Letter to the Speaker of the House and the President of the Senate on the Designation of the Bahamas as a Caribbean Basin Economic Recovery Act Beneficiary

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 the Bahamas as a beneficiary of the trade-liberalizing measures provided for in this Act. Designation will entitle the products of the Bahamas to duty-free treatment until September 30, 1995, except for products statutorily excluded. As a beneficiary, this country will have the opportunity to become eligible for the convention expense tax deduction under Section 274(h) and to become an eligible domicile for the establishment of foreign sales corporations under Section 927(e)(3)(A) of the Internal Revenue Code of 1954, by entering into an exchange of information agreement with the United States on tax matters.

Designation is an important step for the Bahamas in its effort to strengthen its economy. Designation is also 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 the Bahamas flows out of discussions held between this Administration and that nation regarding the designation criteria set forth in Section 212 of the CBERA. Our discussions with the Bahamas were concluded this past month.

The Bahamas have demonstrated to my satisfaction that its laws, practices, and policies are in conformity with the designation criteria of the CBERA. The government of the Bahamas has communicated on these matters by letter with Secretary of State Shultz and Ambassador Brock and in so doing has indicated its desire to be designated as a beneficiary (copies of the letters are enclosed). On the basis of the statements and assurances in this letter, and taking into account information developed by the United States Embassy and through other sources, I have concluded that the objectives of the Administration and the Congress with respect to the statutory designation criteria of the CBERA have been met.

I am mindful that under Section 213(B)(2) of the CBERA, I retain the authority to suspend or withdraw CBERA benefits from any designated beneficiary 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 the Bahamas and other beneficiary countries and entities which are pertinent to the designation criteria.

This Administration has been and will continue to work closely with its fellow governments in the Caribbean Basin and with the private sectors of the United States and the Basin countries to ensure that the wide-ranging opportunities opened by the CBERA are fully utilized.

Sincerely,

RONALD REAGAN