2007 REPORT FOR BIENNIAL CARIBBEAN BASIN INVESTMENT SURVEY

UNCLAS SECTION 01 OF 04 PORT OF SPAIN 000648 SIPDIS SIPDIS SENSITIVE FOR USITC - ATTN L.M. SCHLITT E.O. 12958: N/A TAGS: ETRD ECON TD XL SUBJECT: 2007 REPORT FOR BIENNIAL CARIBBEAN BASIN INVESTMENT SURVEY - TRINIDAD REF: (A) STATE 65843, (B) POS 517 SENSITIVE BUT UNCLASSIFIED - CONTAINS BUSINESS SENSITIVE INFORMATION ¶1. (U) SUMMARY: In response to our survey, twelve Trinidad-based companies reported US$793 million in investment generating an estimated US$1.0 billion in exports to the US under CBERA/CBTPA. CBERA preferences have contributed to rapid growth of petrochemicals, ethanol, and selected manufacturing in Trinidad, as well as supporting GOTT efforts to promote the nation as a conference destination. For CBTPA, petroleum remains the major T&T interest. Apparel has never taken off in T&T, except for work clothes and safety gear for the oil and gas industry. GOTT officials see CBERA/CBTPA benefits as important for sustaining growth and diversifying the economy. The Prime Minister has made specific proposals for further enhancing preferential access to the U.S. market. END SUMMARY. -------------- IMPACT OF CBERA/CBTPA ON TRINIDAD & TOBAGO -------------- ¶2. (U) Thanks to a relatively industrialized and diversified economy, Trinidad & Tobago (T&T) is the leading CBI beneficiary and US trading partner in the region. The total value of US imports from T&T in 2006 was US$8.4 billion, up 34.5% from 2005, and the total value of products imported under CBI preferences to the US in 2006 was 43% of the total. ¶3. (U) T&T's 14 years of consecutive real GDP growth have been underpinned by sound macro-economic policies, while the accelerated growth in the last 8 years has been driven by exports of liquefied natural gas (LNG) and petrochemicals. These sectors would have grown with or without CBI, since LNG and ammonia enter the US at MFN rates of zero, but CBERA preferences for methanol clearly have contributed to T&T's emergence as one of the leading world producers and top supplier to the US of that commodity. Ethanol producers in Trinidad also readily acknowledge that without the U.S. tariff on imported ethanol and the CBI exemption, they would not be doing business here. ¶4. (U) CBERA preferences also have contributed to recent growth in manufacturing exports to the US. The top performing non-energy sector exports to the US were lamps and lighting; electrical relays; non-alcoholic beverages; roofing tiles; and insulated wires/cables. Roofing tiles and insulated wire/cables performed especially well, registering annual increases of 85.0% and 80.3% respectively in ¶2006. ¶5. (U) CBI provisions that permit U.S. business travelers to deduct the cost of attending conferences in the region are seen as contributing to the success of the GOTT effort to promote the twin-island country as a conference destination. T&T's energy-driven economic boom already has generated a boom in business travel, and several major new hotels are under construction. A range of meetings and events in the run-up to T&T's hosting of the 2009 Summit of the Americas also promises to keep business hotels and conference centers busy. ¶6. (U) T&T's main interest in CBTPA continues to be petroleum, with US$2.6 billion in US imports in 2006, up from US$2.0 billion in 2005). Other qualifying CBTPA exports remain limited, although prepared/preserved fish (US imports of US$2.8 million under CBTPA in 2006, supplementing US$16.6 million under CBERA) may increase as the GOTT is targeting the fish and fish processing sector for further development. Apparel production and exports to the US (under US$200,000 in 2006) have never taken off, with the exception of niche market production by Caribbean Safety Products, which manufactures work clothes and safety gear for the oil and gas industry (see survey response below). ¶7. (U) Access to the U.S. market remains a high priority for GOTT officials, who view it as critical to their efforts to promote energy based industries and downstream manufacturing and stimulate the non-energy economy. They have voiced concerns over the perceived instability of CBI, citing the scheduled expiration of CBTPA and the non-renewal of its WTO waiver. In that regard, Prime Minister Manning has repeatedly asked visiting U.S. officials to consider extending preferential access on a permanent basis to energy-based products and as goods packaged in T&T regardless of origin (reftel B). -------------- 2006 CBI SURVEY: SECTOR RESULTS FOR T&T -------------- PORT OF SP 00000648 002 OF 004 ¶8. (SBU) Survey responses follow. All company-specific information should be considered business-sensitive for purposes of this report. ETHANOL -------------- 1) Name of company: EthylChem Ltd. 2) 2006 investment amount: US$26 million 3) Is this a new or expansion investment? New investment under construction 4) Is investment located in a free trade zone? Yes - soon to be designated a free trade zone 5) Type of product to be exported? Ethanol 6) Estimated value of exports to the United States: US$200 million, starting in 2008 7) Would project have been launched in the absence CBERA/CBTPA? No 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: None 1) Name of company: Trinidad Bulk Traders Ltd. 2) 2006 investment amount: US$4 million 3) Is this a new or expansion investment? New expansion 4) Is investment located in a free trade zone? Yes 5) Type of product to be exported? Fuel grade ethanol 6) Estimated value of exports to the United States: US$120 million to 140 million 7) Would project have been launched in the absence CBERA/CBTPA? No 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: No raw materials of U.S. or CBERA beneficiary origin, but more than 50% of investment was based on U.S. sources. Annual cost of U.S.-origin equipment and services is US$100,000 to US$200,000; this increases to US$300,000 to US$400,000 every 4th or 5th year of operation. MANUFACTURING: APPAREL -------------- 1) Name of company: Caribbean Safety Products 2) 2006 investment amount: TT$90,000 (US$14,000) 3) Is this a new or expansion investment? New investment (replacement of outdated equipment) 4) Is investment located in a free trade zone? No 5) Type of product to be exported? Wearing apparel 6) Estimated value of exports to the United States: TT$950,000 (US$151,000) 7) Would project have been launched in the absence CBERA/CBTPA? No 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: 100% - all raw material inputs were supplied by the U.S. customer at their cost. MANUFACTURING: ELECTRICAL GOODS -------------- 1) Name of company: Electrical Industries Ltd 2) 2006 investment amount: US$4.1 million 3) Is this a new or expansion investment? This is investment to produce new lines of cables that are primarily sold in the United States. 4) Is investment located in a free trade zone? No 5) Type of product to be exported? Copper electrical cables 6) Estimated value of exports to the United States: US$1.58 million 7) Would project have been launched in the absence CBERA/CBTPA? No 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: 4% of the value of the raw materials is spools manufactured in the U.S. 2% of the value of the raw materials in the goods shipped is nylon 6 manufactured in the U.S. MANUFACTURING: FOOD & BEVERAGE -------------- 1) Name of company: Diana Candy Company Ltd. 2) 2006 investment amount: US$31,700 3) Is this a new or expansion investment? New expansion 4) Is investment located in a free trade zone? No 5) Type of product to be exported? Confectionery 6) Estimated value of exports to the United States: US$350,000 7) Would project have been launched in the absence CBERA/CBTPA? No 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: 100% 1) Name of company: Dockside Seadfoods (Trinidad) Ltd./Capatains Choice Ltd. 2) 2006 investment amount: US$586,000 PORT OF SP 00000648 003 OF 004 3) Is this a new or expansion investment? New investment 4) Is investment located in a free trade zone? No 5) Type of product to be exported? Marinated breaded flash fried and frozen fish fillets, formed sea products, and shrimp products 6) Estimated value of exports to the United States: US$2 million 7) Would project have been launched in the absence CBERA/CBTPA? Yes. It was planned three years prior and influenced by both Yum Brands Inc. and Burger King Corporation 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: 20% 1) Name of company: K.C. Confectionery Ltd. 2) 2006 investment amount: US$1.25 million 3) Is this a new or expansion investment? New expansion 4) Is investment located in a free trade zone? No 5) Type of product to be exported? Sugar confectionery and bubblegum 6) Estimated value of exports to the United States: US$2 million 7) Would project have been launched in the absence CBERA/CBTPA? No 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: 10% MANUFACTURING: OTHER -------------- 1) Name of company: Applied Industries Ltd. 2) 2006 investment amount: US$100 million 3) Is this a new or expansion investment? New investment 4) Is investment located in a free trade zone? No 5) Type of product to be exported? Glass containers 6) Estimated value of exports to the United States: US$4 million 7) Would project have been launched in the absence CBERA/CBTPA? No 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: Yes; 60% 1) Name of company: Caribbean Insulation Services Ltd. 2) 2006 investment amount: US$1 million 3) Is this a new or expansion investment? New investment 4) Is investment located in a free trade zone? Will be 5) Type of product to be exported? Power Catamarans 6) Estimated value of exports to the United States: US$2 million 7) Would project have been launched in the absence CBERA/CBTPA? No 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: US$1.2 million 1) Name of company: Caribbean Roof Tile Company 2) 2006 investment amount: N/A 3) Is this a new or expansion investment? New investment 4) Is investment located in a free trade zone? Yes 5) Type of product to be exported? Manufactured clay products - roof tiles 6) Estimated value of exports to the United States: US$3.29 million 7) Would project have been launched in the absence CBERA/CBTPA? Yes 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: COMMENT: Caribbean Roof Tile Company started operation in 2006 and ships clay roof tiles to the United States, but company officials consistently denied that their products qualified for CBERA preferential rates, even after we produced U.S. import statistics showing that all clay tiles imported from T&T in 2006 had qualified for CBERA rates. Overall trade statistics in 2006 show an 85% increase in roofing tiles over 2005. END COMMENT. PETROCHEMICALS -------------- 1) Name of company: Methanol Holdings Ltd. 2) 2006 investment amount: During the period 2003 - 2006 an investment of US$611 million was made to purchase and start up our M5000 Methanol Plant. The first full year of operation was 2006. 3) Is this a new or expansion investment? New investment 4) Is investment located in a free trade zone? No 5) Type of product to be exported? Refined methanol 6) Estimated value of exports to the United States: US$430 million 7) Would project have been launched in the absence CBERA/CBTPA? No 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: None COMMENT: We believe company officials misunderstood question 8. Methanol Holdings produces methanol from natural gas originating in Trinidad & Tobago. END COMMENT. 1) Name of company: Phoenix Park Gas Processors Ltd. 2) 2006 investment amount: US$44.7 million 3) Is this a new or expansion investment? Expansion PORT OF SP 00000648 004 OF 004 4) Is investment located in a free trade zone? No 5) Type of product to be exported? Gasoline extracted from natural gas 6) Estimated value of exports to the United States: US$250 million 7) Would project have been launched in the absence CBERA/CBTPA? No 8) Approximate share of inputs of U.S. or CBERA beneficiary origin: Plant, equipment, and contractor cost approx. US$44.7 million COMMENT: Company officials appear to have misunderstood question 8. Phoenix Park Gas produces gasoline from natural gas originating in Trinidad & Tobago. END COMMENT. AUSTIN