The Enriquillo-Plantain Garden Fault which caused Tuesday’s (January 12, 2010) earthquake in Haiti runs through the Dominican Republic, to Haiti, and under the Caribbean Sea across to Jamaica. This same fault line has generated previous earthquakes, including the 1692 quake that destroyed Port Royal, Jamaica — the “wickedest city in the world”. So, this was a tragedy waiting to happen. It was only a matter of time that some country along this fault experienced another devastating earthquake.
That the earthquake struck Port-au-Prince, Haiti, the most impoverished city in the Western Hemisphere, has been a triple tragedy:
- Haiti’s weak government, inadequate infrastructure, and almost non-existent resources make it the least equipped to cope with and recover from the destruction.
- The earthquake’s epicenter hit just 16 miles west of Port-au-Prince, whose overpopulated slums and substandard infrastructure magnified the destructive effects of the earthquake’s tremors.
- After decades of authoritarian rule, military intervention, neglect, and poverty, Haiti was just experiencing the first glimmers of recovery, including a nascent textile export sector and signs of positive economic growth.
So, as difficult as it’s been to pull myself away from the television stories and news articles about the horrors in Haiti in order to write this post, I find that I must look ahead in order to assure myself that something good can and will come of this tragedy. While immediate attention is correctly focused on search and rescue and humanitarian efforts, comments by President Obama and other world leaders have also addressed the need for more long-term approaches. Trade will play an essential role and supporters of Haiti must work to ensure the appropriate policy framework and perspective going forward.
The Limitations of HOPE: The US-initiated Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Acts I & II of 2006 and 2008 can claim much credit for the recent growth in Haiti. The program extends to Haiti, until 2018, duty-free access to the U.S. market for specified textiles and apparel products and allowed them more flexible sourcing arrangements, such as combining with inputs from the neighboring Dominican Republic. U.S. technical assistance has focused on improving the quality of the apparel industry’s sourcing, production and marketing; providing workforce training for young adults in basic industrial sewing; strategic planning for the sector; and encouraging U.S. investments in the sector.
The HOPE focus on textiles is a quick way to create jobs for Haiti; however the history of these maquilladora programs in the Caribbean also shows that the jobs and investment that they generate are just as quickly lost once conditions more favorable to such programs develop elsewhere. (The region is reported to have lost 150 textile plants and 123,000 jobs to NAFTA.) Consequently, as currently structured HOPE can provide only a temporary solution.
The most appropriate framework for a Haiti trade policy is one that recognizes Haiti’s status as an independent country that has the capacity to become an active member of the global trading community. Haiti is already a member of the Caribbean Community (CARICOM), a signatory to the region’s treaty to create a common single market, and a signatory to the Economic Partnership Agreement (EPA) that the entire region has signed with the European Union. Against this backdrop, a more integrated and long-term approach to development in Haiti will provide support for the Caribbean regional integration effort of which Haiti is an integral and essential part, facilitate the reforms that Haiti and the region need to promote growth and investment, and support the development of vibrant export and domestic sectors.
Support for Caribbean Regional Integration: Haiti is an integral member of the Caribbean Community (CARICOM), which has also responded swiftly to the disaster. Like CARICOM countries, within their more limited means, are also providing funding, supplies, personnel, and refuge for Haitians already located within their borders. The Dominican Republic, Haiti’s neighbor on the island of Hispaniola with close ties to CARICOM, has moved quickly to provide relief and logistical support to the relief efforts of other countries.
CARICOM has begun work to create a Caribbean Single Market (CSME) which will permit the free movement of goods, services, labor, and capital within its members. Haiti is a signatory to the CSME. It has not, however, completed its accession and the region has acknowledged the additional significant challenges it faces in integrating Haiti. Nevertheless, the potential benefits to Haiti and the entire region make it essential to address and overcome these challenges. A CSME that fully incorporates Haiti will comprise a regional market of 14 million consumers, (incorporation of the Dominican Republic, already closely linked to CARICOM, increases that potential to a market of 24 million consumers), creating the potential to attract and retain investment, generate exports, and create jobs that no one country can achieve alone. Accordingly, simultaneously with direct assistance to Haiti, meaningful long-term support for Haiti’s development will include support for the regional integration process and for Haiti’s integration into the CSME.
Support for Internal Reform: Haiti and the entire region need assistance with addressing the impediments that prevent or hinder regional entrepreneurs and development of strong export markets. These impediments have been well-documented and include: insufficient coordination on export development agendas; minimal private sector representation in trade policy formulation; inadequate access to market intelligence; difficulty matching market requirements with the type, availability, and reliability of the products and services that businesses can offer; insufficient supply chain integration; difficulty complying with the international legal environment, particularly with respect to sanitary and phyto-sanitary requirements; limited access to short and long-term finance; limited efficiency and transparency in customs administration; weak infrastructure development (road, ports, etc.); and the need to be more open to international trade and investment. The reassessment of U.S. trade preference programs currently underway in the U.S. Congress provides an opportunity to revisit and reshape assistance under the Caribbean Basin Initiative preference program.
Agricultural Trade Policy Reform: Current U.S. agricultural trade policy, in the form of protective tariffs (sugar, tomatoes) and subsidies of U.S. products (rice and milk products) have impeded the ability of Haitian and other Caribbean products to export and to compete even in their domestic markets. Haiti, once self-sufficient in rice, is now dependent on imported rice from the United States. The result has been the collapse of previously self-sufficient farmers and migration with their families to the slums of Port-au-Prince. Now, news agencies are reporting on the outflow of many families from the devastated city back to rural Haiti. Meanwhile, reform of these trade-distorting policies has been tied to the WTO Doha Round negotiations which have been stalled, in part around this very issue. This disaster reminds us of the real impact on human lives of the failure to correct these policies. Ignoring this opportunity to revive Haiti’s agriculture will only compound this disaster. Haiti and the rest of the Caribbean have the potential for vibrant agricultural export markets and need a more level playing field through agricultural trade policy reform as well as assistance in demonstrating that their products can meet the health and safety rules of the destination markets. It is also worth noting that as the Western Hemisphere’s only less-developed country (LDC) Haiti has been promised duty-free quota-free access to developed country markets.
Finally, it is crucial to remember that this earthquake can, and will most likely happen again. While the international community has demonstrated its willingness to rally around another member in times of disaster, the long-term approach needs to improve the ability of Haitians, and the entire Caribbean region, to help themselves to rebuild.