Understanding Trade Between the United States and Haiti
The United States has a long history of facilitating the trade with many of its neighboring countries, such as those in the Americas and the Caribbean through the implementation of trade agreements that result beneficial for all countries involved by promoting stability in their economies.
Countries like Haiti, which are very close to the US, become interesting trading partners thanks to their accessibility. In 2006, partially in response to concerns arising with Haiti’s apparel parity issues, the United States Congress implemented the Haitian Hemispheric Opportunity through Partnership Encouragement (more commonly known as just HOPE) Act. HOPE was enacted alongside the General System of Preferences (GSP), the Caribbean Basin Economic Recovery Act (CBERA), and the Caribbean Basin Trade Partnership Act (CBTPA). However, the first iteration of this partnership was mostly unsuccessful.
The HOPE Bill Upgraded
Two years later, in 2008, Congress passed an extended and ungraded copy of the bill, known as HOPE II. This version included an increase in the Tariff Preference Level (TPL) for specific woven and knit productions; as well as co-production with the Dominican Republic, which shares the island of Hispaniola with Haiti; and the inclusion of luggage, sleepwear, and headgear in eligible trade items.
The intention of HOPE II was to establish new rules of origin that would help make Haiti eligible for better trade benefits regarding apparel imports and enhance sourcing flexibility for producers.
This helped to modify the existing trade preference programs operating under HOPE and further develop the benefits of the act. An adjacent act, HELP also helps to provide duty-free treatment to additional textile and apparel products coming from Haiti. These preferences are all currently valid and are set to expire on September 30, 2025.
About the HELP and HOPE Acts
The Haitian Economic Lift Program (HELP) is designed to promote economic growth in this developing country and extends advantageous duty-free treatment to additional textile and apparel products from Haiti. The HELP act works alongside the HOPE act and helps to extend duty-free shipping to the US market, which includes around 1,500 products (making for a total of 5,000 duty-free products eligible under the GSP).
Trade preferences under the HOPE and HELP acts are specific to Haiti since they are carefully created and conditioned around two major parties: the Haitian government and the producers individually meeting certain core labor standards. These producers are expected to participate in a Technical Assistance Improvement and Compliance Needs Assessment and Remediation program (TAICNAR) as well as comply with the predetermined and internationally agreed-upon core labor standards.
The Generalized System of Preferences (GSP)
To understand the HOPE and HELP acts, we must also discuss the GSP. The US Generalized System of Preferences, or simply just GSP, is a program that is intended to promote economic growth in developing nations. It helps to provide duty-free treatment to various designated beneficiary countries and is currently up to 5,000 eligible products under duty-free allowance (as mentioned above). The lists contain a combination of goods including agriculture, fishery, industrial, and most dutiable manufactured and semi-manufactured products.
Current preference highlights include:
- Duty-free access for up to 70 million square meter equivalents (SME) of knit and woven apparel (each), with some exclusions. This is without regard to the country of origin for the fabric or components, so long as the apparel is assembled in Haiti. After the 70 million SME limit is hit, it increases up to 200 million.
- Duty-free treatment for apparel that is assembled or knit-to-shape entirely in Haiti, with around 50 – 60% value from any combination of Haiti, the US, a US Free Trade Agreement partner, or program beneficiary.
- Duty-free treatment under a special “two for one” import allowance program for knit or woven apparel sourced from the US or certain trade partner countries. For every two SMEs of qualifying fabric, one SME of non-qualifying fabric will be allowed under this rule.
- Duty-free treatments for clothing items such as undergarments like brassieres, luggage, headgear, and certain types of sleeping wear.
- Permission for duty-free goods to enter the United States from Haiti when shipped directly from Haiti or the Dominican Republic.
Some of the preferences are set to expire at a certain time, so be sure to read up on these programs, available at the US Department of Commerce Office of Textiles and Apparel!
Laws Regarding Free Trade Zones
The very important component for the execution of these acts is Free Trade Zones. On August 2, 2002, a law on free trade zones (FTZ) was implemented to set out acceptable conditions for creating, operating, and managing FTZs. There are also exemption and incentive regimes that are applicable to ventures made in these zones. As defined by the law, a free trade zone is a geographical area that operates under the regime of customs duties that controls taxation, immigration, capital investment, and foreign trade. It is also an area where domestic and foreign investors can provide services including importing, storing, producing, exporting, and re-exporting goods. These FTZs are either a private or a joint venture that is involved with state or private investors.
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Previously, only two free trade zones were granted status in 2003, with only one being operational in northern Haiti. However, in January 2019, a new FTZ was declared in Ganthier Balan.
Haiti also has issued at least nine Free Trade Zone licenses, which are as follows:
- FTZ de Trou du Nord, which is the first agricultural free trade zone in Haiti.
- FTZ CODEVI is located in the northeastern city of Ouanaminthe and is operated by a Dominican company Grupo M, that manufactures clothing for various U.S. companies.
- FTZ Port Lafito is located in Douillard, Cabaret. Lafito home to the only Panamax seaport in Haiti.
- FTZ Hispaniola, located in Route 9 Cité Soleil.
- FTZ SIDSA in Tabarre Port-au-Prince.
- FTZ de Digneron, which is fairly new, having been inaugurated in just 2018 in Croix-des-Bouquets.
- FTZ Santo Dujour is also located in Croix-des-Bouquets.
- FTZ HEH Les Palmiers, located in Carrefour, Port-au-Prince.
- FTZ Balan in Ganthier, which we previously mentioned.
The Free Zones National Council and Free Zone Directorate
The Free Zones National Council (CNZF) is an inter-ministerial commission, which is comprised of representatives from the public and private sectors. They are directly responsible for various regulations and rules regarding the free trade zones in Haiti.
Some responsibilities include:
- Approving applications for admission to the free zone regime.
- Authorizing the operation of free zones.
- Ensuring that projects approved are carried out in accordance with relevant regulations.
- Ensuring that projects approved are carried out in accordance with relevant regulations.
- Defining and regulating free zones.
- Approving and monitoring procedures and operations in free zones.
- Receiving applications for approval as a free zone.
- Approving the CNZF’s own rules and procedures.
There is also the Free Zone Directorate, an entity that exists within the Ministry of Commerce and Industry. They act as the CNZF’s Technical Secretariat in order to uphold and ensure the implementation of decisions taken by the CNZF.
In addition, the responsibilities of the Free Zone Directorate include:
- Sending quarterly reports on the operation and applications of the FTZ;
- Examining and approving applications for the FTZ;
- Participating in negotiations, agreements, or conventions regarding FTZ at the national and international levels; and
- Overseeing and ensuring the regular monitoring of all FTZ in Haiti.
Crunching the Numbers (as per the ITA)
The International Trade Administration (ITA) is a United States government agency within the Department of Commerce that promotes and oversees the export of nonagricultural US goods and services. According to their numbers, the United States is one of Haiti’s top trading partner. Based on data from 2018, the US imported over $991 million in goods from Haiti (which was up almost 8% from the previous year).
Of those 2018 imports, $926 million were generated from apparel goods manufactured in the Haitian garment sector via the HOPE and HELP acts and the CBTPA legislation! In addition to the apparel assembly sector; telecommunications and transport fields also attract a substantial number of investors. Exports of US goods to Haiti are also worth noting, with amounts totaling up to $1.4 billion in 2018.
Considering Expanding Your US Business Market?
Some reasons to expand your export or import business into Haiti.
- Currently, US goods comprise, on average, over 24% of Haiti’s total imports.
- There are four major security certified ports that provide international maritime access to Haiti, including Port-au-Prince, Cap-Haitian, Lafito, and St. Marc.
- There are multiple daily flights available to the United States from Miami via the two international airports in Haiti (Port-au-Prince and Cap-Haitian). These allow for quick access to the CARACOL and CODEVI industrial parks, which are located in FTZs in the northeastern region of the country.
- Haiti’s total imports (according to the Central Bank of Haiti) reach over $4.5 billion during the 2018 fiscal year (exports were valued much lower at only $1.1 billion). This means imports represent more than 70% of goods currently sold on Haitian land.
If you need assistance branching into the Haitian market for US exports and for goods being imported into the US from Haiti, we can help! Located in Miami, we have plenty of experience coordinating shipments and transport to Haiti, whether it is via ocean transport or air freight, call today for a quote.