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WRITTEN TESTIMONY AND SUPPORTING ANALYTICAL REPORT In Support of Bill No. 36-0194 An Act Urging the United States Congress and the Office of the United States Trade Representative to Expand and Modernize the Caribbean Basin Initiative Submitted to: Committee on Economic Development and Agriculture 36th Legislature of the United States Virgin Islands Submitted by: Dr. Justin Ram Date: January 2026 Written Testimony Chairman, Vice Chairman, and Honourable Members of the Committee Thank you for the opportunity to submit written testimony in support of Bill No. 36-0194. I commend the Legislature of the United States Virgin Islands for advancing this timely and necessary measure, which addresses the future relevance and effectiveness of the Caribbean Basin Initiative in supporting economic development, resilience, and regional stability. The Caribbean Basin Initiative has served for more than forty years as a cornerstone of United States Caribbean economic relations. However, recent evidence from official United States government assessments demonstrates that while the Initiative continues to deliver benefits, its structure has not kept pace with fundamental changes in global trade production systems, climate risk, and the economic realities facing both Caribbean economies and United States territories, such as the United States Virgin Islands. The purpose of Bill No. 36-0194 is therefore not to expand trade preferences indiscriminately but to modernize an existing framework that is underperforming due to outdated design rather than flawed intent. Declining utilization rates, extreme export concentration, and widening gaps between eligibility and actual use all point to the same conclusion. Without modernization, the Caribbean Basin Initiative will continue to lose relevance as a development tool at precisely the moment when the Caribbean region faces a heightened economic climate and geopolitical pressures. From the perspective of the United States and its territories, the evidence is equally clear. The Caribbean Basin Initiative poses no material risk to United States industries, employment, or consumers. On the contrary, it supports upstream United States industries, strengthens regional supply chains, and contributes to stability in a strategically important region. For the United States Virgin Islands, the Initiative carries direct economic and fiscal relevance, reinforcing the case for territorial inclusion in any future reform. For these reasons, I strongly support Bill No. 36-0194 and urge its passage as an evidence-based call for modernization that aligns United States trade policy with twenty-first century economic realities. Thank you for the opportunity to submit this testimony. (Justin Signature) Supporting Analytical Report The Caribbean Basin Initiative (CBI) remains a central mechanism through which the United States engages with the Caribbean region. It was established to promote economic growth, export diversification and political stability. The CBI provides non- reciprocal duty-free access to the United States market for eligible goods originating from designated beneficiary countries. Over four decades, the Initiative has influenced regional trade patterns, supported export-oriented industries and encouraged investment flows. However, recent assessments1 indicate that the Initiative’s design no longer aligns with contemporary Caribbean economic structures, resulting in declining utilisation and concentrated benefits. These findings underpin the economic rationale for modernising the framework as proposed under Bill No. 36-0194. Economic Impact Overview The Caribbean Basin Initiative (CBI) continues to shape trade patterns between beneficiary economies and the United States by influencing export diversification, sectoral performance, and market access outcomes. The following eight tables summarise key dimensions of this impact, highlights an insight into how beneficiary countries participate in U.S. markets over time and where modernisation of the Initiative could support more inclusive and resilient growth. – This space is intentionally left blank – 1 Assessments by U.S. International Trade Commission (USITC) and the Office of the U.S. Trade Representative (USTR) Table 1 Breadth of Export Diversification: Number of Distinct Products Exported to the United States Source: Source: USITC calculations using data from USITC DataWeb/Census, U.S. imports for consumption, accessed November 17th, 2025. Note: Product count refers to average number of HTS 6-digit subheadings with U.S. imports in a given period. Table 1 shows the number of distinct HTS six-digit product categories exported to the United States from each beneficiary economy over six multi-year periods. Most countries expanded their export product range over the past three decades, indicating deeper market integration. Aruba, Guyana, Montserrat, and Belize recorded the largest increases, demonstrating diversification momentum. Others such as Dominica and Haiti contracted, reflecting structural vulnerabilities. Overall, the region maintained Country 1990–94 1995–99 2000–04 2005–09 2010–14 2015–19 2020–24 % Change 1990–2024 Aruba 26 55 63 64 67 64 65 151.9 Guyana 102 145 158 154 149 141 179 75.6 Montserrat 27 21 19 26 28 35 46 68.6 Belize 84 92 108 123 117 133 138 63.7 Trinidad and Tobago 223 302 332 362 305 311 312 39.9 Antigua and Barbuda 47 49 44 51 46 68 62 32.1 British Virgin Islands 36 79 92 87 88 88 47 31.7 Bahamas 125 158 178 215 198 185 162 30 Grenada 39 33 31 34 32 39 47 18.3 Saint Vincent and the Grenadines 41 50 39 28 30 44 44 8.3 Saint Kitts and Nevis 85 117 100 90 76 84 89 5.2 Haiti 281 269 245 203 229 248 243 -13.6 Jamaica 355 347 285 299 291 264 286 -19.5 Barbados 136 186 177 157 132 111 109 -20 Saint Lucia 98 117 100 80 52 47 47 -51.7 Dominica 93 114 70 40 37 40 39 -58.2 Curacao — — — — — 100 81 n.c. CBERA region total 963 1,134 1,130 1,098 993 1,018 1,011 5 Pacific Islands region 270 337 433 495 467 503 534 98.1 stable export breadth, underscoring the value of preferential access, while highlighting uneven country-level performance. Table 2 U.S. Imports Under CBERA by Major Product Categories (USD millions) Sector 2020 2021 2022 2023 2024 Agriculture 185 193 214 225 228 Methanol & Energy 796 1,479 1,494 943 764 Textiles & Apparel 750 1,010 978 752 590 Other Mining & Manufacturing 77 109 160 52 55 Total 1,808 2,191 2,801 1,973 1,836 Source: USITC DataWeb/Census, U.S. imports for consumption, accessed November 17th, 2025. Note: Agriculture: HS 1–24; Energy: HS 2905.11.20 & 27; Textiles & Apparel: HS 50–63. Table 2 summarises U.S. imports under CBERA across major product categories from 2020 to 2024. Energy products, particularly methanol, dominate total import values, peaking in 2022. This reflects established comparative advantages in petrochemicals and energy-related production. The data also show that textiles and apparel remain relevant despite long-term restructuring of global supply chains. The category distribution demonstrates that CBERA utilisation is concentrated in a limited number of product groups. Table 3 U.S. Imports of Energy Products (USD millions) Product 2020 2021 2022 2023 2024 Methanol 249 472 377 185 179 Other Energy Products 547 407 1,072 729 764 Total 796 879 1,449 943 943 Source: USITC DataWeb/Census, U.S. imports for consumption, accessed November 17th, 2025. Note: Methanol: HS 2905.11.20; Other energy products: HS 27. Table 3 provides a breakdown of U.S. imports of methanol and other energy products. Methanol volumes fluctuate from USD 249 million in 2020 to USD 179 million in 2024, while other energy products range from USD 407 million to USD 1,072 million across the same period. These variations align with global energy price cycles and changes in export capacity. Energy products remain one of the primary channels through which beneficiaries leverage CBERA preferences. Table 4 Breadth of Export Diversification (By Sector) Sector 2000–04 2005–09 2010–14 2015–19 2020–24 Agricultural products 199 197 205 221 232 Chemicals 129 122 105 115 119 Electronics 158 161 138 137 137 Energy-related 19 19 15 15 16 Footwear 11 11 11 9 12 Machinery 103 108 97 96 93 Minerals & Metals 129 117 108 109 95 Textiles & Apparel 193 175 147 137 124 Transportation Equipment 49 55 54 57 58 All sectors 1,135 1,105 999 1,025 1,017 Source: USITC calculations using USITC DataWeb/Census, U.S. imports for consumption, accessed November 17th, 2025. Note: Sector counts reflect number of distinct HTS 6-digit product categories exported. Table 4 tracks the number of distinct product categories exported across nine industrial sectors over five periods from 2000 to 2024. Agricultural, chemical, and transportation- related products remain consistently present, while textiles and apparel show gradual decline over time. Electronics, machinery, minerals and metals remain stable, indicating persistent but modest manufacturing capabilities. This sectoral pattern confirms a gradual shift away from traditional apparel assembly toward a more balanced mix of agricultural and industrial exports. Table 5 Imports by R&D Intensity (Number of Products) R&D Level 1990–94 1995–99 2000–04 2005–09 2010–14 2015–19 2020–24 Low 123 160 144 148 180 199 183 Medium-Low 876 907 818 721 711 687 687 Medium 191 247 245 259 308 285 267 Medium-High 273 431 437 522 465 476 447 High 105 198 206 264 242 245 221 Total 1,568 1,943 1,902 2,011 1,916 1,916 1,805 Source: USITC calculations using USITC DataWeb/Census, U.S. imports for consumption, accessed November 17th, 2025. Table 5 categorises imports by research and development (R&D) intensity across seven time periods, illustrating the technological profile of CBI-linked exports. Most exports fall within low and medium-low R&D categories, consistent with the production structures of small island developing economies. Medium and medium-high R&D categories increased between 1990 and 2009 before stabilising, demonstrating some technological upgrading during that period. The distribution highlights opportunities to support more innovation-oriented sectors through modernisation of the Initiative. Table 6 U.S. Imports for Consumption from CBERA Countries (USD millions) Country 2020 2021 2022 2023 2024 Antigua & Barbuda 5 29 9 12 22 Aruba 34 27 16 15 11 Bahamas 270 446 1,721 1,822 1,790 Barbados 46 43 51 45 48 Belize 51 67 61 55 81 BVI 2 5 4 21 89 Dominica 8 5 2 2 2 Grenada 12 15 17 15 14 Guyana 735 2,168 2,842 3,400 5,221 Haiti 829 1,101 1,044 798 631 Jamaica 383 505 348 388 360 St. Kitts & Nevis 50 40 31 22 20 St. Lucia 14 12 10 10 7 St. Vincent & Grenadines 6 5 9 5 8 Trinidad & Tobago 2,621 4,170 5,426 3,011 3,246 Total 5,089 8,682 11,640 9,691 11,585 Source: USITC DataWeb/Census, accessed November 17th, 2025 Table 6 presents total U.S. imports from each beneficiary country from 2020 to 2024. The data reveal significant heterogeneity in export performance. Guyana, Trinidad and Tobago, and the Bahamas comprise the bulk of export value, driven primarily by hydrocarbons, energy products and mixed goods, while smaller island economies such as Dominica, Grenada, and St. Lucia contribute modest amounts. This concentration reflects differences in factor endowments, scale and market structures, and underscores the need for cumulative or collaborative mechanisms to widen participation. Table 7 Leading Imports Under CBERA (by HTS Chapter) HTS Description 2020 2021 2022 2023 2024 27 Mineral fuels & oils 547 407 1,072 729 764 61 Apparel, knitted 608 806 796 576 442 29 Organic chemicals 257 492 436 190 123 62 Apparel, not knitted 114 170 155 150 123 21 Edible preparations 54 60 61 73 74 Source: USITC DataWeb/Census, accessed November 17th, 2025 Table 7 highlights the dominant HTS chapters driving CBERA trade flows. Mineral fuels and oils (HTS 27) and knitted and non-knitted apparel (HTS 61 and 62) represent the most significant categories. Organic chemicals (HTS 29) and edible preparations (HTS 21) demonstrate additional export relevance. The composition confirms that petrochemicals and apparel are longstanding pillars of CBERA utilisation, with some diversification into value-added food products. Table 8 U.S. Imports for Consumption by Sector (USD millions) Sector 2020 2021 2022 2023 2024 Energy-related 547 407 1,072 729 764 Textiles & Apparel 750 1,010 978 752 590 Chemicals 318 574 526 258 248 Agricultural 185 193 214 225 228 Source: USITC DataWeb/Census, accessed November 17th, 2025 Table 8 reports total U.S. imports from CBERA beneficiaries by sector from 2020 to 2024. Energy-related imports dominate throughout, followed by textiles and apparel, chemicals and agricultural goods. Apparel’s decline from USD 1.01 billion in 2021 to USD 590 million in 2024 reflects supply chain adjustments and global competition. By contrast, agricultural imports increase steadily, demonstrating stable demand for Caribbean agricultural goods and highlighting an area of potential expansion. Overall, the trade patterns observed under the CBI confirm its continued economic value while highlighting opportunities for improvement. With modernisation aimed at widening eligibility, supporting emerging industries and enabling collaborative supply chains, the programme could deliver broader and more durable economic benefits for the region. – This space is intentionally left blank – Modernizing the Caribbean Basin Initiative for the Virgin Islands and the Wider Caribbean Bill No. 36-0194 responds directly to structural challenges identified in recent assessments2. Although the CBI remains a core instrument of United States-Caribbean engagement, its design reflects economic conditions that no longer exist. As a result, the Initiative delivers uneven benefits and declining utilisation despite imposing no meaningful cost on the U.S. economy. When established, the Programme aligned with regional development strategies centred on apparel assembly, light manufacturing, agriculture and resource-based exports. Over time, it was expanded legislatively to support apparel production. While these measures produced measurable benefits, they embedded a production model calibrated to a late twentieth-century economic environment. Today the global economy is characterised by services, digital trade, knowledge- intensive activity and climate-related vulnerabilities. Competitiveness in small island economies is shaped by energy costs, infrastructure durability and supply chain reliability rather than tariff margins alone. Yet, the CBI remains confined to a narrow goods-based framework, reducing its developmental relevance. Evidence Supporting Modernization Figure 1 U.S. imports under the CBERA program, by major product category, 2020–24 Source: USITC, Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers and on Beneficiary Countries, 27th Report, September 2025; DataWeb/Census, U.S. imports for consumption, accessed March 5, 2025. Note: Agriculture products are imported under HS chapters 1 through 24; energy products are imported under HTS subheading 2905.11.20 (methanol) and under HS chapter 27 (other energy products); textile and 2 Assessments by the USITC and USTR apparel products are imported under HS chapters 50-63, 65; and other mining and manufactured products are products not included under other major product categories. Figure 1 illustrates United States imports under the Caribbean Basin Initiative by major product categories between 2020 and 2024. The data reveal extreme concentration with methanol and other energy products along with textiles and apparel accounting for more than eighty percent of all preferential imports. Agricultural products and other manufactured goods remain marginal despite longstanding policy objectives aimed at diversification. This concentration increases vulnerability to commodity price volatility geopolitical shocks and climate related disruptions undermining economic resilience across the region. The same figure also highlights volatility rather than sustained growth. Imports peaked sharply in 2022 and declined in subsequent years reflecting exposure to external shocks rather than durable expansion of productive capacity. From a development perspective volatility without diversification undermines employment stability fiscal planning and long-term investment. Figure 2 U.S. imports for consumption from CBERA beneficiary countries, by import program, 2024 Source: USITC, Caribbean Basin Economic Recovery Act: Impact on U.S. Industries and Consumers and on Beneficiary Countries, 27th Report, September 2025; DataWeb/Census, U.S. imports for consumption, accessed March 5, 2025. Figure 2, which presents United States imports from Caribbean Basin Initiative beneficiaries by import program in 2024, exposes the most significant inefficiency in the current framework. Although total imports from beneficiary countries reached approximately 11.6 billion dollars, less than sixteen percent entered the United States under Caribbean Basin Initiative preferences. Nearly half were classified as normal trade relations dutiable imports, while more than one-third were duty-free, with no use of the Initiative. This pattern reveals a pronounced utilization gap between eligibility and actual use. This gap is not the result of declining trade or lack of market demand. On the contrary, eligible exports from the region have expanded significantly. However, average utilization rates have collapsed, reflecting structural barriers such as complex rules of origin, compliance costs that disproportionately affect small producers, limited exporter capacity, and weak alignment between eligibility criteria and modern production processes. The Office of the United States Trade Representative’s Sixteenth Report confirms that these constraints, rather than noncompliance, drive low utilization in many beneficiary countries. Figure 3 CBERA Utilization Rates, by country, 2020-2024 Figure 3, which shows utilization rates by country over time, reinforces this conclusion by revealing stark divergence across beneficiaries. A small number of countries with established supply chains achieve very high utilization rates, while many small island economies record minimal or zero use despite eligibility. This divergence demonstrates that the Caribbean Basin Initiative can work where alignment exists but fails where design constraints dominate. Modernization is therefore essential to broaden participation and prevent further concentration of benefits. Figure 4 Export Diversification Outcomes among Caribbean Basin Initiative Beneficiaries Figure 4 illustrates export diversification outcomes under the Initiative. While the number of distinct products exported to the United States has increased modestly, export revenues remain heavily concentrated in a narrow set of goods. Depth of diversification has therefore declined even as breadth has expanded. The United States Trade Representative report complements this finding by documenting cases where utilization improved once rules aligned more closely with production realities, demonstrating that diversification is achievable under a modernized framework. From the perspective of the United States economy, the evidence strongly favours reform. Imports under the Caribbean Basin Initiative represent a negligible share of total United States imports, and both the United States International Trade Commission and the Office of the United States Trade Representative conclude that the Initiative has no meaningful negative impact on United States industries, employment, or consumers. Where measurable effects exist, they are often positive. United States upstream industries benefit from increased demand for intermediate inputs, particularly in textiles and apparel, supporting domestic employment and production. Figure 5 Estimated sector-level effects of the CBERA program on export revenues in CBERA beneficiary Figure 5 presents estimated export revenue gains attributable to the Caribbean Basin Initiative. In 2024 alone, the Initiative increased export revenues across beneficiary countries by nearly 350 million dollars relative to a scenario without the program. Haiti experienced particularly strong gains in apparel exports and gross domestic product while Trinidad and Tobago and Jamaica recorded meaningful benefits in chemicals and food manufacturing. These outcomes demonstrate that the Initiative delivers measurable development benefits when aligned with productive capacity. For United States territories particularly the United States Virgin Islands the case for modernization is especially compelling. The United States Virgin Islands share many of the same vulnerabilities as neighbouring Caribbean economies including exposure to climate shocks high energy costs and supply chain fragility. At the same time the territory operates within the United States legal and fiscal framework positioning it as a natural bridge between federal policy and regional economic systems. The Office of the United States Trade Representative report highlights fiscal linkages including rum related excise tax provisions that underscore the direct budgetary relevance of Caribbean Basin Initiative trade for the United States Virgin Islands. Despite this strategic position United States territories are often excluded from formal Caribbean Basin Initiative policy design and review processes. Modernizing the Initiative to explicitly include territories such as the United States Virgin Islands would strengthen regional supply chains enhance resilience and support diversification within the territory itself. Expanded eligibility for renewable energy technologies climate resilient infrastructure digital services and small business participation would deliver tangible territorial benefits while reinforcing United States strategic interests. The urgency of reform is heightened by the impending expiration of key components of the Caribbean Basin Initiative framework and recent changes in United States tariff policy that have narrowed preference margins. The Sixteenth Report to Congress documents these developments and makes clear that failure to modernize will further erode utilization and relevance. Bill No. 36-0194 correctly identifies this moment as an opportunity to realign the Initiative with twenty first century economic conditions rather than allow gradual obsolescence. In conclusion the combined evidence from the United States International Trade Commission and the Office of the United States Trade Representative strongly supports Bill No. 36-0194. The Caribbean Basin Initiative remains a valuable policy instrument, but its current design constrains its effectiveness. Modernization would enhance development outcomes strengthen regional stability support United States territorial economies such as the United States Virgin Islands and do so without imposing meaningful costs on United States industries or consumers. This submission therefore urges strong legislative support for the bill.