- The Washington Times - Friday, March 26, 2010

ANALYSIS/OPINION:

Congress and the Obama administration should appreciate that business can’t go on as usual when something very unusual is going on. Asking why it is necessary to increase Haiti’s duty-free access for knit and woven apparel from the current limit of 70 million square-meter equivalents (SMEs) to 250 million SMEs is like asking a farmer if he needs water to grow his crops. The question should really be: Why are there any limits at all on Haiti? Why not unlimited access such as Egypt and Jordan presently enjoy in the U.S. market?

Haiti needs very generous access to the markets of wealthy countries, particularly the United States, to transform its economy and build a new Haiti. Apparel has been the road to economic development for every developed country dating to Great Britain in the 19th century. The United States will import this apparel - the main question is, will it come predominately from China and Asia, or will Haiti get its fair share?

The magnitude 7 earthquake on Jan.12 shattered Port-au-Prince and raised questions in the minds of potential foreign investors about doing business in Haiti. The trade preferences offered under Hemispheric Opportunity Through Partnership Encouragement (HOPE I and II) are no longer sufficient to attract the investment that is necessary to transform Haiti’s economy.

Right now, in the current HOPE, there exist two tariff preference levels (TPLs) covering both woven and knit apparel. Each of these is set at 70 million SMEs. Quite simply, this means quotas - equal to three-tenths of 1 percent of U.S. apparel imports - for goods made from third-country fabric entering the United States duty-free. Thus, if Haiti wants to sell blouses made from Italian fabric, it is only duty-free if the TPL is available. This creates uncertainty and is a disincentive to investment.

Some in the U.S. textile industry think the jump from 70 million SMEs to 250 is too high. It isn’t. They are concerned it will generate greedy scenarios of companies bringing in material cheaply from other countries (i.e., China) and having products made in Haiti. So what? This won’t be stopped with 70 million SMEs or 140 million SMEs, either, because no trade agreement can screen out every bad apple. Shouldn’t Congress be motivated by helping Haiti get back on its feet and not ferreting out the few who will take advantage?

Some are fighting the extension of Haiti trade benefits much beyond their current expiration - some benefits expire as soon as 2012. Failure to extend the benefits for several years would be a big mistake. Haiti has asked for seven years to 2025, while some say Congress should only agree to a gratuitous two years to 2020. This short extension would do nothing to attract serious investors to Haiti or give partner groups confidence in potential growth. The logistical setbacks caused by the earthquake, albeit temporary, have given companies pause. Moving the time frame to 2025 has the ability to influence foreign investment and profitability, while two years does not. Come on, Congress - it’s time for a redo.

It doesn’t take a math genius to figure out that the numbers proposed by some won’t have enough of an impact to generate the types of investment needed to build Haiti back up quickly. If there has ever been a need for a fire sale, it is now. The U.S. commitment for the Haiti rebuild should be approached as a sprint - not a marathon. Hopefully, Congress won’t play the role of the tortoise to Haiti’s hare. It’s time for Americans to put their money where their mouths are and bring hope to Haiti through a HOPE that will matter.

Fritz Felchlin isthe Athens, Ga.-based president of Island Apparel in Port-au-Prince, Haiti.

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