Global Policy Forum

US House Clear Haiti Trade Bill





By Jim Lobe

May 5, 2010

The U.S. House of Representatives Wednesday approved a major trade bill designed to boost U.S. and other investment in Haiti's textile and apparel industry following January's devastating earthquake in which at least 200,000 people are believed to have been killed.

The bipartisan bill, which passed by voice vote, could be approved by the Senate and sent on to the White House for President Barrack Obama's signature as early as next week, according to Congressional staff.

The House action came as two key senators Wednesday introduced bipartisan legislation, the Haiti Empowerment, Assistance and Rebuilding (HEAR) Act of 2010, that would authorise 3.5 billion dollars to support Haiti's reconstruction over the next five years.

The proposed legislation also requires Obama to appoint a "senior Haiti policy coordinator" responsible for "advising, overseeing, and coordinating all policies of the United States government related to Haiti".

The two latest developments come after the approval by both houses late last month of additional legislation that directs the treasury secretary to instruct U.S. executive directors at the World Bank, the Inter-American Development Bank, and other multilateral development agencies "to use the voice, vote and influence of the United States" to have all debts owed by Haiti to those institutions cancelled.

That legislation, which was already signed into law by Obama, also calls for Washington to use its influence in the multilateral agencies to ensure that additional assistance to Haiti take the form of grants, rather than loans so that the Americas' poorest country does not take on additional debt.

Haiti currently owes the international institutions about 800 million dollars in debt, or about two-thirds of its total external debt.

The trade bill approved by the House Wednesday is designed to jumpstart the once-promising textile and apparel industry which was badly damaged - both by the damage inflicted on factories and on port facilities - by the Jan. 12 earthquake.

The United States has long been Haiti's biggest market for textiles and apparel, and U.S. retailers and humanitarian groups urged Congress even before the earthquake to broaden existing investment and trade incentives for apparel makers to expand their operations in the country as a way to boost its economy. Apparel exports from Haiti to the U.S. exceeded 500 million dollars last year.

Among other measures, the legislation will permit Haiti to nearly triple the amount of knit and woven fabrics it can export to the U.S. duty-free - from some 70 million square metre equivalents to 200 million square metres.

The bill was strongly backed as well in recent weeks by former presidents Bill Clinton and George W. Bush, who were asked by Obama to establish a fund that would raise money and other support for Haiti's recovery.

Bush and Clinton, who wrote letters to lawmakers on the eve of Wednesday's vote, also favour extending from eight to 15 years related trade preferences for Haiti included in the Haitian Hemispheric Opportunity Through Partnership Encourage Act (HOPE II).

In a joint statement, they praised Wednesday's vote, calling it an "important step (that) responds to the needs of the Haitian people for more tools to lift themselves from poverty, while standing to benefit U.S. consumers".

The final bill, which took several weeks to negotiate, represented a compromise between the deeply troubled U.S. textile industry, which is worried that third-country companies will use Haiti as an export platform to the U.S., and advocates for more generous treatment of Haitian goods.

Given the strong bipartisan sentiment in Congress in favour of helping Haiti recover, the textile industry decided not to put up as strong a fight against imports made from yarns and fabric in third countries, such as China, as it has in the past with respect, for example, to the 2005 Central American Free Trade Agreement (CAFTA).

Nonetheless, the legislation does include quotas on certain kinds of apparel that may be given duty-free treatment to protect some domestic producers.

"As the single largest sector of Haiti's economy, the apparel industry will play a leading role in Haiti's overall recovery," Kevin Burke, president and CEO of the American Apparel and Footwear Association, said late last month.

The legislation "provides important incentives to expand trade and investment in Haiti, and it does so in a manner respectful of the complementarities of the industries in our two countries," said Sander Levin, chair of the key Ways and Means Committee, who helped steer the legislation through the competing interests.

The Senate is expected to take up the same bill next week.

In addition to authorising 3.5 billion dollars in aid over five years, the bill introduced Wednesday by the Democratic chair of the Senate Foreign Relations Committee, John Kerry, and Republican Sen. Bob Corker, calls for the U.S. Agency for International Development (USAID) to prepare and submit a comprehenshive rebuilding and development strategy for the country "in consultation with the Government of Haiti, civil society organisations, private sector entities, and other implementing partners, and in coordination with the international community".

It calls for the adoption of a strategic policy framework to address four critical priorities: good governance, including security sector reform; economic growth and economic sustainability, including investment sin infrastructure, urban management, and agricultural development; environmentally sustainable programmes designed to restore Haiti's natural resources; and "investments in people, particularly women and children".

The bill also calls for all reconstruction efforts to support the Haitian government's own Action Plan and other existing development plans.

It comes in the wake of a major conference in New York last month at which dozens of governments, international institutions and NGO coalitions pledged nearly 10 billion dollars towards rebuilding Haiti over the next decade, including 1.15 billion dollars from the U.S.


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