[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]




    THE STRATEGIC IMPORTANCE OF BUILDING A 
    STRONGER U.S.--CARIBBEAN    PARTNERSHIP

=======================================================================

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                         THE WESTERN HEMISPHERE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 14, 2016

                               __________

                           Serial No. 114-189

                               __________

        Printed for the use of the Committee on Foreign Affairs



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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       BRIAN HIGGINS, New York
MATT SALMON, Arizona                 KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          ALAN GRAYSON, Florida
MO BROOKS, Alabama                   AMI BERA, California
PAUL COOK, California                ALAN S. LOWENTHAL, California
RANDY K. WEBER SR., Texas            GRACE MENG, New York
SCOTT PERRY, Pennsylvania            LOIS FRANKEL, Florida
RON DeSANTIS, Florida                TULSI GABBARD, Hawaii
MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
TED S. YOHO, Florida                 ROBIN L. KELLY, Illinois
CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
SCOTT DesJARLAIS, Tennessee
REID J. RIBBLE, Wisconsin
DAVID A. TROTT, Michigan
LEE M. ZELDIN, New York
DANIEL DONOVAN, New York

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

               Jason Steinbaum, Democratic Staff Director
                                 ------                                

                 Subcommittee on the Western Hemisphere

                 JEFF DUNCAN, South Carolina, Chairman
CHRISTOPHER H. SMITH, New Jersey     ALBIO SIRES, New Jersey
ILEANA ROS-LEHTINEN, Florida         JOAQUIN CASTRO, Texas
MICHAEL T. McCAUL, Texas             ROBIN L. KELLY, Illinois
MATT SALMON, Arizona                 GREGORY W. MEEKS, New York
RON DeSANTIS, Florida                ALAN GRAYSON, Florida
TED S. YOHO, Florida                 ALAN S. LOWENTHAL, California
DANIEL DONOVAN, New York
















                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Mr. Eric Farnsworth, vice president, Council of the Americas and 
  Americas Society...............................................     4
Ms. Sally Yearwood, executive director, Caribbean-Central 
  American Action................................................    10
His Excellency Richard Bernal, pro-vice chancellor for global 
  affairs, University of the West Indies in Jamaica..............    24

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Mr. Eric Farnsworth: Prepared statement..........................     7
Ms. Sally Yearwood: Prepared statement...........................    13
His Excellency Richard Bernal: Prepared statement................    26

                                APPENDIX

Hearing notice...................................................    40
Hearing minutes..................................................    41
 
    THE STRATEGIC IMPORTANCE OF BUILDING A STRONGER U.S.--CARIBBEAN 
                              PARTNERSHIP

                              ----------                              


                        THURSDAY, JULY 14, 2016

                       House of Representatives,

                Subcommittee on the Western Hemisphere,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The committee met, pursuant to notice, at 2 o'clock, in 
room 2200 Rayburn House Office Building, Hon. Jeff Duncan 
(chairman of the subcommittee) presiding.
    Mr. Duncan. Okay. A quorum being present, the subcommittee 
will come to order. I would now like to recognize myself for an 
opening statement. Thank you, guys, for your patience.
    Today, we need to highlight a very important region in our 
hemisphere that unfortunately often gets overlooked. Many of 
our Caribbean friends have repeatedly urged the United States 
to pay more attention to the Caribbean, and I want you to know 
that I have heard you.
    I would also like to thank Ranking Member Sires in 
particular for his leadership in working to prioritize this 
subcommittee's focus on the Caribbean. These islands, home to 
many beautiful and popular travel destinations, often come up 
in conversation for the average American only in the context of 
tourism and planning a future vacation.
    However, while these are certainly important strengths for 
the region, the Caribbean has much more to offer which U.S. 
businesses, universities, and local communities should consider 
when planning future investment, academic research, or where to 
develop stronger economic ties.
    One of the primary tools of U.S. engagement with CARICOM 
countries is the Caribbean Basin Initiative, or CBI, which was 
created in 1983.
    Can we turn that sound down a little bit, sir? Can we turn 
that down just a little bit? Okay.
    Which was created in 1983 and has subsequently expanded to 
provide 17 countries and dependent territories with duty-free 
access to U.S. market for most goods. This engagement has led 
to a 44-percent increase in U.S. exports to the Caribbean over 
the past 10 years, and last year the total trade relationship 
between the U.S. and the Caribbean was $33.4 billion.
    I believe it is critical to work with our neighbors to 
mutually promote economic growth through trade liberalization, 
respect for the rule of law, and adherence to free market 
principles in order to achieve prosperity that is sustainable 
for the region. In addition, I am a firm supporter of deeper 
U.S.-Caribbean energy relations. To me it is a win-win 
situation.
    U.S. possesses an abundance of oil, natural gas, and 
technical expertise, and the Caribbean has some of the highest 
energy costs in the world and needs to lower these costs by 
building infrastructure for delivering energy, integrating 
energy markets to attract investment and financing, and 
establish pipelines and liquified natural gas frameworks.
    In view of Venezuela's instability, its oil production 
decline, and low global oil prices, countries in the Caribbean 
dependent upon Venezuela's Petrocaribe programs should 
seriously consider how they can diversify their energy matrix 
and build stronger energy partnerships with the United States 
and other energy-producing countries in the region. After all, 
the United States is the largest energy producer in the Western 
Hemisphere; collectively with Mexico and Canada, North America 
accounts for 71 percent of the hemisphere's crude oil and 28 
percent of natural gas reserves in the hemisphere.
    Similarly, Argentina, Brazil, Colombia, Peru, and Trinidad 
and Tobago have significant oil and natural gas production. In 
my view, freedom-loving, market-friendly, energy-producing 
countries in this hemisphere should be working more closely 
together to pursue hemisphere-acquired, energy independence and 
that means assisting non-energy producing countries including 
the Caribbean neighbors in reaching this objective. Ultimately, 
if the Western Hemisphere were more energy independent it would 
go a long way to transforming our societies and security and 
independence and our economic growth.
    So today, there are many trade energy opportunities for 
U.S. and CARICOM. However, I remain concerned about the growing 
security challenges in the region from transnational criminal 
organizations that seek to use the region to ship drugs, 
migrants, and contraband to United States shores. The Caribbean 
Basin Security Initiative is another tool the United States has 
used since 2010 to address regional security issues, and given 
the Caribbean's strategic location to U.S. homeland, we need to 
keep considering ways to improve CBSI and more effectively 
cooperate with the regional partners to control borders, block 
criminal groups' ability to exploit permissive environments to 
their advantage.
    I am also concerned about the people from the Caribbean 
that have joined Islamic extremist organizations. Last year, 
the former head of the U.S. Southern Command, General Kelly, 
testified before Congress that close to 100 people had left the 
Caribbean to go fight in Syria. At a subsequent briefing, he 
specifically named Jamaica, Siriname, and Trinidad and Tobago 
as having had people leave for the battlefield. These threats 
to the United States and regional security should motivate all 
of us; give us all a greater willingness to do more to 
strengthen security cooperation.
    Moreover, I want to point out at a previous subcommittee 
hearing on border security threats in the region, I raised 
concerns regarding reports that I had seen about citizen by 
investment programs in the Caribbean which have enabled fraud, 
corruption, and exploitation by foreign nationals. I hope our 
Caribbean friends will consider the regional implications of 
poorly managed CIPs. They pose security vulnerabilities to all 
of us since improperly vetted CIP applicants might allow a 
transnational criminal to evade sanctions and travel 
restrictions.
    In view of the growing security threats that I have 
mentioned, it is vital for regional security that Caribbean 
countries, as well as all Latin American countries, adopt and 
follow strong vetting mechanisms according to international 
best practices using all checks of law enforcement sanctions 
and terrorist database that are available to them.
    And finally, I would be remiss if I did not mention the 
importance the United States places on cooperation in the 
multilateral organizations such as United Nations or the OAS, 
Organization of American States. I want to thank the Caribbean 
countries that voted with the United States recently at the OAS 
on the situation in Venezuela. I recognize your support and 
friendship, and I commend your courage of conviction to speak 
the truth to power even when it is difficult.
    These countries that chose to abstain from voting or voted 
against the resolution at the OAS regarding the situation in 
Venezuela, I want you to know that your decision only furthers 
oppression and tyranny in the Americas. It is my hope that you 
will reconsider how your vote on these type of issues in the 
future.
    Ultimately, we all have a responsibility to actively 
safeguard freedom in the Americas, but that can only require 
very tough choices. I realize these decisions are complex, and 
I look forward to hearing from our witnesses on all these 
topics today, and so with that I will turn to the ranking 
member for his opening remarks.
    Mr. Sires. Thank you, Mr. Chairman, for working together on 
this hearing, and I want to thank the witnesses for being here 
today. Thank you very much.
    The Caribbean is often described as America's third border 
and I agree with this description. With almost 45 million 
people encompassing 16 independent countries and 14 overseas 
territories, the Caribbean is a diverse region that includes 
some of the hemisphere's richest and poorest nations. It is a 
region of great economic and cultural, political and security 
ties to the United States. The U.S.-Caribbean relationship is 
characterized by extensive economic linkages, significant 
security cooperation, and continued U.S. assistance to support 
economic and social development, including efforts to combat 
HIV/AIDS and to mitigate the effects of climate change.
    Over the past 3 years, the administration has put forth a 
new effort supporting energy diversification and clean, 
sustainable energy projects to improve the region's energy 
security and to help it move away from its dependence on oil 
from Venezuela. Venezuela, which has long subsidized energy 
costs to many Latin American and Caribbean countries, must turn 
inward to rescue itself from economic and political collapse. 
Amidst these troubling times we must work with our Caribbean 
partners to diversify energy sources, strengthen their 
economies, and build upon a mutual security interest.
    On the legislative front, last month the House approved 
H.R. 4939, the United States-Caribbean Strategic Engagement Act 
of 2016. This act is designed to increase engagement with the 
Caribbean that requires the Secretary of State to submit a 
multiyear plan to Congress for U.S. engagement with the 
Caribbean regions and update on its U.S. diplomatic effort to 
engage the eastern Caribbean countries.
    As a global power, the United States faces challenges and 
threats from every corner of the world. However, it is vital 
that we remain engaged in the Western Hemisphere and not lose 
sight of our interests so close to home. I look forward to 
hearing from our witnesses on how the U.S. efforts in the 
Caribbean can improve and how America can continue to 
strengthen its partnership with our Caribbean neighbors. Thank 
you.
    Mr. Duncan. I will thank the ranking member, and I will 
just say I don't know how many other members we are going to 
have today. We have adjourned for the August recess break and 
we wanted to continue. Knowing that we were going to adjourn, 
we were willing to continue with this hearing because that is 
how important it is to the ranking member and myself, so don't 
think because no other members show up that it isn't a vital 
issue to the committee and to the subcommittee. And I look 
forward to hearing from the witnesses who are very well known 
to the committee so their bios are available to us, and I will 
recognize Eric Farnsworth for 5 minutes.

 STATEMENT OF MR. ERIC FARNSWORTH, VICE PRESIDENT, COUNCIL OF 
               THE AMERICAS AND AMERICAS SOCIETY

    Mr. Farnsworth. Well, Mr. Chairman, thank you very much for 
continuing with the hearing on such a vital topic. Thank you 
for your leadership overall on these issues as well as the 
Caribbean specifically, and Mr. Ranking Member, you as well. It 
is really important to have a bipartisan voice on these issues 
and we note that. We take satisfaction in that and thank you 
for that leadership, and we ask that that would continue in 
some way given the importance of the issues at hand.
    The United States does have strategic issues in the 
Caribbean Basin and we don't often talk about it in that way, 
but in my view they are strategic, from support for democratic 
institutions--some of which are quite fragile; some of which 
are strong and enduring--we have security interests including 
drug trafficking, counterterrorism, the fight against financial 
crimes, obviously immigration and humanitarian concerns, 
energy, the environment, economic development; it is a very 
wide range of issues to which the United States has interest. 
The United States also maintains significant diplomatic 
interests in the region most notably in the current context 
related to Venezuela's slow motion collapse and related 
discussions at the OAS and the United Nations, and both of you 
have referred to those issues as well.
    Recognizing this, the administration has made a number of 
efforts along these lines to improve relations with the 
Caribbean. Presidential and vice presidential travel has been 
well received as have initiatives on security and energy. The 
Caribbean Basin Security Initiative, for example, has proven to 
be a workable concept. In my view, enhanced results would be 
anticipated with the availability of greater resources for that 
program.
    At the same time at least in this instance, geography 
really is destiny and the hard reality is that the Caribbean 
lies between the major drug producing region of the Andes and 
the overwhelming demand for drugs in North America and also in 
Europe. It has also been a jump-off point for extraregional 
migration to the United States. Security is a constant 
challenge for regional law enforcement requiring close 
coordination and assistance from the United States and other 
interested parties.
    Economically, the Caribbean Basin is also under strain. 
With generally small productive capacities, the region has 
relied on preferential trade access with the United States and 
Europe, robust tourism receipts, and most recently Venezuelan 
energy largesse via Petrocaribe. With the reduction both in 
global energy prices and also Venezuelan production Petrocaribe 
is less important now than it once was, but the program has 
nonetheless left a significant debt overhang for a number of 
Caribbean nations.
    Likewise, tourism is being impacted by new market entrants 
in the region as well as the possibility of reduced demand from 
the United Kingdom in the wake of Brexit and also health 
related concerns such as the Zika virus which we are hearing so 
much about. The Obama administration has sought to address 
several of these economic concerns by promoting the Caribbean 
Energy Security Initiative to catalyze a cleaner, more energy 
secure future, consistent with the Paris climate change 
accords, nonetheless still greater progress might be made.
    I thought for some time, Mr. Chairman and Mr. Ranking 
Member, that we need to think bigger and bolder and more 
strategically about the Caribbean, and this hearing is part of 
that process and again I thank you for doing it. In my judgment 
and with the new expansion of the Panama Canal, it is time 
perhaps for a new Caribbean Basin Initiative which will bring a 
number of the policy priorities together under one strategic 
initiative. For this reason I am particularly pleased that the 
House has just passed the United States-Caribbean Strategic 
Engagement Act, and Mr. Sires you referenced that in your 
opening comments. This is a worthy bipartisan effort to begin 
the process and I urge prompt Senate passage of the bill.
    Several related initiatives might also be considered, 
learning from successes like Costa Rica, for example. The 
Caribbean should consider branding itself the cleanest, most 
environmentally friendly region for tourists and citizens which 
the United States can actively support. Not just technical 
assistance, but also concessionary financing, technology 
transfer, debt-for-nature swaps, and a regional commitment to 
open markets perhaps through expanded trade investment ties 
with the United States particularly in natural gas exports, 
which would all be part of a new CBI designed in full 
consultation and coordination with Caribbean leaders themselves 
to rebrand the region as a model for environmental and clean 
energy development.
    Caribbean leaders for their part would be encouraged to 
strengthen regional integration and cooperation, reduce 
barriers to trade and investment, create efficiencies 
particularly in clean energy related sectors including 
standards and regulations, and promote a regional vision not 
just a national vision for each individual nation.
    A focus on investment climate issues would also be welcome 
as would mechanisms to ensure that de-risking by U.S. banks not 
unduly burden the Caribbean banking sector or reduce access to 
trade finance and development support including remittances.
    Diplomatically, we could anticipate a favorable response 
from the region if the United States took a more proactive 
approach. Additional Embassies and pre-clearance facilities, a 
commitment to ongoing high level consultations including 
visits, and the naming of a senior level envoy for Caribbean 
Basin affairs could all be considered. In the meantime, 
recognizing the collective weight of Caribbean nations within 
the OAS and other international bodies should motivate the 
United States to look for quick dispersing deliverables which 
can be highlighted. One of these in my view should be a high 
profile, joint assault on Zika including subsidized access to 
vaccines as soon as they can be developed and effectively 
deployed.
    Other nations, including China and Venezuela, are 
particularly good at these sorts of diplomatic initiatives. The 
goodwill they have engendered in the region through such 
activities should be a wake-up call for Washington that the 
Caribbean Basin cannot be taken for granted. In the current 
environment the United States must contend for the Caribbean as 
indeed we have to contend for all of Latin America, and I 
believe that additional U.S. efforts in the Caribbean would be 
rewarded. So Mr. Chairman, Mr. Ranking Member, thank you again 
for the opportunity to join you. It is a privilege to do so, 
and I look forward to the questions you might have.
    [The prepared statement of Mr. Farnsworth follows:]
    
    
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                              ----------                              

    Mr. Duncan. Thank you, Eric. Next witness very well known 
to the committee as well, Sally Yearwood, you are recognized 
for 5 minutes.

STATEMENT OF MS. SALLY YEARWOOD, EXECUTIVE DIRECTOR, CARIBBEAN-
                    CENTRAL AMERICAN ACTION

    Ms. Yearwood. Thank you, Mr. Chairman, Ranking Member 
Sires. Thank you for holding this timely hearing on the U.S.-
Caribbean partnership. Coming as it does in the wake of the 
House passage of H.R. 4939, we have an important opportunity to 
assess and recalibrate the relationship.
    The Caribbean is the United States' third border. U.S. 
security interests in regional stability are intrinsically 
linked and so, by extension, collaboration on critical 
economic, political, and social development issues must be a 
foreign policy priority.
    Today there is no dominant partner in the region. Russia, 
China, Canada, Taiwan, Venezuela, and the European Union all 
have a substantial presence. The Islamic Development Bank has 
established significant ties with financing in some Caribbean 
nations, and other countries ranging from Qatar to Japan and 
Brazil have had a significant impact on how and where the 
countries of the Caribbean have turned to search for trade and 
financing alternatives.
    The United States remains the region's primary trading 
partner, but there is no doubt that when it comes to overall 
engagement other countries are filling, and in some cases 
exploiting, a vacuum. What can be done to build this stronger 
partnership? I will speak to the areas of economic cooperation 
that we believe could have an impact.
    Trade and Assistance. The 1983 Caribbean Basin Economic 
Recovery Act remains one of the most generous nonreciprocal 
trade bills ever granted by the U.S. The Caribbean Basin 
remains a top ten trading partner with a balance of trade 
surplus in favor of the U.S. It is also worth noting that the 
Caribbean is the only area of the world where U.S. ship 
operators and U.S. nationals remain significant players in the 
international carriage of goods by sea.
    When CBERA was passed, regional economies were very much 
oriented around agricultural and manufactured products. 
However, the world has changed. The economies today with some 
exceptions are largely dominated by travel and tourism, the 
financial services sector and other service based industries.
    At the Inter-American Development Bank, the World Bank, and 
the United States Agency for International Development there 
are substantial programs that are designed to build regional 
competitiveness. With H.R. 4939, the U.S. Government can 
examine what exists, where there are gaps, and recommend 
potential areas for trade and cooperation which reflect today's 
reality.
    Correspondent Banking and De-risking. While the technical 
issues behind this are under discussion among your colleagues 
in the Financial Services Committee, and recently they sent a 
letter to the OCC requesting clarity on the application of 
rules and compliance, this issue has been front and center for 
the countries of the Caribbean for a while.
    This is a global problem, but it is widely acknowledged 
that the Caribbean has been disproportionately affected because 
of the size of the markets and the perception of risk. CCAA has 
been working with the region, the U.S. Government, 
international financial institutions, associations, and the 
private sector to help identify solutions for the Caribbean. 
The CEO of the FIBA describes the situation as follows: We are 
working on financial inclusion in developing countries and de-
risking is then blocking access to finance. This amounts to a 
de facto embargo on the region in the area of financial 
services.
    When international banks sever relationships with regional 
banks, there is a direct impact on economic growth, trade, and 
remittances. As important, when the costs of complying with 
regulations create a burden on the legitimate banks and they 
shut down, there is a threat that underground or less regulated 
institutions will take their place. This brings the issue into 
the territory of economic stability, viability, and ultimately 
security for the region and the United States.
    While we can all agree that the banking community's ability 
to combat money laundering and terrorist financing is a shared 
priority, what we cannot do is place undue burdens on any 
individual party. There exists an opportunity for all 
stakeholders to come together to craft a balanced, risk-based 
approach between regulation and inclusion, where all parties 
recognize that they have a role in the problem as well as in 
the solution.
    Travel and Tourism. Millions of travelers move by air and 
sea between the Caribbean and the U.S. every year. Air and sea 
ports are a critical part of the security apparatus every day. 
Sharing the security responsibility at the front lines gives 
the U.S. additional control over its borders and creates a 
collaborative environment for managing terrorist watch lists as 
well as trafficking of guns, drugs, and other contraband.
    Pre-clearance facilities in-region are an instrument for 
building a security partnership. While the cost does not 
justify pre-clearance in every Caribbean country, a strategic 
look at increasing pre-clearance presence through a hub and 
spoke system would be beneficial to shared collaboration and 
security.
    Diplomatic Presence. Representative Engel has long called 
for the establishment of a diplomatic presence in the countries 
of the Eastern Caribbean. There are nine member states of the 
Organization of Eastern Caribbean States, six of which are 
independent. The OECS is a political and economic union that 
has proven effective and proactive. If there is no appetite for 
diplomatic presence in all of the countries of the Eastern 
Caribbean, I believe that there should at least be stronger 
recognition of the force that the OECS represents in the 
region, and at least one full Embassy should be established 
there.
    Security and Disaster Resilience. CCAA has run a Disaster 
Management Workshop Series with our partners from Tropical 
Shipping and other regional partners for almost two decades. 
This event underscores the importance of public-private 
partnerships in disaster management. Previously focused very 
much on natural disasters, we now look at broader threats to 
the specific countries.
    The United States Southern Command is an important 
collaborator and I would be remiss not to mention their ongoing 
engagement as well as their responsiveness to regional 
disasters whenever called upon. The region is vulnerable to 
range of natural and other disasters and resilience is 
critical. Any breakdown has trade, economic, and security 
implications for the broader region and for its partners 
outside the region. A multi-country strategy forged in 
collaboration with regional partners should be a part of the 
engagement.
    Time does not allow for the full range of matters to be 
addressed. Energy, for one, is a regional priority and there I 
would urge continued U.S. engagement on the sustainable energy 
front, building on the Vice President's hallmark Caribbean 
Energy Security Initiative. Furthermore, Haiti remains an 
ongoing challenge and the current political crisis has 
implications for the region as a whole.
    In conclusion, the United States and the Caribbean are 
natural allies, and today, with the uncertainty over the future 
of Venezuela and the added uncertainty about what Brexit means 
for the countries of the Commonwealth Caribbean, we can 
alleviate the insecurities that these small, vulnerable 
economies face when there is a direct disruption on the 
horizon. A quick look at the communique issued after the recent 
CARICOM Heads of Government meeting reflects the wide range of 
issues that the region is dealing with. H.R. 4939 could not 
have come at a more strategically important time for the 
relationship.
    Thank you Mr. Chairman, Ranking Member Sires, members of 
the committee for the opportunity to be with you today. I look 
forward to any questions.
    [The prepared statement of Ms. Yearwood follows:]
    
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                                      ----------                              

    Mr. Duncan. Thank you so much, Ms. Yearwood.
    We will now enter in the question phase of it. We have a 
lighting system in here. I don't know if we are going to use 
that with just the three of us here, and I think Representative 
Meeks is coming. So we will just try to get through it and I 
will try to monitor it.
    All eyes are on Venezuela right now, and Venezuela's impact 
on the Caribbean nations from energy to trade and other things 
are very concerning, especially Eastern Caribbean nations. So, 
I guess the question that I have is, all six countries of the 
Organization of Eastern Caribbean States are members of the 
Bolivarian Alliance known as ALBA, which includes efforts to 
promote regional cooperation and alleviate poverty; so to what 
extent have ALBA and Petrocaribe increased Venezuela's 
influence in the Caribbean? I think I can answer that question 
tremendously.
    What effect will it have with the waning influence of 
Venezuela given the nature of the Maduro government and the 
issues with energy, and the issues with poverty, and food 
security and that sort of thing? So Eric, you know, let's just 
delve into how Venezuela and the situation there is actually 
going to impact especially the Eastern Caribbean ALBA 
countries.
    Mr. Farnsworth. Mr. Chairman, thank you. And I agree it is 
the pregnant issue if you will of the region. Venezuela is a 
country that is in collapse. Economically, some are saying it 
is no longer a democracy. It is a country that has severe and 
lasting internal problems which it is going to take years to 
get beyond.
    And so, the relationship that Venezuela has developed with 
a number of countries of the Caribbean in good times has become 
strained, because the largesse that Venezuela has been able to 
frankly give away or to provide a concessionary on 
concessionary terms has been much constrained in the current 
environment. You know, you talk to Caribbean leaders and they 
say we are not big fans of the Venezuelan regime, but if they 
are giving us free stuff why not take it? And I think in some 
ways, it is very much a commercial relationship or, it has been 
a commercial relationship.
    I guess what I would say is in the current environment, 
because of the troubles that Venezuela is having and frankly 
because of the opportunities that we have in the United States 
through the entire revolution of energy that we have seen in 
our own country over the last several years, we have an 
opportunity to come into the Caribbean as a partner and say, 
look, you know the programs and the activities that you may 
have been doing with Venezuela are no longer relevant and we 
can provide the same things that you need without the political 
or without the ideological overhang that you might have had 
previously.
    Mr. Duncan. Let me ask you something about that. Is there 
enough trust of the United States for us to step into that void 
with those countries? I don't know the answer to that.
    Mr. Farnsworth. Well, I think in the current environment we 
need to do some groundwork. We need to do some spade work. I 
mean, look, Petrocaribe was a very successful program and we 
understand why. I mean, it was timely, it provided something 
that the leaders needed when they needed it. It was symbolic. 
It was very, very easy to explain to people. I mean, we are 
getting oil from Venezuela. It was focused. It was on one 
issue.
    And I think sometimes, when the United States engages with 
the countries of the Caribbean, we have a lot of well meaning 
programs and wonderful ideas, but they are diluted, right? Not 
deluded, but diluted in terms of the effort and the focus. 
Under Petrocaribe, it was one product easily explained, highly 
symbolic, and people said Venezuela's our friend.
    And I think what we need to do better from the United 
States' perspective is to build that level of trust through an 
ongoing sustained engagement with the region so that people can 
say, look, we do trust you. We do take this partnership on the 
terms in which it is offered because it is mutually beneficial.
    Mr. Duncan. I personally think energy is a great 
opportunity for us, no doubt about that. Let me delve into 
money laundering and terrorism financing a little bit. There is 
a big push by the U.S. to have U.S. banks sever relationship 
with Caribbean-based banking institutions. Does that policy 
work to reduce money laundering and opportunities for terrorist 
organizations to access the financial system? And that is 
probably to Sally.
    Ms. Yearwood. In a lot of ways it does the opposite, 
because once U.S. banks move out of the region what you have 
created in fact is a void and that becomes filled by other 
institutions. And there are anecdotal accounts of people when 
taking remittances between jurisdictions that have to carry 
that in cash in a suitcase. So, what is being created is a 
situation where there is more opportunity for terrorist 
financing or something to go wrong and somebody to exploit that 
void. So I would say that the U.S. banks absolutely need to be 
a key and vital player in the regional money system.
    Mr. Duncan. I am probably less concerned, and maybe I 
shouldn't be, but less concerned about terrorism financing 
through the Caribbean financial institutions as I am about 
money laundering. We just saw in Panama, a huge $800 million 
money laundering scheme, real estate involvement, huge number 
of employees involved in a legitimate business--still a money 
laundering scheme. And so I want to make sure that we are 
cognizant of the possibility in the Caribbean nations as well.
    Ms. Yearwood. Part of the issue is the perception of risk 
versus the reality of the risk. Banks are not leaving the 
Caribbean because there is money laundering. Banks are leaving 
the Caribbean because the costs of compliance are 
overwhelmingly stacked against the banking system. You have 
small jurisdictions and for every account that you are dealing 
with you have to put a huge amount of money into making sure 
that the cost of--that the businesses is clean.
    But what we have to do in effect is create a system where 
the regulators, the banks, everybody is working together, 
information is being shared, and when information is passed 
between the regulators and the Treasury or the regulators and 
the banks, people know where the voids are. What we need to 
also do is see what the technology, the tools that are out 
there that can create better compliance that can--the 
blockchain and other things that can build a more stable and 
more verifiable, transparent banking system.
    And the problem in the Caribbean is that the economies are 
small, putting these systems in place costs a lot, but all the 
Caribbean will tell you that they meet the compliance 
regulations. And so there is a disconnect between what is 
actually happening and what people are saying is happening. I 
think one of the common complaints is the breakdown between 
what is going on in offshore financial services and what is 
going on in banking.
    And the Panama Papers were very largely linked to the 
offshore financial services industry versus the correspondent 
banking and de-risking issue that is currently being faced. 
And, so, that break needs to be made so we can tackle the 
problem at hand which is the ability to move money back and 
forth in a clean, transparent manner.
    Mr. Duncan. I am assuming that the Federal Government is 
monitoring--in Panama Papers an individual is never implicated 
in that and start shifting financial resources around, in 
possibly, the Caribbean nation. I am assuming our Treasury and 
FBI are monitoring that, I would assume. So I am going to go 
ahead and yield to the ranking member.
    Mr. Sires. One of the reasons that I supported, or I still 
support the export of energy from this country is to offset the 
influence of Venezuela because basically they were using it for 
political purpose. You know, if you look at the votes they took 
at the U.N. or even the OAS, you know, these people just became 
so dependent on Venezuela that we had to, I felt, offset that 
influence.
    So now Venezuela is in trouble. I think their production is 
something like 40, 50 percent less, and there is a void there 
that we can help fill and, you know, we can really help in 
terms of just having a little bit more influence on people.
    The other thing that worries me is that on the eastern part 
of the Caribbean. Basically, we have an Embassy in Barbados and 
it serves all those islands there. Meanwhile, you have 
Venezuela, Cuba, Brazil, they all have a presence there. So I 
was just wondering how much of a competitive disadvantage this 
puts us when we don't have, really, a presence in the Eastern 
Caribbean.
    Mr. Farnsworth. Well, Mr. Sires, I think both of your 
points are very well made and I would agree with both of them, 
the implications of both of them. You can't ask somebody for 
their vote and their support as an international institution if 
you haven't done anything to build that rapport in advance, and 
I think having diplomatic presence is part of that.
    And, you know, again, I go back to what I said earlier. 
Petrocaribe was a very successful program. Now I wish that we 
had done Petrocaribe and not Venezuela, but now there is an 
opportunity to change that. But we see the results. And when 
the OAS under a very courageous secretary general, Luis 
Almagro, tries to bring the institution toward recognizing that 
Venezuela is no longer in compliance with the Inter-American 
Democratic Charter, he is not getting the full support of the 
hemisphere, and indeed much of the Caribbean Basin has not gone 
along with that. And if you line up the votes, who voted in 
favor and who abstained, you can do a pretty easy one for one 
comparison based on who is a member of Petrocaribe.
    And so the implication of your question I think is spot on, 
you know, and that is why I think when we talk about the 
Caribbean in Washington, oftentimes we think about it in the 
context of, you know, island nations or programs or social 
development, and all of these are very, very important issues. 
Venezuela looks at this as a strategic issue. And the dividends 
pay off down the road when Venezuela itself is in the spotlight 
of the international community. Then they have friends that 
they can rely on and it pays dividends for them.
    So I think that at the end of the day that is a lesson 
frankly that we can learn, and I think we can build toward 
reversing that course.
    Ms. Yearwood. I agree 100 percent with Eric. Venezuela 
stepped in at a time that was very important for much of the 
region and now the region is very much paying the price, 
whether it is in debt or other areas related to votes and other 
requirements that they do as a result of the----
    Mr. Sires. Increased costs in energy too now.
    Ms. Yearwood. Sorry?
    Mr. Sires. An increase in the cost of energy also.
    Ms. Yearwood. Oh, absolutely, absolutely. And so I think to 
the point, we are at an important juncture now with the cost of 
energy being what it is with the U.S. energy supply going up 
and the region looking at ways to increase sustainable energy, 
whether it is through natural gas or getting the region less 
dependent on Petrocaribe and able to make these switches to new 
types of energy is going to make a huge difference.
    Mr. Sires. See, I don't think things happen by accident. I 
think this was well calculated between Venezuela and Cuba and, 
you know, unfortunately--well, we have an opportunity now to 
fill in a void.
    The other concern that I have is the significant increase 
of China in this region. You know, we seem to be put to a lull 
of sleep or something because everybody seems to move in and 
then we react. And we don't seem to catch these things until 
something like this happens, you know, like Venezuela.
    So unfortunately, you know, since I have been here we have 
been pushing--and I know Mr. Meeks and the other members that 
are here, you know, this is an important region for us. It is 
an important region for America and we really should 
concentrate. So now you have the Chinese moving in. They are 
going to go through the Panama Canal and they come in and they 
throw money, you know, at these small countries, which in 
reality they can't afford not to accept the money. So how much 
of influence is there now of the Chinese? And I know it is 
growing, but----
    Ms. Yearwood. The Chinese influence, it is actually very 
interesting to watch the way China has kind of come into the 
region and the types of projects. Sometimes it is a sports 
stadium. I think the recent, the Baha Mar debacle in the 
Bahamas, you have seen the Chinese Government come in in a way 
that the U.S. businesses cannot come in to any country. If a 
Chinese developer comes into a country in the region they have 
the Chinese financing and the Chinese Government behind them.
    Mr. Sires. And the employees.
    Ms. Yearwood. And the employees. And so you have 
effectively got a package that the U.S. cannot--the Foreign 
Corrupt Practices Act and all sorts of other reasons, the U.S. 
cannot compete in terms of the types of investment that they 
are able to take in without kind of having to do the due 
diligence behind it. And it is very welcome in a lot of places, 
but what Baha Mar has shown us is that it can create a very 
difficult situation for the countries where they go.
    Mr. Farnsworth. I think Sally raises a really interesting 
and important point in this context. You know, the Chinese or 
Venezuelan model is a state-led model, so the capital of the 
country, the leaders in the country can say this is what we are 
going to do. We are going to create Petrocaribe or we are going 
to build a sports stadium or we are going to declare that we 
are going to develop these projects, whereas the U.S. model is 
private sector-led model.
    And the disconnect here is that we are dealing with smaller 
economies, island nations, and in comparison of other 
investment opportunities in other countries in Latin America, 
much less worldwide, these are economies that generally aren't 
going to draw that large investment except in a couple sectors 
like tourism like we have been talking about.
    And so there is a place, in my view, for the United States 
Government to help leverage and facilitate private sector 
engagement in the Caribbean Basin, but I think we have to be 
very intentional about it. We can't just assume that okay, the 
private sector will show up or they won't based on market 
conditions and we will be happy with that. I think that this is 
where the strategic emphasis comes in to say, look, you know, 
during the 1980s we created the Caribbean Basin Initiative. It 
was private sector-led, right, but the government facilitated 
it, and that has been in large measure how we have worked in 
terms of Caribbean issues.
    I don't have any problem with that. I think that is 
appropriate. But we are competing against state-led competitors 
with a lot of money. And so this is some of the disconnect and 
I think we have to recognize that and then develop the approach 
based on what the reality is so that we can be more effective 
in our approach.
    Mr. Sires. Thank you. Mr. Chairman.
    Mr. Duncan. The Chair will now go to Mr. Yoho from Florida.
    Mr. Yoho. Mr. Chairman, I appreciate you putting this 
together, and I want to thank you for putting the pivot on our 
neighbors in the Caribbean.
    As you have stated and that we have seen, and it is not 
just this administration, it is probably over the last 20 or 30 
years where we have taken our eye off the ball in the 
Caribbean. When we have nation states that close to us with 
like cultures, you know, we value the same things, our family 
values, things like that, that close to us, and we take the eye 
off of that we start losing our competitiveness and we have 
seen that.
    I come from Florida, and we have over 105 million visitors 
a year in the tourist trade and it is the gateway to the 
Caribbean whether it is through our airports or through our 
shipping ports. And it is so important down in that area and we 
want people, you know, number one is to be secure in that area. 
And with the conflicts going on in the world we don't want them 
to invade in that area and unfortunately, we are starting to 
see that.
    And I think one of the biggest things is President Maduro, 
after Chavez, seeing what is going on in Venezuela.
    And we have seen in the past, when you have self-appointed 
dictators that come to power and when they fall there is a 
vacuum filled. We have seen that around the world. We have seen 
it in the Middle East. And when that happens you are never 
quite sure who is going to fill that void.
    And we want to make sure that we can have, I don't want to 
say an influence, but we want to, you know, promote the people 
with the ideals, the same values that we have and help them 
succeed in that without being meddling into their societies. 
And it is just so important, especially with this time in our 
nation and around the world with the conflicts going on. You 
know, there is a collection of islands down there--nation 
states, satellite countries--and like I said earlier we share 
the same cultures, values in all except maybe for that one sore 
thumb about 90 miles off our coast, and there is possibility of 
changing.
    And I think my questions are with the energy for the 
Caribbean islands, if Venezuela collapses, which I know the oil 
production will still go on, it is going to hurt all the 
Caribbean nations. And so who will fill that void? Who would 
best be to fill that? And what I want you to think about, I am 
being a little bit jaded here. I think I would like to see an 
American company come in there and fill that void. How would 
you see that happening and what would you recommend? We will 
start with you, Ms. Yearwood.
    Ms. Yearwood. Thank you, Mr. Yoho. I think that the U.S. is 
well placed to fill the void in the event that Venezuela is no 
longer able to provide through the Petrocaribe program. I think 
the surplus natural gas, I think the growth of clean and 
renewable energy, the region is really at a crossroads in terms 
of transitioning to clean and renewable energy whether its 
solar or wind.
    But there are other areas if I can make a couple of 
recommendations. One of the issues, for example, is OPEC has a 
large amount of investment in the Caribbean in the energy area. 
But there are two issues. The size of the markets in the 
smaller countries of the Caribbean don't necessarily enable 
them to receive OPEC financing or really be able to put 
together a good package for OPEC financing, and the second 
point is lack of feasibility studies. OPEC doesn't make grants 
and it doesn't do feasibility studies and so there is a lot of 
legwork that needs to be done in order bring some of this new 
technology into the space.
    Mr. Yoho. Is there any private partnerships, private-public 
partnerships or NGOs that you would recommend that would be 
best suited, you know, with the oil companies and, you know, 
one of our think tanks up here?
    Ms. Yearwood. I would recommend Eric. No.
    Mr. Yoho. You have to like that. Is that a segue you want 
to----
    Ms. Yearwood. No, I think there are a lot of entities in 
the U.S. that are working on energy in the Caribbean.
    Mr. Yoho. Okay. And I guess my concern is we can't worry 
about what happened in the past over the last 20 or 30 years. 
We can start from this point forward so that we have policies 
in place so that we have a strong foothold in there. And I know 
our feelings are we don't want to tell you how to live, we just 
want to be good trading partners with you, but help become 
strong trading partners where we develop an economic base in 
your countries.
    And with the influence of China, all my life China was kind 
of an adolescent, but in the last, say 10 years, I have seen 
them grow into puberty and they have a lot of money and they 
are starting to feel the effects of their testosterone. And we 
have seen that in the South China Sea, but we have seen the 
investments they have done in the Caribbean, you know, in the 
Bahamas--I think it was $3\1/2\ billion--and what they have 
done in Panama and Honduras and all that.
    I don't want to deny anybody doing business. I just think 
there are better partners that we can have and I think that 
would come from the good ol' U.S. of A. And so policies that 
you would help direct us, you know, whether it is ag, energy, 
just merchandise trade, what would you recommend, Mr. 
Farnsworth?
    Mr. Farnsworth. Well, Mr. Yoho, thank you for the question. 
And let me make a quick footnote on the China issue, first, if 
I can. You know, China's engagement in the Caribbean--and 
Ambassador Bernal is the true expert on this. I don't want to 
step on your toes.
    But it is different in the Caribbean than it is in South 
America, for example, where it is much more commercial, it is 
much more commodities based. In the Caribbean, there is a very 
healthy political component because of the desire for China to 
be recognized globally, right. You still have the political 
competition with Taiwan in parts of the Caribbean and Central 
America, et cetera, et cetera, so we have to remember that part 
of the aspect as well.
    In terms of the energy relationship, one of the things we 
are learning from the reforms in Mexico is it is not just oil 
and gas drilling, for example. Everybody focuses on that in the 
majors in the deepwater in the Gulf of Mexico and when is the 
next bid round and all that. But what it is even more impactful 
in Mexico is the power grid, the electricity, and when that 
gets freed up the cost of electricity comes down and that is 
really good for the consumer.
    And what we see in the Caribbean, across the Caribbean is 
the cost of electricity is really, really high. And so if you 
can bring that cost down to the consumer, first of all, you 
have more disposable income to spend on other things, but also 
it becomes a much more competitive commercial platform to begin 
to produce and so that begins to bring investment, which right 
now is more limited because again on the size of the economy.
    So if there is one aspect that could really be focused on, 
you know, it is not let's continue to import dirty diesel fuel 
and some of the really dirty pollutants that Venezuela is 
providing. Let's help convert the Caribbean to a clean energy 
power grid that can be used much more efficiently that where 
the cost of electricity can come down and make the entire 
region a much more competitive productive platform which will 
help their economies long term.
    So energy isn't just then seen as an energy sector issue, 
it is seen as an economic issue which I think is how we need to 
begin to view it.
    Mr. Yoho. And I appreciate it. And I am out of time, but I 
look forward to working with you in the future so that we can 
draft legislation to help bolster the presence of America 
there, and I think everybody wins in that situation. And I 
yield back, Mr. Chairman.
    Mr. Duncan. Thank you. We are then joined by Ambassador 
Bernal. Thanks for coming. I am sorry about the DC traffic and 
probably exacerbated by the DC heat. But we are going to go 
ahead and recognize you for 5 minutes for an opening statement.

STATEMENT OF HIS EXCELLENCY RICHARD BERNAL, PRO-VICE CHANCELLOR 
  FOR GLOBAL AFFAIRS, UNIVERSITY OF THE WEST INDIES IN JAMAICA

    Mr. Bernal. Thank you, Mr. Chairman, my apologies for being 
late. I left my house at 3 o'clock a.m. this morning. I was 
going well until the Falun Gong had a demonstration on 
Constitution Avenue.
    I will very briefly summarize my verbal statement which is 
that I think this is an important time for the U.S. to re-
examine its policy toward the Caribbean and to take a new bold 
initiative in the Caribbean; because, the Caribbean has been 
having a very difficult time since the global economic crisis; 
a combination of long term structural institutional factors as 
well as some short term cyclical factors, such as oil prices.
    It is important for the U.S. and for Jamaica because the 
U.S. is the main and largest trading partner and main source of 
investment and tourists. It is in the interest of the U.S. to 
have a prosperous, peaceful, and democratic Caribbean. In that 
regard I focus on the economic issues, because I think the 
economic issues impinge on all the other issues which are 
important such as governance, democracy, anti-narcotics 
campaigns.
    I have identified six issues which I think need to be 
addressed. The first issue which I think needs to be addressed 
is the debt situation. The Caribbean countries have become some 
of the most highly indebted countries in the world. The levels 
of debt now for many countries have the necessity of several 
restructuring exercises, and indeed the debt is now at a level 
where these countries cannot grow out of debt; that something 
has to be done.
    The debt is in three forms and it is multilateral debt, 
bilateral debt, and commercial debt. It is time to take an 
initiative which significantly reduces the debt structure which 
will free these economies to try to stimulate their own growth 
process.
    The multilateral debt needs to be stretched out and at a 
much lower interest rate. The bilateral debt can be reduced 
through a range of initiatives from debt-for-environment swaps 
to cancellation. The commercial debt needs to be transferred 
over to the multilaterals. This will give some fiscal space and 
allow these countries to resume public investment and 
investment in health and education.
    Second issue is what I call international financial 
intermediation. The de-risking of the correspondent banking 
relationships are very important to the Caribbean because 
international financial banks have been critical not only to 
domestic economy but in its link to the global economy. Some 
services have already been choked off and there must be a way 
for us to find an initiative that combines the security goals 
which we subscribe to, and also at the same time, allow 
financial intermediation such as trade financing, transfers of 
profits, debt payments, et cetera, to continue.
    Thirdly, security. The small states of the Caribbean find 
it very difficult to contend with transnational crime linked to 
narcotics trafficking, international terrorism, cybersecurity, 
et cetera. The U.S. has done an outstanding job in supporting 
these countries, but I think there is room to do more in the 
interest of our mutual security. Security these days can only 
be defined as international and can only be responded to by 
cooperation among countries.
    Fourthly, in the trade area there are some good legislation 
in place for trade. However, many of the Caribbean countries 
are now service oriented countries and we need to examine 
possibilities for promoting mutual and beneficial value chains 
which combine U.S. and Caribbean in services such as health 
care, education, and back office support. I think by combining 
the skills on Capitol Hill with some of the human resources in 
the Caribbean, these firms can remain competitive both here and 
in the U.S.
    Climate change. The Caribbean countries are coastal 
societies. Infrastructure, economic activity, population, the 
building environment are all concentrated on a narrow strip on 
the coast, even for those countries which are not islands, for 
example, Belize and Guyana. It means that they are among the 
most vulnerable countries to climate change. More resources 
need to be made available in a more accessible way to mitigate 
climate change and to assist these countries in surviving. And 
I point particularly to the tourist industry which is 
critically dependent on the quality of that immediate coastal 
strip.
    Finally, energy. The Caribbean, bar the exceptions of 
Trinidad and Tobago, depend heavily on importation of energy. 
It is time for the Caribbean to move toward alternative energy 
sources. Solar, wind, and thermal all have possibilities, and 
to shift the production of electricity which is among the 
highest cost in the world onto energy in less expensive 
sources. That would serve to revive a whole range of economic 
activity, including manufacturing.
    And I conclude, Mr. Chairman, by saying that all of these 
are interrelated aspects that need to be addressed. If we could 
address them in one overall initiative led by the U.S. and 
involving the development of financial institutions, I think 
that they reinforce each other and it is time for a new bold 
initiative in U.S. policy toward the Caribbean.
    Thank you for allowing me to make this brief statement at 
this late stage in the proceedings.
    [The prepared statement of Mr. Bernal follows:]
    
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                                 ----------                              

    Mr. Duncan. Well, thank you so much for making the effort 
to be here. Mr. Meeks has agreed we are going to skip over him 
and go to the former chairman of the full committee, Ms. Ros-
Lehtinen, for 5 minutes.
    Ms. Ros-Lehtinen. Thank you so very much and I apologize 
for coming late. And we have another hearing which I am 
chairing on Syria, but thank you, Chairman Duncan and Ranking 
Member Sires, for holding this important hearing.
    And I don't think that we can discuss U.S. foreign policy 
initiatives with the Carribean without focusing on PDVSA and 
Petrocaribe. Venezuela established Petrocaribe in 2005 to help 
influence many countries in the hemisphere and up to this point 
the strategy has worked. However, now we see the collapse of 
the Venezuelan economy because of the incompetence of the 
Maduro regime.
    So it gives the U.S. an opportunity to fill that void, and 
this is where we need the State Department and the Department 
of Energy to be extremely focused on this effort right now 
because it is in our national security interest to coordinate 
an energy solution; a strategy so that fewer countries in the 
Western Hemisphere would be dependent on a very unreliable 
Venezuela.
    And if we don't--and when not if Venezuela falls because 
you see the writing on the wall--we mitigate the fall by not 
allowing other countries in the region to go down with the 
sinking ship. And I think that we have got to be working with 
our partners, our allies in the Caribbean to help them take 
advantage of the abundant and cheap natural gas and the new 
advanced clean wind and solar technologies available. This way 
we strengthen our partners' economies, we buffer the region 
from the impacts of Venezuelan collapse and take realistic 
steps toward reducing carbon emissions.
    So the crisis in Venezuela may cause an oil supply 
disruption. What impact would such a disruption have on the 
Caribbean nations?
    Mr. Bernal. My colleagues are determined to make sure I 
carry a fair share of the load. First of all, I would like to 
recognize your longstanding interest in Caribbean affairs. 
Thank you for that.
    The relationship with Venezuela is a long and complicated 
one. Venezuela initiated the Petrocaribe at a time when many 
Caribbean countries were really very stretched financially and 
really needed some assistance. However, the relationship has 
its complexities. For example, Venezuela claims a very large 
share of Guyana which is a member of the CARICOM group. It also 
has extended its claims in terms of coastal waters based on an 
island almost 400 miles away from Venezuela and mainland, so 
that the relationship is not all the Caribbean benefiting from 
some financial support.
    I think we are at a juncture where the relationship is 
going to become very unpredictable because of nobody knows 
exactly what will happen in the Caribbean with Venezuela. But I 
think that this is time for a re-examination of the 
relationship. Several Caribbean countries are thinking beyond 
Petrocaribe because they don't assume that it will continue in 
its present form and they have to be thinking of alternatives. 
This creates a juncture in which new initiatives, including 
from the U.S. in energy, would be very welcome in the region.
    Ms. Ros-Lehtinen. Thank you very much, Mr. Chairman and 
Ranking Member Sires. Thank you.
    Mr. Duncan. Well, thank you. Thanks for taking time to run 
down here. The Chair will now go to Mr. Meeks.
    Mr. Meeks. Thank you, Mr. Chairman. And thank you for being 
here, and good to see all of you who, you know, we rely upon 
very much with your expertise and because the Caribbean is 
extremely important, I think. I know it is to all of us in the 
United States of America. It is really, you know when you look 
at our hemisphere and we have got to make sure that we 
strengthen and working together.
    And I hear my colleagues in regards to especially 
Petrocaribe, but I think that the issues that are confronting a 
lot of the islands--and I notice, for example, Mr. Ambassador, 
you listed as number six in order of priority the energy 
crisis, et cetera, in trying to make sure. So I want to try to 
find out as it pertains to the islands themselves the things 
that are most pressing with them that would help them overall 
with their economy, because I know, for example, you can't just 
depend upon tourism or you can't just depend upon, you know, 
they have the diversification of it needs to be there.
    And one of the things that I know we have worked on and I 
would like to get your assessment on the success of it. We have 
been doing a lot in regards to in trading. And let's talk, for 
example, in 2020 for Haiti the HOPE Act expires. Is HOPE good? 
What do we need to do? How can we improve it? Would it help the 
situation in Haiti because Haiti is crucial, I think, also to 
the Caribbean. I don't know, and so that is important.
    The two preferential trade programs with reference to 
Caribbean imports the Caribbean Basin Trade Partnership Act. 
That is--where are we with that? Is that helpful? Do we need to 
do more? Do we need to relook at it? You know, in some other 
parts of the world, but looking at these trade agreements as a 
mechanism of economic benefits for both sides.
    So how do you see and how do you think that we can continue 
to improve, you know, extend or modify some of the trade 
agreements that we have with the Caribbean?
    Ms. Yearwood. Thank you, Mr. Meeks. Thank you for your 
leadership on Caribbean issues. I am going to tackle two issues 
here primarily, and I will leave my colleagues to address some 
of the others.
    I think one of the key issues that the Caribbean has is 
competitiveness. And I think to make better use of U.S.-
Caribbean trade agreements a lot of the competitive issues need 
to be addressed. I mentioned in my testimony that the IDP they 
are doing a lot of work on trade facilitation. That is going to 
be important to getting the Caribbean more able to kind of have 
single windows, reduce the costs of transportation, and reduce 
the cost of clearance in moving goods.
    There are interregional issues as well. Issues such as 
traveling from one Caribbean island to the other can be more 
expensive than going to Miami and then going back down. So 
there are a lot of issues that the Caribbean needs to tackle in 
order to become a more competitive place to do business and to 
trade more effectively.
    I didn't want to, however, not take the opportunity to say 
something about Haiti. I did live there for 13 years and I do 
follow what is going on there very closely. And I think it is 
extremely critical that the HOPE bill not just go to 2020, but 
go--there has to be some sustainability to what is going to 
succeed the HOPE bill following 2020.
    Haiti is in a very difficult situation right now 
politically. Parliament is shaky to say the least, kind of an 
interim President that may or may not constitutional. I am not 
a Haitian constitutional expert, but I have questions. But at 
this point in time, what Haiti needs more than anything else 
once this particular juncture of political difficulty is 
overcome, Haiti is going to need sustainability and stability 
to its relationship for trade and investment with the United 
States. So I think that is a critical issue that the Congress 
needs to keep its eye on. Thank you.
    Mr. Meeks. Yes, sir.
    Mr. Farnsworth. If I could simply reinforce what Sally just 
said, the issue of competitiveness is real and we deal with the 
business community all the time. And again if you are are 
dealing with smaller economies which don't have as many 
prospects as some of the other opportunities for the 
international investor, folks are going to go elsewhere. And so 
there has to be in my view a singular attention to investment 
climate issues. Energy is part of that. It is certainly not the 
only aspect.
    I think we also have to be aware of unintended 
consequences. And you have done some really good work obviously 
on the trade agenda, Mr. Meeks. Clearly the TPP is something 
that Council of the Americas supports. We appreciate your 
leadership and others of the subcommittee on that.
    But there are perhaps some unintended consequences. And for 
example, when the North American Free Trade Agreement was first 
passed one of the strongest advocates for something that became 
known as NAFTA Parity was Ambassador Richard Bernal of Jamaica 
who came into the U.S. Government of which I was a member at 
the time and said we support, we the Jamaicans, for example, 
support NAFTA. It is a good thing, but we want to make sure 
that Jamaica and the other Caribbean countries are not 
negatively impacted by the trade and investment diversion that 
might go to Mexico as a result of NAFTA.
    I think that was a very important point then and it is a 
very important point now. And to the extent that TPP goes 
forward, and again I hope that it does. I strongly support it 
and we hope that it is a near term issue. Nonetheless, with 
some new entrants into textiles, for example, and agriculture 
that are highly competitive in the global environment that will 
impact countries in the Caribbean Basin.
    It will impact Central American countries, some of the 
Northern Triangle countries where we are giving a lot of U.S. 
taxpayer assistance to which we support, but again the issue is 
one of trade and investment diversion. We have to be careful 
that doing the ``right thing'' with other economies we are not 
negatively impacting some economies which are already stressed.
    And so what is the answer here? I think the answer is to go 
back to the original idea in some way of NAFTA Parity only this 
is TPP parity, right? If Haiti, for example, is dependent on 
the textiles trade with the United States, we I think need to 
make sure that whatever we do in TPP doesn't unnecessarily 
undermine that or doesn't create difficulties in a way that 
would take away some of those advantages that Congress has 
worked so hard over the years to develop. And it is not just 
Haiti of course, but that is perhaps the best example.
    So my point is that if we look at these in a more 
comprehensive way, in a way that where you have a lot of 
different, integration of different strands, then I think we 
will come to a better place. And so as we are looking at these 
issues strategically, I just very much support the way that you 
are putting this in the context of it is not just this issue or 
that issue or another issue, it is all of these together and 
how can we move forward in a comprehensive integrated manner in 
support of the Caribbean, and I think that is what we have to 
keep foremost in mind.
    Mr. Bernal. Let me begin by thanking you, Congressman 
Meeks, for your consistent leadership on Caribbean issues. In 
response to the issue that you raise, I believe that the onus 
is not only on the U.S. but is on the Caribbean. We in the 
Caribbean have to do some things to make it easier for business 
to operate and to become internationally competitive. I remain 
convinced that if we create the right kind of environment 
between the U.S. and the Caribbean that there is private sector 
initiative on investment and there are opportunities, very real 
opportunities which can take place by combining Caribbean and 
U.S. resources in a way beneficial both to the U.S. and to the 
Caribbean.
    In that regard, I think that we are focused a lot on trade 
in goods. That is going to be difficult for the Caribbean 
because of its energy imports and because of the small scale of 
production. So I think we now have to begin to think about 
services. After all, services is the fastest growing sector in 
the world economy. There are areas in which the U.S. could 
provide more services and there are areas for collaboration 
where doing some of it in the Caribbean can allow U.S. firms to 
retain their international competitiveness against China, Asia, 
et cetera.
    And I think we now need to look at what is it we have to do 
to free services? For example, health care, retirement homes, 
tourism, higher education, all of those are potential growth 
sectors which are mutually beneficial. What the onus has to be 
is to find ways to clear and establish a seamless economic 
space between the U.S. and the Caribbean so that private sector 
capital can work. There are opportunities.
    Lastly, I would say that the Caribbean is becoming a much 
more complex area because of the changes in policy toward Cuba, 
the cross-cutting trade agreements such as CAFTA, et cetera, 
and we have to think of the Caribbean now in a wider sense. In 
regard to Haiti, I think very important is its continued 
integration with the English-speaking Caribbean, because these 
are well established democracies and it is an economic area 
which holds opportunities for Haiti and there is now quite a 
lot of Caribbean investment going into Haiti and vice versa. 
One very large investment in petroleum distribution in the 
Caribbean is from a Haitian firm.
    So I think it is very important for that Caribbean 
integration to continue to embrace Haiti and that should be 
encouraged from the U.S. end as well.
    Mr. Meeks. I think I will ask one question and that is, 
what has been the engagement activity when you talk about some 
of the planning of folks, say, of some of the international 
banks like the IDB? Are they participating and they have ideas 
to help and finance some of the businesses there? Or the IMF, 
are they in--you know, in Jamaica we had a big problem at the 
time when you talk about debt and trying to figure out.
    What is the involvement of the international development 
banks in the Caribbean and can, or should, the United States 
use some of its influence with some of the banks that it also 
makes contributions to?
    Mr. Bernal. I will take the first shot on this one because 
I just finished a week ago, 8 years on the board of directors 
of the Inter-American Development Bank. I can assure you that 
the Inter-American Development Bank in particular has been very 
active and has provided substantial support across a range of 
sectors. I believe that our big brother, the World Bank, has 
contributed, but I would venture to suggest that there is scope 
for much more resources to be put into the region.
    The issue here is that the Caribbean is classified as 
middle income, developed countries and are therefore excluded 
from certain concessional facilities and are not necessarily 
seen as a priority when it comes to poverty alleviation. But 
while these are middle income countries, the basis of their 
economies is fragile. Sometimes it is one sector, tourism, and 
therefore while they are middle income they are vulnerable and 
need continued support. The U.S., I think, has a critical role 
in urging the development institutions to continue to play a 
role in the Caribbean.
    Mr. Farnsworth. Just a quick coda to that as well. We have 
talked a little bit about the debt overhang that affects the 
Caribbean and so there is a potential future role, maybe not 
too far in the future, in terms of the international banks 
perhaps the IMF as well to really help work through some of 
those debt issues in a meaningful and lasting way. So a lot has 
already been done as the Ambassador was indicating, but I think 
there is even a greater role going forward that could be 
contemplated.
    Mr. Duncan. We have time for a few more questions. I 
thought it was going to be just the ranking member and myself. 
I am glad we had such active participation. I am glad you 
showed up.
    Brazil is concerned about tourism with regard to the 
Olympics. And tourism being such a big part of the Caribbean 
nations' economy and a big part of the U.S. tourism headed 
there--Zika. It has got to be on their minds. I guess I am 
concerned about how much U.S. assistance will make it to the 
Caribbean nations and whether Zika is even a concern on the 
island nations themselves and what effect that may have on 
tourism, or expected effects. So if you all could delve on that 
a little bit because that is on my constituents' minds.
    Eric?
    Mr. Farnsworth. It is very much on the minds of the 
hemisphere community. You referenced Brazil and I think that is 
absolutely correct. Although, in Brazil right now it is the 
winter and the mosquito population in the winter tends to go 
down, and so at least we hear from the Olympic organizers that 
Zika won't be as much of an issue during this current time of 
the Olympics, et cetera.
    But look, Zika is an issue across the region and indeed 
here in the United States too. As I explain in my prepared 
comments, it seems to me that this could be an easy win for the 
United States if we want to put it in those terms. Zika affects 
all of us. We all have a very real incentive to get rid of it 
as fast and as quickly and as comprehensively as possible.
    So there is a lot of good research going on in the United 
States and other places. Once the vaccine or the right approach 
to address Zika comes forward, why not, working with the 
Caribbean partners and others in the hemisphere have a very 
significant public health initiative that affects people where 
they live? I mean, this is the type of thing, these are the 
types of lessons we are learning that are very effective from 
other countries when they do it whether it is Venezuela, 
whether it is China, whether it is other countries because this 
is what people need.
    And if the United States could be seen as helping to 
address a very relevant public health issue and do so in a cost 
effective way in partnership with host governments, I think 
that is an obvious area to try to explore.
    Ms. Yearwood. The Caribbean Hotel & Tourism Association, 
the Caribbean Tourism Organization, the Caribbean Public Health 
Agency, and the Pan American Health Organization are all 
intimately involved in trying to deal with the Zika crisis not 
just at the global level but also at the tourism level. People 
recognize Zika as a singular issue that could impact the 
economy of the entire region and so they are very cognizant and 
working toward trying to contain the threats and dealing with 
the vector management, et cetera.
    I think to Eric's point, the ability of those agencies to 
have greater participation by the U.S. Government providing 
support, technical assistance, and working with CDC, getting 
additional resources into the fight could only be helpful.
    Mr. Bernal. Mr. Chairman, if you will permit me. Zika is a 
problem in itself, but it raises a much broader issue which is 
hemispheric and global pandemics. There are so many people 
moving around the region from the U.S., Canada, from the 
Caribbean--several million a year--that it is an interest of 
common and mutual importance that we try to combat these 
pandemics.
    Early intervention is critical. The moment--we need to have 
a fast-acting reaction to the possibility of pandemics. We 
know, for example, that way back in the '60s when there was an 
outbreak of polio in Jamaica that for a relatively small amount 
of expenditure on preventive measures, vaccines, we could have 
prevented a major human tragedy.
    So one of the things we can look at is a fast-reacting 
mechanism for possible pandemics. It is in our mutual interest. 
These are issues which are not national or even regional. They 
are global, and the only way to tackle them is by effective 
cooperation.
    In passing, let me say that the debt situation is such that 
it is beginning to constrain the governments and their ability 
to do health and education which has long term adverse 
consequences for development. If we could address the debt, and 
maybe one of the areas to look at is to bring in foundations 
and development agents to look at debt-for-health swaps in 
which some of the debt can be alleviated and that money be put 
into preventive health care.
    Mr. Duncan. Thank you for that. I would be remiss if I 
didn't mention Haiti and Dominican Republic, and ask--I will 
let you ask the question if you would like.
    Mr. Meeks. I would be remiss if I didn't ask about Haiti 
and the Dominican Republic.
    Mr. Duncan. So migration, economy, situation in Haiti with 
the government, if you all just want to touch on that.
    Ms. Yearwood. That is opening a rabbit hole, but there are 
a lot of possible ways to go at this question. Haiti is in a 
particularly interesting situation. As I mentioned I was there 
for 13 years. I have been working on the issue for almost 20 
years, and I think at this particular point in time it is as 
bad as I have ever seen it in terms of the simple inability to 
know what is going to happen. And whether it is with the 
Parliament or the government, crime is on the rise.
    Budget wise, we know the U.S. and European Union are not 
going to be providing money toward elections. Last I heard, 
there was no money in the Haitian budget for elections, so 
somehow they need to find 55 million to get to a set of 
elections that nobody is certain, you know, if it can happen 
and if it will happen because of the impasse on the ground 
there. That of course has repercussions on the DR-Haiti 
migration issue. If Haiti continues to slide downhill, it is 
going to be hard pressed for anybody to be able to stop the 
flight of migrants either to the Dominican Republic, the 
Bahamas, Turks and Caicos, Jamaica, and of course Florida and 
the United States.
    So I don't know if the question is how do we solve this 
because I don't know, but it is I think something that is just 
critical at this moment and I think that the potential is there 
for this to go very bad very quickly.
    Mr. Duncan. I recognize the ranking member for a question.
    Mr. Sires. Thank you. You know I would be remiss if I 
didn't bring up Cuba. You know, many of these island nations, 
their main source of income is tourism. We have this push now 
to open up Cuba, lifting the travel embargo and making it 
easier for Americans to travel to Cuba. Now how much of a 
detriment is that going to be for the rest of the islands, 
because Cuba has always been seen as the place to go in the 
Caribbean. And I think that that is going to hurt the economy 
of a lot of these islands.
    First of all, it is 90 miles from Miami, you could 
practically swim there, and, you know, it has always been this 
destination with this mystique. They still think they are going 
to see Hemingway having a drink over there at La Bodeguita. So 
how do you see that happening? What do you see happening there 
as tourism keeps increasing and people don't go to the other 
destinations? Yes.
    Mr. Bernal. The return of Cuba to as a destination for 
American tourists has both negative and positive effects. In 
the short run it is a new destination. It is going to attract a 
lot of investment and tourists there, and that could divert, 
particularly, tourists from the nearest islands to Cuba such as 
the Bahamas and Dominican Republic, but it could affect the 
entire Caribbean.
    However, the tourist industry has grown steadily each year 
globally and in the Caribbean even in the wake of the global 
financial crisis, so there is room to accommodate further 
growth. What is important for the Caribbean is to do the 
following: One, to maintain the freshness of the tourism 
product and its international competitiveness in price and 
quality; and secondly, to look for the possibility of multiple 
destination tourism. That is, some time in Cuba, some time in 
the rest of the Caribbean, find collaborative ways.
    Lastly, the Caribbean has tremendous tourism expertise and 
management which it can offer to Cuba in building Cuban 
tourism. One of the essential things is to ensure that as 
airlift comes from new markets like China that the Caribbean 
also makes sure that it is competitive with the new 
destinations. For example, direct flights from China to Cuba, 
but not yet to the rest of the Caribbean.
    So the Caribbean faces competition, but it is an industry 
in the Caribbean which has shown an ability to remain 
internationally competitive and attractive. I have no doubt 
that the industry will continue to grow, but it needs to up its 
game because of the new competition.
    Ms. Yearwood. I don't have a lot to add to Ambassador 
Bernal's point. International tourism grew by 4 percent in 
2015; global trade grew by 2.8 percent. So what we do know it 
that the tourism market continues to expand and the Caribbean's 
growth has been positive for awhile now. So I think on the 
whole, the Caribbean is doing well.
    To the point, Cuba does present a little bit of a challenge 
and there have been a number of studies done. The Caribbean 
Hotel & Tourism did do a study on the disruption that Cuba 
could cause. But one of the points that there is, is that the 
U.S. is the only country that has the embargo on Cuba and other 
countries have been traveling to Cuba without any interference 
forever, I guess, and so that market is safe. You have the 
Canadians, the Europeans. To Ambassador Bernal's point the 
emerging Chinese and Asian market coming into the Caribbean, so 
I think it is both a challenge and an opportunity. But I think 
as long the Caribbean does work on its competitive issues and 
does remain able to compete with Cuba on cost and quality they 
should be okay.
    Mr. Sires. Thank you.
    Mr. Duncan. Well, as you can see, on a day when sessions 
end and people are leaving town we have the committee members 
come even unexpected to the chairman, and that shows the 
importance that the Caribbean region is to our subcommittee, to 
Congress as a whole, and I think to the government.
    We are going to continue delving into these issues and 
figuring out ways that we can engage more, especially in light 
of Venezuela as we have talked about, and what may or may not 
happen with Petrocaribe. I think there is great opportunity. I 
talk about jobs, energy, and the founding fathers all the time. 
I think there is opportunity in jobs, opportunity in energy, 
and opportunity for hemispheric engagement for the country and 
especially in this region.
    So witnesses are reminded there may be other questions that 
are submitted and we ask you to respond to those. We will leave 
the record open for 10 days. And we want to thank you Eric, 
Sally, and Ambassador. Thanks for coming and I look forward to 
continuing the conversation. Yes, thank you. Yes, sir.
    Mr. Bernal. It would be remiss of us if we didn't place on 
record our appreciation to you for your leadership and chairing 
of the committee and for convening this session to give us an 
opportunity to share some views with you, and we place on 
record our appreciation. It will be remiss of us.
    Mr. Duncan. Well, let's put the attention where it is 
directed. My ranking member wanted to focus on this issue and I 
am glad he did. We were welcome to, happy to accommodate him 
and I appreciate that. It kind of directed my focus toward the 
region and I am super glad that he did.
    So we will look forward to seeing you in September after 
this break and I hope everyone has a good break as well. And 
with that the committee will stand adjourned.
    [Whereupon, at 3:39 p.m., the subcommittee was adjourned.]

                                     

                                     

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