Originally: TRADE PREFERENCES FOR HAITI
HEARING BEFORE THE HOUSE WAYS AND MEANS COMMITTEE
SUB-COMMITTEE ON TRADE
TRADE PREFERENCES FOR HAITI
Mr. Jean Edouard Baker
Vêtements Textiles, S.A.
September 22, 2004
Distinguished Members of the Sub-Committee:
It is a privilege to be before your prestigious Committee this afternoon. As a Haitian citizen and a manufacturer I am conscious of the responsibility that is upon me to present and defend an issue that could have tremendous impact upon my country.
I am here to support the Haitian Economic Recovery Opportunity Act of 2004 introduced in the House by Congressman Clay Shaw. This version was introduced in the Senate by your esteemed colleague, Senator Mike DeWine, and passed in June of this year. It is the best bill for Haiti.
Many Committee members are longtime friends of Haiti, and like many of its citizens you have posed the question: ?Will Haiti ever move past its problems?? I know, as you do, that if hope and good intentions could change the course of history, this hearing would not be necessary– Haiti would be the thriving, stable neighbor that we aspire to be. But we all know that it takes more than this. The international community has had to physically intervene too often. In the last two decades however, when Haiti was struggling to emerge from dictatorship and political turmoil, there has been one element that has never been addressed: the fundamental need for long-term job creation as a part of the transition. Can a country without a growing economy and vibrant middle-class ever become a democracy?
Let me take a moment to address some of Haiti?s challenges:
First: Chronic mismanagement by a series of governments.
Second: Overpopulation–Haiti has 9 million inhabitants with the majority concentrated in the cities where jobs are scarce. Estimates show that 70% of Haiti?s working-age population is unemployed or under-employed.
Third: no significant natural resources.
Fourth: Inadequate and decaying infrastructure.
In the face of these issues, Haiti?s once dynamic apparel industry is no longer competitive. In the 1980s, Haiti?s industry supported 60,000 jobs. Now the sector employs only 20,000 workers.
One of the fundamental reasons for this drop was of course the international embargo in the early 1990s. And while Haiti was under the embargo, the rest of the world was changing. Globalization was underway, with China and the rest of Asia emerging as aggressive competitors. Countries of the Caribbean Basin had received significant development funding to build modern infrastructure including ports and airports, roads, electricity and telecommunications. When Haiti emerged from the embargo, although the new era was greeted with hope, it quickly became clear that the manufacturing sector was not getting the support that it needed. And left to fend for itself, it struggled to compete internationally.
What Haiti needs, and what we are hoping to gain with the HERO bill as introduced by Representative Shaw, are AGOA-type incentives. The African Growth and Opportunity Act, passed unanimously by Congress in 2000 and renewed this year, recognized that the Least Developed Countries of Africa deserved special treatment. As the only Least Developed Country in this hemisphere, I believe that granting similar incentives to Haiti is the right thing to do. I fully support the Congress? efforts to assist these African countries; but your LDC neighbor deserves these benefits too. In light of the quota elimination in January, and stiff competition with other suppliers, the only way Haitian companies can compete is through a duty advantage that provides a simple and flexible rule of origin, with no tricks, that anyone can understand and apply.
This will provide critical security and lowered risk for investors in Haiti?s future ? foreign investors and local investors like myself. I have five factories in Haiti, and employ 800 people. All of these factories were burned down to the ground during the recent looting–looters even took the roofs off the buildings. My 800 workers had no sewing machines to work on, no buildings to go to work to, but knowing that they have no other support, I struggle to rebuild my factories. Even now, I have only been able to start up one of the factories and put 150 people back to work. But I have confidence that with hard work and great financial difficulties for my company and my family, I can get my factories back on line, but I need to know that there is security in my investment, and that there will be the opportunity to compete.
This bill would be a win-win situation for the United States. It does not threaten U.S. jobs and a recent US AID study, the executive summary of which I have submitted with my written testimony (Attachment 1), says the following:
?There should be no adverse impact on US apparel manufacturers since the type of apparel that could conceivably enter from Haiti under the new provisions of HERO have long-since left the United States for offshore operations?. Furthermore, according to the study as regards to any displacement of US textile mill products:
?If there is any diversion, it is most likely to come at the expense of imports from the Far East made with no US components.
It should also be noted that by keeping production in Haiti, statistics show that 15-20% of inputs are from U.S. — even if the main body fabric is from a third country. Just as an example, my company uses a large number of American inputs, including American buttons, American thread, American zippers, American labels, and American packing materials and my goods are shipped on an American shipping line. When quotas on China expire at the end of the year, it is expected that there will be a massive production shift to China. China, unlike Haiti, produces its own inputs, therefore there will be no increase in US exports to China, but instead, a net loss as production moves away from countries like Haiti.
I would like to make a few important points before concluding:
First: As we create jobs and bring stability to Haiti, we alleviate the migration problems of Haitians going to the Dominican Republic, the Bahamas, and, of course, Florida.
Second: Every job created in the manufacturing sector in Haiti has the potential to create one and a half short- and long-term jobs in related service sectors including construction, food service, etc.
Third: The average Haitian worker supports seven dependents. Estimates show that production growth could create 100,000 direct jobs over the next five years. If we factor in the indirect employment, the potential impact of this bill on Haiti?s economy and society could be staggering, giving access to proper nutrition, healthcare, and education to millions. Access to these fundamental human rights is a cornerstone of democracy.
Finally, I have included figures from the U.S. Census Bureau and USITC showing recent U.S. trade statistics with my testimony (Attachment 2). The figures for Haiti reflect normal trade patterns over the past decade: Haiti imports about twice as much from the US as it exports to the US. Other trading partners show a negative balance with the US. 80% of Haitian imports are from the United States, and this will not change. Estimates are that for every dollar generated in Haiti 80% is sent back to the US. Therefore a stronger Haitian economy implies increased export of US goods and services to us. This is a true win-win situation.
In closing, I want to thank you for allowing me to appear before you today. You have the opportunity to do something historic in passing HERO as introduced by Congressman Shaw. The saying ?trade, not aid? is perhaps not applicable to Haiti ? we need aid. But by passing this bill, perhaps ten years from now you will have changed the face of a nation to where aid is the exception, and opportunity is the norm.