Trade HELP for Haiti: Did It Make a Difference?

Just a few months after the devastating earthquake in Haiti four years ago, Congress overwhelmingly approved the Haiti Economic Lift Program (HELP) Act to reduce the barriers to Haiti’s clothing exports. Congress’s goal in improving market access was to help Haiti attract investment and create jobs as part of the rebuilding process. There’s been some progress, evident in the numbers (unlike most aid disbursements, trade data are readily available). Since 2009, Haiti’s share of US clothing imports has increased by 25 percent, and the apparel industry has create some jobs. The HELP Act has made a difference, but not enough. Improving duty-free market access and simplifying rules of origin restrictions would go a long way to help Haiti’s ongoing recovery. Keep reading for more details.

Haitian Apparel Exports to the United States (millions of dollars)

* Extrapolated from data for January through October.

As shown in the table, Haitian apparel exports to the United States were nearly 60 percent higher in 2013 than in the year before the earthquake. The United States began providing special preferences for Haiti, the only UN-designated least-developed country in the western hemisphere, in 2007. But, as I noted here, the HOPE I program was hamstrung by complex rules of origin and other restrictions, and HOPE II, passed by Congress in 2008, only partially addressed those problems.

Under HOPE II, the rules of origin affecting Haiti’s apparel exports still took up four and a half, single-spaced pages, and the simpler rules for some products excluded t-shirts and sweatshirts, which were nearly three-quarters of the total in 2008. While designated clothing items can incorporate fabric from anywhere in the world—subject to a cap—producers of t-shirts and sweatshirts must use fabric that is either American or locally produced from American yarn. That condition—designed to benefit US textile producers—raises costs and decreases Haiti’s competiveness.

The HELP Act, which took effect at the end of 2010, extended Haiti preferences for two years, to 2020, raised the caps for clothing produced with globally sourced fabric, and modestly eased the rules of origin in other categories—but not for t-shirts and sweatshirts. The impact of these changes is evident from the data: imports under HOPE II (which incorporates the HELP Act changes) eclipsed those under the older and more restrictive Caribbean Basin Trade Partnership Act last year. Haiti’s share of US clothing imports is also up by 25 percent since 2009. The jobs created by the industry—roughly 30,000—are still a drop in the bucket. But the figure is expected to double by 2016 and these are among the very few formal-sector jobs in Haiti.

Despite the progress, US trade with Haiti is still far from duty-free or quota-free. The WTO package adopted at the ministerial meeting in Bali last December calls for developed-country members to improve duty-free market access for LDCs and to simplify the rules of origin that apply to them. Haiti, still struggling to recover from that devastating earthquake, would be a good place to start.