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a847: "(k)nit-picking": Dominican Republic and Haiti in U.S. reporton Caribbean Basin Initiative, December 2001 (fwd)

From: Stuart M Leiderman <leidermn@cisunix.unh.edu>

excerpts from the
Fourth Report to Congress on the Operation of the
Caribbean Basin Economic Recovery Act
December 31, 2001
Prepared by the Office of the
United States Trade Representative

complete report at <http://ustr.gov/reports/2002cbi-final.pdf>

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p 3


The trade programs known collectively as the Caribbean Basin Initiative
(CBI) remain a vital element in the United States economic relations with
its neighbors in Central America and the Caribbean. The CBI is intended to
facilitate the economic development and export diversification of the
Caribbean Basin economies. Initially launched in 1983 through the
Caribbean Basin Economic Recovery Act (CBERA), and substantially expanded
in 2000 through the U.S.-Caribbean Basin Trade Partnership Act (CBTPA),
the CBI currently provides 24 beneficiary countries with duty-free access
to the U.S. market for most goods.

The CBI was initially envisioned as a program to facilitate the economic
development and export diversification of the Caribbean Basin economies.
During the nearly two decades since its inception, however, it has become
clear that the CBI represents important benefits for the United States,
as well as beneficiary countries. U.S. exports to the CBI region more than
tripled between 1983 and 2000, totaling $20.7 billion in 2000. <snip>

p 4

Chapter 1


Key Product Eligibility Provisions

CBERA Preferences

The Caribbean Basin Economic Recovery Act of 1983 (CBERA) allows the U.S.
President to grant unilateral duty-free treatment on U.S. imports of
certain eligible articles from beneficiary countries. In order to receive
benefits, products must: a) be imported directly from a beneficiary
country into the U.S. customs territory; b) contain a minimum 35 percent
local content of one or more beneficiary countries; and c) be wholly the
growth, product or manufacture of a beneficiary country or be
substantially transformed into a new or different article.

In 1990, the CBERA was amended to modestly increase market access to the
United States, and was made permanent. <snip>

p 5

Under the CBTPA, unlimited duty- and quota-free treatment is provided for
apparel assembled in the CBI from U.S. fabrics formed from U.S. yarns and
cut in the United States.  If the U.S. fabrics used in the production of
such apparel are cut into parts in CBTPA countries rather than the United
States, the apparel must also be sewn together with U.S. thread. Duty- and
quota-free  treatment is also available for certain knit apparel made in
CBTPA beneficiary countries from fabrics formed in the Caribbean
Basin region, provided that U.S. yarns are used in forming the fabric.
This regional fabric benefit for knit apparel is subject to an annual
quantitative limit, with a separate limit provided for T-shirts. The
limits are subject to annual growth rates of 16 percent through September
30, 2004. Duty/quota free treatment is also be available for certain
brassieres, certain textile  luggage, apparel made in the CBI from fabrics
determined to be in short supply in the United States, and designated
hand-loomed, handmade, or folklore articles. <snip>

p 28


Population: 8,581,477
Per Capita Income: $2,100

Department of Commerce 2000 Trade Statistics:
	U.S. Exports: $4,351,913,000
	U.S. Imports: $4,378,235,000
	U.S. Trade Balance: ($26,322,000)

Economic Overview:

In late 2001, the Dominican Republic was experiencing the continuation of
an economic slowdown that began in 2000. The Dominican Central Bank
reported 8.0 percent economic growth for 1999, and 7.8 percent in 2000.
Due in part to a slowing U.S. economy, Dominican economic growth shrank
sharply to zero percent in the first half of 2001, with a prediction of 3
percent growth for the entire year. Financial sector problems that
developed in the early 1990s have not completely faded, and interest rates
remain high.

The Dominican Republic has long been the leading user of CBI benefits.
Most participants in the Dominican apparel sector recognize that the
enhanced CBTPA benefits have created new opportunities for growth, and new
investments have been made in that sector. However, the initial impact of
the CBTPA was considered disappointing by some in the Dominican private
sector, due in part to shrinking demand from U.S. customers and a
perception of greater cost competition from some Central American
producers. <snip>

p 29

Provision of Internationally Recognized Worker Rights:

Labor law in the Dominican Republic protects workers rights of association
and most workers freely exercise this right. About 10% of the workforce is
organized into 190 unions and four national confederations.  The Ministry
of Labor has made concerted efforts in recent years to improve the
enforcement of the country's labor code, although observance of legal
requirements by many companies, including in the extensive free trade
zone sector, continues to fall short. While workers in free trade zones
are entitled to the same rights as workers elsewhere in the country, there
are allegations that employers frequently fire zone workers who
attempt to organize into unions.

Collective bargaining agreements exist in only a few companies, and the
ILO considers that the legal requirements to engage in collective
bargaining are excessive and impede the exercise of this right.

p 30

Though the law prohibits the employment of children under age fourteen,
many children work, primarily in the informal economy, due to the high
poverty rate. <snip> Social Security Institute establishes workplace
health and safety standards, and the Ministry of Labor implements them.
Enforcement of these standards is weak overall, however.  Working
conditions are considered to be especially poor in the sugar cane sector.
Employment in this sector has declined significantly since privatization
in 1999 and the Dominican Human Rights Committee has reported that
workers are required to work longer hours at less pay and with fewer

Commitments to Eliminate the Worst Forms of Child Labor:

<snip> In part because of the traditional use of children as agricultural
workers alongside their parents, the government in 1997 prohibited
individuals entering the Dominican Republic as agricultural laborers
(mainly from Haiti) from bringing either their spouses or their children.
Since then, employers have been required to repatriate employee families
found in violation of the law or face prosecution. Non-government
organizations continue to report, however, that there continues to be
Haitian child labor in the sugar cane sector.

Counter-Narcotics Cooperation:

The Dominican Republic is classified as a major transshipment country for
narcotics moving from South America into Puerto Rico and the territorial
United States. <snip>

p 42


Population: 6,964,549
Per Capita Income: $510

Department of Commerce 2000 Trade Statistics:
	U.S. Exports: $562,520,000
	U.S. Imports: $296,713,000
	U.S. Trade Balance: $265,807,000

Economic Overview:

Hait's progress in fulfilling the eligibility criteria of the CBI
programs has been deliberate but slow. Weak institutions, lack of
resources, and a series of political crises have diminished the
governments capacity to adjust trade regulations, enforce existing laws,
or otherwise take effective action in the areas covered by the CBI
eligibility factors. The CBI is promoting Hait's only current
significant engine for economic production, the assembly sector, and
participants in this sector have displayed a heightened awareness of CBI
eligibility criteria, including those regarding labor practices.

Economically, Haiti remains the poorest and least developed country in
the Western Hemisphere. The United Nations has consistently ranked it as
one of the worst in terms of health education, and other measures of human
development. Economic growth (1.2 percent in 2000, falling to a projected
1 percent in 2001) has not kept pace with population growth. Inflation and
unemployment (roughly 65 percent) remain high. Seventy-five percent of the
population lives below the poverty line; literacy stands at about 50
percent. An irregular parliamentary election in May 2000 has resulted in
the suspension of hundreds of millions of dollars in bilateral and
multilateral economic assistance.

Commitment to WTO and FTAA:

Haiti has a generally open trade regime, but successive political
crises have prevented the national legislature from bringing Haiti into
technical compliance with many WTO obligations. The Haitian Parliament has
not ratified legislation that would make the country a full

p 43

member of the Caribbean Community (CARICOM). While Haiti is represented
among the 34 countries participating in the FTAA process, the level of
ongoing participation in the work of the various negotiating groups has
been minimal.

Protection of Intellectual Property:

Hait's major laws governing intellectual property protection date
from the early- to mid-20th century and have not been updated to reflect
the provisions of the TRIPS Agreement. Limited manufacturing capacity
means that piracy activity is limited, although illegal broadcasts of
copyrighted motion pictures occur occasionally on Haitian television, in
spite of laws prohibiting such broadcasts. Weak judicial institutions
result in poor enforcement and erode the protection offered by current

Provision of Internationally Recognized Worker Rights:

The Constitution and the labor code provide the right of free association
to both public and private sector workers, and nine union confederations
represent about 5% of Haitis 2.8 million workforce. Persistent high
unemployment and anti-union sentiments among factory owners, and some
workers, has limited successful organizing activities by unions. Though
the law prohibits reprisals against workers who engage in union
activities, unions report that such reprisals frequently occur and the law
is poorly enforced. Collective bargaining is virtually non-existent and
employers usually set wages unilaterally. Workers in export processing
zones enjoy the same rights as workers elsewhere in the country, though
their working conditions are usually better than outside the zones. There
is some evidence that the few Haitian companies using CBI benefits are
more sensitive to labor  standards, due in part to an awareness of the
eligibility criteria related to the CBI preferences.

The minimum employment age is fifteen (twelve for domestic employment),
and minors are prohibited from working in dangerous conditions and working
at night in industrial enterprises. Fierce adult competition for the few
available jobs in the industrial sector ensures that child labor is not a
factor in the formal economy, but many children work in the rural and
informal sectors. Some young children are forced to work as unpaid
domestic servants. Though the law provides for free and compulsory
primary education, about 40% of children never attend school due to
extreme poverty, and are further dissuaded by nominal education fees.

A national minimum wage has been set, but does not apply to domestic work,
where many women and children are employed, or in the agricultural sector,
where the majority of the population engages in subsistence agriculture.
The standard workday is eight hours, and the standard workweek is
forty-eight hours. Safety and health standards are generally enforced in
the formal industrial sector, but are considered problematic elsewhere,
particularly in construction.

Commitments to Eliminate the Worst Forms of Child Labor:

Haiti has not ratified ILO Convention 182. The country has signed a
Memorandum of Understanding with the ILO International Program for
the Elimination of Child Labor (IPEC) and is working with the ILO on
various programs aimed at phasing out exploitative child labor. The legal
minimum age for employment is 15 and the law prohibits

p 44

minors from working in dangerous conditions and at night in industrial
enterprises. However, child labor does exist in the informal sector and in
agricultural production. The most widespread exploitation of children
occurs through the common and widely accepted practice of wealthier
families using poor provincial children as unpaid domestic servants. There
is growing awareness in Haiti of the cruelty of this practice, but lack of
government enforcement efforts and resources mean that it is likely to
persist for some time.

Counter-Narcotics Cooperation:

Hait's weak law enforcement institutions have not permitted the kind of
efforts necessary to meet stiff requirements for counter-narcotics
certification. The country received a national interest waiver to the
certification requirements in March 2001.

Implementation of the Inter-American Convention Against Corruption:

Hait's parliament has ratified the IACAC, but notification has yet to be
published in the public record. In April 2001, the parliament passed
legislation to strengthen anti-money laundering measures. Corruption
remains widespread in most aspects of Haitian economic and political life.

Transparency in Government Procurement:

Government procurement is limited due to a lack of funding. For small and
Haitian-funded contracts, procurement is generally biased towards insiders
and local firms. For large and externally-funded procurements, sealed
bidding procedures generally apply and the process is often more
transparent because of requirements imposed by providers of funds.

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Stuart Leiderman
Environmental Response