US embassy cable - 05PORTAUPRINCE1336

UNCLAS SECTION 01 OF 02 PORT AU PRINCE 001336 
 
SIPDIS 
 
STATE PLEASE PASS TO USTR 
DEPT FOR WHA/CAR 
WHA/EPSC 
EB/TPP 
INR/IAA/MAC 
TREASURY FOR ALLEN RODRIGUEZ, GREGORY BERGER, WILLIAM 
BALDRIDGE, LARRY MCDONALD 
USDOC FOR 4322/ITA/MAN/WH/OLAC/ (SMITH, S.) 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, EIND, PGOV, HA 
SUBJECT: HAITIAN GOVERNMENT, PRIVATE SECTOR FEAR CAFTA-DR 
 
 
 1.  (U) This cable is Sensitive but Unclassified. 
 
2.  (SBU) SUMMARY:  Recently, Haitian government and private 
sector officials have discussed their fears of CAFTA-DR with 
Emboffs, saying that it would hurt Haiti economically and 
politically.  The Minister of Commerce told us that CAFTA-DR 
would likely cause Dominican firms operating in Haiti to 
close down and move back to their home country, thus 
exacerbating the unemployment problem.  The Minister added 
that CAFTA-DR would create incentives for Haitians to 
illegally immigrate to the Dominican Republic in search of 
jobs, inflaming pre-existing prejudices against Haitian 
workers and exacerbating tensions on the border over illegal 
immigration.  Our private sector contacts worry too, claiming 
that without some type of preferential trade legislation for 
Haiti, CAFTA-DR would cause the apparel assembly sector in 
Haiti to close down.  Passage of CAFTA-DR would have 
significant positive benefits for other countries in the 
region, but the consensus among our contacts here is that it 
would have a significant negative impact on Haiti.  There 
just are not enough positive cross-border linkages to cause 
positive spillover effects.  END SUMMARY. 
 
Minister of Commerce says No to CAFTA-DR 
--------------------------------------------- --------------- 
3.  (SBU) Minister of Commerce and Industry Fritz Kenol told 
Econ Counselor and visiting Commercial Counselor and 
Commercial Officer that passage of CAFTA-DR would have a 
strong, negative economic and political impact on Haiti. 
Kenol predicted that those few Dominican firms that have set 
up operations in Haiti would likely close down and move back 
to their home country, thus exacerbating Haiti,s 
unemployment problem.  The Minister added that Haiti would 
also lose whatever chance it had to attract foreign direct 
investment as investors, looking to open up new assembly 
facilities in the region, would look to the Dominican 
Republic not Haiti.  Kenol dismissed the argument that 
CAFTA-DR would help Haiti by increasing remittances from 
Haitian workers in the Dominican Republic, pointing out that 
the job losses in Haiti would far outweigh any economic gains 
through increased remittances. 
 
Would also Exacerbate Political Tensions 
--------------------------------------------- -------- 
4.  (SBU) The Minister was equally concerned about the 
political impact.  Relations between Haiti and the Dominican 
Republic are always fragile, particularly concerning border 
issues.  CAFTA-DR would create huge economic incentives for 
Haitians to immigrate illegally to the DR in search of new 
jobs, inflaming pre-existing prejudices against Haitian 
workers and exacerbating tensions on the border over illegal 
Haitian migration into the Dominican Republic.  (NOTE: 
Shortly after Kenol made this argument the government of the 
Dominican Republic expelled several thousand Haitian workers 
as a protective measure after a murder near the border, 
allegedly by three Haitians.  END NOTE.) 
 
The Private Sector Worried too 
---------------------------------------- 
5.  (SBU) A prominent member of the Haitian Industrialists, 
Association, who is also a textile manufacturer, told Econ 
Counselor that passage of CAFTA-DR, without preferential 
trade legislation for Haiti, would be the death of the 
apparel assembly sector.  He predicted that all 20-23,000 
jobs remaining in the sector, Haiti,s largest export earner, 
would be lost.  A major U.S. investor in the same sector 
confirmed those sentiments, saying that if CAFTA-DR passed, 
without preferential trade legislation for Haiti, he would, 
shut down his factory, lay-off all of his 750 workers, and 
move production to the Dominican Republic. 
 
One Way Out 
----------------- 
6.  (SBU) However, both the representatives from the 
Industrialists, Association and the Haitian American Chamber 
of Commerce said that passage of CAFTA-DR, along with passage 
of HOPE/HERO-type preferential trade legislation for Haiti, 
would be a net gain for the country.  Passage of both bills 
would make the region more attractive to investors, while not 
disadvantaging Haiti compared to its neighbors. 
 
7.  (SBU) COMMENT:  Passage of CAFTA-DR would no doubt have 
significant positive benefits for the United States and the 
region, and our contacts in the government and private sector 
may be over-dramatizing its impact on Haiti.  We note, for 
instance, that Haitian manufacturers on the border with the 
Dominican Republic likely could ship goods to the Dominican 
Republic for shipment to the U.S.  However, government and 
private sector leaders in Haiti clearly believe that CAFTA-DR 
would adversely affect their country.  Given the difficult 
operating environment in Haiti, manufacturers need incentives 
to counter the inherent risks.  END COMMENT. 
GRIFFITHS