CARLS CORNER

Haiti's Challenges and Opportunities
in the context of Regional Integration and Globalization".

Ladies and Gentlemen,
On behalf of the Haitian Manufacturers Association (ADIH), I wish to express my sincere appreciation to the Haitian-American Center for Economic and Public Affairs (HACEPA), the United Haitians American of Florida (UNHAF), and the Consulate general of Haiti in Miami for inviting me to share some remarks with such a distinguished audience. I also congratulate them for choosing to place their second Annual Conference in the framework of the commemoration of the Bicentennial of Haiti's independence.

While we gather here to discuss issues related to trade, commerce and tourism, our country is at a crossroad that brings both serious concerns and great hopes. As business men and women, we are realistic enough to carefully measure the risks inherent in the environment where we operate. Yet, as entrepreneurs, we have learned to design proper strategies to mitigate those risks. Also, in today's world, it pays to "think globally and act locally". It is in this spirit that I entitled my remarks: "Haiti's challenges and opportunities in the context of regional integration and globalization".
My topic will be developed under the following headings:
· Haiti in the world today;
· The challenges of globalization;
· Regional Integration as a response;
· A three-track strategy;
· Toward sustainable tourism;
· HERO as a pillar in the construction of Haiti 2004;

Haiti in the World Today
While we are pondering today on how to pay respect to the memory of our ancestors who achieved a remarkable and successful revolution against slavery, Haiti's ranking position in two important classifications is at its lowest levels:
· In the Global Competitiveness Report 2002-2003 she scored 80th among 80 participating countries;
· In the Human Development Index she now ranks 145th compared to the 134th position of 2001.
It is critical to take a minute to fully grasp the true meaning of those results. Global competitiveness is measured by two indices:
1. The Growth Competitiveness Index (GCI) is based on three (3) broad categories of variables that are found to drive economic growth in the medium and long term: technology, public institutions and the macroeconomic environment;
2. The Microeconomic Competitiveness Index (MICI) examines the underlying conditions defining the sustainable level of productivity in each of the 80 countries in the report.
Taken together, these classifications based on Growth Competitiveness and Microeconomic Competitiveness tell a worrisome story: the income per capita in the Republic of Haiti is low and will remain low unless the course is radically altered. In a country where 2% demographic growth combines with low or no production growth, poverty will amplify and building democratic institutions is extremely problematic under such conditions. As Michael Porter taught us, wealth is governed by productivity or the value created per day of work, dollar of capital inverted and unit of the nation's physical resources employed. It is also imperative that we understand the important distinction between comparative advantages and competitive advantages as sources of wealth in order to avoid the world's problem of economic development.
For Haiti to make it in the modern era several questions must be genuinely answered:
· Can we ride the waves?"
· "Can we implement strategies that will ensure our survival and also allow us to capitalize on the opportunities presented by the global new economy (GNE)?"
· "Are we equipped to take advantage of the new markets and technologies that emerge?
· "Can we embrace new business models that allow us to meet our strategic goals, within the context of the evolving GNE"?
· "Our organizations, are they equipped to transform our internal processes and our business-to-business processes?"
I do not pretend nor will I attempt to answer these questions, but during my remarks I would like to share some observations in order to shed some lights on the new challenges carried by the globalization of economic activity. I will also comment on regional integration as a response to those challenges. And finally, I will advocate a 2 or 3 track strategy where industrial exports and sustainable tourism can play a significant role.

Globalization and its Challenges
What is globalization?
Fundamentally, this phenomenon is the closer integration of the countries and peoples of the world which has been brought about by technology, by the huge reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flow of goods, services, capital, knowledge and (to a much lesser extent) people across borders. We are the witnesses of great changes, most for the better, but some of them creating new problems. It is above all the economic dimension of globalization which is the subject of controversy. At issue is the setting up of a new world system. We are indeed in the midst of an evolving multilateral order. Changes are everywhere: in the political, financial, legal, commercial etc. But today, we limit our focus on trade and investment.

The globalization process and the new rules and norms arising out of it are becoming the determining factors of the conditions of production, of consumer habits, of income distribution and of economic investment. The decade of the 90s has witnessed major changes in the multilateral trading system. Following the long negotiations of the Uruguay Round, the World Trade Organization (WTO) has been created with a mandate to oversee almost the whole world trade. The fact that new topics like labor and the environment are today part of the global trade and commerce agenda should serve as a warning to small economies like ours: the rules of the game have changed. What we have to do now is to look for new opportunities and new ways to enhance our competitive position. We cannot resist the inevitable changes. It is a prerequisite to ride the new waves.
Economic barriers between countries are gradually coming down and, by the same token, this brings about new phenomena: first, the effectiveness of national economic policies is being reduced and the interdependence of countries is growing. Second, the impact that economic changes in large countries have upon smaller countries is increasing.
In Haiti, the private sector is becoming increasingly conscious that the new rules and norms require a complete new approach to the business of growth as the excellent 2001 IDB report on Latin-American competitiveness was named.
1) The productive system has to be designed on the basis of the requirements of free trade, which precludes the use of protectionist policies of any flavor.
2) We ought to promote competitiveness and diversification of production while considering local and external markets as one.
3) As a consequence of the above, we ought to create the most favorable investment climate by promoting the proper public policy framework. The recently published "Haiti 2020: Toward a Competitive Nation" is a valuable contribution of the Haitian private sector to the much needed policy dialogue. The Center for Free Enterprise and Democracy (CLED) is to be commended for this worthwhile endeavor.
Is Regional Integration the Proper Response?
Is there a future for a small economy in the world shaped by Globalization?
Some people consider that we are facing a purely negative phenomenon that threatens the economies of smaller countries and brings the risk of loss of national sovereignty and identity.
On the other hand, however, there are those of us who believe that we can find ways to deal with globalization and that, provided we agree on common positions, this is a process that has the potential to be of great benefit to our countries.
We, at ADIH, are convinced that there is no way a small country like Haiti can prevail by itself. We realize that in the world of the Internet, a world where goods and services move across most national borders with fascinating ease, where trillions of dollars move daily at the speed of light, effectively creating open economic spaces with an increasingly competitive environment, our whole Caribbean Region is particularly vulnerable. Integration, if conducted properly, represents the appropriate method by which we can benefit to the maximum from the winds of globalization and set sail towards the future model of competitive development that we should readily embrace.
Integration in the case of Haiti has certainly not been, so far, conducted properly. We are deeply concerned by the lack of consultation which preceded our adhesion to CARICOM. Whereas Business will be very much impacted by the decisions taken by governments, there has been almost no dialogue on the important topics, like tourism, trade, investment etc.
If things proceed the way the United States wishes, the Free Trade Agreement of the Americas will be a reality within 18 months. The destiny of the small economies of the Region is not clear yet. Let us recall that the working group on smaller economies has been eliminated since 1997 when the Ministerial Meeting confirmed the US position of no separate negotiation group on smaller economies, though recognizing that this group has special needs which should be taken account of in facilitating their full integration in the FTAA. A Consultative Group on Smaller Economies is charged with the responsibility to monitor the negotiations and to bring the needs of this group of countries to the attention of the Trade negotiation Committee. The great challenge facing smaller economies is to bring their inputs and monitor negotiations in all nine negotiating groups.
The Caribbean Region has created a unified negotiating mechanism called the Regional Negotiating Machinery (RNM). The Haitian private sector has yet to meet any of its members and it is less than certain that the Government of Haiti has any meaningful communication with the entity.
I would like to seize this opportunity to state strongly that participation of small economies is imperative for the success of the FTAA. A hemispheric economic space cannot exist without participation from small economies.
On the other hand, despite the complex mosaic of interests and the packed negotiation agendas of the countries within the Region, there is no doubt that the two most important items on that agenda are the process for the creation of the FTAA and the potential launch of a new round of negotiations within the framework of the WTO. In particular this relates to the treatment of differences in the size and development of countries taking part in these two initiatives.
We are aware of problems relating to implementations of agreements that are considered critical for developing countries, such as the agreement on textiles and clothing and the agreement on agriculture, for example and we should do our utmost to make our voices heard before it is too late. One voice alone will be inaudible for the powerful actors.
The Haitian policymakers ought to raise to the consciousness that, in the context of globalization, the priorities of development oriented economic policies are shifting: they are centered around how efficiently to achieve insertion into the global economy and how to handle the effects that new international rules on trade and investment have upon the economy. This depends to a large extent upon how foreign policy and trade negotiations are handled. In fact, international relations, foreign policy and trade negotiations fall within the scope of economic policy and constitute one unit.
In that perspective, skills and knowledge relating to areas such as economics, new aspects of commerce and schemes for integration are becoming the most highly valued assets or talents when it comes to carrying out the new functions of diplomacy.
Needless to say that, because of the scarcity of those skills, the Ministry of Foreign Affairs should wisely count on the support of business leaders and the civil society in general. As it takes two to tango, a new framework for public-private partnership is certainly a pre-requisite. Right there is one of the greatest challenges facing public and private leaders in our country.
A Three-Track Strategy
In regard of all the above considerations, I submit that we need multiple approaches. At least three tracks should be followed:
· One is to find ways to participate in the negotiation process, first at the CARICOM level and, jointly, at the hemispheric level;
· The other one is to establish at the Business level strategic alliances with partners of the Region. This may require new approaches: sustainable tourism is a good example;
· The third one is to enhance Haiti's attractiveness. Our lobbying effort to obtain passage of the Haitian Economic Opportunity Act goes in that direction.
Why Sustainable Tourism?
The simple answer is: because that's where the Caribbean Region is heading. Let us briefly review the basics.
The Association of Caribbean States created, in December 2001, the STZC. The objective is to establish the Zone as a geographically determined, cultural, socio-economic and biologically rich and diverse unit, in which the development of tourism will depend on sustainability and on the principles of integration, cooperation and consensus, geared to facilitating the integrated development of the Greater Caribbean.
The STZC is based on four essential pillars:
· Respect for natural and cultural patrimony;
· Community participation in the benefits generated by the sector;
· Growth in the domestic product as well as employment;
· Profitability of investments.
The strategy to implement sustainable tourism involves two main actors in our societies: these are the states as agents of management and change, and civil society as a new emerging actor in the era of globalization. It will require a whole new set of public policy measures combined with new private strategies, appropriate to the new regional focus.
As a medium term goal, sustainable tourism can help the Haitian tourism sector to elaborate the proper strategy in an increasingly competitive industry.
In this spirit, it seems to me that the effort to create multi-destination products will contribute greatly to establish a framework for sustainable tourism.

On HERO (Haiti Economic Recovery Act)
As President of ADIH I am very pleased to confirm the progress being made in obtaining from the US Congress passage of the HERO bill. It is important for this distinguished audience to clearly assess what this HERO Act can and will do to greatly improve the investment climate in our country.
The purpose of HERO is to help improve the economic and political situation in Haiti through trade and thereby allow Haiti to better be able to confront its serious economic and social problems.
· The bill would correct a glitch or oversight in US trade legislation that recognized the special economic needs of least developed countries in Africa but did not contain special provisions for the only LDC country (UN definition) in the Western Hemisphere. Haiti is in an unique position in our hemisphere as being very poor with few natural resources. The bill is designed to promote employment in Haitian industry by allowing the country to become a garment production center.
· The bill would amend the "Trade and Development Act of 2000" by granting duty-free status to Haitian apparel articles assembled or knit-to-shape from fabrics/yarns from countries in which the U.S. has a free trade or regional agreement eg. Canada, Mexico, Israel. Jordan, beneficiaries of CBI, Andean Trade and AGOA Trade Preferences and soon Chile and Singapore.   Currently, the only Haitian apparel articles that can enter the U.S. duty-free are ones that are made of U.S fabrics/yarns and a limited amount made of CBI knit fabrics. It would also grant such status on articles, regardless of the origin of the fabrics/yarns, if the fabrics/yarns were not commercially available in the U.S.
· The type of assembly carried out in Haiti would have minimal impact on employment in the United States. In fact, it would encourage the emigration of jobs away from the Far East and back to our hemisphere. In fact, it would create jobs in the United States since unlike in the Far East, most of Haitian foreign exchange earnings are utilized to purchase American products.
· Haitian apparel accounts for less than one percent of all apparel imports, and the bill would cap duty-free imports made of fabrics/yarns from the designated countries at 1.5 percent growing modestly over time to 3.5 percent. And, the Trade and Development Act of 2000 already include strong safeguards against transshipment.
· In order for Haiti to be eligible for the benefits, the President must certify to Congress that Haiti has established, or is making continual progress toward establishing, a number of important reforms on matters like democracy, rule of law, free and fair elections, and freedom of the press. This will not be an easy task for the Haitian government but because of the bill's incentives, it will be more apparent to Haitian government that it is in their interest to reform.
· The preferential treatment under the bill would apply in each 12-month period beginning retroactively beginning October 1, 2002 (The current bill would probably begin October 1, 2003.)
Ladies and Gentlemen
Haiti needs HERO. As Business people, we need HERO to enhance our contribution to the welfare of the Haitian society, by creating much needed stable jobs.
Let us seize the Opportunities!
From all these considerations I conclude that the opportunities for Haiti and for Business peoples willing to seize them are enormous. For once our LDC status can be considered a strategic advantage in certain key sectors such as tourism, textiles and clothing. In order to profit from it let us keep in mind that, in the global economy, trade increasingly follows investment. Indeed trade is becoming a function of investment.
Business leaders of the Americas, please take note! : Haiti is open for serious business. The new Investment Code and the new Law on Free Zone offer great advantages to investors willing to export from the Haitian platform. New industrial parks are being built under specs that are fully congruent with the most stringent international environmental norms. My association has, for sometime now, endorsed the World responsible Apparel Production or WRAP standard which is a prerequisite for anyone willing to sell to the best names of the industry. We think that joint venture and strategic alliances should help mitigate the residual risks for the foreign investor who has been reluctant to even visit our country. I want to take this opportunity to ask the US Government to at least rephrase its travel advisory notes at a time where the American Airlines planes from Miami and New-York are packed.
Ladies and Gentlemen
At the eve of commemorating its 200th anniversary, Haiti needs more trade than aid. By looking at the possibilities of doing business there, you will, not only make good money, but also contribute to the economic growth of a Nation who prides itself to have contributed to one of the most decisive steps in the progress of mankind.

THANK YOU ALL
Marie Claude Bayard
President
Association des Industrie d'Haiti (ADIH)
Miami Florida, July 26th 2003