Production sharing in the Caribbean basin

America's businesses are experimenting with all kinds of new cost-cutting tools in this era of growing international competition.

One such new concept for American business is production sharing. TSUS 806.30/807 imports, the major trade categories used by production sharing operations, have grown from $.9 billion in 1966 to $21.8 billion in 1983. According to a study by the International Trade Commission, U.S. content averaged 71 percent in these type of imports from Haiti in 1983, where U.S. content in similar operations in Singapore was 28 percent and from Hong Kong only 16 percent.

Currently, 95 percent of the baseball gloves used in the great American pasttime are assembled in Taiwan and Korea. But they are made from American cowhide, shipped to Brazil for tanning before being assembled in the Far East.

Today, much of this type of labor-intensive work is moving back to out hemishpere to the benefit of U.S. firms. While a baseball cap made in Korea uses plastics, textiles and other inputs from Far East sources, a cap made in a Caribbean Basin country will most likely use U.S. raw materials. Already, 90 percent of the world's baseballs and all of our major league balls are assembled by U.S. firms operating in Haiti--Rawlings alone produces 13,000 baseballs a day there.

Production sharing in the Caribbean Basin means that U.S. machinery, U.S. inputs and intermediate products, and U.S. management and technology are used. Profits return to the U.S. parent company, contributing to the pool of capital for American entrepreneurs. As the cycle of economic development takes hold, expanding incomes in the region create new demand for U.S. consumer goods.

The advantages of production sharing, combined with the commercial opportunities of the President's Caribbean Basin Initiative, make for an exciting new era of business expansion, and offer a new competitive edge for U.S. firms. I encourage your firm to explore production sharing opportunities in this region.

COPYRIGHT 1985 U.S. Government Printing Office
COPYRIGHT 2004 Gale Group