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TITLE:  HAITI ECONOMIC POLICY AND TRADE PRACTICES
DATE:  FEBRUARY 1994
AUTHOR:  U.S. DEPARTMENT OF STATE

                              HAITI

                     Key Economic Indicators
        (Millions of U.S. dollars, unless otherwise noted)


                                  FY1991    FY1992    FY1993 /1
Income, Production,
 and Employment

Nominal GDP (million gourdes) /1  13,000    13,752      n/a
Real GDP Growth (pct.) /1          -6.2     -12.6       n/a
Nominal GDP  /1                    1,699     1,513      n/a
By sector (percent of GDP):
  Agriculture                      28.42     30.00     32.40
  Energy and Water                  0.97      0.80      0.84
  Manufacturing                    13.09     12.54      8.69
  Construction                      6.24      4.90      5.56
  Commerce                         16.14     16.08     14.53
  Rents                             6.03      6.75      6.31
  Financial Services                0.15      0.13      0.15
  Other Services                   16.53     19.13      n/a
  Social Services                   3.80      3.97      n/a
Net Exports of
 Goods and Services                -9.60      n/a       n/a
Nominal Per Capita GDP
(U.S. dollars) /1                  257       225        n/a
Unemployment Rate (pct.)           40-50     50         n/a


Money and Prices

Money Supply (M2, pct. growth       4.2      27        34.15
Base Interest Rate  2/             16-22     12-18     14-20
Consumer Price Index  3/           20.6      20.1      27.20
Exchange Rate (gourdes per $)
  Official                          5         --         --
  Parallel                          7.66      9.09     12.43


Balance of Payments and Trade
(Millions of U.S. dollars)

Trade Balance                     -201.76   -202.43     n/a
  Exports                          198.72     74.72     n/a
  Imports                          400.48    277.15     n/a
U.S.-Haiti Trade
  Exports to U.S.  4/              316.1     122.9     151.9
  Imports from U.S. 4/             473.8     194.6     247.1
Trade Balance with U.S.           -157.7     -71.7     -95.2
Aid from U.S. (Obligations)         78.9      59.1      84.0
Aid from other Countries            n/a       n/a       51.5
External Public Debt  1/5/          750      788       830
Debt Service Payments (paid)         51.2     n/a         0
International Reserves (net)        -41.9     n/a       n/a

Sources:  Banque de la Republic d'Haiti, Institut Haitien de
Statistique et d'Informatique, USDOC, USAID and embassy
estimates.

1/  All 1993 figures and others noted are estimates based on
data available in November 1993.
2/  Figures are ranges of actual lending rates, not changes in
them.
3/  September to September.
4/  Merchandise trade - data from U.S. Dept. of Commerce on FAS
and customs basis, not adjusted for assembly export and
re-import.
5/  End of year, includes FY1991 official debt write-off by the
United States and France and accumulation of arrears.



1.  General Policy Framework

    Haiti has a predominantly agriculture-based,
market-oriented economy.  Historically its performance has been
strongly influenced by the United States, its major trading
partner and the largest donor of foreign assistance.

    Following the military's ouster of president Jean Bertrand
Aristide in September, 1991, the Organization of American
states imposed voluntary economic sanctions against Haiti to
help restore the democratic government.  The United States
suspended all but humanitarian aid to Haiti, froze Haitian
government assets in the United States and imposed a broad
trade embargo on the country.  These sanctions, though
suspended briefly between August 31 and October 19, 1993, are
still in effect.  Humanitarian donations as well as the export
of certain medical and food items (sugar, rice, beans, cooking
oil, wheat and corn flour, milk, and edible tallow) are allowed
under the trade embargo.  Articles for assembly, personal
hygiene items, school supplies and other goods of a
humanitarian nature, may also be traded on a case by case basis
under license from the Department of the Treasury's Office of
Foreign Assets Control.

    Fiscal policy:  For the past decade Haiti has run a public
sector deficit financed through central bank credit and
international aid.  The public sector deficit for fiscal year
1992 was estimated to be about five percent of GDP.  In fiscal
year 1990/91 the deficit was only about 2.7 percent of GDP,
after adding in external grants.  The growth of the deficit in
fiscal year (FY) 1992 was caused both by declining tax revenues
and the curtailment of foreign assistance.  After an
improvement during the brief tenure of president Aristide in
FY1991, government revenues declined by over 45 percent in real
terms in FY1992.  The decrease in receipts can be attributed to
the drop in economic activity which lowered both tax and tariff
revenues, but widespread tax evasion and the lack of transfers
from public enterprises aggravated the problem.  The de facto
regimes of the past two years were forced to cut government
expenditures and re-orient them toward salary payments which
accounted for over 80 percent of the Treasury's outlays by the
end of FY 1992.

    Monetary policy:  There is no financial market in Haiti. 
Under the sanctions imposed during the last two fiscal years,
the successive de facto governments have had little recourse to
foreign assistance and have relied on domestic credit, mainly
central bank financing, to cover the large fiscal deficit. 
Monetary policy has been conducted mainly through the
regulation of reserve requirements, though expansion of credit
to the public sector has also been accommodated by the central
bank.  Overall monetary growth was estimated at 27 percent for
FY1992 and 34 percent for FY1993.  The official inflation rate
for FY1992 was 20.1 percent as measured by the consumer price
index, but most reputable economists estimate inflation was
closer to 35 percent.  The official consumer price index rose
by 27.2 Percent in FY1993, but again, informal estimates place
inflation significantly higher.


2.  Exchange Rate Policy


    For decades, Haiti's currency, the gourde, was officially
tied to the U.S. dollar at a rate of five gourdes to one
dollar.  A parallel market in foreign exchange arose in the
early 1980's.  For several years, the official exchange rate
continued to hold for some transactions, such as disbursements
of official external loans, petroleum imports and public debt
service payments as well as a share of inward transfers and
export earnings.  Beginning in April 1991, the Government of
Haiti removed the surrender requirement on remittances and
transferred some public capital transactions to the free
market.  On September 16, 1991, the central bank ceased all
operations at the official rate, thereby unifying the exchange
system at the free floating market rate.

3.  Structural Policies

    Haiti is essentially a market-oriented economy.  Although
traditional economic interventionism remains, most visibly
through an array of state-owned enterprises, government's role
in the economy has been sharply reduced since 1986/87.  In the
few areas where the government has tried to control prices or
supplies, its efforts have been frequently undercut by
contraband or overwhelmed by the sheer number of minor
retailers.  Even when ex-factory prices on goods produced by
state-owned enterprises, such as flour and cement, were set by
the Government of Haiti, the final consumer paid prices
governed by levels of supply and demand.  Gasoline pump prices
and utility prices, which are more efficiently regulated, are
probably the only exceptions to the rule.

    The tax system is inefficient.  Direct taxes represent only
about 15 percent of receipts.  Moreover, tax evasion is
widespread.  Foreign trade receipts have fallen as a percentage
of total receipts due to the abolition of certain export taxes
and the embargo.  A value-added tax of ten percent is applied
across the board.


4.  Debt Management Policies

    Since the coup, Haiti has not serviced its external debt,
and arrears to the international financial institutions were 
estimated at about $53 million dollars as of end-December
1993.  Near the end of fiscal year 90/91, total external debt
stood at a relatively modest $848 million.  The bulk is on
concessional terms.  On the eve of the September 1991 coup, the
United States forgave an estimated $124 million in official
bilateral debt.  The embassy is not aware of any new foreign
debt acquired since that time.


5.  Significant Barriers to U.S. Exports

    The Haiti transactions regulations implementing the
President's Executive Orders No. 12775 and 12779 effectively
ban the export of most U.S. goods, technology and services to
Haiti.  In addition, the United Nations has imposed a mandatory
embargo on exports of petroleum products and arms to Haiti.  On
the Haitian side, average effective protection is high at
somewhat under 40 percent.  Only seven products require import
licenses: rice, corn, millet, beans, sugar, fifth quarters of
pork, and poultry parts.  However, these products readily come
in as contraband.


6.  Export Subsidies Policies

    The only practice resembling an indirect export subsidy is
the duty exemption available to semifinished products which are
processed locally and reexported.  Haiti is not a member of the
GATT Subsidies Code.


7.  Protection of U.S. Intellectual Property

    Infringement of intellectual property rights has not been a
significant issue in Haiti.  The economy produces a small
variety of products and much of what it manufactures is for
export to countries like the United States, which do not
tolerate open patent infringements.  Most manufactured goods
sold here are imported.  The most obvious example of
intellectual property rights infringement is in the handful of
video outlets where poor quality pirated videotapes outnumber
legitimate products by a wide margin.  Because legal
protections for patent or copyright holders are not vigorously
enforced, the potential for more extensive abuse of
intellectual property rights exists should Haiti's economy
improve significantly.


8.  Worker Rights

    a.   Right of Association

    The constitution and the labor code guarantee the right of
association.  Workers, including those in the public sector,
are specifically granted the legal right to form and join
unions without prior government authorization.  A union, which
must have a minimum of ten members, is required to register
with the Ministry of Social Affairs within 60 days of its
establishment.  Tripartite negotiations (labor, management, and
government), begun in 1986 to revise the labor code, concluded
in May, 1993.  The revised code (which has yet to be approved
by the legislature) recognizes the right to strike but
restricts the duration of certain types of strikes, as did the
previous code.  Under the new code, the Ministry of Social
Affairs must recognize workers' right to strike in each case
before the strike is legal.

    In 1993, the AFL-CIO filed a petition to remove GSP
benefits from Haiti for failure to provide internationally
recognized worker rights.  While the petition was accepted, no
action was taken due to the continued unsettled political state
of the country.

    b.   Right to Organize and Bargain Collectively

    Trade union organizing activities are protected by the
labor code, and those who interfere with this right may be
fined.  Employers, however, still routinely attempt to prevent
workers from organizing labor unions, and government
enforcement remains mostly ineffective.  Collective bargaining
has never been widespread in Haiti and was nonexistent in 1993
as in 1992.  The rapid deterioration of the economy has also
hurt union membership and organizing efforts.  For example, the
assembly sector, which had been one of the more organized
sectors of the economy, has experienced a 75 percent drop in
employment since 1991.  Even more dramatic declines in
employment have occurred in public enterprises, another sector
where unions were strongly represented.

    c.   Prohibition of Forced or Compulsory Labor

    The labor code prohibits forced or compulsory labor, but
enforcement of these provisions is practically nonexistent. 
Forced domestic labor by an estimated 109,000 children in
Haiti, called "restavek" in Haitian creole, continues.  These
children serve as unpaid domestic labor, work long hours,
receive poor nourishment, little or no education, and are
frequently beaten and sexually abused.  Local human rights
groups do not regard the plight of these children as a
priority.  The Justice and Social Affairs ministries of the
post-coup governments were equally silent on the issue.

    d.   Minimum Age for Employment of Children

    The minimum age for factory employment is 15 years.  Fierce
adult competition for jobs ensures that child labor is not a
factor in the industrial sector.  The "restavek" children
described previously are not remunerated for their labor beyond
room and board.  Children also work at odd jobs in both rural
and urban settings in Haiti to supplement family income. 
Enforcement of the law, which is the responsibility of the
Ministry of Social Affairs, has been criticized by the
International Labor Organization as inadequate.

    e.   Acceptable Conditions of Work

    A few weeks before the coup, parliament passed a new
minimum wage of 26 gourdes a day for workers in the industrial
sector.  Although technically it became law before the coup,
the legislation has never been published in the equivalent of
the federal register.  Many companies in the assembly sector
have adopted the new wage.  Even if it were widely applied, the
new minimum would not provide a worker and family with a decent
living.  Moreover, the majority of Haitians who work in the
agricultural sector must survive on considerably less than the
minimum wage.  The labor code sets the normal work day at eight
hours and the work week at 48 hours and establishes minimum
health and safety standards.  The government has not
systematically enforced these provisions.  These regulations
are somewhat better observed in the industrial sector, which is
concentrated in the Port-au-Prince area and is more accessible
to outside scrutiny.

    f.   Rights in Sectors with U.S. Investment

    Though workers in industries owned by Americans tend to be
better paid and enjoy better working conditions, there is no
formal difference in worker rights between those sectors where
U.S. capital is invested and those where it is not.




         Extent of U.S. Investment in Selected Industries

              U.S. Direct Investment Position Abroad
                on an Historical Cost Basis - 1992
                    (Millions of U.S. dollars)

Category                                    Amount

Petroleum                                                 4
Total Manufacturing                                      21
    Food & Kindred Products                     0
    Chemicals and Allied Products               0
    Metals, Primary & Fabricated                0
    Machinery, except Electrical                0
    Electric & Electronic Equipment             0
    Transportation Equipment                    0
    Other Manufacturing                        21
Wholesale Trade                                           0
Banking                                                   5
Finance and Insurance                                    -1
Services                                                  0
Other Industries                                          0

TOTAL ALL INDUSTRIES                                     29


Source:  U.S. Department of Commerce, Bureau of Economic
Analysis.

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