Caribbean Basin Initiative (CBI)
The Caribbean Basin Initiative (CBI) remains an important element of U.S. economic relations with Haiti. The CBI is intended to facilitate the development of stable economies in the Caribbean Basin by providing beneficiary countries with duty-free access to the U.S. market for most goods.
Approximately 3,500 Haitian export products are eligible for duty-free entry into the United States under the CBI. Most textiles are excluded, with the exception of those made from linen, 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 United States to qualify for CBI preference. The products may incorporate imported components as long as the goods exported to the United States 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 United States 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 the U.S. market 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 USMCA-equivalent tariff treatment to a number of other products previously excluded from the CBI program. The U.S. Congress passed an extension of CBTPA in 2020. It is now scheduled to expire on September 30, 2030.
The HOPE and HELP Acts
Haiti was and continues to be eligible for the GSP, CBERA, and CBTPA programs; however, in the first decade of 2000, new Haiti-specific trade preferences were enacted. The Haiti-specific trade preference program—comprising HOPE I, HOPE II, and HELP—expanded and enhanced trade benefits for Haiti and gave Haitian apparel producers more flexibility in sourcing yarns and fabrics. The Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act of 2006 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 includes progress towards 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 an extended HOPE bill—HOPE II. The HOPE II bill includes 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.
HOPE established special new rules of origin that make Haiti eligible for new trade benefits for apparel imports, and that enhance sourcing flexibility for apparel producers in Haiti. HOPE II modified the existing trade preference programs under HOPE, and HELP provided duty-free treatment for additional textile and apparel products from Haiti. These preferences are scheduled to expire on 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.
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.
Generalized System of Preferences (GSP)
The U.S. Generalized System of Preferences (GSP), a program designed to promote economic growth in the developing world, provides preferential duty-free treatment for over 3,500 products from a wide range of designated beneficiary countries. As a least-developed beneficiary developing country, Haiti qualifies for duty-free access to the U.S. market for an additional 1,500 products, to make a total of 5,000 duty-free eligible products under GSP. The combined lists include most dutiable manufactured and semi-manufactured products and certain agricultural, fishery, and primary industrial products that are not otherwise duty-free.
Current Preference Highlights
Current trade preference highlights include:
- Duty-free access, with some exclusions, for up to 70 million square meter equivalents (SME) of knit apparel and 70 million SMEs of woven apparel without regard to the country of origin of the yarn, fabric or components, as long as the apparel is wholly assembled or knit-to-shape in Haiti; once the 70 million SME limits for knit and woven apparel are hit, the limits increase up to 200 million SMEs;
- Duty-free treatment for apparel wholly assembled or knit-to-shape in Haiti with between 50 percent and 60 percent value from Haiti, the United States, a U.S. free trade agreement partner or preference program beneficiary, or a combination thereof; this preference is currently set to expire in 2030;
- Duty-free treatment of knit or woven apparel under a “two for one” earned import allowance program: for every two SMEs of qualifying fabric (sourced from the United States or certain trade partner countries) used to produce exports for the U.S. market in Haiti, one SME of non-qualifying fabric can also be used;
- Duty-free treatment for certain brassieres, luggage, headgear, and certain sleepwear; and
- Permission for Haitian goods to enter the United States duty-free if shipped either directly from Haiti or through the Dominican Republic.
More information on these programs is available from the U.S. Department of Commerce, Office of Textiles and Apparel (OTEXA).
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.
To date, Haiti has issued free trade zone licenses for the following areas:
- FTZ de Trou du Nord, the first agricultural free trade zone, in North East department.
- FTZ CODEVI in the northeastern city of Ouanaminthe, North East department, where a Dominican company, Grupo M, manufactures clothing for a variety of U.S. companies and rents factory space to several American and foreign companies.
- FTZ Port Lafito: in Douillard, Cabaret, West Department. Lafito is the home of the Haiti’s only Panamax seaport.
- FTZ Hispaniola in the Route 9 Cité Soleil area of Port-au-Prince.
- FTZ SIDSA in the Tabarre area of Port-au-Prince.
- FTZ de Digneron: in the Croix-des-Bouquets area of Port-au-Prince.
- FTZ Santo Dujour located in the Croix-des-Bouquets area of Port-au-Prince.
- FTZ HEH Les Palmiers in the Carrefour area of Port-au-Prince.
- FTZ Balan in Ganthier, West Department.
- FTZ Savane-Diane, an agro industrial free trade zone in Artibonite Department.
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, an entity 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 tourism vehicles;
- 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.
In October 2024, a new general code is expected to be applied revising some of these exemptions, most notably reducing tax exemptions.
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.
Resources
Additional information can be found at:
www.brh.ht
https://www.whitehouse.gov/briefing-room/
https://www.answers.com/redirectSearch?query=lom-convention&filter=all