US embassy cable - 05PORTAUPRINCE2674

UNCLAS SECTION 01 OF 03 PORT AU PRINCE 002674 
 
SIPDIS 
 
USTR FOR RUSSELL SMITH 
WHA/CAR 
EB/TPP 
WHA/EPSC 
INR/IAA/MAC 
STATE PASS TO AID FOR LAC/CAR 
TREASURY FOR MAUREEN WAFER 
USDOC FOR 4322/ITA/MAN/WH/OLAC/ (SMITH, S.) 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, HA 
SUBJECT:  Haiti:  Information on Caribbean Basin Recovery 
Act 
 
REF:  SECSTATE 188288 
 
1.  Per reftel, following is information for USTR to use in 
preparing its biannual report on the operation of the 
Caribbean Basin Economic Recovery Act.  Responses are in 
narrative form and are keyed to the specific questions in 
paragraphs six and seven of reftel. 
 
2.  Responses to Questions from paragraph six: 
 
(1) Haiti has a relatively open trade regime and has 
committed to undertake and fulfill its obligations under 
the WTO on or ahead of schedule.  Due to resource 
constraints, the Government of Haiti only participates on a 
limited basis in international negotiations.  The Interim 
Government of Haiti (IGOH) has indicated informally that it 
would like to participate in a free trade agreement with 
the United States, but also that it is not ready to begin 
negotiations at this time. 
 
(2) Haiti's major laws governing intellectual property 
protection date from the early- to mid-twentieth century 
and have not been updated to reflect the provisions of the 
Agreement on Trade-Related Aspects of Intellectual Property 
Rights (TRIPS).  Limited manufacturing capacity, lack of 
disposable income, and paucity of tourist traffic mean that 
commercial piracy is limited.  Weak judicial institutions 
result in poor enforcement and erode the protection offered 
by current statutes. 
 
(3) The Constitution and the Labor Code provide the right 
of free association to both public and private sector 
workers.  The economy's informal nature makes estimations 
of workforce participation and unionization difficult, but 
the number is probably relatively low.  Persistent high 
unemployment and the lack of a large manufacturing sector 
have also limited union organizing activities.  Employers 
usually set wages unilaterally, though wages in the formal 
sector are usually higher than the legal minimum wage.  The 
Labor Code prohibits forced or bonded labor for adults and 
minors.  Though Haitian law provides a framework for 
internationally recognized worker rights, such rights are 
often violated or circumscribed, particularly in the 
informal or underground economy. 
 
Workers in export processing zones enjoy the same rights as 
workers elsewhere in the country, and their working 
conditions are usually better than those in the economy at 
large.  Due to concerns from U.S. customers, and because 
Haitian companies using CBI benefits are aware of the 
eligibility criteria, it is likely that these beneficiary 
companies are more sensitive to labor standards. 
 
The minimum employment age is 15, and minors are prohibited 
from working in dangerous conditions and working at night 
in industrial enterprises.  Legislation passed in 2003 
removed exceptions in the labor law that had previously 
allowed children to work as domestic servants beginning at 
age 12.  Fierce adult competition for the few available 
jobs in the industrial sector means that child labor is not 
a factor in the formal economy, but there are reports of 
compulsory and child labor in the rural and informal 
sectors.  Internal trafficking of children for domestic 
labor remained a widespread problem; see description of the 
problem in the following sections. 
 
Haiti has signed but not ratified ILO Convention 182.  The 
country has signed a Memorandum of Understanding with the 
ILO International Program for the Elimination of Child 
Labor and is working with the ILO on various programs aimed 
at phasing out exploitative child labor. 
 
(4) Haiti was categorized as a Tier 2 Watch List country 
for failure to show evidence of increasing efforts to 
combat trafficking in persons over the past year.  The 
majority of trafficking in Haiti involves the internal 
movement of children for forced domestic labor, referred to 
as "restaveks." The restavek tradition is widespread in 
Haiti, and fraught with abuse.  Poor rural families 
sometimes give custody of their children to urban, more 
affluent families or other family members, in the hope that 
they will receive an education and economic opportunities. 
However, the reality is often mistreatment, abuse, and long 
hours of uncompensated labor.  The IGOH estimates there are 
90,000-120,000 children in coercive labor conditions as 
restaveks, but UNICEF estimates the number is much higher, 
between 250,000 and 300,000.  Since the political crisis in 
Haiti, the interim government has attempted to address 
trafficking in the country.  However, there is much more 
that needs to be done and the newly elected government, 
which is scheduled to take office in February 2006, should 
be committed to addressing these issues, including the 
large-scale exploitation of restavek children. 
(5) Haiti meets U.S. counter-narcotics certification 
criteria under the Foreign Assistance Act of 1961. 
 
(6) Haiti became a party to the Inter-American Convention 
Against Corruption (IACAC) when its ratification was 
published in July 2002.  However, the country is still 
widely viewed as one of the most corrupt countries in the 
world.  There has been some limited progress under the 
interim government.  Under recent IMF agreements, the IGOH 
has drastically cut back on the use of "current accounts" 
which are often used by corrupt officials to fund personal 
or political expenditures.  In addition, the IGOH has begun 
to conduct audits of several state-owned enterprises in 
order to eliminate ghost employees.  The IGOH's Financial 
Intelligence Unit, with assistance from the U.S. 
government, is actively investigating corruption by the 
previous regime.  Despite these steps, corruption still 
remains endemic in the country. 
 
(7) Government procurement is still characterized by 
procedures that are inadequately transparent and corruption 
is common. 
 
3.  Responses to questions in paragraph seven: 
 
There are no active cases of the government nationalizing 
or expropriating the property of a U.S. citizen, although 
there are several dormant cases where no action has been 
taken by either party for a number of years.  Post has seen 
no evidence of the country failing to act in good faith in 
recognizing arbitral awards in favor of U.S. citizens. 
Post is not aware of any preferential treatment to products 
of a developed country that has an adverse effect on U.S. 
commerce.  Government entities do not, as a matter of 
policy or general practice, broadcast copyrighted material 
belonging to U.S. copyright-holders without their express 
consent.  The U.S. has an extradition treaty with Haiti 
(Extradition Treaty between Haiti and the United States of 
1904).  Under this treaty, however, Haitians do not 
extradite their citizens, but will extradite U.S. citizens 
under a Mutual Legal Assistance Treaty (MLAT). 
 
In February 2004, President Aristide resigned and left the 
country following an outbreak of political violence 
directed at overthrowing his regime.  An interim government 
took over and governs Haiti until new elections take place, 
currently set for December 2005 and January 2006.  A new, 
democratically elected government is scheduled to be 
inaugurated in February 2006. 
 
Haiti is one of the poorest countries in the world; it is 
the poorest country in the western hemisphere.  Average 
income is estimated at between USD 300 and 400.  Growth in 
FY 2005 was 1.5 percent, following a 3.8 percent drop in FY 
2004.  Much of the FY 2004 drop was due to political 
violence and natural disasters.  The economy has been in a 
long-term decline, averaging negative growth over the past 
25 years.  The economy consists of retail trade, small- 
scale agriculture, light manufacturing and some services. 
Most of the economy exists in the informal sector and is 
unregulated.  Haiti runs a large trade deficit; its largest 
trading partner is the United States, which accounts for 
over half of its exports and imports.  Haiti's major export 
is apparel, such as tee shirts.  A major component of the 
economy is remittances, estimated at more than USD 1 
billion per year and foreign aid, at approximately USD 500 
million last year.  Without that assistance, particularly 
remittances that go directly to the pockets of Haitians, 
the economic situation in Haiti would be much worse. 
 
Haiti has a relatively open trading regime and utilizes 
few, if any, export subsidies or trade distorting export 
performance or local content requirements.  Because Haiti's 
economy is so small and it trades little with its Caribbean 
neighbors, the country's trade policies contribute only 
marginally to the revitalization of the region as a whole, 
although its trade policies certainly do not impact the 
region negatively.  The country is doing what it can to 
promote its own economic development, given limitations 
caused by the paucity of resources and the recent history 
of violence and natural disasters.  Haiti generally 
cooperates closely with the United States on economic 
issues.