Is HOPE too soon?

A bilateral trade agreement with the Caribbean nation of Haiti could greatly improve the quality of life in that country, the hemisphere’s poorest nation. However, business culture in Haiti is exceedingly regressive, which is highlighted in a recent report by the World Bank. The report, hopefully, is a wakeup call to Haitian President Rene Prèval for comprehensive regulatory and structural reform of the private sector.

Haiti’s position is further exacerbated by its exclusion from DR-CAFTA and the expiration of trade quotas on such countries as China and India. While these latter factors may only hinder the potential of a trade agreement with the United States, the former certainly could preclude one. During Mr. Prèval’s first months in office, he should address the regulatory inefficiencies of the private sector to facilitate negotiations on a bilateral agreement.

In December of 2005, the World Bank published its “Doing Business” analysis of regional customs houses in Latin America and the Caribbean. What they found, while dismal, certainly was not unexpected. In the report, the World Bank concluded that Haiti's customs houses were at the bottom of the list for operational efficiency.

The World Bank evidenced this claim citing that an export business in Haiti is required to collect 20 signatures of authorization; taking on average 58 days to complete. For those businesses wishing to import items into Haiti, they were required to wait 60 days and collect 35 signatures. (Exports in Latin America, on average, take 30 days, seven signatures, and seven documents, while imports take only slightly longer, 37 days, eleven signatures and ten documents).

In April of this year, during his first official visit to Washington, DC, then-President-elect Prèval, sought support for continued US aid during his second term, specifically by means of a bilateral trade agreement. While on Capitol Hill, he met with lawmakers in the Senate and Members of the House Ways and Means Committee to champion the Haiti Hemispheric Opportunity Partnership Enhancement (HOPE) Act, a trade bill that would offer preferential trade status to Haiti on certain textile exports to the US. Mr. Prèval had also stated his desire for passage of the HOPE Act in his March 29th OP-ED piece in the Miami Herald.

However, the HOPE legislation is merely a watered down version of another trade bill, the Haiti Economic Recovery Opportunity Act (HERO) (which happens to be the only trade bill pertaining to Haiti currently being considered by Congress). Doubts among foreign policy and trade analysts suggest that HOPE would not offer sufficient economic incentive for risk-adverse foreign investors to chance Haiti’s endemic social and political instability. Additionally, the HOPE Act only exists in draft form still. Initially drafted during the 108th Congress, it has never been introduced for public consideration.

While Congress deliberates which trade agreement to offer Haiti, it would behoove Mr. Prèval to address the country’s custom-house woes. A demonstrated commitment to economic reform as well as regulatory oversight has long been a desire of the Congress, and this could act to expedite trade negotiations. Furthermore, these reforms would maximize a trade agreement’s potential benefit once ratified. While it may seem foolhardy of Mr. Prèval to champion a trade bill that does not yet exist, it may be safe to say that with this current Haiti-fatigued Congress, something is better than nothing.

Robert Miller
Haiti Innovation