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.

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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).

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2006 CBI SURVEY: SECTOR RESULTS FOR T&T
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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
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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
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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