IFC Decision Pending on Controversial Haiti Free Trade Zone

Bretton Woods Project
August 19, 2003

The Board of the International Finance Corporation (IFC), the World Bank's private-sector arm, is in the final stages of approval for a loan for development of the first of a series of proposed free trade zones along the border between Haiti and the Dominican Republic. Several local NGOs have raised serious concerns over the proposed project's impact on farmers' livelihoods and the environment.

The total cost of the project is estimated at $43 million. The proposed IFC financing consists of a $20 million loan for Dominican clothing manufacturer Grupo M and $3 million to the Haiti Project development company. Grupo M is the largest apparel producer in the Caribbean/Central American region supplying to major US companies including Liz Claiborne, Polo, Levis, Hanes and Tommy Hilfiger. The company has won awards for labour practice and corporate citizenship.

The Maribahoux Plain, site of the development, is one of Haiti's most fertile agricultural regions with production capacity to feed half a million people. Taking this land out of food production is being questioned at a time when the FAO says that a "silent food crisis is looming in Haiti".

Compensation for expropriated lands
In a response to the NGO Haiti Support Group (HSG), Brian McNamara of the IFC says he recognizes "that some resentment and confusion has been generated as a result of the government's aquisition of the land for the industrial zone." The Environmental Review Summary, released 12 August, states that project consultants and a local NGO are searching for land for smaller farmers and sharecroppers who want it. For those seeking financial compensation, the Social Compensation Plan contends that payment will be made at a meeting at the end of August.

Environmental impacts
The free trade zone is to be built on the edge of an environmentally sensitive area. Haitian agronomists suggest that associated construction and development outside the site will destroy 1,200 acres of agricultural land. The IFC assures concerned residents that "many local and international NGOs, UNDP, and others are active in the region, and we are already engaged with them to support as many common and coordinated solutions as is realistically possible." HSG finds Grupo M's plans for dealing with in-migration by pursuing a local hiring policy inadequate in the face of intense levels of unemployment nationwide. Furthermore, there is no mention in the contract of Grupo M's responsibilities when the 25-year lease expires.

Labour rights
HSG was pleased to learn that, according to the IFC, "...all of the workers in the Zona Franca will have the right to organize unions and to collective bargaining." However, in light of similar promises broken in the past, HSG has asked for this to be "formally and clearly included in any loan agreement made with the IFC". Haiti's first free trade zone - the Industrial Park near Port-au-Prince launched under the Duvalier regime in the early 1970s - is witness to serious environmental degradation and has failed to provide the promised benefits to workers. While skilled Dominicans are paid $24 a day Haitians receive only a tiny fracion of that ($1.06).

Lack of transparency
Most Haitians did not learn about the project to build free trade zones on the Maribahoux plain until President Jean-Bertrand Aristide arrived for the ceremonial ground-breaking in April 2002. Three months later, a "Trilateral Agreement" between Haiti, the Dominican Republic, and the United States was revealed which would turn a 5 km corridor along the 375 km border into industrial parks, highways, and airports. This is the prime feature of the US State Department-championed "Hispaniola Plan," which aims to convert the foreign debt of Haiti and the Dominican Republic into "tripartite" controlled territory.

The IFC believes efforts were made to inform the affected communities, including an environmental impact assessment and an opinion survey, although they agreed that transparency "can be further improved." HSG charges that none of the local groups that are opposed to the development were consulted. Farmer Jean Eugene claims the bulldozer teams that seized his fields in March came unannounced and there has been no offer of new land. Whereas he could previously expect annual crop profits of around 70,000 Haitian Gourdes, he says the government has offered around a third of that sum as total compensation. "I don't want the money. My land is not for sale."

Project documents claim that the zone will create 2,500 jobs for Haitians - and that a further phase of the project may create up to 20,000 direct jobs and tens of thousands of indirect jobs. Camille Chalmers, leading Haitian economist and founder of one of the groups opposing the project, says that the "job creation rhetoric is propaganda. They talk about jobs being created, not the jobs that are being lost. They should work with farmers to increase agricultural productivity and feed Haiti's people, rather than destroying the country's bread basket to benefit foreign investors." HSG has argued that the plan lacks any provisions for an estimated 2,000 farm workers who had seasonal work on the farms destroyed by the site.

The project was originally scheduled to go to the IFC Board for approval in June. A final decision is expected in the coming weeks

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