4^th of 7 articles

“Haiti Stakes Recovery on Clothiers” - Wall Street Journal, May 14, 2010

“Free Trade Zones should be one of the spearhead’s to launch reconstruction.” - Jean-Alix Hecdivert, director of the government Free Trade Zone Office (FTZO)

Beginning forty years ago, Haitian authorities and their backers pinned their hopes – in part – on Free Trade Zones (FTZs) and assembly jobs. [See also Why is Haiti “attractive?” - Story #3]

More recently, the Haitian government and its backers have nuanced their approach. The 2010 Presidential Commission on Competitiveness report, Shared Vision for an Inclusive and Prosperous Haiti, named textiles as one of five “priority” sectors. (The other four are: animal husbandry, tourism, fruits and tubers, and construction.)

But in the wake of the earthquake, and with the advent of the US HELP law which extends the HOPE II benefits, the main focus appears to be on FTZs and the assembly industry sector. The FTZO has received many requests for new authorizations, Hecdivert told Haiti Grassroots Watch said.

“We are working on all of these projects because the focus is: create the most jobs possible in the shortest amount of time,” he added.

Echoing Hecdivert, a key figure in the new administration said the government is basically banking on “a massive influx of foreign capital.” In a September 12 article in Le Nouvelliste, Laurent Lamothe, head of Martelly’s new Council on Economic Development and Investments, said “the biggest need for the Haitian population is job creation."

Map showing approximate locations of existing or planned industrial and
FTZ parks. HGW

According to HGW’s interviews with the FTZO, and the evidence culled from dozens of documents and reports, there are over a half-dozen new FTZs and other assembly industry-related projects in the works. These include FTZs, Free Trade Industries (essentially an FTZ that the size of the building) and “Special Economic Zones” which are like expanded FTZs but with some non-FTZ businesses allowed in the region. One of the biggest projects is the Industrial Park of the North Region (Parc Industriel du Region Nord - PIRN) [See also The Case of Caracol - Story #6]. Another large project – although not much is known about it – is a giant combination of FTZs and other initiatives some journalists are calling the “North Pole Initiative.”

Despite numerous requests to FTZO officials, Haiti Grassroots Watch (HGW) was not able to obtain definitive paperwork on all of the projects, nor a map of approved FTZs. Below is an incomplete list of existing or potential FTZs and related projects.

Charity or profit?

The language in the press releases and on the websites announcing the millions in loans and grants for the expansion of the textile assembly industry constantly reinforces the idea that relocation of factories to Haiti is practically a charitable enterprise.

The Interim Haiti Recovery Commission says the project is in the “job creation” sector, making it sound almost like a social service. Billionaire George Soros’ investment group hyped that their participating in the West Indies Free Trade Zone would “improve the standard of living for 300,000 residents.” A Citi news release on its $250,000 grant to CODEVI congratulated itself for helping “create 1,400 new full time jobs for Haitians over the next 12 months.”

But a look at what the buying power of a Haitian textile worker’s salary dispels the myth that assembly jobs contribute to a significantly improved “standard of living.” [See Salaries in the “new” Haiti - Story #1]  And in any case, an investment is an investment – the objective is to make a profit. That is why financiers like Soros and Korean textile giants like Sae-A Trading are in Haiti, not in Alabama or France.

The jobs “created” in Haiti most likely already existed as jobs in another country before moving to the home of the hemisphere’s lowest wage. Haitian laborers are likely replacing more expensive laborers, and are basically making it possible for clothing labels like GAP, Banana Republic, Gildain, Levis and others to make even more profits by shutting down factories based in countries with better salaries and better worker protections.

A look across the border is instructive. Between 2004 and 2008, as wages rose a tiny bit, and a preferential trade agreement came to an end, the Dominican Republic lost 82,000 assembly jobs. [For more information, see Anti-union, pro-“race to the bottom,” Story #2 and What makes Haiti “attractive?” Story #3]

In the US, during about the same period (between 2004 and 2009), over 260,000 textile workers lost their jobs, according to the US Bureau of Labor Statistics. US sewing machine operators – the least trained textile workers – earned about $9.50 an hour in 2008 (the most recent figures available). In Haiti they earn about $5.90 a day.

Manufacturers do not offshore their jobs in order to “jumpstart” industry or “improve the standard of living.”  They do it to make a profit. As Canadian company Gildan Activewear said in a recent newspaper article, the savings offered is “too good to pass up.”

According to a 2009 study commissioned by the Haitian government and paid for by the World Bank, Haitian assembly plants seem to be making a good profit, also. At that time were netting between 8 and 67 cents profit per piece, with factories stitching up to 1.7 million items per month.

Wage comparison chart, from the government-commissioned
study. Bringing HOPE to Haiti's Apparel Sector

Not all bad

Industrialization brings some benefits. Haitian workers get training, industrial parks are built, and there is likely some transfer of technology. Electricity, water and other infrastructure is usually improved in the FTZ areas. But the industry is volatile, and at any moment a textile company can pick up and leave. 

For these and other reasons, Haitian economist Camille Chalmers is thinks the current approach – marketing Haiti’s sweatshop-wage salaries – is “a big error.”

“Basing the country’s development on assembly industries is a big error, it will lead us into a hole, into dependency. We’ve already experienced it, we know what it does,” he told HGW.

While Chalmers admitted that the areas with FTZs have slightly better infrastructure than the rest of the country, and that workers use their meager wages to buy food, the overall effects are minimal and do not help the economy’s productive forces grow. 

“The sector is practically cut off from the rest of the country. You get some factories and some salaries, and everything else is imported,” he added.

“it’s completely wrong-headed and it won’t help the country get out from under its economic crisis,” the economist concluded. “”People need to know what FTZs are, what has happened in Mexico, or Honduras, so they don’t think these things will ‘save’ us.”

How have other countries fared?

See Stepping Stone or Dead End? - Story #5

Learn more about the PIRN. See The Case of Caracol - Story #6

Return to the Introduction and the video