Haiti: Legislative Responses to the Food Crisis and Related Development Challenges

Haiti: Legislative Responses to the Food
Crisis and Related Development Challenges
Clare Ribando Seelke and J. F. Hornbeck
Foreign Affairs, Defense, and Trade Division
Summary
Haiti faces several interrelated challenges, the most immediate being a lingering
food crisis that in April 2008 led to deadly protests and the ouster of Haiti’s prime
minister. Haiti also suffers from a legacy of poverty, unemployment, and under-
development that is compounding security problems for its new and fragile democracy.
On May 23, 2008, the Bush Administration announced that it would send an additional
$25 million in emergency food aid to Haiti, bringing its total emergency contribution to
$45 million. In late June 2008, Congress appropriated $1.2 billion in FY2008 and
FY2009 supplemental assistance for P.L. 480 food aid in the FY2008 Supplemental
Appropriations Act, H.R. 2642 (P.L. 110-252). Haiti is one of ten priority countries
likely to receive a portion of that assistance. In June 2008, the House and Senate also
passed the Food, Conservation, and Energy Act of 2008 (H.R. 6124/P.L. 110-246), the
Farm Bill. Title XV includes the Haitian Hemispheric Opportunity through Partnership
Encouragement (HOPE) Act of 2008, which provides tariff preferences for U.S. imports
of Haitian apparel, its largest export sector. This report will not be updated.
Background
Haiti has had a long, difficult history highlighted by prolonged poverty, political
instability, and underdevelopment resulting in a politically fragile state with the lowest
standard of living in the Western Hemisphere. With the assistance of the United Nations
Stabilization Mission in Haiti (MINUSTAH) and large amounts of international aid, Haiti
has been attempting to establish a foundation for longer-term economic development.
Security issues have presented the primary risk to stability, while restoring economic
growth, investment, employment, and access to basic social services have been the major¹

and equally formidable challenges to sustainable development.
¹ For a summary of political events, see CRS Report RL32294, Haiti: Developments and U.S.
Policy Since 1991 and Current Congressional Concerns, by Maureen Taft-Morales and Clare
Ribando Seelke. For an analysis of obstacles to Haiti’s democratization, see Fatton, Robert Jr.
Haiti’s Predatory Republic: The Unending Transition to Democracy. Boulder: Lynne Reinier
Publishers. 2002.

Since assuming his second non-consecutive term of office in May 2006, President
René Préval has emphasized the importance of rebuilding democratic institutions and
establishing conditions for private investment to create jobs. The success of his
government will depend largely on its ability to improve security and socioeconomic
conditions in Haiti, a country in which 76% of the population lives on less than $2 a day.
During his first two years in office, security conditions have improved, but Haitians have
seen their already substandard living conditions deteriorate further with the rise in global
food prices and recent devastation by a series of hurricanes. In a country where more than
half of the working age population is unemployed, even many of those who have jobs do
not earn enough to provide their families with more than one meal a day.
Steeply rising food prices and resulting riots in Haiti were a catalyst for action by
Congress and the Bush Administration. The 110^th Congress responded directly to Haiti’s
immediate food needs, but has also taken the opportunity to advance legislation on other
fronts it deems critical for Haiti’s longer term development. In April 2008, the House
unanimously passed an amendment to the Jubilee Act (H.Amdt. 993 to H.R. 2634) that
recommends immediate cancellation of Haiti’s outstanding multilateral debts. In June

2008, the House and Senate passed the Food, Conservation, and Energy Act of 2008 (H.R.

6124/P.L. 110-246), the Farm Bill. Title XV includes the Haitian Hemispheric
Opportunity through Partnership Encouragement (HOPE) Act of 2008, which gives trade
preferences to U.S. imports of Haitian apparel. In late June 2008, Congress amended the
Mérida Initiative, an aid package for Mexico and Central America that was part of the
FY2008 Supplemental Appropriations Act, H.R. 2642 (P.L. 110-252), to include
counternarcotics funds for Haiti.² Some Members of Congress have also urged the
Administration to grant temporary protected status (TPS) for Haitian immigrants living
in the United States (H.R. 522). Collectively, these efforts form the basis for a
multifaceted congressional response to Haiti’s stability and development challenges.
Haiti’s Food Crisis
Rising food prices are having economic and political effects around the world, but
especially among poor people in low-income developing countries like Haiti.³ Prices for
basic food commodities in Haiti, the vast majority of which are imported, have risen by
an average of 30-40% over the last year. In early April 2008, weeks of protests against
rising food prices turned violent, with at least six people killed, including one U.N.
peacekeeper. Haitians were reportedly frustrated by the Préval government’s lack of
action and protests continued until the President announced a plan to partially subsidize
the cost of rice. On April 12, Haiti’s Prime Minister resigned after the Haitian Parliament
accused him of mishandling the government’s response to the food crisis.
Since then, the Haitian Parliament rejected two Préval nominees for Prime Minister
on technical grounds, before ratifying Michele Pierre-Louis, who was sworn in on
September 6, 2008. Nonetheless, the parliament, comprising 19 political parties,
continues to be a fractious body, creating a serious governance challenge. Some

² See CRS Report RS22837, Merida Initiative: U.S. Anticrime and Counterdrug Assistance for
Mexico and Central America, by Colleen W. Cook and Clare Ribando Seelke.
³ For more information on the effects of rising food prices, see CRS Report RL34478, Rising
Food Prices and Global Food Needs: The U.S. Response, by Charles E. Hanrahan.

observers have warned that, should conditions not improve, supporters of ousted President
Jean Bertrand Aristide may push for his return.⁴ Aristide’s last government (2001-2004)
was marred by tension and violence, and his departure from office led to the introduction
of U.N. forces to stabilize the country’s security situation.
To overcome the current crisis, observers maintain that President Préval will have
to solidify his governing coalition, a formidable task, and secure significant support from
the international community. The World Bank is providing $10 million in grant funding,
and the IDB is reportedly providing a $24.5 million grant to Haiti. Emergency assistance
from individual donor countries has increased significantly in recent weeks, particularly
since the U.S. and Canadian governments announced major pledges to the World Food
Program (WFP) for its efforts in Haiti. The WFP has received 49% of the support
estimated to be needed over the next two years to support the Haitian government’s
efforts to strengthen social safety nets and create food price stabilization programs.⁵
Administration Response. The Bush Administration initially responded to the
food crisis in Haiti by redirecting $6.5 million in development assistance funds to support
President Préval’s plan to subsidize the cost of rice ($1 million) and to create short-term
employment programs ($5.5 million). Haiti had already been allocated a regular
appropriation of approximately $234 million in U.S. assistance in FY2008, including⁶
some $34 million in P.L. 480 Title II food aid. The FY2009 request for Haiti was for
roughly $246 million, including $35.5 million in P.L. 480 food assistance. On April 14,
2008, President Bush directed the Secretary of Agriculture to draw down the Bill Emerson
Humanitarian Trust by $200 million to help meet global emergency food needs.⁷ USAID
has indicated that it will use that $200 million worth of commodities plus an additional
$40 million in emergency P.L. 480 Title II food aid to assist 10 priority countries in
FY2008, including Haiti. The food aid will be distributed by the WFP and private
voluntary organizations. On May 16, 2008, USAID announced that it would provide $20
million worth of emergency food aid to Haiti, and on May 23, 2008, USAID pledged an
additional $25 million to support the WFP’s programs in Haiti.⁸
Congressional Emergency Food Aid Response. In late June 2008, Congress
appropriated $1.2 billion in FY2008 and FY2009 supplemental assistance for P.L. 480
food aid in the FY2008 Supplemental Appropriations Act, H.R. 2642 (P.L. 110-252).
Members from both the House and Senate have asked the Administration to provide Haiti

⁴ “Haiti Politics, On a Knife’s Edge,” Economist Intelligence Unit, April 15, 2008; “Hungry for
Change in Haiti,” Christian Science Monitor, April 22, 2008.
⁵ Nicole Gaouette, “Emergency Funding For Latin America Announced,” Los Angeles Times,
May 28, 2008; World Food Program, “Haiti Financial Resource Status,” June 2, 2008.
⁶ P.L. 480 Title II authorizes the U.S. Agency for International Development (USAID) to
distribute U.S. agricultural commodities for emergency relief and for use in development
programs.
⁷ The Bill Emerson Humanitarian Trust is a reserve of commodities and cash authorized under
P.L. 105-385 that can be used to meet unanticipated humanitarian food aid needs in developing
countries or when U.S. domestic supplies run short.
⁸ USAID Press Release, “USAID Announces Additional Emergency Food Assistance for Haiti,”
May 23, 2008.

with no less than $60 million in emergency supplemental food assistance. The additional
food aid could be used to support the Préval government’s effort to subsidize the cost of
rice and WFP programs in Haiti, including communal kitchens and school feeding
programs. Haiti, however, will have to compete for food aid allocations with other larger
countries that also have pressing needs, such as Afghanistan and Sudan.
While responding to Haiti’s emergency food needs is the immediate priority, some
advocates have urged Congress to consider funding programs to promote agricultural
development in Haiti as a long-term solution to the country’s food insecurity. They have
recommended U.S. support for new initiatives aimed at diversifying food production and
supporting agricultural, conservation, and infrastructure projects.⁹ Many analysts also
point to the large Haitian diaspora as a possible avenue to promote rural development
projects, possibly through short-term consultancies with the Haitian government.
The HOPE Act: Trade Preferences for Export Promotion
To assist Haiti with rebuilding its economy by encouraging investment and job
creation in the once vibrant apparel sector, the 109^th Congress passed the Haitian
Hemispheric Opportunity through Partnership Encouragement in December 2006 (HOPE
I). The act provided duty-free treatment for select apparel imports from Haiti that are
made in part from less expensive third country (e.g. Asian) yarns and fabrics, provided
Haiti meets eligibility criteria related to labor, human rights, and anti-poverty policies.
Early assessments of HOPE I were disappointed in the progress made. To enhance the
effectiveness of these provisions, the 110^th Congress expanded them in June 2008 when
it passed the Food, Conservation, and Energy Act of 2008 (H.R. 6124/P.L. 110-246) —
the Farm Bill, Title XV of which includes the Haitian Hemispheric Opportunity through
Partnership Encouragement Act of 2008 (HOPE II).¹⁰
Support for the duty preferences recognizes the dominant role of the U.S. market as
the main destination for Haitian apparel exports. Apparel assembly is also Haiti’s core
export sector and essential for its economic well-being because it generates up to 80% of
the country’s foreign exchange used to finance Haiti’s large food import bill, among other
needs. In 2007, apparel constituted over 80% of Haiti’s total exports and 93% of exports
to the United States (81% knit, 12% woven articles), so the sector provides one potential
avenue for employment growth. The preferences also support textile firms in the
Dominican Republic, which have an expanding co-production arrangement with Haiti.
The HOPE Acts differ from other trade arrangements with the Caribbean that
emphasize apparel benefits. Unlike apparel provisions in the Caribbean Basin Trade
Partnership Act (CBTPA), of which Haiti is a beneficiary country, and the Dominican
Republic-Central America-United States Free Trade Agreement (CAFTA-DR), which
does not include Haiti, those in the HOPE Acts permit duty-free treatment for apparel
imports in limited quantities assembled or knit-to-shape in Haiti with inputs from third-
party countries, or those outside the region that are not in a trade arrangement or

⁹ “Deforestation and Failing Agricultural Production in Haiti,” interview with Dr. Robert
Maguire, Chicago Public Radio, April 28, 2008.
¹⁰ For a detailed discussion, see CRS Report RL34687, The Haitian Economy and the HOPE Act,
by J. F. Hornbeck.

agreement with the United States. The competitive advantage to Haitian firms derives
from their ability to use less expensive Asian inputs and still receive duty-free treatment.
To the extent that this advantage is in place for an extended period of time, it is intended
to encourage increased investment in the apparel assembly business in Haiti, contributing
to growth in output, employment, and exports.
HOPE I provided three major tariff preferences for limited amounts of articles
imported directly from Haiti: (1) quotas for the duty-free treatment of apparel articles that
meet the regional value-added content rule (50% rising to 60%), effectively allowing the
remaining portion of inputs to be sourced from outside the region; (2) additional quotas
for duty-free treatment of a limited amount of woven apparel that cannot meet the 50%-
60% value-added rule (allowing all inputs for these articles to be sourced from anywhere
in the world); and (3) a single transformation rule of origin that allows for duty-free
treatment of brassieres made from components sourced anywhere in the world, provided
the garments are cut and sewn or otherwise assembled completely in Haiti, the United
States, or both.
HOPE I, however, did not result in dramatic growth in Haitian textile exports to the
United States, inhibited by the limited time frame and complicated rules of origin.
Further, U.S. textile producers objected to the rules, contending that because they permit
use of third-party fabrics and other inputs, they effectively displace jobs in the United
States and the Caribbean with those in Asia. As an alternative, the industry suggested
allowing preferences only for goods no longer produced in the Western Hemisphere. U.S.
textile producers also found the rules of origin to be vague and difficult to enforce, and
raised concern that the tariff preferences could divert apparel production to Haiti from
countries in the region that are partners to U.S. reciprocal trade agreements.
Proponents of the HOPE II responded that it would clarify rules of origin and
simplify other implementation problems. They further argued that the preferences are
quantitatively limited, apply to a very small portion of U.S. apparel imports, and are in
place for only a specified period of time, presenting little threat to larger U.S. and regional
textile producers. Support for enhancements in HOPE II rested on arguments that these
benefits outweighed potential costs and therefore would be a constructive part of an
ongoing multifaceted response to Haiti’s development needs.
The HOPE II Act enhances the tariff preferences by extending them for 10 years
through September 30, 2018, making the rules more flexible and simpler, and expanding
duty free treatment for U.S. apparel imports wholly assembled or knit-to-shape in Haiti.
Specifically, HOPE II: (1) maintains the value-added rule in HOPE I, freezing the cap on
total apparel imports and keeping the original five-year sunset provision because the rule
was little used and is highly complicated; (2) increases the cap for select woven apparel
imports; (3) provides a new cap for select imports of knit apparel, with significant
exclusions; (4) adds a new uncapped “3 for 1” earned import allowance (EIA) that allows
duty-free treatment of imports made from qualifying inputs (e.g. fabrics made from U.S.
or countries a party to U.S. trade agreements) and articles made from non-qualifying
inputs (e.g. from Asian fabrics) in a 3 for 1 ratio; (5) includes a new uncapped benefit for
apparel using non-U.S. fabrics deemed to be in “short supply,” (6) expands the single
transformation rule from brassieres to apparel articles covered under CAFTA-DR,
headgear, and select sleepwear, luggage, and handbags; and, (7) allows for direct
shipment of apparel articles sent from Haiti to the Dominican Republic for finishing,

reducing transportation costs and lead times incurred under the HOPE I requirement that
articles be returned to Haiti for direct shipment to the United States. HOPE II also
requires that Haiti create a new apparel sector monitoring program (Labor Ombudsman)
to ensure compliance with internationally recognized core labor standards.¹¹
Debt Relief
Some Members of Congress also pushed to provide immediate debt relief to Haiti
to help the Préval government free up limited fiscal resources to address the food crisis.
According to the Haitian Central Bank, Haiti’s foreign public debt totals roughly $1.7
billion, a large portion of which is owed to multilateral institutions such as the World
Bank, IDB, and International Monetary Fund (IMF). A March 2008 IMF report projects
that the Haitian government will make debt service payments of roughly $71.7 million in
2008.¹² On April 16, 2008, the House unanimously passed an amendment to the Jubilee
Act (H.Amdt. 993 to H.R. 2634) that recommends immediate cancellation of Haiti’s
outstanding debts to the international financial institutions. A companion bill (S. 2166)
has been introduced in the Senate. Hearings were held, but the bill is still in committee.
The Jubilee Act seeks to change multilateral lending practices and cancel debt for many
low-income countries.
Critics charge that providing immediate cancellation of Haiti’s debt is probably
unnecessary because Haiti is already advancing through the Heavily Indebted Poor
Countries (HIPC) debt relief process. They assert that Haiti, similar to other heavily
indebted countries, should be encouraged to adopt sound reforms and policy changes that
will (hopefully) help it avoid future excessive indebtedness. Providing Haiti with
unconditional debt relief, they argue, would encourage the Haitian government to increase
borrowing. In November 2007, the Haitian government published a Poverty Reduction
Strategy in line with IMF and World Bank recommendations. Many observers had
predicted that Haiti would be able to meet the so-called “completion point” required for
debt relief by late 2008 or early 2009, but the current crisis could delay this outcome.
Proponents counter that given Haiti’s immediate food crisis, the Secretary of the
Treasury should urge the multilateral donors to cancel Haiti’s foreign debt immediately
because Haitian public finances could be better used to subsidize food purchases that are
desperately needed right away. Immediate assistance would also accelerate debt relief
anticipated under the HIPC program, but which may not be forthcoming soon because
Haiti is unlikely to meet the remaining conditions for debt relief in the near future.

¹¹ For details on the HOPE Acts, see CRS Report RL34687, The Haitian Economy and the HOPE
Act, by J. F. Hornbeck.
¹² International Monetary Fund, “Haiti: Country Report No. 08/117,” March 2008.