CARIBBEAN BASIN: IMPACT OF AN END TO THE US SUGAR QUOTA

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CIA-RDP90T00114R000100390001-5
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August 20, 1987
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II I~ II ~ IIIIII'llll'lIIIIII~!~~ III III I IIIIIIILI II lllllllilllliIIIIIIII I~II'IIIIIIIIIIIII I II'II II I I ' IVIII Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 Central Intelligence Agency DATE DOC NO~f 1 OIR .3 P & PD__L _ Washinpn. D. C 20505 DIRECTORATE OF INTELLIGENCE 20 August 1987 CARIBBEAN BASIN: IMPACT OF AN END TO THE US SUGAR QUOTA Summary An abrupt termination of US sugar quotas, in our opinion, would create problems for a number of Caribbean and Central American countries already experiencing severe economic difficulties. Although .area leaders generally recognize the need to reduce dependence on the volatile sugar market, the sudden elimination of the quota system would undermine foreign exchange earnings, raise unemployment, and potentially slow. efforts to diversify agricultural exports. The negative effects would be particularly strong in the Dominican Republic, St. Kitts-Nevis, and Belize, where preferential sugar sales to the.United States account for a significant proportion of total export earnings. .Even a gradual phasing-out of quotas would cause some economic dislocations, although the continuation of generous foreign assistance--in the form of European Economic Community (EEC) sugar quotas for most This typescript was requested by Eugene J. McAllister, Special Assistant to the President and Executive Secretary, Economic Policy Council,..The-White House. It follows an earlier typescript.-that-more generally assessed international reactions to. US sugar po.licy done b the Office of Global Issues. This report was prepared:by Office of African;:~and Latin American Analysis, with a contribution by Office of Global Issues. Comments and queries are welcome and may be directed to the Chief, Middle America- Caribbean Division, ALA 25X1 25X1 25X1 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 Caribbean islands and large-scale US aid to Central American countries--would cushion the impact. Any worsening of the economic situation resulting from an end to the quota system also would create additional political problems for fragile democratic governments in several countries, but we doubt such action would provoke a domestic crisis anywhere, with the possible exception of the Dominican Republic. The abrupt lifting of the US quota almost certainly would harm US relations with area governments, at least over the near term. At a minimum, such action would generate anti-US sentiment and severe criticism. It would also probably further undermine support for the Caribbean Basin Initiative and raise fears of deep cuts in the US economic aid program. Without special access to the US sugar market, the Caribbean Basin countries probably would lobby harder for increased economic assistance and could become less cooperative with Washington in counternarcotics efforts and other areas of mutual concern. Dependence on the US Sugar Quota Dependence on the US sugar quota varies widely. Among the Caribbean islands, the Dominican Republic and St. Kitts-Nevis are the most heavily dependent, deriving about 25 and 50 percent of their respective export earnings from sugar sales (see Table 1).1 According to the International Sugar Organization, sales to the United States under the sugar quota comprise nearly two thirds of the Dominican Republic's sugar exports and almost 20 percent of St. Kitts-Nevis' (see Table 2). Other Caribbean countries depend substantially less on the US sugar quota. IMF and World Bank reports indicate that sugar represents less than 10 percent of the total export earnings of Jamaica, Haiti, Trinidad and Tobago, and Barbados. Moreover, under the Lome Convention, these countries--aside from Haiti-- depend largely on European Economic Community (EEC) quotas, which have increased slightly in recent years to help cushion reductions in US purchases. According to US Embassy reports, Jamaica and Trinidad and Tobago consider the United States to be a residual market for sugar not sold to the United Kingdom or other EEC countries. The Central American countries--with the exception of Belize, where sugar accounts for 25 to 40 percent of export earnings--earn only a small share of their export earnings from This paper considers only those countries presently covered under the Caribbean Basin Initiative. 2 SECRET Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 I' I I I .1111 11!IILIUIIIIIIIIIIIIIIIIIIIIGIII1 I11 1~flJlllLIL T((ll~[IL~IIJIllI 1~IL~11~1 11111'II 11 L111IIIII' II 1 1 1 1 1 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 ? SECRET sugar. Their heavy reliance on the US market, however, has magnified the impact of recent cuts in the US quota (see Figure 1). In 1986, for example, about 40 percent of the region's total sugar exports went to the United States. According to Embassy reporting,, Costa Rica, El Salvador, and Panama rely on the US market to absorb nearly 60 percent of their sugar.exports. Guatemala and Honduras shipped about 25 percent of their exports to the United States in 1986,-while Belize. sent roughly 50 percent. Special access to US and European markets, along with domestic subsidies, has helped to insulate the uncompetitive, labor-intensive sugar industries of the Caribbean Basin from low world prices. Exporters protected by US and--in the case of most Caribbean islands and Belize--EEC quotas'receive premium prices for their sugar, ranging between 17 and 20 cents per pound. Even so, lack of mechanization, relatively high labor costs, generous domestic support prices, and inefficient management of nationally. owned sugar companies have kept domestic production costs near the US and EEC preferential prices. Most. producers argue, correctly in our view, that the steep financial. losses incurred by selling sugar on the world market--at the.current average price.of six cents per pound--would be unsustainable (see Figure 2). Coping with Low Prices and Quota Reductions Individual countries have adjusted in varying degrees to low world sugar prices and previous US reductions in quotas, largely by implementing policies designed to improve the profitability of their sugar industries and to develop higher-value exports. -- The Dominican Republic has encouraged production of pineapples, melons, tomatoes, and other crops on some land formerly used for sugar. In addition, the government has aggressively promoted foreign investment in agroindustries and tourism-to cushion the impact of falling sugar revenues.. --..By increasing mechanization and upgrading some sugar mills, Jamaica's Prime Minister Seaga since 1981 has managed.to close three state-owned sugar mills and lay off 10,000 workers without 'reducing production. -- The Haitian Government, in recent years a net importer of cheaper foreign sugar, has closed unprofitable sugar mills, according to the US Embassy, and laid off more than 3,000 sugar mill workers. -- Trinidad and Tobago recently announced plans to dismantle the government's sugar monopoly, its biggest moneylosing firm,,and to.sell the land at reduced prices.. 3 SECRET Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 1.. J..;. i Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TOO114R000100390001-5 -- Barbados' efforts to promote tourism, manufacturing, and agricultural diversification are paying off; these sectors have absorbed many displaced sugar workers, and electronic components have replaced sugar as the country's single largest export item. -- By contrast, St. Kitts-Nevis lacks the funds to mechanize its sugar industry and expand irrigation to produce alternate crops. As a result, the 40-percent drop in sugar export earnings has not been made up in other sectors, and foreign merchandise sales dropped by 25 percent between 1981 and 1985. Nevertheless, only two Caribbean countries have significantly reduced their sugar production. Barbados and the Dominican Republic cut production by 27 and 14 percent, respectively, between 1981 and 1985. Bridgetown attributes much of its success to the use of cash incentives to shift production to such alternate crops as cotton, peanuts, and onions and to convert marginal lands to pasture. The US agricultural attache and press reporting indicate successful government incentives to cultivate alternate crops were partly responsible for production declines in the Dominican Republic; reduced operating capital and problems in contracting Haitian sugar cane workers, however, also were factors. Central American countries generally have done somewhat less than their Caribbean counterparts to curtail dependence on the US sugar market. Moreover, maintenance of high domestic sugar prices and other direct subsidies for cane producers have helped to increase production in five of the six countries since 1980, notwithstanding declines in the US quota. Output and employment in the sugar industry have increased particularly fast in El Salvador and Guatemala, even though overall agricultural production has slumped in both countries. In Honduras, only 5 percent of land allocated to cane production has been shifted to other crops, primarily basic grains. The notable exception to this trend is Panama, where sugar production has declined by 40 percent in the last three years as private growers have shifted nearly one third of.the land once devoted to sugar cane to other crops. Attempts to boost sugar sales to nontraditional markets have met with some success, although the industry's relative lack of competitiveness is hampering these efforts. El Salvador's state sugar monopoly, for example, lost three cents on every pound of sugar it sold to non-US markets in 1986, according to Embassy reporting. Guatemala, Honduras, and Costa Rica have boosted sales to new markets, particularly the Soviet Union, and Belize recently signed an agreement to export sugar to the People's Republic of China, according to press reports. Despite the poor performance of Central American sugar industries, government mismanagement and poorly developed 4 SECRET Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 I I -J--. J I ... _ I . Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TOO114R000100390001-5 infrastructure have hampered diversification to more profitable agricultural crops and byproducts. In El Salvador and Honduras, for example, a failure to maintain competitive exchange rates has stifled trade and private investment. Throughout the region, the poor quality of roads is a primary impediment preventing increased production of perishable fruits and vegetables, according to Embassy reporting. Meanwhile, the fall in world oil prices has largely sidetracked efforts to develop nascent industries to produce fuel alcohol from sugar in Costa Rica, El Salvador, and Belize. Domestic Impact of Quota Termination An abrupt end to the preferential imports under the US sugar quota for the Caribbean Basin would have negative economic and political ramifications for the region. Such a move would substantially hurt the region's ability to sustain its sugar industries financially and cause sizable foreign exchange losses in some countries, at least over the short run. For example, assuming these countries could sell the same volume of sugar assigned under the 1987 quota on the international market at world rather than preferential prices, total sugar earnings for the Caribbean Basin countries would drop from a projected $134 million in 1987 to $44 million (see Table 3). Although scheduled US economic aid, particularly to Central America, and EEC sugar quota arrangements with many Caribbean countries would help to offset this decline, several countries--including the Dominican Republic, St. Kitts-Nevis, and Belize--would be substantially less insulated from the impact. An end to the quota also would exacerbate domestic political difficulties by adding to already unacceptable levels of unemployment. Nevertheless, it is unlikely that it would provoke a domestic political crisis in any country, with the possible exception of the Dominican Republic. The Caribbean Islands Dominican Republic. Among the Caribbean Basin countries, the Dominican Republc Would be the most severely hurt by an end to its US sugar quota. We believe such a move, on top of the Dominican Republic's already serious financial problems, would substantially weaken President Joaquin Balaguer. According to US Department of State reporting, the Dominican Republic is the only country in the region that will earn almost as much from sugar sales to the United States this year as it will receive in US economic assistance. St. Kitts-Nevis. St. Kitts-Nevis probably would be the only other Caribbean island hurt seriously by a lifting of the US quota. The US Consulate in Antigua estimates that sugar production employs 35 percent of St. Kitts' labor force. Despite .'See the Appendix for a detailed-as-sessment of the impact on the Dominican Republic. 5 SECRET Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 .._._. I .1.1 .. 1 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TOO114R000100390001-5 c 25X1 a dramatic expansion in tourism, the Consulate indicates that this industry is unlikely to create enough jobs over the next few years to replace even half of those expected to be lost in the sugar sector. As a result, a sudden end to US sugar imports, in our view, would significantly increase the island's current 30-40 percent rate of unemployment and undermine its efforts to diversify agricultural exports. We believe, nonetheless, that lack of strong opposition to the centrist government of Prime Minister Simmonds, continued EEC sugar quotas, and the safety valve of steady emigration would prevent problems in the sugar industry from radicalizing local politics. Other Caribbean Countries. Other Caribbean countries would be much less affected because of their relative lack of dependence on sugar exports to the United States. Haiti is likely to continue to remain a net sugar importer over the near term. Moreover, scheduled increases in US and multilateral aid over the next several years will more than offset the small financial losses resulting from Haiti's inability to re-export cheap imported sugar to the United States. US Department of Agriculture officials expect EEC quotas--which absorb the major share of sugar exported by Barbados, Jamaica, and Trinidad and Tobago--to continue in the near term at present levels and to absorb much of their excess sugar production over the next few years. Central America Belize. Of the Central American countries, Belize probably would face the most serious fallout from an elimination of its US sugar quota. The slack economy already has sparked criticism of Prime Minister Esquivel, and additional declines in the sugar industry would make economic revitalization more difficult. Embassy reporting indicates that the small left wing of the opposition party hopes to capitalize on economic discontent to win national elections in 1989. Marijuana production--90 percent of which is destined for US markets, according to US Embassy reporting--already is a major source of income in Belize and almost certainly will increase as production of sugar becomes less. profitable. .El Salvador. The severe social, political, and economic problems facing El Salvador also would be substantially increased by an end to its US quota. Marxist-Leninist insurgents already are exploiting the country's faltering economy to increase popular discontent with the government and boost their own base of support. Because of this, the ruling Christian Democrats probably would not quickly abandon the sugar industry even if financial pressures intensified; it employs nearly 35,000 full- and part-time workers in a country where roughly one half of the labor force is unemployed or underemployed. Scheduled US economic and military aid would help to cushion the impact of mounting financial losses from quota reductions and to shore up President Duarte's political position. 6 SECRET Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 I I .1.1 .. 1 . Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TOO114R000100390001-5 SECRET Honduras. Honduras also would face increasing financial losses if it no longer had preferential access to the US sugar market. As in El Salvador, however, US assistance over the next few years probably would cover some losses and preserve politically sensitive employment while sputtering efforts to diversify the economy dragged on. Guatemala. Although the Guatemalan economy remains stagnant, its relative diversity, the government's promising efforts at economic reform, and scheduled US balance-of-payments support probably would negate much of the impact of an end to its quota. Government officials are committed to policies--including exchange rate adjustments and streamlining of bureaucracy--that will encourage new private investment and diversification. Costa Rica. With a stable democracy, a modestly expanding economy, and scheduled US economic aid, Costa Rica probably could make a relatively smooth transition to an end of the quota. The ensuing probable decline in sugar sales to the United States would complicate the politically difficult agricultural reforms- San Jose faces to reduce its large budget deficit. Panama. Panama's largely service-oriented economy probably would be little affected by an elimination of its quota. State- owned production and processing plants account for 90 percent of sugar exports, but Panama City already has begun to reduce its role in the agricultural sector and is likely to suffer minimal financial losses. New private investment can be redirected to alternate crops. With unemployment already exceeding 10 percent, joblessness stemming from displacement of sugar workers would pose further political problems for the regime. The military, however, has developed goodwill in rural areas with aggressive civic action programs, and such support probably would help to Implications for Relations-With the United States Caribbean Basin governments and media have responded to past sugar quota cuts by criticizing US trade and foreign policies, but there have been no significant public protests. The strongest reaction in Central America has come from Belize, where Prime Minister Esquivel publicly called the 1985 cut a "cruel blow" and even the staunchly pro-US media attacked the decision. Esquivel wrote President Reagan requesting that Belize's quota be restored to a higher level with no future erosions. Salvadoran and Guatemalan officials have expressed concern both officially and publicly about the balance-of-payments impact of past quota cuts on their countries. Of the Caribbean countries, the Dominican Republic and St. Kitts-Nevis have made the loudest protests, publicly and through diplomatic channels. Government leaders in both countries have requested increased quotas and special exemptions from further cutbacks. On the positive side, 7 SECRET Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 1 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TOO114R000100390001-5 SECRET we know of no instances of popular anti-US demonstrations or violence in any of the Caribbean Basin countries associated with past cuts in the quota. We judge that the Caribbean Basin countries--individually and through regional organizations--would mount formal protests should the United States eliminate the import quotas. Leaders in the region more recently have criticized Washington for cutting other economic aid programs, particularly to Jamaica. Barbados, Jamaica, and Trinidad and Tobago--each struggling to cope with severe economic difficulties caused by a world glut of such key exports as electronic components, bauxite, and petroleum--almost certainly would argue that the US quota is needed to help cover the heavy financial costs of the domestic sugar industry and thereby ease the economic and political costs of diversification. Regional governments would lobby even more heavily for increased US assistance to prevent serious economic decline and to help ensure political stability. Elimination of the quota also could hurt cooperation with Washington in several key areas: Such a move probably would undermine public and private support for the Caribbean Basin Initiative and raise fears of further deep cuts in the US economic aid program. -- A cut in the sugar quota could weaken area cooperation with Washington in counternarcotics efforts. Regardless of the quota, production of illicit drug crops is likely to accelerate as sugar production becomes less profitable. The Dominican Republic and Belize probably would issue the most vehement protests over elimination of the quota and probably are the two countries where US interests stand the greatest chance of suffering. Dominican President Balaguer, who prides himself on being one of Washington's longstanding and staunchest allies, would interpret any cuts as a personal affront. The Balaguer administration already has sharply criticized the United States for cutting economic aid to the Dominican Republic and for not pressuring the IMF and other official creditors for financial help. An end of the US quota probably would foster closer relations between Santo Domingo and Havana.,3 In Belize, President Esquivel already is criticized by government and opposition leaders for being too closely aligned with the United States. US action to cut the quota would increase anti-US sentiment and probably would make Esquivel hesitant to continue cooperation with Washington's counternarcotics efforts. While the other Caribbean and Central American countries would strongly protest elimination of the quota, their 3See Appendix for more details. 25X1 8 SF.C_RF.T Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 I i ;.. I Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP90TOO114R000100390001-5 displeasure probably would be tempered by other economic and political considerations. -- In St. Kitts, President Simmonds' desire to maintain US assistance in other areas, particularly tourism, probably would prevent a significant worsening in bilateral relations. -- The end of the quota would strain relations with the Central American democracies, but concern with regional security issues would prevent any serious bilateral rifts. -- Panama's relations with the United States are strained by recent political unrest and we do not believe cuts in the quota would have a significant further impact. 9 SECRET Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TOO114R000100390001-5 Appendix The Dominican Republic: A Special Case The Dominican Republic's heavy dependence on sugar and lack of access to EEC special sugar arrangements make the country particularly vulnerable to any cut in the US quota. The Dominican Republic since 1981 has made a concerted effort to diversify agricultural production, reducing sugar output by 20 percent in 1986 alone, according to IMF reports. Still, the sugar industry remains the country's second largest employer after light industry. An end to the US quota would worsen the country's deteriorating foreign financial situation by sharply reducing sugar export earnings. The US Embassy reports these sales fell to about $140 million in 1986, compared with $530 million in 1981, due partly to falling world sugar prices and previous reductions in the US quota. Although increased foreign exchange inflows from other sources--such as coffee, meat, and tropical fruit exports, tourism, and remittances from overseas--partially offset lost sugar income, the country's overall foreign currency earnings still dropped slightly over this period. Moreover, foreign debt amortization payments more than quadrupled to roughly $950 million annually, severely draining the country's Balaguer's popularity initially helped to shield him from major political challenges after he resumed office in 1986, but his inability to revive the economy has begun to erode his support and to increase resistance to negotiating an IMF program, a linchpin to further foreign debt reschedulings. The public's expectations of rapid economic progress and fears that Balaguer will tighten austerity measures have increased his political troubles over the past few months. The US Embassy in recent weeks has reported strikes and other disturbances in cities throughout the country, illegal land seizures in rural areas, and the arrest of 700 peasant squatters in a northern province. The government, fearing urban riots, resumed exchange-rate controls in June to stabilize the currency. The specter of the violent leftist-led demonstrations in 1984 in which more than 70 people were killed--following the Jorge Blanco administration's belt-tightening to secure IMF funds-- probably will cause Balaguer to continue shying away from a formal IMF program. In these circumstances, the President almost certainly would view a US decision to abolish the country's quota as yet another signal that the United States takes for granted the country's more than two decades of political stability and his own close relationship with Washington. US Embassy 1 SECRET Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TOO114R000100390001-5 C reporting reveals that the President already feels personally slighted by cuts in US Economic Support Funds, which dropped from a peak of roughly $135 million during 1984 and 1985 to $20 million this year. Balaguer reportedly has been irked further by Washington's reluctance to disburse even this reduced amount until Santo Domingo secures a new IMF agreement, a move he apparently fears would provoke further unrest. The President also faults Washington for not pushing harder to convince the IMF of the political need to allow the Dominican Republic to formulate its own recovery program, rather than requiring the country to meet specific quarterly economic targets set by the IMF. In the event of an end to the US quota, we judge that Balaguer probably would resort to further improving relations with Cuba and to expansionary economic measures to try to save face domestically and make good on his campaign promises of renewed economic growth. According to US Embassy reporting, Balaguer already has sought closer ties to Cuba in part to divert vocal leftist attention from his failure to garner more tangible benefits from his relationship with the United States. L Embassy reporting indicates that Balaguer as reverted to populist policies--including price controls on basic commodities, make-work public projects, and inflationary monetary policies--to try to disarm his opponents. Further populist measures to boost his popularity would reduce the country's eligibility for US and IMF assistance and scuttle hopes for foreign debt relief. 2 SECRET Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 Table 1 CARIBBEAN BASIN: KEY SUGAR TRENDS IN SELECTED COUNTRIES Sugar Production Millio n US $ thousand metric tons 1981 1985 1981 Export Earnings Of Which: Sugar 1985 Export Earnings Of Which: Sugar TOTAL 7,314 8,959 10,796 t 933 8,022 1 425 Barbados ------ + 137--- ~- 100 _- -- _- -195 -- --- ---- 26 332 Belize , 98 t 102 75 43 64 23 Costa Rica 2,521 2,950 . f- - 1,009 -- ---42 934 11 Dominican Republic 1,075 921 19188 534 735 190 El Salvador 21,263 -- ---- 3,455 - 798 -- . - - 15 679 34 Guatemala 443 600 1 1,29 1 -- 85 1,131 46 Haiti 50 51 __- --~_.._._...158_._~ 0 217 - + -- - --- 4 Honduras 212 I - 235 ( ---~ _ 784 47 805 22 Jamaica 195 222 974 46 547 45 Panama 185 170 494 53 301... - ~ -- - - -~ 27 St. Kilts----- Nevis I 30 32 1 25 16 19 9 Trinidad- Tobago 105 1i 115 3,761 I 27 2,212 22 -- Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 Table 2 CARIBBEAN BASIN: DEPENDENCE ON SPECIAL SUGAR EXPORT ARRANGEMENTS 1984 1985 ' 1986 Total 1 Total 1 Total T Exports' % to U.S. % to EEC Exports % to U.S. % to EEC 1 Exports % to U.S. % to EEC Barbados 85.9 8.7 85.5 77.8 22.6 68.8 88.4 13.7 58.4 Belize 101.5 36.4 rn 43.4 95.5 13.6 46.9 105 52.8 41.9 Costa Rica 83.6 100 0 3.1 . 2 85.5 885.1 69.4 1 721.6 64.4 0 _-__... 367.22 64.9 0 Republic El Salvador 78.3 100 0 115.5 46.6 0 103.9 33.5 0 Guatemala 304.4 43 0 127.8 80.4 0 428.33 29.7 3.1 Haiti 15.7 100 0 ni ni ni ni ni ni Honduras 93.1 55.1 0 112.5 52.4 0 118 25.1 0 Jamaica 160.4 18.7 81.3 152.1 13.4 .86.5 1443 6.2 88.2 Panama 82.4 100 0 77.7 100 0 58.6 62.4 0 St. Kitts- 28.5 46 51 25.2 18.7 79 no no no Nevis Trinidad- 49.9 0 100 62 15.2 84.8 no no no Tobago ISO May 1987 1. Thousand Metric Tons 2. Jan-Aug 3. USDA estimate Oct-Sep market year. NI (net importer) Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 t _ I J1 I Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TOO114R000100390001-5 Caribbean Basin: Reliance on US Commercial Sugar Sales and Foreign Assistance Million US $ 1987 Sugar US Economic Sales to US* Assistance (FY 1987 Authorized) Income From US Sugar Sold at World Prices** Total 134 946 44.5 Barbados 3 0 1.0 Belize 7 10 2.3 Costa Rica 7 117 2.3 Dominican Republic 61 69 20.3 El Salvador 10 302 3.3 Guatemala 17 116 5.7 Haiti 3 98 1.0 Honduras 6_ 128 2.0 Jamaica 4 78 1.3 Panama 10 19 3.3 St. Kitts-Nevis 3 9- 1.0 Trinidad-Tobago 3 0 1.0 * Projected imports under the US sugar quota in 1987 at roughly 18 cents per pound. ** Assumes sugar sales diverted from the US market at the 1987 volume and sold at a world market price of 6 cents per pound. Declassified in Part - Sanitized Copy Approved for Release 2012/05/07 : CIA-RDP90TO0114R000100390001-5 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90T00114R000100390001-5 Figure 1 Caribbean Basin: U.S. Sugar Import Quota 1 1500 (1000 Metric Tons) 1 raw value 10/1/82- 9/26/83- 10/1/84- 12/i 85- 9/30/83 9/30/84 11/30/85 12/31/86 vii ;..Jim f' ~~/ - -v / 7'i %.w'.., ' ~ "? 1. Quota year determined annually by USDA. V1187- 12/31/87 M3 Other Caribbean I?/3 Costa Rica 123 El Salvador ? Panama 0-3 Guatemala Dom. Republic Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90T00114R000100390001-5 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 FIGURE 2 AVERAGE RAW SUGAR PRICES*, 1975-1987 O ---T-- -- -----T ---1 1975 76 77 78 79 80 81 82 83 84 85 86 87 ? NO. 11 CONTRACT PRICE (F.O.B. CARIBBEAN). Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90T00114R000100390001-5 Orig - Eugene J. McAllister, Special Assistant to the President for Economic Affairs, Rm 216, Old EOB 1 - Alan Tracy, Assistant to the President for Food Aid and Agricultural Trade, Rm 216, Old EOB 1 - Gordon Rausser, Senior Staff Economist for Agriculture, Council of Economic Advisors,Rm 322, Old EOB 1 - Randall Davis, Associate Director for Natural Resources, Rm260, Old EOB 1 - Stephen Danzansky, Special Assistant to the President and Senior Director of International Economic Affairs, NSC, g__365, Old EOB 1 - Michael Smith, USTR,\ 1 - Geza Feketekuty, USTR 1 - Suzanne Early, USTR, 1 - Jon Rosenbaum, USTR,~ BW09, CHB BW09, CHB BW09, CHB BW09, CHB 1 - Ellen Terpstra, Rm 212-A North Bld, US Department of Agriculture 1 - Daniel Amstutz, Rm 212-A North Bld, US Department of Agriculture 1 - Dan Crafts, Rm 4324, Treasury 1 - Robert Cornell, Rm 4324, Treasury 1 - Hazen Gale, Rm 4324, Treasury 1 - Douglas McMinn, Assistant Secretary for Economics and Business Affairs, Rm 6828, State Department 1 - W. Allen Wallis, Under Secretary for Economic Affairs, Rm 7256, State Department 1 - Terence Byrne, Acting Director, Office of Economic Analysis, Rm 8722, State Department 1 - Carl Kundiff, Director, Office of Food Policy and Programs, Rm 3427, State Department 1 - Ralph Ives, International Economist, Primary Commodities Division, Rm 1015, Commerce Department 1 - DCI, 7D60 1 - DCI Executive Staff, 7E12 1 - DDI, 7E44 1 - O/DDI, 7E44 1 - LA/NIO, 7E62 1 - NIC/AG, 7E47 1 - PDB Staff, 7F30 1 - C/DDI/PES, 2G25 1 - DDI/CPAS/ILS, 7G50 5 - CPAS/IMC/CB, 7G07 1 - D/OGI, 3G00 1 - C/SRD/OGI, 3G46 1 - C/PRB/OGI, 3G46 5 - OGI, 3G46 1 - D/ALA, 3F45 1 - DD/ALA, 3F45 2 - ALA/PS, 4F21 1 - ALA/Research Director, 4F44 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90T00114R000100390001-5 i Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 1 - C/MCD 1 - DC/ALA/MCD 1 - C/ALA/MCD/CAR 1 - C/ALA/MCD/CA 1 - __]ALA/MCD/CA 1 - ALA/MCD/CARIB 1 - MCD Files 1 - CAR Files C/ALA/MCD/CAR/JB/jd/19 Aug 87 Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90TO0114R000100390001-5 i ..I JI ._ I Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90T00114R000100390001-5 CARIBBEAN BASIN: IMPACT OF AN END OF THE US SUGAR QUOTA 25X1 ALA/MCD/CA/CARIB (20aug87) Declassified in Part - Sanitized Copy Approved for Release 2012/05/07: CIA-RDP90T00114R000100390001-5