The Multinational Monitor



Skirting the Embargo

by Charles Kernaghan

Despite the United Nations and Organization of American States-declared trade embargo of Haiti, U.S. companies are doing booming business with the country.

Data compiled by the U.S. Department of Commerce reveal that more than 60 U.S. corporations are shipping a torrent of goods intended for assembly into Haiti, and then reimporting the assembled products back into the United States. Among the traded products are toys, fishing lures, cord, clay floor tiles, brooms, baseballs, softballs, pajamas, pants and T-shirts.

Companies are allowed to import many of these products duty-free into the United States under U.S. programs designed to benefit developing countries.

The dozens of U.S. companies engaged in the growing U.S.-Haiti trade are taking advantage of a loophole in the U.S. embargo created by then-President George Bush shortly after the embargo was first adopted.

Two days after the September 30, 1991 Haitian military coup ousted democratically elected President Jean-Bertrand Aristide from power, the Organization of American States (OAS) imposed a commercial embargo on Haiti. The Bush administration did not comply with the embargo for a full month, and then gave U.S. companies until December to start clearing out their inventories. On February 4, 1992 - despite the opposition of President Aristide and Haitian trade unions - the administration partially lifted the embargo, exempting U.S. assembly companies from the trade ban.

Duty-Free Loophole

Haitian goods entering the United States are eligible to benefit from trade incentives offered under the Caribbean Basin Initiative, the U.S. program to promote economic development in the Caribbean Basin, and the Generalized System of Preferences (GSP), which allows goods from developing countries to enter the United States duty-free. In 1992, $17.3 million worth of Haitian exports entered the United States duty-free under the Caribbean Basin Economic Recovery Act, and Haitian goods remain similarly eligible for duty-free treatment today. An additional $9.6 million worth of Haitian exports entered the United States duty-free under the GSP that same year, with another $8.9 million coming into the United States duty-free under the GSP in the first 10 months of 1993.

The U.S. apparel industry, traditionally the largest importer from Haiti, has exploited the loophole most aggressively. Haiti exported almost $100 million worth of apparel to the United States in 1993, a 46 percent increase over 1992. Apparel exports accounted for approximately two-thirds of Haiti's exports to the United States, with the total amounting to $154 million, a 44 percent increase from 1992.

Some of the products assembled in Haiti and reimported into the United States are marketed under well-known brand names. Wilson Sporting Goods and Star Sportswear sell baseballs and softballs made in Haiti. Other companies producing in Haiti include the Shelby, North Carolina-based Universal Manufacturing, which supplies apparel to Kids-R-Us, and the Grand Rapids, Michigan-based H.H. Cutler Co, a subsidiary of the VF Corporation, which makes goods for the labels Disney's Babies, Fisher-Price, Mickey's Stuff for Kids, Major League Baseball, the National Basketball Association, the National Football League and the National Hockey League.

It is not possible to compile a full list of the companies which the U.S. government has authorized to bypass the embargo, because the Treasury Department's Office of Foreign Assets - which controls the licensing process allowing Haitian exports to enter the United States despite the embargo - refuses to release a list of the companies to which it has granted import licenses.

Problem-Free Union-Busting

The incentives for U.S. corporations to move labor-intensive, low-technology assembly operations to Haiti and maintain them there are simple: low wages, virtually no taxes and no unions, plus the added incentives from the U.S. government.

In the decade prior to the election and ouster of Aristide, the real wages of Haitian apparel workers were slashed by more than 50 percent, while assembly exports from Haiti to the United States skyrocketed. Apparel exports more than doubled from 1983 to 1989, rising from $81 million to $180.9 million.

Wages in the assembly sector are now approximately $0.14 per hour. In violation of Haitian law, U.S. assembly companies in Haiti (either U.S.-owned or under contract) pay no health or pension benefits. Haitian assembly workers who attempt to organize to improve wages and working conditions are routinely fired. The baseball- and softball -making business of Fritz Mevs, one of Haiti's wealthiest businesspeople, for example, recently fired a score of union organizers. Mevs's facilities produce and export balls to the United States.

U.S. assembly companies in Haiti also pay no corporate or personal taxes, and the materials they assemble enter and leave the country duty-free.

Raymond Lafontant, the head of the Association of Haitian Industrialists, explains how U.S. apparel manufacturers (who are subject to U.S. import tariffs) are able to run assembly operations in Haiti without incurring significant duty-related expenses. Under the 807 tariff program, U.S.-cut fabric enters duty-free into Haiti, where it is assembled and then shipped back to the United States. On re-entry into the United States, duty is assessed only on the value added in Haiti-that is, the cost of assembling the piece goods, not the cost of the fabric. According to Lafontant, the value added in Haiti to apparel exports is a mere 13 percent.

Loophole Fuels Repression

The Clinton administration's decision to maintain the assembly loophole to the embargo on Haiti is serving to buttress the illegal Haitian military regime. The loophole is an invitation to further defiance on the part of the military and its business supporters. For example, Leslie Maximillien, who led a failed coup attempt against President Aristide shortly after he was elected, is also being allowed to export apparel to the United States. Maximillien, a known supporter of the Ton Tons Macoutes, was imprisoned by the Aristide government for his coup activities, only to be released after the coup and return to his apparel assembly business exporting to the United States.

The Clinton administration could significantly ratchet up the pressure on the Haitian military and elite coup supporters by closing the assembly loophole. Closing the loophole, however, would require the administration to subordinate narrow economic interests to its professed commitment to human rights and the restoration of democracy in Haiti, a step it has so far been unwilling to take.

U.S. Trade with Haiti Before the Embargo

U.S. Imports from Haiti
Jan-Jul 1992 ($Thous)
Jan-Jul 1993 ($Thous)
%change, 1992 to 1993
Apparel 29,689 57,194 9300%
Edible fruits &nuts; citrus fruit or melon 199 7,238 3537
Baseballs and softballs 4,256 6,164 45
Electrical machinery etc; sounds & TV equip 3,780 4,396 16
Rawhides and skins (no furs) and leather 1,435 2,471 72
Leather articles; saddlery etc; handbags 850 2,120 149
All other imports 13,872 15,359 11
Total US Imports 54,081 94,942 76
U.S. Exports from Haiti
Jan-Jul 1992 ($Thous)
Jan-Jul 1993 ($Thous)
%change, 1992 to 1993
Apparel and cut pieces 19,589 35,921 83
Electrical machinery etc; sounds & TV equip 739 3,132 324
All other exports 89,993 91,481 2
Total US Exports 110,321 130,534 18

Partial List of U.S. Companies Importing from Haiti

(October 19 - November 30, 1993)
Action Screen Printing,* Longwood, FL O AGA Electronics (Andre S. Apaid)**, Miami, FL o American Imports, Miami, FL o Arkie Lures,* Springdale, AR o Bantam Collections, Mt Vernon, NY* Belco Imports and Exports, Miami, FLo C & S, Sunrise, FU Caribbean WestTrading, Dallas, TX, Cherokees (Saddlecraft, Inc.),' Cherokee, NC o Consolidators, Miami, FL o Cosgrove Enterprises,' Opa Locka, FL o Cottage Collectible,' Brazoria, TX- Country Originals, Inc," Jackson. MS- Cutecumber, New York, NY- Demis Products, Lithonia, GAO Depth Perceptions, Jupiter, FLo Don Tallet Hardware and Lumber, Miami, FL o Dudley Sports Company (Spalding and Evenflo Companies, Inc)," Chicopee, MA o Eden Toys Division (Penguin USA),"` Jersey City, NJ* Gateway Agency,' Miami, FL o GCP,' Williston, VT o General Stores,' Medley, FL, General Trading," Miami, FLo H. H. Cutler Company (VF Corporation),' Grand Rapids, Ml, Happy Fella,* New York, NYo Holiday Souvenir,* Ft. Lauderdale, FLo Intermarketing Union, Hialeah, FLoJMSApparel Manufacturing Company, New York, NY* Kane International Company,* Rye, NY, Kellwood Company," Mc Comb, MS o Kenford Apparel, New York, NY o Lion Electronics, Lincolnwood, IL o Magid Glove and Safety Manufacturing Company, Inc.,* Chicago, IL o Mills River Industries,* Hendersonville, NC o Panda Products,* Brainer, MN o PFB Inter Apparel,* Miami, FL o Quality Purchasing, Miami, FL o R.J. Tackle Inc., Minden, LA o Spencer Industries, Inc.,' NewBrunswick, NH, StarSports, Inc,'* Miami, FL' States Nitewear Inc.,' New York, NY* Sun Imports and Exports, Miami, FL o Tifton Sportswear,' Tifton, GA o Universal Manufacturing (Kingley Manufacturing Corporation),* Shelby, NC o Ventura Products,' Fayettevile, GA o Ventura, Hialeah, FL o Walker International,' Detroit, MI o Wilson Sporting Goods Co,*' Chicago, IL o Worth Inc.,'* Tulianoma, TN*Zeppelin Inflatables, Ft. Lauderdale, FL

' Indicates the company imported goods to the United States during the three-month period (November, December 1992 and January 1993), despite the OAS-sanctioned embargo at that time.

'* These companies own plants in Haiti. All of them imported to the U.S. during the three-month period (November, December 1992 and January 1993), despite the OAS-sanctioned embargo at that time.

Source: PIERS database compiled by the Journal of Commerce.

Charles Kernaphan is the executive director of the New York-based National Labor Committee Education Fund in Support of Worker & Human Rights in Central America.

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