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Public Papers - 1990

Letter to Congressional Leaders on the Liberalization of Trade and Investment With Nicaragua

1990-11-07

Dear Mr. Speaker: (Dear Mr. President:)

Pursuant to section 212 of the Caribbean Basin Economic Recovery Act (CBERA), I wish to inform you of my intent to designate Nicaragua as a beneficiary of the trade-liberalizing measures provided for in this Act. Designation will entitle the products of Nicaragua, except for products excluded statutorily, to duty-free treatment. As a beneficiary, Nicaragua also may become eligible for investments using funds generated in Puerto Rico under section 936(d)(2) of the Internal Revenue Code and re-lent to eligible Caribbean Basin countries at favorable rates, and for the convention expense tax deduction under section 274(h) of the Internal Revenue Code, by entering into an exchange of information agreement with the United States on tax matters.

Designation is an important step for Nicaragua in its effort to revitalize and rebuild its weakened economy. Designation also is significant because it is further tangible evidence of the constructive cooperation between the United States and the peoples and governments of the Caribbean Basin.

My decision to designate Nicaragua results from consultations between this Administration and the Government of Nicaragua regarding the designation criteria set forth in section 212 of the CBERA. Nicaragua has demonstrated to my satisfaction that its laws, practices, and policies are substantially in conformity with the designation criteria of the CBERA. The Government of Nicaragua has communicated on these matters by letter to Ambassador Hills, and in so doing has indicated its desire to be designated as a CBERA beneficiary (a copy of the letter is enclosed).

I intend to exercise the authority provided by the Caribbean Basin Economic Recovery Expansion Act of 1990 (CBEREA) to waive the worker rights criteria. The CBEREA amended the worker rights criteria to bring them in conformity with the worker rights criteria under the Generalized System of Preferences (GSP). Nicaragua was terminated from the GSP program in 1987 due to its worker rights practices. Nicaragua has agreed to update its labor law. The approach of the new Nicaraguan Government is totally different from that of its predecessors, and I am confident that real change can now occur. Nevertheless, in order to ensure that Nicaragua satisfies the legal requirements of the new criteria, we would need to perform a full review, which would require several months.

Nicaragua has recently emerged from a period in which it undermined the security and stability of Central America. Nicaragua's political stability depends in large measure on its ability to make significant economic progress. However, the economic situation in Nicaragua remains precarious. Nicaragua's economic recovery hinges on stimulating the private sector, particularly in the area of foreign trade. By extending duty-free treatment to Nicaraguan imports, the United States can foster Nicaraguan political stability through enhanced economic growth. Continued political stability in Nicaragua will contribute to the stability of the region. Central America's stability and development are clearly in the national security interest of the United States.

For these reasons, I have determined, pursuant to section 212(b) of the CBERA, as amended, that it would be in the national security interest of the United States to expedite Nicaragua's CBERA beneficiary status by waiving the worker rights criteria (a copy of the determination is enclosed). On the basis of the statements and assurances in Nicaragua's letter, and taking into account information developed by the United States Embassy and through other sources, I have concluded that designation of Nicaragua as a CBERA beneficiary is appropriate at this time.

I am mindful that under section 212(e) of the CBERA, as amended, I retain the authority to suspend, withdraw, or limit the application of CBERA benefits from any designated country if a beneficiary's laws, policies, or practices are no longer in conformity with the designation criteria. The United States will keep abreast of developments in Nicaragua that are pertinent to the designation criteria -- particularly with respect to worker rights.

This Administration looks forward to working closely with the Government of Nicaragua and with the private sectors of the United States and Nicaragua to ensure that the wide-ranging opportunities opened by the CBERA are fully utilized.

Sincerely,

George Bush

Note: Identical letters were sent to Thomas S. Foley, Speaker of the House of Representatives, and Dan Quayle, President of the Senate. The letter was released by the Office of the Press Secretary on November 8. The proclamation designating Nicaragua as a CBERA beneficiary is listed in Appendix E at the end of this volume.

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