Commerce États-Unis-Haïti : Impact des Programmes de Préférences Américains sur l'Économie et les Travailleurs d'Haïti

United States International Trade Commission U.S.-Haiti Trade: Impact of U.S. Preference Programs on Haiti’s Economy and Workers December 2022 Publication Number: 5397 Investigation Number: 332-590 Commissioners David S. Johanson, Chairman Rhonda K. Schmidtlein Jason E. Kearns Amy A. Karpel Catherine B. DeFilippo Director, Office of Operations William M. Powers Director, Office of Economics Address all communications to Office of External Relations (externalrelations@usitc.gov) United States International Trade Commission Washington, DC 20436 United States International Trade Commission U.S.-Haiti Trade: Impact of U.S. Preference Programs on Haiti’s Economy and Workers December 2022 Publication Number: 5397 Investigation Number: 332-590 U.S.-Haiti Trade: Impact of U.S. Preference Programs on Haiti’s Economy and Workers This report was prepared principally by: Project Leaders Alan K. Fox, Samantha Schreiber Office of Industry and CompetitivenessAnalysis Simon Adhanom, Mahnaz Khan, Steven LeGrand Office of Economics Saad Ahmad, Tamara Gurevich, Ross Jestrab, Tricia Mueller, Karen Thome, Ravinder Ubee Office of Tariff Affairs and Trade Agreements Ryan Kane Office of Analysis and Research Services Onslow Hall Content Reviewers Lesley Ahmed, Chang Hong,Natalie Hanson Statistical Reviewers Maureen Letostak, Russell Duncan Editorial Reviewers Judy Edelhoff, Brian Rose Production Support Justin Holbein,Gwenetta Duvall Under the direction of David Riker Chief, Research Division Office of Economics 4 | www.usitc.gov Table of Contents Table of Contents Abbreviations and Acronyms............................................................................11 Glossary of Terms.............................................................................................15 Executive Summary..........................................................................................17 The Request and Approach........................................................................................................17 Main Findings.............................................................................................................................18 Overview of Haiti-Eligible U.S. Preference Programs............................................................18 Summary of the Impact of the U.S. Preference Programs on Haiti’s Economy ....................20 Overview of Haiti’s Economy .................................................................................................22 Case Studies...........................................................................................................................26 Chapter 1 Introduction ................................................................................31 Scope ..........................................................................................................................................31 Analytical Approach ...................................................................................................................31 Report Organization...................................................................................................................32 Data Availability and Limitations...............................................................................................32 Trade Data..............................................................................................................................32 Employment Data ..................................................................................................................33 Macroeconomic Data.............................................................................................................33 Overview of Haitian Economy, Geography, and Preference Programs.....................................33 Chapter 2 Preference Programs...................................................................37 Introduction ...............................................................................................................................37 Trade Preference Programs.......................................................................................................37 GSP .........................................................................................................................................41 CBERA.....................................................................................................................................44 CBTPA.....................................................................................................................................47 Haiti-specific Trade Preference Program (HOPE I/HOPE II/HELP).........................................49 Chapter 3 Overview of the Haitian Economy, Trade, Workers, and Competitiveness...............................................................................................55 Overview of Haiti’s Economy .....................................................................................................55 Key Macroeconomic Indicators .............................................................................................55 Structure of Haitian Economy................................................................................................60 Haiti’s Overall Trade in Goods and Services..........................................................................62 U.S. Imports from Haiti between 1980 and 2021..................................................................66 Investment in Haiti.................................................................................................................73 Haiti’s Labor Market, Working Conditions, and Wages.............................................................76 Haiti’s Population and Employment......................................................................................76 Working Conditions in Haiti...................................................................................................82 Nominal and Inflation-adjusted Wages.................................................................................84 United States International Trade Commission | 5 U.S.-Haiti Trade: Impact of U.S. Preference Programs on Haiti’s Economy and Workers Competitiveness of the Haitian Economy..................................................................................88 Overview ................................................................................................................................88 Business Environment............................................................................................................91 Infrastructure .........................................................................................................................96 Workforce Competitiveness................................................................................................101 Haitian Products with Potential for Increased Exports............................................................103 Chapter 4 Case Studies..............................................................................109 Case Study: Haiti’s Apparel Industry........................................................................................109 Summary ..............................................................................................................................109 Description of Haiti’s Apparel Industry................................................................................110 Employment and Wages......................................................................................................119 Special Apparel Provisions in Haiti’s Preference Programs.................................................122 Analysis of Historical Trends in Production and Exports and Utilization of Preferences....128 Working Conditions and Labor Standards in Haiti’s Apparel Sector ...................................141 Case Study: Haiti’s Mango Industry .........................................................................................153 Summary ..............................................................................................................................153 Description of Haiti’s Mango Industry and Workers ...........................................................153 Supply Chain.........................................................................................................................157 Case Study: Haiti’s Sporting Goods Industry............................................................................163 Summary ..............................................................................................................................163 Description of Haiti’s Sporting Goods Industry ...................................................................164 Firms, Employment, and Wages in the Industry..................................................................165 Historical and Current Trends in Production and Exports...................................................169 Bibliography...................................................................................................175 Appendix A Request Letter........................................................................203 Appendix B Federal Register Notice...........................................................207 Appendix C Calendar of Witnesses............................................................213 Appendix D Summary of Views of Interested Parties..................................219 Appendix E Tables for Figures....................................................................225 Appendix F Supplemental Tables...............................................................247 Boxes Box 2.1 The Cambodia Textile Trade Agreement: Precursor to TAICNAR.............................................. 52 Box 3.1 Timeline Surrounding Haiti Sanctions and Embargo from 1991–94 .......................................... 67 Box 3.2 The COVID-19 Pandemic and Its Effects on Haitian Workers.................................................... 82 Box 3.3 Effects of Natural Disasters on Haiti’s Infrastructure............................................................. 100 Box 3.4 Live Eel Exports from Haiti................................................................................................... 108 Box 4.1 Co-Production in the Apparel Sector between Haiti and the Dominican Republic.................... 119 Box 4.2 Understanding the Baseball Manufacturing Process.............................................................. 167 6 | www.usitc.gov Table of Contents Figures Figure ES.1 A timeline of U.S. trade preference programs relevant to Haiti, 1975–2025........................ 18 Figure ES.2 Total U.S. merchandise imports from Haiti, 1980–2021 ..................................................... 24 Figure ES.3 U.S. apparel imports from Haiti, 1980–2021 ..................................................................... 27 Figure ES.4 U.S. Imports of baseballs and softballs from Haiti, 1980–2021 ........................................... 29 Figure 1.1 Map of Haiti, highlighting key cities.................................................................................... 34 Figure 2.1 A timeline of U.S. trade preference programs relevant to Haiti, 1975–2025 ......................... 41 Figure 3.1 Haiti’s annual income per capita 2000–2021 ...................................................................... 56 Figure 3.2 Inflation in Haiti and in Latin America and the Caribbean, by year, 2000–2021 ..................... 58 Figure 3.3 Official exchange rate, gourde per U.S. dollar, 2000–2021................................................... 58 Figure 3.4 Haiti’s current account balance as percent of GDP, 2000–2021............................................ 59 Figure 3.5 Haiti’s trade as percent of GDP, 2000–2021........................................................................ 60 Figure 3.6 Top importers of goods from Haiti, in certain years, 2005–20.............................................. 62 Figure 3.7 Top products exported from Haiti, in certain years, 2005–20............................................... 63 Figure 3.8 Top exporters of goods to Haiti, in certain years, 2005–20 .................................................. 64 Figure 3.9 Top products imported by Haiti, in certain years, 2005–20.................................................. 65 Figure 3.10 Haiti’s trade in services, 2000–2021 ................................................................................. 66 Figure 3.11 Total U.S. merchandise imports from Haiti, 1980–2021..................................................... 69 Figure 3.12 Selected top U.S. imports from Haiti, 1980–2021.............................................................. 72 Figure 3.13 Haiti’s inward FDI stock, 2000–2021................................................................................. 75 Figure 3.14 Haiti’s employment by sector, in certain years.................................................................. 79 Figure 3.15 Annual growth rate of output per worker in Haiti, 2010–21............................................. 103 Figure 4.1 U.S. apparel imports from Haiti, 1980–2021 ..................................................................... 129 Figure 4.2 U.S. Imports under the Knit Apparel TPL classified under HTS subheading 9820.61.35, 2008–21 ...................................................................................................................... 132 Figure 4.3 U.S. imports under the Woven Apparel TPL classified under HTS 9820.62.05, 2007–21 ...................................................................................................................... 133 Figure 4.4 U.S. imports of T-Shirts from Haiti under HTS subheadings 6109.10 and 6109.90, 1989–2021 ....................................................................................................................... 137 Figure 4.5 U.S. imports of mangoes from Haiti by quantity, 2013–21. ................................................ 160 Figure 4.6 Share of the quantity of U.S. imports of mangoes by source, 2021..................................... 162 Figure 4.7 Illustration of baseball manufacturing components.......................................................... 167 Figure 4.8 U.S. Imports of baseballs and softballs from Haiti, 1980–2021........................................... 169 Figure 4.9 Tariffs on baseballs and softballs, 1963–2000................................................................... 170 Figure 4.10 U.S. imports of baseballs from Haiti, 1980–2021............................................................. 171 Figure 4.11 U.S. imports of softballs from Haiti, 1980–2021 .............................................................. 173 Tables Table ES.1 U.S. imports for consumption from Haiti under preference programs, 2000–2021 ............... 20 Table 1.1 Summary of in-scope U.S. preference programs for products from Haiti, by date enacted................................................................................................................................ 35 Table 2.1 Number of U.S. tariff lines by normal trade relations (NTR) duty rate and preference program eligibility, 2022 .................................................................................................. 38 United States International Trade Commission | 7 U.S.-Haiti Trade: Impact of U.S. Preference Programs on Haiti’s Economy and Workers Table 2.2 Count of U.S. tariff lines by preference program eligibility, 2022........................................... 39 Table 2.3 U.S. imports for consumption from Haiti coming in under trade preference programs, 2000–2021....................................................................................................................... 40 Table 2.4 Summary of selected program features and corresponding eligibility requirements............... 54 Table 3.1 Haiti’s major economic indicators, in certain years 2000–2021 ............................................. 56 Table 3.2 Composition of Haiti’s GDP by broad sector, in certain years................................................ 61 Table 3.3 U.S. imports of the top 20 Tariff System of the United States (TSUS) statistical reporting numbers from Haiti in the 1980s, by product category and period......................... 71 Table 3.4 Haiti’s population statistics, in certain years........................................................................ 77 Table 3.5 Haiti’s employment, in certain years................................................................................... 78 Table 3.6 Status of Haiti’s employment, in certain years..................................................................... 80 Table 3.7 Haiti’s employment by occupation, in certain years............................................................. 80 Table 3.8 Proportion of informal employment in total employment, 2012 ........................................... 81 Table 3.9 Working hours lost in Haiti as a result of the COVID-19 crisis, 2020–22 ................................. 82 Table 3.10 Mean weekly hours actually worked of prime-age employed persons, 2012........................ 83 Table 3.11 Proportion of Haiti’s population covered by social protection floors/systems, 2020............. 84 Table 3.12 Haiti’s labor income distribution, in certain years............................................................... 85 Table 3.13 Haiti’s daily minimum wage changes, by announcement date and by industry, 2014–22........................................................................................................................................... 87 Table 3.14 Select rankings of Haiti’s individual indicators in the 2019 Global Competitiveness Index (GCI)................................................................................................... 90 Table 3.15 Haiti’s labor force statistics, in certain years.................................................................... 101 Table 3.16 Top 20 products by NRCA index, by HS 4-digit heading (according to constructed Haitian exports in 2015–19) ..................................................................... 106 Table 3.17 Constructed Haitian exports of live eels by destination market, 2015–19 .......................... 108 Table 4.1 Largest apparel manufacturing firms in Haiti, by country of ownership,location, and number of employees.............................................................................................................. 117 Table 4.2 Haiti’s apparel employment figures for selected years, 1980–2022..................................... 121 Table 4.3 Daily average or minimum wage rates in certain years, 1979–2022..................................... 122 Table 4.4 CBTPA:Requirements concerning origin of inputs and processes, value added, and quantitative limits........................................................................................................................... 124 Table 4.5 HOPE I apparel provisions................................................................................................. 125 Table 4.6 HOPE II apparel provisions................................................................................................ 127 Table 4.7 HOPE I/HOPE II/HELP: Requirements concerning origin of inputs and processes, value added, and quantitative limits................................................................................................ 128 Table 4.8 Woven, knit, and value-added apparel TPLs under HOPE I/HOPE II/HELP, levels and utilization rates, 2008–21 ................................................................................................ 131 Table 4.9 Preference program rules for brassieres under CBTPA, CAFTA-DR, HOPE I, and HOPE II.................................................................................................................................... 135 Table 4.10 Top U.S. imports from Haiti, by article of apparel, 1990.................................................... 136 Table 4.11 U.S. imports from Haiti, by apparel garment, 2000........................................................... 138 Table 4.12 U.S. imports from Haiti, by article of apparel, 2010 .......................................................... 138 Table 4.13 U.S. imports from Haiti, by article of apparel, 2020 .......................................................... 139 8 | www.usitc.gov Table of Contents Table 4.14 Better Work Haiti Reports: Percentage of Factories in Noncompliance with Working Time Standards, 2009–22 .................................................................................................. 143 Table 4.15 Better Work Haiti Reports: Percentage of Factories in Noncompliance with Compensation Standards, 2009–22.................................................................................................. 144 Table 4.16 Better Work Haiti Reports: Percentage of Factories in Noncompliance with Compensation Standards, 2009–22.................................................................................................. 148 Table 4.17 Better Work Haiti Reports: Percentage of Factories in Noncompliance in Occupational Safety and Health (OSH), 2009–22............................................................................... 152 Table 4.18 U.S. baseball imports by source country, 2017–21 ........................................................... 172 Table 4.19 U.S. softball imports by source country, 2017–21............................................................. 173 Table 4.20 U.S. imports of sporting goods products from Haiti excluding baseballs and softballs, 1980–2021 ................................................................................................................ 174 Table E.1 A timeline of preference program's effective and extension dates since 1975, by program status........................................................................................................................... 227 Table E.2 Haiti's income per capita 2000–2021................................................................................. 228 Table E.3 Inflation in consumer prices, in Haiti and in Latin America and the Caribbean, by year, 2000–2021 ........................................................................................................................ 229 Table E.4 Official exchange rate, gourde per U.S. dollar, 2000–2021.................................................. 230 Table E.5 Haiti's current account balance as percent of GDP, 2000–2021........................................... 231 Table E.6 Haiti's trade as percent of GDP, 2000–2021....................................................................... 232 Table E.7 Top importers of goods from Haiti, in certain years............................................................ 232 Table E.8 Top products exported from Haiti, in certain years............................................................. 233 Table E.9 Top exporters of goods to Haiti, in certain years................................................................ 233 Table E.10 Top products imported by Haiti, in certain years.............................................................. 234 Table E.11 Haiti's trade in services, 2000–2021 ................................................................................ 234 Table E.12 Total U.S. merchandise imports from Haiti, 1980–2021 .................................................... 235 Table E.13 Selected top U.S. imports from Haiti, 1980–2021 ............................................................. 236 Table E.14 Haiti’s inward FDI stock, 2000–2021................................................................................ 237 Table E.15 Haiti’s employment by sector, certain years..................................................................... 237 Table E.16 Annual growth rate of output per worker in Haiti, 2010–21.............................................. 237 Table E.17 U.S. apparel imports from Haiti, 1980–2021 .................................................................... 238 Table E.18 U.S. Imports under the knit apparel TPL classified under HTS 9820.61.35, 2008–21 ...................................................................................................................... 239 Table E.19 U.S. imports under the woven apparel TPL classified under HTS 9820.61.05, 2007–21 ...................................................................................................................... 239 Table E.20 U.S. imports of T-Shirts fromHaiti under HTS subheadings 6109.10 and 6109.90, 1989–2021.................................................................................................... 240 Table E.21 U.S. imports of mangoes from Haiti by quantity, 2013–21 ................................................ 240 Table E.22 Share of the quantity of U.S. imports of mangoes by source, 2021.................................... 241 Table E.23U.S. imports of baseballs and softballs from Haiti, 1980–2021 .......................................... 242 Table E.24 Tariffs on baseballs and softballs, 1963–2000 .................................................................. 243 Table E.25U.S. imports of baseballs from Haiti, 1980–2021 .............................................................. 244 Table E.26U.S. imports of softballs from Haiti, 1980–2021 ............................................................... 245 Table F.1 Top 20 U.S. imports from Haiti, 1980–88 ........................................................................... 249 United States International Trade Commission | 9 U.S.-Haiti Trade: Impact of U.S. Preference Programs on Haiti’s Economy and Workers Table F.2 Top 50 products by NRCA index, by HS 4-digit heading (according to constructed Haitian exports in 2015–19) ..................................................................... 249 10 | www.usitc.gov Abbreviations, Acronyms and Glossary Abbreviations and Acronyms Acronyms Term AAFA American Apparel and Footwear Association ADIH Association des Industries d’Haïti [Industrial Association of Haiti] AFL-CIO American Federation of Labor and Congress of Industrial Organizations AGOA African Growth and Opportunity Act AMS Agricultural Marketing Service (USDA) APHIS Animal and Plant Health Inspection Service (USDA) BEA Bureau of Economic Analysis (USDOC) BDC beneficiary developing country BTI Bertelsmann Stiftung’s Transformation Index CAFTA-DR Dominican Republic-Central America-United States Free Trade Agreement CARICOM Caribbean Common Market CBERA Caribbean Basin Economic Recovery Act CBI Caribbean Basin Initiative CBP U.S. Customs and Border Protection CBTPA Caribbean Basin Trade Partnership Act CES constant elasticity of substitution CFI Center for Facilitation of Investments CIA Central Intelligence Agency CODEVI Compagnie de Développement Industriel [Industrial Development Company] CRS Congressional Research Service CSIS Center for Strategic and International Studies EB Bureau of Economic and Business Affairs (USDOS) ECLAC Economic Commission for Latin America and the Caribbean (UN) EDIS Electronic Docket Information System (USITC) EIA U.S. Energy Information Agency (USDOE) EIAP Earned Import Allowance Program EIU Economist Intelligence Unit FDI foreign direct investment FTAA Free Trade Area of the Americas FTA free trade agreement FTE full-time equivalent GALs guaranteed access levels GATT General Agreement on Tariffs and Trade GCI Global Competitiveness Index (WEF) GDP gross domestic product GOSTTRA Groupement Syndical des Travailleurs du Textile pour la Réexportation d’Assemblage [Union of Textile Workers for Re-export Assembly] GSP Generalized System of Preferences GTA Global Trade Atlas HELP Haiti Economic Lift Program Act of 2010 HOPE I Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 HOPE II Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2008 HS Harmonized Commodity Description and Coding System or Harmonized System (global tariff schedule) HTS Harmonized Tariff Schedule of the United States IFC International Finance Corporation IJDH Institute for Justice & Democracy in Haiti ILO International Labour Organization United States International Trade Commission | 11 U.S.-Haiti Trade: Impact of U.S. Preference Programs on Haiti’s Economy and Workers Acronyms Term IMF International Monetary Fund ICT information and communication technology ITA International Trade Administration (USDOC) LDBDC least-developed beneficiary developing country LDC least-developed country (UN) LNG liquefied natural gas LPI Logistic Performance Index (World Bank) MFN most-favored nation (see also NTR) mt metric ton NAFTA North American Free Trade Agreement NBER National Bureau of Economic Research n.e.s.o.i. not elsewhere specified or included NGO nongovernmental organization NRCA normalized revealed comparativeadvantage index nspf not specifically provided for NTR normal trade relations (U.S. term; same as MFN elsewhere) OFATMA Office d'Assurance Accidents du Travail, Maladie et Maternité [Insurance Office for Occupational Injury, Sickness and Maternity] ONA National Office for Pension Insurance OTEXA Office of Textiles and Apparel (USDOC) PPE personal protective equipment PPP purchasing power parity PRW production-related worker R&D research and development RCA revealed comparative advantage index ROOs rules of origin SIDS small islands developing states SMEs square meter equivalents SOCOWA Sendika Ouvriye Codevi nan Wanament [Union of Workers of CODEVI] SOFEZO Syndicat des Ouvriers et Employés de la Zone Franche [Union of Workers and Employees of the Free Zone] TAICNAR Technical Assistance Improvement and Compliance Needs Assessment and Remediation TPL tariff preference level TRQ tariff-rate quota TSUS Tariff Schedules of the United States (replaced by HTS, January 1, 1989) UN United Nations UNCTAD UN Conference on Trade and Development UNDP UN Development Program USAID U.S. Agency for International Development USDA U.S. Department of Agriculture USDHS U.S. Department of Homeland Security USDOC U.S. Department of Commerce USDOE U.S. Department of Energy USDOL U.S. Department of Labor USDOS U.S. Department of State USFIA U.S. Fashion Industry Association USITC U.S. International Trade Commission USTR Office of the U.S. Trade Representative 12 | www.usitc.gov Abbreviations, Acronyms and Glossary Acronyms Term UTE/MEF Unité Technique d’Exécution du Ministère de l’Economie et des Finances [Technical Execution Unit of the Ministry of Economy and Finance] WEF World Economic Forum WRAP Worldwide Responsible Accredited Production WTO World Trade Organization United States International Trade Commission | 13 14 | www.usitc.gov Glossary of Terms Glossary of Terms Term Definition Association des Industries d’Haïti [Industrial Association of Haiti] (ADIH) Compagnie de Développement Industriel [Industrial Development Company] (CODEVI) Free Zone An association of private sector companies in Haiti that advocates for and promotes Haitian interests. It has historically been instrumental in the lobbying and implementation of U.S.-Haiti preference programs. A zone in the northern city of Ouanaminthe on the border of Haiti and the Dominican Republic that houses several apparel factories. The factories in the zone receive special treatment on customs duties and controls, taxation, immigration, capital investment, and foreign trade, where domestic and foreign investors can provide services, import, store, produce, export, and re export goods. cumulation Cumulation in the context of textiles and apparel refers to yarns or fabrics from one specified partner country that can be used in another specified partner country and still qualify for duty-free benefits from the importing country. In this report, the term is used to refer to the ability of a Haitian producer to use inputs from the U.S. or another specified partner country and still qualify for duty-free treatment in the United States. Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) Trade agreement between the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua. The Agreement entered into force for the United States, El Salvador, Guatemala, Honduras, and Nicaragua in 2006, for the Dominican Republic in 2007, and for Costa Rica in 2009. International Labour Organization (ILO) A UN agency that brings together governments, employers, and workers of 187 member states to set labor standards, develop policies, and devise programs promoting decent work for all women and men. It provides statistics and databases and research related to labor topics. For more information, see https://www.ilo.org/global/about-the-ilo/. National Bureau of Economic Research (NBER) A private, nonpartisan U.S. organization that facilitates investigation and analysis of major economic issues. It disseminates research findings to academics, public and private sector decision-makers, and the public by posting working papers and convening scholarly conferences. For more information, see https://www.nber.org/about-nber. normalized revealed comparative advantage (NRCA) index A measure for calculating the relative advantage or disadvantage a country has in exporting certain goods. The NRCA index was used by the Commission to analyze the export potential of goods produced by Haiti and presented in chapter 3 of this report. United States International Trade Commission | 15 U.S.-Haiti Trade: Impact of U.S. Preference Programs on Haiti’s Economy and Workers Term Definition square meter equivalent (SME) A notional, common unit of quantity measurement used to determine quota limits for duty-free access across apparel categories. For apparel, conversion factors set in a free trade agreement (FTA) or in the Harmonized Tariff Schedule of the United States (HTS) are used to convert units of measure such as units, dozens, or kilograms into SMEs. tariff preference level (TPL) Quantitative limits set by an FTA or a duty preference program for certain non-originating textiles and apparel goods that may be entitled to preferential tariff treatment if the goods meet the provisions of the preference programs. A TPL permits a limited quantity of specified finished textile, apparel goods, or both to enter the U.S. market at preferential duty rates. Once the TPL is reached, goods may still be entered but at higher rates of duty. For Haiti, there are three types of TPLs in effect (with certain exceptions): value-added TPL, woven apparel TPL, and knit apparel TPL. Technical Assistance Improvement and Compliance Needs Assessment and Remediation (TAICNAR) program A program established pursuant to the Haiti-specific preference program by Haiti in cooperation with the ILO and implemented by the ILO’s Better Work Haiti program to conduct firm-level inspections and monitoring to help Haitian apparel factories comply with core labor standards, Haitian labor laws, and occupational health and safety rules. 16 | www.usitc.gov Executive Summary Executive Summary This report provides information and analysis on the Haitian economy, U.S. preference programs that benefit Haiti, and the impacts of these preference programs on the Haitian economy and workers. The United States is Haiti’s largest trading partner, with Haitian exports to the United States comprising more than 80 percent of Haiti’s total exportsin recent years. The Haiti-eligible U.S. preference programs have played an important role in the trade relationship between the two countries and the development of Haiti’s apparel sector. They also help Haiti’s apparel sector continue to attract investment despite a difficult political, social, and environmental landscape. The Request and Approach The U.S. House of Representatives Committee on Ways and Means (House Ways and Means Committee or Committee) requested an investigation and report in a letter to the U.S. Trade Commission (Commission or USITC) dated February 22, 2022, to gather information and analysis on Haiti’s economy and trade. Specifically, the Committee requested that the report analyze the impact of U.S. preference programs on Haiti’s economy and workers, including on select industries in a series of case studies. The Committee also requested that the Commission solicit input from as diverse an array of voices as possible. As requested by the Committee, the Commission gathered information from a variety of sources. The Commission held a public hearing on May 26, 2022, to gather information and views of interested parties on topicsrelevant to the reportsuch as market trends, competitiveness, and compliance with core labor standards. The hearing began with testimony from Bocchit Edmond, Ambassador of the Republic of Haiti to the United States of America. Two panels followed Ambassador Edmond’s testimony. The first panel focused on worker issues, with six witnesses representing different Haitian labor unions and one university professor who conducts research on the effectiveness of the Better Work programs. The second panel featured representatives from U.S. apparel brands, U.S. apparel industry associations, and Haitian industry representatives. In the course of the investigation, Commission staff also met with industry representatives, U.S. and Haitian government officials, union officials and representatives, and subject matter experts to obtain a more complete view of the economic situation in Haiti, as well as the role and scope of U.S. preference programs in shaping the Haitian economy. Extensive participation by Haitian labor unions and the Solidarity Center, a nonprofit organization, was critical to informing the analysis of the worker experience in Haiti. This report also relies on trade data covering the years 1980–2021, as reported by the United States and Haiti’s other trade partners, and other economic data covering 2000–2021 to analyze the impacts of U.S. trade preference programs on Haiti. United States International Trade Commission | 17 U.S.-Haiti Trade: Impact of U.S. Preference Programs on Haiti’s Economy and Workers Main Findings Overview of Haiti-Eligible U.S. Preference Programs Certain U.S. imports from Haiti may qualify for the following U.S. preference programs: the Generalized System of Preferences (GSP); the Caribbean Basin Economic Recovery Act (CBERA); the United States Caribbean Basin Trade Partnership Act (CBTPA); and the Haiti-specific trade preference program comprising the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 (HOPE I), the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2008 (HOPE II), and the Haiti Economic Lift Program Act of 2010 (HELP Act). As described in chapter 2, each successive program expanded benefits while adding or strengthening eligibility criteria. Qualifying imports from Haiti have received duty-free treatment under one or more of these programs since 1975 (figure ES.1). Figure ES.1 A timeline of U.S. trade preference programsrelevant to Haiti, 1975–2025 This figure uses icons to represent trade preference programs in a timeline. Underlying data for the figure appears in Appendix E, table E.1. Source: USITC compiled from dates of entry into force or changes to dates of termination. For GSP: 19 U.S.C. § 2465 (Notes); CBERA: 19 U.S.C. § 2706 (Notes); CBTPA and HOPE I/HOPE II/HELP: Trade and Development Act of 2000, Pub. L. No. 106-200. Haiti Economic Lift Program Act of 2010, Pub. L. No. 111-171. Extension of the Caribbean Basin Economic Recovery Act, Pub. L. No. 116-164. Note: U.S. importers can choose among GSP, CBERA, CBTPA, HOPE I/HOPE II/HELP to claim duty-free benefits.These programs are therefore listed on separate rows in this figure. White gaps on the GSP timeline indicate that the GSP program was expired for the entire year. Years that have both a green diamond and an x are years in which the program both expired and was renewed. The GSP, which became effective in 1976, was the first of several trade preference programs that provided duty-free treatment for many U.S. imports from Haiti. Established by Title V of the Trade Act of 1974, it authorizes the President, subject to certain conditions, to provide duty-free treatment to a wide range of goods from designated developing countries, including Haiti. One goal of the program was to encourage economic diversification and export development within the developing world. More than 18 | www.usitc.gov Executive Summary 5,000 tariff linesin the Harmonized Tariff Schedule of the United States (HTS) are currently eligible for duty-free treatment under GSP. CBERA,the second-oldest U.S.trade preference program for which Haiti is eligiblewas enacted in 1983 with the support of the administration of President Ronald Reagan. Created by Title II of Pub. L. No. 98- 67 in 1983, it authorized the President to extend additional preferential tariff treatment to U.S. imports from a list of specific Caribbean Basin countries and territories, including Haiti, subject to certain conditions set out in the statute. Two important goals of CBERA were to counter perceived Cuban and Soviet influence in the region and to promote U.S. trade and investment in the region. The CBERA program offers duty-free treatment for more than 5,000 tariff lines, which significantly overlap with those included under the GSP program.Unlike the GSP program, the CBERA program was made permanent in 1990. Title II of the Trade and Development Act of 2000, enacted May 18, 2000, built on the CBERA program by creating the CBTPA program. The CBTPA program was designed as a step for beneficiary countries toward the Free Trade Area of the Americas (FTAA)—a proposed Pan-American free trade agreement. The goal of CBTPA was to provide countries in the Caribbean Basin with similar rates of duty to what Mexico received through the North American Free Trade Agreement (NAFTA). CBTPA provides preferential access to many products originally excluded from the CBERA and GSP programs. CBTPA is the first instance of the United States authorizing duty-free treatment for imports of qualifying cotton, wool, and manmade-fiber apparel imports from the Caribbean Basin region. Haiti was and continues to be eligible for the GSP, CBERA, and CBTPA programs; however, in the first decade of 2000, new Haiti-specific trade preferenceswere enacted. The Haiti-specific trade preference program—comprising HOPE I, HOPE II, and HELP—expanded and enhanced trade benefits for Haiti and gave Haitian apparel producers more flexibility in sourcing yarns and fabrics. The Haiti-specificprogram, like CBTPA, built on the CBERA program. HOPE I provided duty-free treatment for a limited amount of apparel produced in and imported from Haiti with more flexible sourcing rules than under CBTPA. For example, more flexible sourcing was available for apparel where at least 50 percent of the value of inputs or costs of processing (e.g., assembling an entire garment or knitting it to shape) came from Haiti, the United States, or any country that is a free trade agreement partner with the United States or is a beneficiary of the CBTPA program, the AGOA program, or the Andean Trade Preferences Act. HOPE II was designed to address concerns raised about HOPE I, such as the limited duration of the legislation’s benefits, which could deter investment, and HOPE I’s complexity and ambiguity, which reportedly delayed and discouraged the use of the trade benefits. HOPE II provided additional ways, under simplified rules, that Haitian apparel might qualify for duty-free treatment. It also called for a new labor-related capacity-building and monitoring program in the apparel sector, known as the Technical Assistance Improvement and Compliance Needs Assessment and Remediation (TAICNAR) program, to assess compliance with core labor standards and assist the government of Haiti and Haitian producers in complying with core labor standards. HELP is the third Haiti-specific legislation and was enacted on May 24, 2010. An underlying consideration of the HELP Act was to aid Haiti’s recovery from a major earthquake in January 2010 and to offer additional preferences to make it more cost effective for U.S. companies to import apparel from Haiti. The HELP legislation expanded existing preferences under HOPE I and HOPE II, and established new United States International Trade Commission | 19 U.S.-Haiti Trade: Impact of U.S. Preference Programs on Haiti’s Economy and Workers preferencesfor additional products, with unlimited duty-free treatment for certain knit apparel and certain home goods. Most U.S. imports from Haiti use the Haiti-specific preference program and CBTPA program. In 2021 $751.3 million (67.9 percent) of total imports entered under the Haiti-specific preference program and $260.4 million (23.6 percent) under CBTPA (table ES.1). Table ES.1 U.S. imports for consumption from Haiti under preference programs, 2000–2021 In millions of dollars. All duty Year GSP CBERA CBTPA HOPE I/HOPE II/HELP preference programs No special program 2000 2.6 20.5 4.6 0.0 27.7 269.0 2001 2.2 14.9 143.8 0.0 160.9 102.2 2002 1.1 16.5 160.0 0.0 177.6 76.9 2003 3.1 11.6 199.1 0.0 213.8 118.6 2004 1.5 10.5 207.8 0.0 219.8 150.7 2005 1.7 14.8 288.5 0.0 305.0 142.0 2006 1.4 14.9 364.4 0.0 380.7 115.4 2007 1.9 9.9 420.5 0.4 432.7 54.8 2008 1.1 10.9 394.2 15.3 421.7 28.2 2009 0.8 14.9 374.0 136.9 526.6 25.4 2010 1.8 8.2 355.9 162.2 528.1 22.7 2011 0.5 13.2 461.4 230.6 795.7 36.0 2012 0.5 12.6 424.2 306.0 743.3 30.8 2013 0.4 18.6 343.7 422.1 784.8 24.8 2014 0.1 19.2 386.2 451.5 857.0 40.3 2015 0.3 19.9 413.5 497.2 930.9 37.3 2016 0.7 12.8 305.0 295.0 613.5 281.9 2017 1.2 17.1 277.9 423.2 719.4 196.4 2018 1.1 12.9 284.2 661.4 959.6 45.8 2019 1.4 15.5 246.6 737.1 1,000.6 41.4 2020 3.2 20.8 174.2 573.2 771.4 57.7 2021 0.4 21.8 260.4 751.3 1,033.9 71.8 Source: USITC DataWeb/Census, accessed August 19, 2022. Note: GSP data for 2021 refer only to “GSP-claimed” imports, which have not yet received duty-free treatment, given the lapse in authorization of GSP that affected the entirety of 2021. In the past, duties collected on these goods have been returned to importers after GSP has been reauthorized and applied retroactively to GSP-claimed goods. Summary of the Impact of the U.S. Preference Programs on Haiti’s Economy The impact of the U.S. preference programs on Haiti’s economy is described throughout this report. A summary of key points is provided below. Foreign Direct Investment Haiti experienced a surge in foreign direct investment (FDI) following the implementation of U.S. preference programs in 2006 (HOPE I), 2008 (HOPE II), and 2010 (HELP). Haiti’s FDI stock grew rapidly 20 | www.usitc.gov Executive Summary during this time, about 17 percent per year,from$300 million in 2006 to $1.74 billion in 2017 (figure 3.13, chapter 3). However, political instability, insecurity due to increased gang activity, and disruptions due to the COVID-19 pandemic have all contributed to an investment slowdown, withHaiti’s FDI stock growing by only 2.6 percent per year on average during 2018–21. In addition, participants at the Commission’s public hearing indicated another factor behind lower investment in Haiti has been the uncertainty associated with the renewal of the HOPE and HELP programs and that a long-term U.S. commitment to these preference programs would encourage apparel firms to expand investmentsin Haitian factories, infrastructure, and training. Production and Exports U.S. imports from Haiti generally increased after the implementation of eachU.S. preference program from 1980 to 2021. U.S. apparel imports from Haiti quadrupled after the CBTPA and HOPE I/HOPE II/HELP programs were implemented,from$231 million in 2001 to $994 million in 2021 (figure 4.1, chapter 4). Haiti produces both knit apparel and woven apparel, but exports of knit apparel to the United States have seen much greater growth—from$64 million in 1989 to $884 million in 2021, now representing 83 percent of all U.S. apparel imports from Haiti. U.S. imports of T-shirts, a knit apparel product, accounted for a large proportion of this increase. U.S. preference programs also contributed to a diversification of the product mix, with Haitian factories offering more complex productssuch as outerwear, performance and activewear, workwear, tailored items, and lingerie. After the HELP Act, Haitian factories developed the ability to work with more complex fabrics,such as wool and manmade fibers, to take advantage of new provisions in the program. Employmentand Working Conditions Apparel employ