The Washington Diplomat / April 2010
By Larry Luxner
PORT-AU-PRINCE — Haitians aren't big baseball fans, but at one time, Haiti was among America's top suppliers of baseballs. Along with garments, electronics and medical devices, Haiti's labor-intensive manufacturing sector in the early 1990s employed more than 90,000 people.
Today, only 28,000 Haitians work in the country's garment factories — one of the few economic sectors that seem to have survived the Jan. 12 earthquake and its aftermath. Nobody's made baseballs here for more than a decade, and the electronics plants migrated across the border to the Dominican Republic years ago.
Yet Georges B. Sassine, president of the Haiti Manufacturers Association, says his country's low wages — the average worker makes only $3 a day — and its location only 700 miles southeast of Miami give Haiti the potential to be an apparel export powerhouse.
Sassine said massive new investment could flow into the struggling country — if only lawmakers in Washington would free Haiti of the requirement that its factories must use U.S. raw materials in order to sell its products in the United States without being subject to duties or quotas.
However, opposition from some Republicans on Capitol Hill and the domestic textile industry threatens to derail the proposal, he complained.
"The original HOPE [Hemispheric Opportunity through Partnership Encouragement] Act was passed in December 2006. It was a three-year thing and only permitted woven garments to be sewn," Sassine said in an interview here.
"What happened was that Haiti became a 100 percent T-shirt manufacturer — with big factories making very cheap T-shirts at $1 or $1.50 each. The only good thing about HOPE was that for the first time in years, there was some news about Haiti that was not about hurricanes or coups. That created a positive buzz, and we started receiving inquiries about Haiti."
Then in 2008, the original legislation was extended. HOPE II passed, adding 10 years of duty-free access for up to 70 million square-meter equivalents (SMEs) of knit apparel, and 70 millon SMEs of woven apparel without regard to the country of origin of the fabric or components.
Under the complex "three-for-one" arrangement now in effect, for every three SMEs of qualifying fabric (sourced from the United States or certain trade partner countries) shipped to Haiti, qualifying apparel producers may export duty-free from Haiti or the Dominican Republic one SME of apparel wholly formed or knit-to-shape in Haiti, regardless of the source of the fabric.
"Factories started to re-open and the remaining ones started to get contracts again. We were finally seeing the light at the end of the tunnel. Brazilians were coming, Koreans were coming, things were moving and my phones were ringing off the hook. Then this thing hit," he said, gesturing at his damaged factory building in an industrial zone along the road to Port-au-Prince's international airport.
Sessine was in Washington, about to board a plane home, when he heard the news that Haiti had been struck by a magnitude-7.0 earthquake.
"What we are asking for is 15 more years added to HOPE, which would extend it to 2033, and a limit of 250 million SMEs for knits and wovens," he told the Diplomat. "That 250 million represents only 1 percent of U.S. imports."
Several big deals apparently hinge on Haiti getting this legislation through. One involves DK Textile Co., an Israeli manufacturer that until recently operated a garment plant in Jordan under the Qualified Investment Zone program. But a bitter pay dispute forced the factory's owner, Sergio Domovisky, to flee for his life.
According to Sessine, Domovisky is now negotiating to relocate his operations to Haiti. The $200 million deal under discussion would bring 8,000 jobs to Cap-Haitien, on the country's northern coast.
The National Council of Textile Organizations, a Washington-based lobby, argues that extending additional trade benefits to Haiti is nothing more than giving China a back door to flood the U.S. market with cheap clothing. One of NCTO's most influential member companies is Hanes, which produces T-shirs and underwear in Haiti and also happens to be among Haiti's largest foreign investors.
"Our concern is that everyone is focusing on increasing TPLs [tariff preference levels] to let third-country fabric come into Haiti, be cut and sewn," said Jerry Cook, a Hanes executive based in North Carolina. "Those TPLs are hardly used today, because Haiti's infrastructure is so inadequate. Post-earthquake, their biggest priorities are shelter, food and infrastructure, and we've been trying our hardest to help on all three fronts. So if you want people to come in and invest there, you've got to build the infrastructure first."
Sessine retorts that "it's more of a chicken-or-egg" situation.
"What we have now is only enough to get small investors into Haiti, but not the big guys. And when those big guys come in, they're not just talking about garment assembly but the whole textile industry short of planting cotton — from making fabric to the final packaging," he said, explaining that only the actual stitching of garments is labor-intensive. The rest involves very heavy capital investments that take much longer to amortize.
"Our frustration is that the same arguments used against us for HERO, HOPE and HOPE II are again being used — and we have proven that not one Chinese garment has come through Haiti in the last three years," he said.
In 2009, Haiti exported $540 million worth of garments — about 90 percent of the country's total export value. The remaining 10 percent consisted of mangoes, coffee, rum and other minor products.