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Haitian Garment Industry in Limbo With CBTPA’s Renewal Uncertain

Industry associations are calling for the swift renewal of the Caribbean Basin Trade Partnership Act (CBTPA), which has helped U.S. businesses facilitate trade within the region—most notably, with Haiti.

The American Apparel and Footwear Association (AAFA), the Footwear Distributors and Retailers of America (FDRA), the National Retail Federation (NRF), the Council of Fashion Designers of America (CFDA), the Accessories Council and the Outdoor Industry Association (OIA) were among the groups to co-sign an open letter to United States Trade Representative (USTR) Ambassador Robert Lighthizer on Friday.

The correspondence lobbied for the renewal of the CBTPA, which is set to expire on Sept. 30. The legislation celebrated its 20th anniversary on May 18.

Since its inception in 2000, the CBTPA has been integral to forging strong trade relationships in the Caribbean Basin, the groups argued, and Haiti has emerged as the crown jewel of those efforts.

“Overall, CBTPA is structured in a fashion that reasonably balances the interests of U.S. textile manufacturers with those of textile and apparel manufacturers in the region,” the signatories wrote. “The CBTPA requires the use of U.S. or CBTPA-regional yarns and fabrics, which means Haiti, as the main country still participating in the CBTPA, has become an important export market for U.S. textiles.”

In conjunction with the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act, and the Haiti Economic Lift Program (HELP) Act, the CBTPA has increased U.S. exports. “Not only have these programs supported numerous U.S. textile, apparel, and footwear jobs,” they added, “but they have also supported economic development in the region, advancing key U.S. foreign, security, and immigration policy goals.”

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The industry partnership between the U.S. and Haiti has been measurably strengthened by the CBTPA, with American businesses relying on the country more than ever before for textiles and apparel—reducing dependence on China-made goods. In 2019, all of the imports of such products under the CBTPA came from Haiti, with total garment imports from the country growing more than 13 percent last year.

According to data from the Center for Facilitation of Investments, the CBTPA, HELP and HOPE Acts have also led to an explosion of jobs and economic growth in the country. In 2016, the apparel sector employed 41,000 workers, accounting for nearly one-tenth of Haiti’s GDP. By September 2018, that number had ballooned to 52,000 workers in apparel or textile-related jobs, with exports from the industry reaching $990 million.

According to the U.S. industry trade groups, benefits to both countries are now at risk as the clock runs down on the CBTPA, and its renewal remains in question.

“These concerns come on top of the considerable pain, costs, and uncertainty the industry is already trying to manage as a result of Covid-19 and the accompanying economic crisis,” the signatories wrote, adding that orders have already been placed for goods that will arrive after the legislation is due to expire.

Companies are bracing themselves for the reality that their orders could be subject to full duties, the groups said, which would put Haitian customers and partners—along with U.S. manufacturers and exporters—in a bind. As it stands, the coronavirus pandemic has already dealt heavy blows to the American apparel sector, fraying relationships with global suppliers.

Data from the International Trade Administration’s Office of Textiles and Apparel (OTEXA) reveals that both the volume and value of U.S. apparel imports from Haiti took a precipitous fall in the first half of 2020. Imports decreased by 33.65 percent to 128.37 square meter equivalents (SME), declining in value by 35.32 percent to $304.92 million.

Apparel made up 98 percent of those imports, which largely consisted of cotton and synthetic fiber tops.

“The CBTPA offers a great opportunity for companies looking to diversify their supply chains close to home, but time is running out for this critical program,” the groups wrote.

According to OTEXA, the transit time from Port-au-Prince and Cap-Haïtien to Port Everglades in Florida is just three days, making Haiti an attractive option for brands exploring near-shoring opportunities that would cut down on shipping costs, time and emissions. When goods arrive in Miami, customs procedures are accelerated due to Haiti’s participation in the electronic visa information system (ELVIS) of the U.S. Customs and Border Protection, which allows for speedy dissemination to retail distribution centers.

As U.S. companies continue to look for opportunities to diversify sourcing away from China due to ongoing tariff disputes, human-rights concerns and rising labor costs, partners like Haiti are becoming increasingly attractive options for American businesses.

The trade groups closed their missive with a plea to the USTR Ambassador to “convey support to Congress to renew this program—which has bipartisan, bicameral support—as soon as possible.”

Additional reporting by Arthur Friedman.