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The United Kingdom is formally responsible for Bermudaís foreign and defense policy. U.S. policy toward the U.K. is the basis of U.S.-Bermudian relations. In the early 20th century, as modern transportation and communication systems developed, Bermuda became a popular destination for wealthy U.S., British, and Canadian tourists. While the tariff enacted in 1930 by the U.S. against its trading partners ended Bermuda's once-thriving agricultural export trade--primarily fresh vegetables to the U.S.--it helped spur the overseas territory to develop its tourist industry, which is second only to international business in terms of economic importance to the island. During World War II, Bermuda became a significant U.S. military site because of its location in the Atlantic Ocean. In 1941, the U.S. signed a lend-lease agreement with the U.K. giving the British surplus U.S. Navy destroyers in exchange for 99-year lease rights to establish naval and air bases in Bermuda. The bases consisted of 5.8 square kilometers (2.25 sq. mi.) of land largely reclaimed from the sea. The U.S. Naval Air Station was on St. David's Island, while the U.S. Naval Air Station Annex was at the western end of the island in the Great Sound. Both bases were closed in September 1995 (as were British and Canadian bases), and the lands were formally returned to the Government of Bermuda in 2002. The Government of Bermuda has begun to pursue some international initiatives independent of the U.K. in recent years. Bermuda signed a cultural memorandum of understanding with Cuba in 2003. The island also joined the Caribbean Community (CARICOM) as an associate member in 2003. The U.S. Coast Guard provided search and rescue assistance immediately following Hurricane Fabian in September 2003 but Bermuda declined subsequent offers of reconstruction assistance from the U.S. and U.K., preferring to accept assistance from its Caribbean neighbors. An estimated 8,500 U.S. citizens live in Bermuda, many of them employed in the international business community. There also are a large number of American businesses incorporated in Bermuda, although no actual figures are available. Despite the trend of American businesses moving to Bermuda or other offshore jurisdictions to escape U.S. taxes, Bermuda maintains that the island is not a "tax haven" and that it taxes both local and foreign businesses equally. While U.S. visitors to Bermuda are critical to the island's tourism industry, the number of U.S. visitors to Bermuda is declining. Air arrivals from the U.S. declined by more than 30% between 1990 and 2000 and, in 2004, only 77% of air arrivals originated from the U.S. compared to 83.9% in 1990. The number of air and cruise passengers from the U.S. totaled 464,000 in 2000. That number fell to 409,293 American passengers in 2003. Another 2,300 Americans sailed to the island via private yacht in 2003. In 2004, 79% of Bermuda's imports came from the U.S., up from 74% in 2000. Areas of opportunity for U.S. investment are principally in the re-insurance and financial services industries, although the former U.S. base lands also may present long-term investment opportunities. |
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