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Haiti

FOREIGN ECONOMIC RELATIONS

Unloading containers, Port-au-Prince harbor
Courtesy Inter-American Development Bank

Section of National Highway Two near Miragoâne
Courtesy Inter-American Development Bank

Foreign Trade

Throughout Haiti's history, foreign trade has played a major economic role. Trade provided crucial foreign exchange for Haiti, but the structure of trade and government policies resulted in falling incomes and poorly distributed wealth. In the mid-1980s, about twenty families dominated the importation of basic consumer items. Traditionally, government import-licensing schemes and tariff policies supported import monopolies, a major cause of prevailing high consumer prices. This same structure also permitted the plentiful importation of luxury items at relatively low tariffs. A small group of businessmen also controlled exports, particularly coffee, and its members generally favored commerce over more productive investment. The effects of major trade reforms enacted in 1986 remained to be seen in the late 1980s.

Officially, imports in 1987 reached US$307.7 million, the second lowest level of the decade (after the 1986 level of US$303.2 million). An export level of only US$198.4 million in 1987 created a trade deficit of US$110 million (see table 12, Appendix A). Not reflected in these data, however, were sizable amounts of contraband. The structure of the country's imports changed little during the 1980s. Foodstuffs continued to account for the greatest share (19 percent) of imports in 1987, followed by machinery and transport equipment (17 percent), manufacturing (16 percent), petroleum (13 percent), chemicals (10 percent), edible oils (10 percent), and other categories (15 percent). The United States was the leading exporter to Haiti, supplying 64 percent of all goods and services in 1987.

In July 1986, the National Council of Government (Conseil National de Gouvernement--CNG) swiftly introduced importliberalization policies that eliminated all quantitative restrictions on import items, with the exception of seven (later amended to five) basic consumer goods. Ad valorem tariffs replaced import quotas; this reform also lowered other tariffs significantly. At the same time, authorities began a complete revision of the Tariff Code that resulted in markedly lower overall protection by the end of 1986. In addition, the government revoked the tariff subsidies enjoyed by state-owned enterprises. Additional trade reform streamlined complex importlicensing schemes, which often favored traditional merchants. The government also attempted to expedite customs procedures, something the private sector had long advocated. Import policies, however, conspicuously lacked a serious and comprehensive policy to halt widespread smuggling.

Exports generally increased during the 1980s, but political instability started to weaken export performance toward the end of the decade. The structure of exports changed dramatically as the result of the long decline in agriculture, the termination of bauxite mining, and the implementation of the CBI. In 1987 manufacturing contributed 53 percent of total exports, followed by coffee (18 percent), handicrafts (14 percent), essential oils (2 percent), cocoa (2 percent), and other goods (11 percent). Agriculture, which accounted for 52 percent of exports in 1980, contributed only 24 percent by 1987; exports of traditional commodities, such as sugar, sisal, and meat, either declined to insignificant levels or ceased altogether. Haiti exported goods mostly to the United States, the destination of 84 percent of the country's overseas sales in 1987. France and Italy, the main purchasers of Haiti's coffee, accounted for 3 percent and 4 percent, respectively, of 1987 exports. The balance of exports went to the Dominican Republic (2 percent) and other West European and Latin American countries (7 percent).

Trade policy in the late 1980s strongly favored export promotion within the framework of the CBI, the expansion of assembly manufacturing, and the maintenance of the country's export competitiveness. In an effort to generate more exports, the Duvalier government solicited increased foreign investment through revisions in the foreign investment code during 1985. With funding from AID, the private sector in February 1987 established an export-promotion office to spearhead new investment and to recoup the momentum of exports that had been lost to political upheaval. Other economic reforms, such as budget cuts that helped to maintain the value of the gourde, maintenance of low minimum wages, and trade liberalization, were intended to stimulate investment and exports. The duty-free entry of additional Haitian goods into the United States under the CBI favored the overall growth in exports. In a bid to revitalize traditional exports, the government in 1986 also eliminated longstanding export taxes on coffee, cocoa, sisal, and other items. Haiti had applied for membership in the free-trade association, the Caribbean Community and Common Market (Caricom), in the early 1970s, but it had not been accepted as of 1989.

Data as of December 1989

Haiti - TABLE OF CONTENTS

Haiti: The Economy