The Haitian Economy and the HOPE Act
LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RESEARCH SERVICE
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In December 2006, the 109th Congress passed the Haitian Hemispheric Opportunity through Partnership Encouragement Act of 2006 HOPE I, which included special trade rules that give preferential access to U.S. imports of Haitian apparel. These rules were intended to promote investment in the apparel industry as one element of a broader economic growth and development plan. HOPE I allowed for the duty-free treatment of select apparel imports from Haiti made from less expensive third-country inputs e.g., non-regional yarns, fabrics, and components, provided Haiti met rules of origin and eligibility criteria that required making progress on worker rights, poverty reduction, and anti-corruption measures. The 110th Congress amended HOPE I in the Hemispheric Opportunity through Partnership Encouragement Act of 2008 HOPE II. HOPE II extends the preferences for 10 years, expands coverage of duty-free treatment to more apparel products, particularly knit articles, and simplifies the rules, making them easier to use. Early evidence suggests that apparel production and exports are responding to these changes. The earthquake that rocked Haiti on January 12, 2010, caused considerable damage to the apparel sector, although much has been done to get capacity back to at least 80 of pre-earthquake levels. Early estimates of rebuilding costs for the industry begin at 25 million to refurbish damaged buildings, replace machinery, and train new employees. The apparel world moves quickly, and the greatest fear is that U.S. buyers will abandon Haiti for other production sites just as the apparel industry was making strides in redevelopment. Although buyers are reportedly willing to stay with Haiti factories, the sentiment could shift quickly if production is unable to return to levels adequate to meet orders. The U.S. Congress could respond by amending the tariff preferences and rules of origin in HOPE II to provide additional incentives for investors to operate in Haiti.
- Economics and Cost Analysis