Esta página no está disponible en español.
Puerto Rico Officials See U.S. Port Jobs At Risk $61b In Total Trade & 274,000 U.S. Mainland Jobs Jeopardized
Puerto Rico Officials See U.S. Port Jobs At Risk
By Kristin Roberts
August 18, 2003
SAN JUAN, Puerto Rico - Puerto Rico's commerce and economic development secretary on Monday said the loss of federal tax incentives for U.S. businesses operating on the island threatens not only jobs in the Commonwealth but the work force of key trading partners on the mainland.
For the port authority in Jacksonville, Florida, for example, thousands of jobs would be at risk if Puerto Rico did not win support from the U.S. Congress for incentives aimed at keeping companies from leaving the island for lower-wage nations, said Milton Segarra, secretary of the commonwealth's Economic Development and Commerce Department.
Cargo shipped to and from Puerto Rico accounts for 70 percent of all of the Jacksonville Port Authority's business, generating $1 billion annually, according to port officials.
"So obviously a good economy for Puerto Rico represents a good economy for Jacksonville," Segarra said in an interview.
Jacksonville's port officials say they agree and have asked Segarra and other Puerto Rico officials and industry leaders to speak at a trade summit in the Florida city later this week.
The aim of that meeting - expected to draw more than 200 Jacksonville-area politicians and businessmen, according to a confirmed list of attendees - is to generate political support for new tax incentives proposed by Puerto Rico Gov. Sila Calderon, port and government officials said.
"The economic impact it has in our community is so much that we cannot afford to lose Puerto Rico," said Raul Alfonso, the Jacksonville port's director for Latin America.
Puerto Rico has benefited from 75 years of various federal tax incentives that lured American businesses to the U.S. territory. But they cost the U.S. government billions in lost tax revenue, a total of $4 billion in 2001 alone, according to a government-commissioned report.
In 1996, Congress voted to phase the incentives out to regain revenue needed to compensate for a number of tax relief provisions meant to help small U.S.-located businesses overcome the impact of a minimum wage increase.
Calderon is asking Congress to modify rules under section 956 of the tax code on U.S.-controlled foreign corporations, or CFCs. Under the proposal, estimated to cost $600 million a year, CFCs in Puerto Rico would be given an incentive to invest in the United States the surplus income earned from island operations. This would give Puerto Rico an edge over other countries that offer businesses lower-wage employees, commonwealth officials argue.
Trade Summit Convenes in Jacksonville to Save Thousands of U.S. Jobs Declining Trade with Puerto Rico Jeopardizes $61 Billion in Total Trade and 274,000 U.S. Mainland Jobs
August 21, 2003
JACKSONVILLE, Fla. -- Representatives of Puerto Rico met with local elected officials and business leaders from across Florida at Jacksonville Port Authority (JAXPORT) today to present their strategy to save hundreds of thousands of jobs in the Jacksonville area and across the nation. The Puerto Rican government has proposed to amend Section 956 of the Internal Revenue Code to maintain Puerto Rico's long-standing trade relationship with the United States.
The proposed strategy will allow trade with Puerto Rico to continue at current levels, with Puerto Rico purchasing $16 billion worth of U.S. products and generating 274,000 U.S. mainland jobs. Trade summit participants at JAXPORT, Jacksonville's international trade and cruise seaport, included Jacksonville's Mayor John Peyton, U.S. Representatives Corrine Brown and Ander Crenshaw, Hewlett Packard and the government of the Commonwealth of Puerto Rico.
Tax incentives currently exist to encourage U.S.-based companies to partner with Puerto Rico, but this legislation will be phased out by 2005. Section 956 is a proposal to combat the end of these incentives and ensure that U.S. companies continue to receive tax benefits that will encourage them to maintain investment and trade relationships.
"Our solution stems from growing concern over the economic development of Puerto Rico and the need to pass legislation that yields mutual benefits for the Puerto Rican and U.S. economies," commented Milton Segarra, Puerto Rico's Secretary of Economic Development and Commerce.
Prior to the legislative panel discussion, Segarra stressed the need to continue incentives, "This program enjoys significant bipartisan support on Capitol Hill and given the hundreds of thousands of American jobs that are tied to trade with Puerto Rico, it is imperative that we work with the U.S. government to find a strategy that rewards both parties."
The summit's keynote address was delivered by Anibal Acevedo-Vila, Puerto Rico's Resident Commissioner and member of Congress. Acevedo touched on the importance of the Puerto Rico - U.S. relationship, "In addition to close ties through common citizenship and common defense, Puerto Rico is closely tied to the United States through an economic partnership that benefits both Puerto Rican and U.S. companies."
Acevedo further explained the significance of that relationship, "A strong Puerto Rican economy has direct benefits to U.S. companies and their employees who do business in the Commonwealth."
JAXPORT is a full-service international trade seaport that fosters cargo to and from Puerto Rico. Rick Ferrin, executive director of Jacksonville's Port Authority is concerned about the consequences of declining trade, "Trade with Puerto Rico is the underpinning of our port and its economic impact to the Jacksonville economy."
Ferrin explained Puerto Rico's vital importance to the Jacksonville area, "More than seventy percent of all cargo shipped between the United States and Puerto Rico travels through JAXPORT, a significant decrease in trade with the Commonwealth could have a serious impact on our port and the jobs it sustains."
A recent PricewaterhouseCoopers study confirms the impact of a sound Puerto Rican economy on the United States. According to the report, trade with Puerto Rico generates almost $4 billion and creates 32,561 jobs in Florida alone.
In 2002 Puerto Rico purchased $16 billion worth of U.S. products, exceeding imports from such countries as Italy, Spain, Russia or Australia. With a trade relationship exceeding $61 billion per year, Puerto Rico ranks as the seventh largest global trading partner of the United States.
As the second-largest per capita consumer of U.S. products in the world, Puerto Rico plays an extremely important role in the U.S. economy. If Puerto Rico tax incentives are phased out, the devastating effects will have repercussions on the U.S. economy and potentially affect almost 300,000 workers across the nation. Given the scope of potential impact, Section 956 was devised to create mutual benefits that extend beyond JAXPORT and Florida.
With tax incentives scheduled to end in 2005, U.S. businesses have begun to shift to foreign countries. This relocation results in lost tax revenue to the United States as well as Puerto Rico. In the absence of future incentives, corporations will continue to depart the Island, resulting in more lay-offs and an added blow to an already suffering economy. Section 956 will enable the United States to provide incentives for business investment and generate revenue and jobs in the United States, carrying benefits to U.S. companies, workers and shareholders -- including thousands in Florida.
The Puerto Rico Federal Affairs Administration, which serves as the mainland offices of the Commonwealth of Puerto Rico, operates 12 regional community outreach offices in Boston, Chicago, Cleveland, Hartford, Houston, Los Angeles, Miami, New York City, Newark, Orlando, Philadelphia, and Springfield, MA. and is headquartered in Washington, DC.
Web site: http://www.prfaa.com/
CONTACT: Meredith Henry of Edelman, +1-202-326-1715, +1-202-841-6430, for the Puerto Rico Federal Affairs Administration; Zena Polin of the Puerto Rico Industrial Development Company, +1-787-356-1055; or Celeste Diaz Ferrar of the Puerto Rico Federal Affairs Administration, +1-202-271-7263