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U.S. law helps mend Haiti's torn economy & create jobs

May 30, 2007

PORT-AU-PRINCE, Haiti -- Six months after closing his garment factory and laying off 800 workers, Georges Sassine is preparing to reopen the plant thanks to a recent U.S. law allowing more Haitian-made apparel into the American market duty-free.

The law, the Haitian Hemispheric Opportunity Through Partnership Encouragement Act, or HOPE, could create 50,000 jobs in Haiti in the next few years and provide a boost to the hemisphere's most impoverished nation, diplomats and industry leaders say. The law went into effect in March.

"It's great," said Sassine, owner of AG Textiles and vice president of the Haitian Manufacturers Association. "It's permitting us to move forward after 20 years of moving backwards."

One small step

The HOPE Act is one small step for a nation that has endured a legacy of coups, dictatorships and crushing poverty and still faces huge obstacles to recovery.

Dan Erikson, head of Caribbean programs at the Inter-American Dialogue, a Washington think tank, said Haiti's economy registered growth last year for the first time in years but it was largely due to foreign aid. Formal unemployment remains close to 70 percent.

While describing the HOPE Act as "a shot in the arm" for Haiti's sagging textile sector, Erikson said the country needs even broader tariff reductions for Haitian-produced garments like those recently granted by the U.S. to African nations.

Reforming Haiti's collapsed judicial system and creating laws that better protect private property also are needed to draw investment, according to diplomats and experts.

"Companies like stability and knowing the rules of the game," said Erikson.

Robert Fatton, a University of Virginia professor of government and foreign affairs and an expert on Haiti, said Haitian President Rene Preval's top priority should be agrarian reform and boosting investment in the countryside to increase food production and rural incomes and slow a devastating rural-to-urban migration.

Reasons for optimism

"I don't think that you can have lasting peace in Haiti without resolving the critical problem of rural development," said Fatton.

Still, there are reasons for optimism. Fatton credits Preval for easing political tensions that could have plunged Haiti into further bloodshed.

Security also has improved in Port-au-Prince after an offensive by United Nations forces destroyed the city's once-powerful gangs.

The U.S. and other major donors have taken advantage of the relative calm to begin paying for repairs to roads and other infrastructure.

Once employing some 100,000 workers, Haiti's light manufacturing sector prospered from the 1960s through the 1980s because of the island nation's proximity to the U.S., its abundance of cheap labor and Haitians' strong work ethic.

Among the well-known products made in Haiti were Rawlings baseballs, Haggar slacks, Wilson golf clubs, Sperry boat shoes and stuffed toys such as Care Bears, according to Sassine and other factory owners.

But the bottom fell out in 1991, when economic sanctions were imposed on Haiti after President Jean-Bertrand Aristide was ousted in a coup.

Maxim Conde, a textile manufacturer who closed his factory last November, said he was general manager of Wilson Sporting Goods' operations in Haiti when the company pulled out in 1991. Wilson employed 2,000.

"There were two reasons for it," Conde said. "The situation of the coup against Aristide and the bad publicity, and management was afraid that they were not going to get the goods on time."

The UN tightened sanctions against Haiti in 1994 but lifted them a year later after Aristide's return from exile.

Still, the garment industry never fully recovered because U.S. discounters turned to cheaper suppliers.

"It's very hard work," said Marie Elvius, 30, a textile employee who earns $4.50 a day, more than twice Haiti's minimum wage. "I have no choice not to like it because I've never found any other job. Nothing is available."

Other factors hurting Haitian manufacturers were the country's violence and instability.

One day last month, Sassine toured his idle factory and pointed to a dozen bullet holes in the roof. Stray bullets fired by gang members hit three of Sassine's workers on the job.

Financing still an obstacle

"Every single one of these [incidents] cost me two days' work," said Sassine, holding up a jar full of shattered bullets.

Experts say the origin of the fabric used to assemble garments is crucial to success.

Before the HOPE Act, Haiti was mainly limited to exporting duty-free into the U.S. garments made of usually more expensive American fabric.

The HOPE Act allows duty-free entrance to Haitian-produced garments that use fabric only from countries with free-trade agreements with the United States.

"The best thing for Haiti is to be allowed to export garments duty-free into the U.S. from third countries' fabric without serious limitations," said Stephen Lande, president of Manchester Trade, a Washington firm specializing in trade. "The U.S. allows that for Africa."

Still, with the gangs cleared out and the HOPE Act in place, Sassine has hired workers to clean his factory in anticipation of reopening later this year.

The biggest obstacle now for Haitian textile owners is securing credit and financing for working capital and purchasing new equipment.

"If we don't have financing it's going to be very, very difficult to reap the benefits from HOPE," Conde said.