Haiti's Battle to Shake Off a Poor Reputation

An article appearing in the New York Times today (Earthquake Relief Where Haiti Wasn't Broken) paints a dim view of one of the largest and most ambitious regional investment projects in Haiti's history. The development in the North will not only transform thousands of lives, but also brings new opportunities to one of Haiti's poorest regions. While many may only know about the challenges we have faced since the earthquake in January 2010, we have long faced adversity and had been working vigorously to attract investors. And since the earthquake, the odds of succeeding have not been on our side. We need to provide affordable housing to families affected by the earthquake. We need to attract investment and create jobs so households can sustain their livelihoods and overcome dependence on remittances and charity. We need to hold free and fair elections and strengthen the rule of law in Haiti. And we need to give more kids a chance to attend better schools. The Haitian Government has made visible progress in all these important areas.

We have also made great progress in a less measurable area. For decades Haiti has fought a reputational battle against those in the international community and the media that portray Haiti as an eternally poor, ravaged nation unable to stand on its own feet, forever dominated by outside interests and without the ability to prosper. In that narrow view, decisions are either made in international capitals or by a small group of a business elite who reside in the lush hillsides overlooking Port-au-Prince. Haitian success stories, like the Caracol Park, are discounted as poorly executed projects designed by outsiders to further cement this view of Haiti's people. This oft-shared perspective not only lacks a factual base, it hampers Haiti's development and helps perpetuate the very misery the New York Times and other media like to call attention to. Like every developing nation -- and most great nations, Haiti needs investment, both foreign and domestic, to create jobs and prosper. In an environment where even Haiti's successes are characterized as failures in one the world's most reputable newspapers, we face an eternal uphill battle to share a different and factual narrative: one of capitalizing on untapped opportunity.

The New York Times has missed four important facts that convey a very different picture with its readers: The Caracol Park radically breaks with decades of failed foreign assistance in Haiti; Haiti put in place the toughest labor and social compliance regime in the world; Jobs in light manufacturing mean higher incomes for average Haitians; and the Caracol Park creates opportunity to restore and preserve the environment.

1. The Caracol Park radically breaks with decades of failed foreign assistance in Haiti

Part of the reason the earthquake was so devastating was that so many Haitians live in and around Port-au-Prince. Far more than the city was designed to accommodate. We are pursuing an ambitious strategy of establishing new growth poles to create economic opportunity outside of Port-au-Prince. This is especially challenging, in light of the lack of investment that has impoverished Haiti's regions and created mass migration to the capital. This consensus strategy has been supported by different Haitian administrations and endorsed by the international community, yet we are just seeing the first signs of success with the development of the North:

This is Haiti's industrial park. The implementation of the industrial park is led by the UTE, a Haitian entity under the Ministry of Finance staffed and run by Haitians, who have defied expectations in timely and transparent execution of this major project. The Government also put in place a high-level negotiation team to lead negotiations with Sae-A and other prospective tenants to ensure the project was guided by Haitians themselves.

The Caracol Park and associated investments were approved by the Interim Haiti Recovery Commission (IHRC) in December 2010 by a Board comprising senior members from the executive, legislative and judicial branch, union and civil society leaders and partners from the international community. The Inter American Development Bank and the United States pooled resources and worked in multidisciplinary teams with the Government with environmental experts, energy engineers, civil engineers, urban planners, financial advisers, labor compliance experts, economists and industry experts. This facilitated a level of collaboration and coordination that has been historically lacking in Haiti and ensured that the required investments were addressed holistically, including industrial facilities, waste water treatment, electrification, housing, schools, health centers, ports, food production, skills training, business development and municipal capacity building.

366 small holder farmers that used the land on which the Park is being built have been fairly compensated following months of consultations until agreements were reached. The NYT fails to mention that the compensation plan includes at least two cash payments as well as assistance such as land for land swaps, training and small business loans to ensure farmers are able to sustain their livelihoods long after cash compensation has run out. In addition, the United States is investing in a skills training program as part of their assistance to Haiti that allows local residents without any formal employment background to qualify for new job opportunities.

In developing the Park our priority was the well-being of Haitians and making sure they had the necessary information. We employed a broad communications campaign that provided information to the community and offered mechanisms for residents to share feedback. This included billboards throughout the northern corridor, radio spots, articles, brochures and large townhall meetings. Information kiosk were established and staffed in most regional towns to provide information about the project, answer questions, post job opportunities and accept resumes. Over 100 consultation meetings have been held as part of this outreach effort.

The Government has taken steps to mitigate uncontrolled migration to the Caracol Park that could lead to unsafe housing developments. For example, workers are currently provided transportation by bus in the early morning from central points in regional towns to work. Unlike in other industrial park projects, hiring is not done at the gate. Instead, there is a system of information kiosks in regional towns that post job opportunities and receive applications. This discourages migration to the vicinity of the industrial park.

2. Haiti put in place the toughest labor and social compliance regime in the world

We take worker's rights seriously. Haiti has worked with the US. Government and the U.S. Congress, as well as the International Labor Organization (ILO) to put in place one of the most stringent labor compliance regimes found anywhere in the world. This discourages poor performers from investing in Haiti and ensures that good performers such as Sae-A are continuously held to their commitment of the highest labor standards. The government has created a special commission called "HOPE Commission" to improve the social dialogue in the textile sector and make sure that all the requirements of the HOPE II/HELP legislation are fully respected by the producers in Haiti. Eligibility for trade preferences under the U.S. HOPE/HELP legislation is predicated on compliance with international labor standards. The U.S. Department of Labor has led several high level delegations this year to Haiti with senior officials from the United States Trade Representative and the Departments of Commerce and State, to review compliance of existing manufacturers, and is collaborating closely with the resident ILO Better Works program and the HOPE Commission on continued monitoring and efforts to further strengthen compliance. The adherence to Haitian and international labor standards was also a condition in the Framework Agreement signed by Sae-A, the Government, the Inter American Development Bank and the United States in January 2011. We worked to ensure that the HOPE II trade preference program is based on the fact that economic growth and workers' rights are not mutually exclusive. The legislation governing our trade relationship with the U.S. is the only one to include factory-specific eligibility requirements. Under HOPE II, firms that do not demonstrate progress in the area of core labor standards risk losing their HOPE II benefits. We have taken steps to make sure that we hold our investors and ourselves accountable by making information public. And HOPE II's labor requirements have already produced results. For example, following the dismissal of six executive members of a newly created union, we worked with our partners including bilateral and multilateral partners, and union representatives to secure the reinstatement of all six workers - a significant milestone in Haiti. We outline several of the mechanisms that have been implemented as a result of the legislation and our determination to protect worker's rights.

But first, with regard to Sae-A, we proceeded to work with them only after reviewing their operations and concluded that it is a well-run apparel company with long established relationships with U.S. retailers and a strong record on social and environmental compliance. In response to our inquiries, Sae-A provided a point by point clarification on the allegations made by AFL-CIO regarding one of its factories, many of which appear lacking in supportive evidence. Where Sae-A's Guatemalan management team was found in violation of company policy, corrective action was taken, including dismissal of Sae-A managers and improvement of grievance procedures. Sae-A also shared several independent audit reports conducted through both announced and unannounced factory visits by compliance auditors on behalf of major U.S. buyers that show that Sae-A took quick and decisive action to address any issues that arose in one of their Guatemalan factories.

As mentioned, below are just a few of the multiple monitoring and support mechanisms we have implemented and that are required by HOPE II to assist producers to improve working conditions, including: Establishment of a presidentially-appointed labor ombudsperson to help mediate disputes between workers and factory management when they arise. The ombudsperson was appointed in April 2012 and since then many mediations have been done successfully. We have noted with satisfaction that this new culture of the mediation is very well accepted by the workers and the factory management. Establishment of a "Technical Assistance Improvement and Compliance Needs Assessment and Remediation" (TAICNAR) program, carried out by ILO's Better Work Haiti program and funded by the U.S. Department of Labor (DOL). Producers who wish to be eligible for HOPE II trade preferences must participate in this program. At present, all producers, including those who do not export under HOPE II, participate. Better Work Haiti frequently visits and engages with factories to examine labor conditions in accordance with TAICNAR and produces biannual reports on factory-level compliance with international core labor standards and Haitian labor law. The reports are published on April 15 and October 15 each year and are publicly accessible. Better Work provides assistance to firms in areas where challenges are identified. Identification as to whether a producer has failed to comply with core labor standards and related Haitian labor laws are addressed on a biennial basis. The first identification of noncompliant producers was completed on December 31, 2011, by the Secretary of Labor, in consultation with USTR. The list of noncompliant producers and progress made toward compliance has been published in USTR's annual report on HOPE II. Like Better Work, the United States provides technical assistance to firms and unions to improve working conditions. DOL and other experts from the Department of Commerce, National Labor Relations Board, and the Federal Mediation and Conciliation Service carried out a variety of trainings from February through May 2012 for government officials, worker representatives, industry groups and individual producers. In collaboration with the HOPE Commission, the Minister of Social Affairs of Haiti is working on a document entitled "Compliance Requirements for the beneficiaries of the HOPE II/HELP." This document will be shared with all the producers working in the textile sector. With the "Office National d'Assurances-Vieillesse (ONA)", the HOPE Commission organized meetings with the factory owners and the labor representatives for a better understanding of their obligations to the institution. With the "Secrétairerie d'Etat à l'Intégration des Personnes Handicapées'', the ''Secretairerie d'Etat à la Formation Professionnelle, and the Business Associations, the Haitian Government put in place the Haitian Apparel Center, 'HAC', dedicated to training workers specially for the textile industry. No discrimination will be accepted and the HOPE Commission will work with a special committee to make sure that handicapped people can work in the textile sector without compromising the productivity of the factory. 3. Jobs in light manufacturing mean higher incomes for average Haitians

The New York Times fails to mention the challenges that farmers face in Northern Haiti, one of the poorest regions in the country. We spoke with local residents regularly during our visits to Caracol, and many struggled to support their families, are unable to send their children to school and spoke of the risks and daily toils that smallholder farming involves. Average yields per hectare per year, net of seeds, fertilizer and other inputs, in the Caracol area are roughly $1,450 and a household of smallholder farmers holds on average less than one hectare. This means many smallholder farmers make considerably less than the minimum wage and don't have the means to escape poverty. The 50 hectares where the Sae-A factory is now being developed, generated an estimated $75,000 a year in incomes from agricultural activities. In 5 years, Sae-A's operations on these same 50 hectares are expected to pay approximately $45M in local workers' wages alone each year. This means approximately 600 times more income for the local community. Sae-A's investment plan includes a capital-intensive knitting and dying operation. This not only dramatically increases the country's share of the value-chain, it also makes it difficult to relocate the investment given significant sunk costs.

We also want to point out that beginning in October 2012 there is a scheduled increase in minimum wages and workers daily wages in the apparel sector will range from U$ 5.00 to $7.25 per day ($2,000-$2,800/year including benefits). This is significantly higher than incomes from smallholder farmers and other informal day jobs (by comparison, Haiti's GDP per capita is $670/year). These formal jobs offer benefits and oversight that are lacking in the informal economy such as workers insurance, overtime pay, and enforcement of labor standards.

We are not only working to promote manufacturing, but the fact is that manufacturing jobs create demand for transport, repair services, construction/equipment rental, banking, retail, food vendors/restaurants and offer upward mobility. Economies often start with lower value-industries like apparel before moving up the value-chain (e.g. electronics and machinery), which translates to higher wages. Moreover, the size of manufacturing operations generates more opportunities for workers to become supervisors and managers and expand their skills set (e.g., Sae-A already trained 20 middle managers over six months in Nicaragua).

Perhaps one of the most important points is that the Caracol Park reduces the risks and challenges of doing business in Haiti and makes the country more attractive to the larger private sector community. For too long investors have shied away from Haiti in part because there was not the support and infrastructure required. Now the Park serves as a magnet for new investment. Other sectors beyond apparel are beginning to respond to the new economic opportunities in the region. For example, the Government is about to sign a tenancy agreement with a paint maker. There are a number of proposals for new hotels. Banks and internet service providers are setting up in and around the Caracol Park. Farmers are diversifying into non-traditional crops, new gas stations are opening and additional shipping lines now call on Cap Haitien. Several non-apparel companies (furniture, telecoms, chemicals, hospitality, solar power, candles, packaging) have expressed interest to invest in the Caracol Park. Airlines are investigating additional international flights to the region and a number of Inter American Development Bank and United States programs help small businesses respond to new markets. The Caracol Park also brings investments in ports, electrification, housing, health services, education and environmental preservation as part of the overall program, and these investments will further improve the business environment. The industrial park has jump started economic development in a region that suffered from a lack of infrastructure and services for decades.

4. The Caracol Park creates opportunity to restore and preserve the environment:

Haiti has suffered from tremendous deforestation. The lack of environmental safeguards has impacted marine life as well. We are using the development of the Park as an opportunity to ensure much needed protections are put in place and resources allocated for environmental preservation.

To manage the impacts and risks of aquifer depletion and water contamination from industrial production, measures have already been taken to safeguard the environment. This includes steps to develop a modern wastewater treatment plant and put in place environmental monitoring that regularly tests water quality in and around the industrial park and the Caracol Bay, located over 2 miles from the park, as well as soil and air quality.

The development of this region with the Caracol Park and its associated investments, can generate the resources needed to rehabilitate and sustainably preserve the natural habitat and the mangroves in particular. As part of the Caracol Park project, the Inter American Development Bank has already committed funding to clean and rehabilitate the mangroves, which have suffered from degradation over the past decades. For the first time, different stakeholders have come together and committed funding and are actively collaborating on the restoration and preservation of the Bay's unique ecosystem. The Inter American Development Bank is also allocating $2m for a landfill in the area, the first of its kind in Haiti. Environmental studies, the environmental management plan and a list of consultations held with the community have all be available on the Caracol Park's website since September 2011.