U.S. trade act could offer needed boost to Haiti's economy

PORT-AU-PRINCE, Haiti (Reuters) -- Haiti, as poor as it is, has seen better days.

Today, the currency, the gourde, has plunged to an all-time low of 25 gourdes to the U.S. dollar. Fuel prices nearly doubled three weeks ago to match soaring international rates. And at the same time the United States threatened to withhold funds and aid if the Haitian government did not strengthen democratic procedures before the presidential vote in November.

But there could be a glimmer of light at the end of the tunnel come October, when Haiti is expected to enjoy greater economic opportunities because of the implementation of a U.S. trade agreement.

"He (President Clinton) must, he will, designate Haiti," Richard Coles, president of Manufacturers Association in Haiti (ADIH), said. "Because you can't tell 7 million Haitians, 'hey, guys, we're not giving you this opportunity,' when the business community and government are trying their best to show pro-activeness in complying with these requirements."

Haiti, the Americas' poorest country, is one of 24 Caribbean and Central American nations that have applied to be eligible for enhanced trade preferences for the Caribbean Basin Trade Partnership Act (CBTPA), scheduled to take effect October 1.

On May 18, Clinton signed into law the Trade and Development Act of 2000, which includes the African Growth and Opportunity Act (AGOA) and CBTPA, among other provisions. The measure seeks to expand trade and create incentives for Sub-Saharan Africa and the Caribbean Basin to continue reforming their economies.

A White House report on the Trade and Development Act said Caribbean Basin countries have formed an increasingly important export market for U.S. goods in recent years, and that 23 percent of Caribbean countries formed the sixth-largest export market for U.S. goods in 1999.

The CBTPA, also known as the Caribbean Basin Initiative (CBI), aims to provide greater economic opportunities by providing growth and expansion of the textile and apparel sector in the Caribbean and Central Americas. CBI benefits would allow unlimited duty-free access for apparel produced from U.S. factories.

CBI admission would also bring more factories and jobs and increased imports to the assembly sector, Haiti's main generator of currency, said Kesner Pharel, president and director general of Group Croissance, a business consulting firm in suburban Petionville.

Coles, too, realizes the importance of Haiti's assembly industry and believes that a CBI admission will enable the Caribbean nation to tap into its unrealized potential.

"Haiti has the biggest potential in manufacturing. Actually, ADIH has the vision to make Haiti to be the manufacturing platform on the Caribbean by 2005. Haiti is the last bastion of competitiveness in the Caribbean," he said.

To be eligible, countries must follow certain labor standards, uphold anti-narcotics procedures, respect copyright law, as well as comply with a number of other regulations.

But given Haiti's booming drug trade and fledgling democratic institutions, these benefits could be lost. Haiti has become a major transshipment point and repository for drugs, primarily cocaine, moving from South America to the United States. The U.S. government estimates that 67 metric tons of cocaine passed through Haiti in 1999 -- a 24 percent increase over the 1998 estimate of 54 metric tons.

Several weeks ago, the United States said that it would not send observers or financial support to Haiti for its November 26 presidential election if the Haitian government did not re-examine skewed results from the May 21 vote, which an international monitor declared fraudulent. Ten senatorial seats should have gone to second-round runoff since no candidate won with an absolute majority.

Still, Washington's decision to withhold aid from the government should not jeopardize Haiti's ability to enjoy CBI benefits, given that private and nongovernmental organizations will continue to receive bilateral aid.

"The trade preferences aren't necessarily defined as bilateral U.S. economic assistance. They are on a separate track," said Brendan Daly, a spokesman for the United States Trade Representative (USTR).

The USTR, a government agency responsible for developing and coordinating U.S. international trade, commodity and direct investment policy, makes a recommendation on the behalf of a country to CBI, and then Clinton makes the final decision concerning eligibility.

Like Coles, others in Haiti's private sector felt that CBI and Haiti would become a reality.

"We do believe that it (CBI eligibility) will work well for Haiti," Marie-Claude F. Bayard, general manager for Classic Apparel, said. "I don't believe that there will be any constraints. I'm optimistic for the CBI, and that it will be a success story for Haiti."

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