Haiti - Trade Agreements Haiti - Trade Agreements
Haiti acceded to CARICOM in July 1999, negotiating a ten-year period as a Least Developed Country to fully integrate into CARICOM. GoH is looking to accelerate Haiti’s readiness for participation in the Caricom Single Market and Economy to enable Haiti to fully re-engage in the process of regional integration in the Caribbean Community. The legislation on the Common External Tariff is still pending Parliament approval. In addition, Haiti benefits from three preferential trade programs, including the Caribbean Basin Initiative (CBI), the Caribbean Basin Trade Partnership Agreement, and the Haitian Hemispheric Opportunity through Partnership Encouragement Act II (HOPE II) and the HELP Acts, as outlined below.
Caribbean Basin Initiative (CBI)
Approximately 3,500 Haitian export products are eligible for duty-free entry into the U.S. under the CBI. Most textiles are excluded, with the exception of those made from linen or silk, or qualifying as handicraft work. Other excluded items include certain watches and watch parts, petroleum and its by-products, prepared or canned tuna, sugar, molasses, syrup, beef, spirits, and footwear.
Products must be shipped directly from Haiti to the U.S. to qualify for CBI preference. The products may incorporate imported components as long as the goods exported to the U.S. are a new merchandise product distinct from such components and the Haitian direct costs of production (including domestic raw materials and those originating in other CBI beneficiary countries, including Puerto Rico and the U.S. Virgin Islands) must amount to at least 35 percent of the customs value. Materials of U.S. origin may be included up to a maximum of 15 percent of its customs value.
Eligible articles assembled or processed from U.S. materials, components, or ingredients are accorded duty free access into the U.S. regardless of whether such articles satisfy the 35 percent value-added criterion.
Caribbean Basin Trade Partnership Act (CBTPA)
On October 2, 2000, Haiti was designated as a beneficiary of the CBTPA. Congress passed the CBTPA as part of the Trade and Development Act of 2000. It is designed to provide greater duty-free access to U.S. markets for Caribbean and Central American nations. The CBTPA expands on the CBI program by allowing duty-free and quota-free treatment for imports of certain apparel from the region, and by extending NAFTA-equivalent tariff treatment to a number of other products previously excluded from the CBI program.
The HOPE and HELP Acts
Partially in response to concerns over Haiti’s apparel parity issue, Congress enacted the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act of 2006, which went into effect on March 19, 2007. Congress provided HOPE in addition to other trade preferences under the General System of Preferences (GSP), Caribbean Basin Economic Recovery Act (CBERA), and CBTPA. Eligibility criteria include progress toward achieving a market based economy, increasing employment, enhancing the rule of law, eliminating barriers to U.S. trade, combating corruption, and protecting internationally recognized human and worker rights.
In May 2008 the U.S. Congress passed the Farm Bill attaching an extended HOPE bill—HOPE II. According to Subtitle D Part 1 (Extension of Certain Trade Benefits), the HOPE II bill includes an extension of 10 years effective October 2008; an extension of eligible woven products from three years to 10 years; an increase in the Tariff Preference Level (TPL) for woven and knit products from 50,000,000 to 70,000,000 square meter equivalent; co-production with the Dominican Republic; and the inclusion of luggage, headgear, and sleepwear.
More recently, after the January 12, 2010 earthquake a number of apparel factories based in and around Port-au-Prince were heavily damaged, including the collapse of one major apparel factory that employed nearly 4,000 workers. According to estimates by the Department of Commerce, imports of apparel articles from Haiti to the United States in 2010 decreased by 43 percent in comparison to 2009. As a result, the U.S. Congress passed the Haiti Economic Lift Program (HELP) Act. The bill extends the Caribbean Basin Trade Partnership Act (CBTPA) and the Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE) through September 30, 2025.
The trade preferences available under HOPE/HELP are specifically designed for Haiti, and are conditioned on both the Haitian Government and individual producers meeting certain core labor standards and Haitian labor laws. Producers must participate in a Technical Assistance Improvement and Compliance Needs Assessment and Remediation program (TAICNAR) and comply with internationally agreed core labor standards. HOPE/HELP are intended to strengthen “Brand Haiti."
The Haiti Economic Lift Program (HELP) Act helps create sustainable support for Haiti’s economy by expanding tariff benefits for certain Haitian textile and apparel exports to the United States. HELP also allows the expansion of duty-free access to the U.S. market for Haitian textile and apparel exports and extends existing trade preference programs for Haiti.
The Lomé Convention Trade Advantages
On December 15, 1989, Haiti signed the Fourth Agreement on Common Preferences (ACP) Lomé Convention under which products originating from Haiti and numerous other ACP beneficiary countries are exempt from import duties or equivalent taxes upon entry to the European Union. Certain agricultural products, such as rum, bananas, and sugar are subject to import quotas. Other products must comply with specific import regulations. Primary export products benefit from a price insurance fund called Stabex, which is part of a system created to compensate for losses due to world price fluctuations.
Under the Lomé Convention, exporters must obtain proof of origin, called a certificate of circulation of goods, (Form Eur.1) issued by customs officials in the exporting country. The certificate must then be sent to the customs authorities of the importing country within 10 months of the delivery date.
Free Trade Zones
A law on free trade zones entered into force on August 2, 2002, and set out the conditions for operating, creating, and managing free trade zones, along with the exemption or incentive regime applicable to investment in such zones. The law defines free trade zones as geographical areas to which a special regime on customs duties and customs controls, taxation, immigration, capital investment, and foreign trade applies, and where domestic and foreign investors can provide services, import, store, produce, export, and re-export goods. Free trade zones may be private or joint ventures, involving state or private investors.
Two free trade zones were granted status in 2003, but only one was operational in northern Haiti. Between February 2012 and March 2013, three additional free trade zones were established in Port-au-Prince, bringing total free trade zone space to over 150 hectares of land.
An inter-ministerial commission, called the Free Zones National Council (CNZF), comprised of representatives from both the public and private sector, is responsible for:
• Receiving applications for approval as a free zone
• Approving applications for admission to the free zone regime
• Ensuring that projects approved are carried out in accordance with relevant regulations
• Authorizing the operation of free zones
• Defining and regulating free zones
• Approving and monitoring procedures and operations in free zones
• Approving its own rules and procedures
The Free Zones Directorate, set up within the Ministry of Commerce and Industry, acts as the CNZF's Technical Secretariat. It implements and ensures implementation of decisions taken by the CNZF; receives investors and potential investors; sends quarterly reports on the establishment and operation of free trade zones to the CNZF for approval; examines applications for approval of free trade zone; participates in all negotiations likely to lead to agreements or conventions on free trade zones at the national and international level; monitors the operation of all free trade zones in Haiti; and ensures regular monitoring of the free trade zones.
The law provides the following incentives for enterprises located in free zones:
• Full exemption from income tax for a maximum 15-year period, to be
followed by a period of partial exemption that gradually decreases.
• Customs and fiscal exemption (including registration taxes) for the import of
capital goods and equipment needed to develop the area, with the exclusion of
• Exemption from all communal taxes (with the exception of the fixed occupation
tax) for a period not exceeding 15 years.
• Registration and transposition of the balance due for all deeds relating to
purchase, mortgages, and collateral.
Goods and services sold from free trade zones on the Haitian market are considered to have entered through Haitian customs and are subject to relevant duties and taxes. The volume of free trade zone goods allowed for sale in Haitian markets may not exceed 30 percent of the total production of an enterprise in the free zone.