The Senate Finance Committee on Trade is expected to hold a markup session today on proposed legislation to expand the 1983 Caribbean Basin Economic Recovery Act.

The proposed bill, dubbed Caribbean Basin Initiative 2, would extend duty privileges to products excluded under the previous bill, such as textiles and apparel.The House of Representatives approved its version of CBI 2 last year. Senate leaders have pledged to complete work on their version in the first quarter of this year.

Sources close to the behind-the-scenes negotiations say the outcome of the Senate committee markup is likely to be a moderate expansion of the existing bill, which the Bush administration will be able to support.

That expansion will include duty reductions on rubber and canvas footwear, and a Guaranteed Access Level program, said Stephen Lande, a former assistant U.S. trade representative and now president of Manchester Trade Inc., a Washington, D.C., international business consulting firm.

Under the GAL program, apparel assembled in CBI beneficiary countries from fabric that is both formed and cut in the United States would be subject to special flexible quota limits. Duty-free treatment would be extended to products entering the United States under GALs.

The U.S. trade representative would be required to enter into negotiations with CBI countries requesting GALs.

Mr. Lande said athletic shoes will be excluded from footwear accorded duty privileges, a move he called ridiculous because those items are produced by only one small company in the United States.

The more troublesome aspects of the bill, such as a provision that would

allow Caribbean sugar-producing countries to increase exports to the United States through unused quotas of other countries, are expected to be dropped entirely.

The Bush administration has put its foot down on the sugar provision, arguing that it violates international trade rules laid down by the Geneva- based General Agreement on Tariffs and Trade.

U.S. labor unions have opposed the textile and footwear provisions on the grounds that they would divert U.S. manufacturing, and consequently jobs, to the Caribbean.

The U.S. International Trade Commission has dispelled that fear somewhat in its latest report on the impact of the CBI on U.S. industries and consumers.

"With the (CBI-country) share of U.S. imports at such low levels, impact on U.S. industries and consumers in 1988 was, as expected, minimal," the report said.

"Moreover, over the five years of the program's operation, the level of imports that actually benefited from (CBI) provisions declined - from $506 million in 1984 to $297 million in 1988," it said.

The Senate hearings in February were conducted amid a flurry of international activity, as supporters pushed hard for passage of the bill in its entirety.

Supporters argue that the region's biggest foreign-exchange earners, such as sugar and textile products, should be given the widest possible preferential treatment.

The CBI Embassy Group, which comprises diplomatic representatives of CBI nations in Washington, held a final strategy meeting Tuesday.

Representatives of the U.S. and Caribbean private sectors also delivered their own arguments to the Senate committee Tuesday. They included statements

from the U.S. Chamber of Commerce, the Caribbean Association of Industry and Commerce Inc. and Federicap, which brings together industries from Spanish- speaking Caribbean countries.