Now, when they make a recommendation and we have a chance to examine it, we will look into the sugar quota issue further. Meanwhile, your testimony is certainly a poignant observation of the difficulties that the sugar program, and CBI could have in other parts of our country. So we are glad to have your testimony. Mr. Anthony, do you have any questions or any statements? Mr. ANTHONY. Thank you, Mr. Chairman.

I would like to thank my colleague for coming in. He has touched on one of the serious problems of the economies of the Caribbean Islands. They are like a lot of other producers, trying to get away from sugar and into some other crop or commodity, but it is a very slow process.

You have stated specifically that the recent farm bill did not set sugar quotas nor did it reduce sugar quotas for any specific country or countries. We asked that question of Ambassador Yeutter yesterday. He said that after examining the farm bill, that he felt like he could not do anything to help the Caribbean countries with any increased sugar quotas because if he shifted any allocations from any other countries, it would be in violation of the GATT.

He did mention the farm bill as a continued nontariff barrier in trying to help the Caribbean. I just wonder if you have any response to that. Do you think he misinterpreted the farm bill?

Mr. STANGELAND. Let me say first of all that I think that they can shift quotas if they so choose, and they can do that in bilaterals.

Mr. ANTHONY. And you think they can do that without violating the GATT?

Mr. STANGELAND. Well, they would have to do it through bilaterals.

Let me point out that Canada produces 10 percent of its sugar needs, yet Canada has a quota to import sugar into this country. Now, I don't want to pick on Canada, but I just point that out as a glaring example of a problem that we have got. Canada never had a sugar quota in the old Sugar Act years ago, but they have got a sugar quota now because they became an importer during a time when we did not have a Sugar Act. There are ways of shifting.

But as I pointed out, if this Government and any other Government that we have sitting in Washington determines that they want to assist in some other country with foreign aid and enhance that economy, they ought to do it not at the expense of American agriculture; they ought to do it at the expense of the State Department.

I think we ought to help the Caribbean nations and I support the Caribbean nation initiative, but I don't think we ought to enhance their economies at the expense of our farm economy that is ailing today and at the expense of one part of that economy that is reasonably healthy, that is holding its own. There has got to be another way to do it.

Mr. ANTHONY. I would like to make two points. One, the Ambassador from the Dominican Republic in his testimony-and I would encourage you to read his testimony-very forcefully makes the same points that you make about the EEC being the problem and not our domestic market being the problem. He acknowedges the benefits from that.

I notice you came in quoting Mr. Smart, and I think maybe focusing on that particular testimony is proper.

The thing what bothers me, though, is this. Two years ago when we fought the Caribbean Basin Initiative on the floor, there were people who were worried that if we did not exempt specific products, then there would be loss of U.S. jobs. The workers in the United States, and domestic industries would be hurt.

We exempted and we exempted and we exempted, until we got to the point where we might as well not have even passed the legislation to begin with. Rum seemed to be the most volatile because it was psychological.

We won that battle on the House floor in a very close vote. We have had witnesses that came in testified yesterday that after 2 years we have shown now very clearly and forcefully to Puerto Rico and to the Virgin Islands that allowing CBI rum to come in has not hurt them.

The only way that I would ask you to temper your viewpoint a little bit about the CBI is that these are such small economies. A small amount of additional import of sugar, I personally do not believe, is going to have that devastating an impact on the domestic market. I think we are going to have to take a look at where we can allow a little bit more of CBI products into this country and still not do the type of hurt to the U.S. economy that you say.

I am not looking to replace an American worker with a Caribbean worker, but I am looking to figure out some way to improve this program and to improve the Caribbean.

Mr. STANGELAND. If I may respond just briefly, look at it this way. If additional imports-and we have a very fine balance as to the amount of sugar that is going to be consumed and sold in this country-and if some additional causes our domestic producers and processors to forfeit CCC stocks of sugar, which then become an expense to the Government, it guts our sugar program.

Without a sugar program, the Caribbean nation people importing in here are going to get far less dollars for the sugar they import. They are importing less today, to be sure, than they did a few years ago, but when you see the dollar value of that, because of our sugar program, they are getting the dollar value. And without a sugar program, that dollar value is going to go down and it will go down substantially, and there is no way that they can recover the dollars that they are recovering today without that sugar program. And I say this: If the policy of this Government is to increase their imports and it causes forfeitures by our domestic producers, charge it to the State Department, don't charge it to the Ag Department, don't put it on the backs of our farmers.

Mr. ANTHONY. Mr. Chairman, I would like to thank our colleague for coming in and testifying on this important issue and hope we can resolve the matters between us.

Chairman PICKLE. Mr. Thomas.

Mr. THOMAS. I would also like to thank my colleague from Minnesota for coming in because this is a question that is not as clearly understood as perhaps we would like it to be.

Let me agree with a couple of statements made by my colleague from Arkansas and then ask you if the statements that I make are not correct in today's world.

One of the reasons, I thought, that we started the CBI was to aid the Caribbean nations not only across the board economically but also to diversify their economies. If they want to concentrate on making their dollars out of sugar, we are not helping them in terms of that diversification. It is an easy way to go, but it doesn't help them in the long run.

So by helping them continue to get their dollars out of sugar, we are not helping them in the broader sense, which I thought was one of the thrusts of the CBI.

We did exclude a number of products which would allow them to get that growth. The difficult thing that I have with the sugar question is that they were asking for a return to their old production levels at the new prices, and you really can't have it both ways.

It would be nice if you could do that. And if, in fact, we didn't have the quota program in the United States, perhaps not this year but 5 years or 10 years from now, we wouldn't have any United States production and the Caribbean price would basically be the world price whether it comes into the United States or anywhere else, and we might not have any Caribbean production in terms of being able to sell the product anywhere.

I guess it's an equation, Mr. Stangelan, you are familiar with in terms of wrestling with it. It is difficult to explain to people that by having a quota and having a domestic sugar price that allows domestic production and allows a certain percentage of other folks that we have designated to come in, it actually gives them a price plus a volume which produces more dollars than they could get on the world market. Is that true?

Mr. STANGELAND. I couldn't agree with you more, 100 percent. Mr. THOMAS. Now, the problem is, as you pointed out, when you take a look at the list of those countries that are receiving a quota from the United States-Argentina, Brazil, Canada, as you point out-it would be violative of GATT, in my opinion, to simply rearrange it to benefit the Caribbean nations, but we could if we pursued a dogged bilateral course, make adjustments which would benefit the Caribbean countries.

But at any adjustment procedure, we cannot restore the old production volumes at the current price, which is basically what they are asking.

Mr. STANGELAND. You are right on target.

Mr. THOMAS. Thank you very much, and good luck in continuing to get the point across.

Mr. STANGELAND. Again, thank you for giving me the courtesy of this time, Mr. Chairman. I appreciate it very much. Thank you.

Chairman PICKLE. Our first panel will consist of Mr. Alphonse Salomone, Mr. Art Kane, Mr. John Keller, Mr. Mark Turken, and Mr. Raimundo Riojas. If you gentlemen will come forward and take your place at the witness table.

While they are doing this, let me say to these gentlemen and to the other panelists that we are going to ask you to summarize your statement and stay within the 5-minute limitation. We are going to adhere to that strictly, and if you can make it in 3, that would be more desirable.

We have six panels today. Many of the individuals have come long distances and we must accommodate each one of them, so we ask your cooperation.

Let me identify each one of these individuals. Mr. Alphonse Salomone is senior vice president of the Hilton Hotels Corp.

Mr. Art Kane is vice president of the Norwegian Caribbean Lines.

Mr. John Keller is president of the Caribbean Holidays, Inc. Mr. Keller is not here but he is on his way.

Mr. Mark Turken is president of the Turco Development Co.

Mr. Raimundo Riojas is director of the Agro-Quimicas de Guatemala, Guatemala.

If you will proceed, Mr. Salomone, we will be pleased to have your testimony.

STATEMENT OF ALPHONSE SALOMONE, CONSULTANT,

CORPORATE AFFAIRS, HILTON HOTELS CORP.

Mr. SALOMONE. Thank you, Congressman.

My name is Alphonse Salomone. I am a recently retired senior officer of the Hilton Hotels Corp., however currently serving as a consultant to the Hilton Corp. on corporate affairs. I want to thank the Subcommittee on Oversight of the Ways and Means Committee for inviting Hilton to testify on the Caribbean Basin Initiative. Hilton has had a longstanding interest in the Caribbean Basin, and in fact, a division of Hilton Hotels Corp., our Conrad International Division, will manage the soon-to-be-opened La Belle Creole Hotel on the island of St. Maarten this May.

I once served for 7 years as vice president of Hilton Hotels International. My area was the entire basin, both as an operational vice president as well as one charged with the development of hotel units. My headquarter hotel was the Caribe Bay Hilton in San Juan, Puerto Rico. However, more importantly, I caused the development of Hilton units in Barbados, Curacau, Trinidad, Mayaguez, Puerto Rico, and Dorado, Puerto Rico. I also managed the operation of a then Virgin Island Hilton Hotel and the Jamaica Hilton. I negotiated on behalf of my corporation for hotel sites on St. Marteen, St. Croix, Antigua, Guadalupe, Martinique, Aruba, and also in Venezuela.

I feel safe in saying that I truly know the Caribbean. I know firsthand of its varied cultures, its historic links, its many and diverse peoples, as well as its problems. More importantly, I am aware of the opportunities that exist now and for the future, opportunities that must be grounded in the development of its great tourist potential as was done in Puerto Rico.

As I looked into the possible areas of development in the Caribbean Basin during my time there with Hilton, I had to review a number of factors in determining potential growth areas for the Hilton International, but the overriding factor was the highly marketable commodity of the shining Sun and the beautiful sea which would draw people from the United States and elsewhere, people who loved to travel and had the economic means to do so.

There is much to learn with respect to the Puerto Rican success story, but initially it took dedicated people with very astute leaders to take advantage of that which was available to them.

Puerto Rico in structuring that what was commonly referred to as "Operation Bootstrap" had in 1947 and 1948 recognized that tourism was to be its cornerstone. They recognized, too, that the development of great hotels, including the Caribe Hilton, was to serve as an economic base. From them flow not only economic benefits directly from tourism but also a very important industrial development.

The economic benefits flowing directly from tourism included the goods and services necessary to support the hotel itself, from fresh vegetables, fruits, to linens, numerous other articles, and especially to the services of the local people working at the hotel.

The indirect benefits can be seen in the fact that in Puerto Rico, in excess of a hundred new industries each year joined the ranks and provided tens of thousands of jobs, jobs that offered dignity, a new way of life to people who in many cases were born to poverty.

These industries, incidentally, have ranged from clothing manufacturing to diamond cutting. In fact, at one point there were over 32 brassiere factories in Puerto Rico, so many that we had a little saying: "Our little island uplifts the nation."

The bottom line of my presentation is that CBI seemingly does not recognize the truly great value of tourism. Tourism generates revenue for the local economies. It also offers secondary opportunities for growth by businesspeople who first come as tourists, and while there, recognize business opportunities, as happened so frequently in Puerto Rico with its "Operation Bootstrap." To give a brief example, a dear friend of mine, Harold Toppel, who brought the great Pueblo Supermarkets to Puerto Rico and the Virgin Islands, et cetera, first came to the Caribe Hilton in the Caribbean first as a tourist.

My recommendation to you is that you actively encourage the Caribbean Basin to go after tourism. Give it a top priority and end its "also-ran" status. Tourism is a cash crop. It creates jobs and brings in immediate dollars, dollars which create a ripple effect down on through the economy. Currently there are tax incentives to encourage conventions to go to the CBI countries which share tax information with the United States, but before that incentive can be effective, there has to be a primary focus on tourism so that the facilities are developed to handle that business.

The resource does not dry up; it is people traveling from all over the world. As long as a country is considered safe and attractive and is promoted well for travel, people will travel there. By the same token, developing the tourism-based economy can bring stability to the islands.

This is because tourism is a labor-intensive service industry. It is also industry which can employ many in low-skilled jobs. Certainly this must be considered as our efforts are directed to helping the development of stable economies, thus stable governments in the Caribbean Basin.

Gentlemen, I know the problems that are in the Caribbean Basin. There is no simple solution. The solutions will come painfully slow, but it can be solved through a strong and creative and