounting firms and local licensingof architectural services providers, and higher U.S. tax rates on insurance premiums receivedby non-U.S. insurance companies. He also reports the results of a survey produced by theBarbados Coalition of Service Industries. Service providers in Barbados had two concerns:77Watson, “Study on Market Access Issues,” 2003, 12.78USITC hearing transcript, January 29, 2008, 138–42.79 Josling, “Trade Policy in Small Island Economies,” 1998, 8.80USITC hearing transcript, January 29, 2008, 155–56.81 Irwin LaRocque, Assistant Secretary General of CARICOM, noted that standards may differ even byU.S. port (USITC hearing transcript, January 29, 2008, 153–54).82Based on an analysis of the 2002 World Bank Technical Barriers to Trade Survey of 619 firms in 17countries (Chen et al. “Do Standards Matter for Export Success?” 2006, 5–6).83 Watson, “Study on Market Access Issues,” 2003, 4–6, 29.3-20