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Why Not Do for Haiti Now What We’ve Already Done for Africa?
February 5, 2010
Under the African Growth and Opportunity Act, eligible countries can export apparel to the United States duty-free, using fabric and other inputs from wherever it is produced most cost-effectively, as long as the fabric is cut and sewn in the African beneficiary country. Under the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act, as I discussed in a post earlier this week, most Haitian apparel exports must incorporate American materials to be eligible for duty-free treatment. If American yarn and fabric were the most cost-effective option for Haitian producers, then this provision would not be necessary. That, in turn, suggests that Haiti’s exports are not as competitive as they would be if producers were free to choose where they sourced their materials, and that means fewer exports and fewer jobs created.
Senators Ron Wyden (D-OR) and Bill Nelson (D-FL) recently introduced legislation to improve opportunities for Haiti to export to the United States. Their efforts are certainly welcome and many of the items in the bill have great merit, especially the proposals to quickly extend the Caribbean Basin Trade Partnership Act, which would otherwise expire later this year, and to provide technical assistance so that Haitian exports aren’t blocked by cumbersome customs regulations (subscription required). But, so far, the proposals being floated do not adequately address the fundamental problem created by the convoluted rules of origin. Surely in the midst of this great tragedy, the U.S. contribution to Haiti’s long-term recovery should match the incredible generosity shown in providing short-term relief.
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3 Responses to “Why Not Do for Haiti Now What We’ve Already Done for Africa?”
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February 10th, 2010 at 2:11 am
I do understand the imperative to ease barriers so that links for textiles can be fostered.
However, I am irked by the nagging feeling that heightened reliance on textile exports to the U.S. was seen as the only viable development strategy for the Haitian economy and led to the numerous shanty towns and informal settlements that dot the perimeter of Port-au-Prince.
Perhaps, Haiti can work towards developing more holistic modes of growth like self-supporting food systems or fisheries, or perhaps even ‘green’ tech.
Why make a bad solution slightly better – rather than starting with a new paradigm now, at this pluripotent juncture?
February 10th, 2010 at 12:32 pm
Igor,
I agree with you. In the longer run, Haiti needs to diversify and develop other sectors. But in the short run, apparel factories are there, the skills required are relatively basic, and jobs can be created quickly. Jump-starting the apparel sector would help now. when jobs are so desperately needed, but that should not short-change attention to other economic activities as reconstruction goes forward.
Thanks,
Kim
February 11th, 2010 at 3:19 pm
What does Haiti bargain with to sustain the political support for lowering trade barriers,rules of origin, or duties after the news coverage of this terrible human disaster stops? AGOA has become more favorable to Africa over the years (decades) in a range of products, but the effort has been sustained by US self interest — the importance of Africa’s exports of oil to the USA. Many suggest lowering or eliminating US trade barriers to a variety of Haitian products on an emergency basis. Textile and clothing manufacture industries are divisible and mobile. Haiti has already seen cycles of in and out investment that have not led to improvements in its competitive position in textiles or clothing manufacture, either with development investment, export processing zones (specifically blocked on a world-wide basis by Congressional action with Clinton administration support from receiving US technical or financial assistance), or free trade agreements. If rules of origin and customs code complexity were swept aside, and ten Chinese companies with high efficiency small footprint plants were established, few workers would be employed and the political support in the USA for retaining the exemptions would erode as quickly as volumes of product increased.