Unrest in Haiti Puts Spotlight on Importance of US Trade Deals
As the U.S. government encourages corporations to divest from China and establish supply chains in allied markets, the importance of expiring global trade deals has come into sharper focus. The fate of two such U.S. trade preference programs—AGOA and the Haiti HOPE-HELP Acts—have been under debate for months, and are now being thrust into the spotlight due to recent developments on the world stage.
Devastating waves of gang violence overtook Haiti following the assassination of former President Jovenel Moise in 2021, and a spirit of lawlessness has pervaded in the country ever since. In July, an American nurse and her child were kidnapped and held for ransom, and the United Nations estimates that about 1,000 people have suffered similar fates over the past six months.
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Calls from Haitian government officials for military intervention have been largely met with silence, until last week, when Kenyan Foreign Minister Alfred Mutua made the unforeseen declaration that the African nation would take up the mantle of peace. Mutua offered up to 1,000 police officers to help train and support Haitian law enforcement in battling the criminal cliques who now control much of the capital of Port-au-Prince.
U.S. Secretary of State Antony Blinken chimed in last week, saying that the U.S. “commends the Government of Kenya for responding to Haiti’s call and for considering to serve as the lead nation for a multinational force in Haiti to assist in addressing insecurity caused by gang violence.”
American Apparel and Footwear Association (AAFA) president and CEO Steve Lamar said the peacekeeping mission “reinforces that a country like Kenya has shared values, and shared prosperity, with the United States and with Haiti, and is trying to be a long-term partner.” The country’s involvement could help stabilize the situation and invite other partners, including the U.S., to do the same. “There may also be some residual benefits to the U.S.-Kenya, and writ-large, the U.S.-Africa relationship” as well, he added.
That’s important given the looming 2025 expiration of the Africa Growth and Opportunity Act, or AGOA. The deal offers sub-Saharan African countries duty-free access to the U.S. market on more than 5,000 products, including apparel and textile goods. Kenya is the largest exporter of apparel under AGOA, with the vast majority of the nation’s output making its way to U.S. shores. While the trade deal has enjoyed long-term bipartisan support, calls from industry stakeholders and trade groups have done little to sway Congress to expedite its renewal.
“The preference program upon which industry trade and investment decisions are based is going to expire, and now is the worst time to have a program like that facing expiration,” Lamar said. “There’s a lot of business that’s leaving China, and we want to do everything we can to show that these other locations are long-term, stable, predictable investments for sourcing partners.”
Haiti faces a similar plight, in that its own U.S. trade preference programs—the Haitian Hemispheric Opportunity through Partnership Encouragement Act, and the Haiti Economic Lift Program, known in short as HOPE-HELP—will also expire in 2025, with no renewal date set.
“The export-oriented apparel industry matters significantly to Haiti,” said Dr. Sheng Lu, associate professor and director of graduate studies in the department of fashion and apparel studies at the University of Delaware.
Recent U.N. Comtrade data shows that apparel accounted for more than 92 percent of the country’s manufacturing exports in 2022, and “because of the Haiti trade preference program, over 90 percent of Haiti’s apparel exports went to the United States alone,” Lu said. Haiti’s share of U.S. apparel imports is small, accounting for just 1.2 percent of clothing that entered the country during the first five months of the year, up slightly from 1.1 percent in 2022. But the American fashion sector “strongly supports” another 10-year renewal of the HOPE-HELP programs, as investment in the country’s manufacturing base grows, the associate professor added.
Earlier this year, California blank clothing designer Next Level Apparel said it plans to shift more of its production to a supplier with facilities in the Dominican Republic and Haiti, with the aim of using more U.S. cotton and getting closer to its end market. And in May, South Korean textile and apparel producer Hansae signed a deal with fabric manufacturer Willbes Dominica Synthetic Mill in the Dominican Republic, with the goal of enhancing its existing operations in Haiti. Hansae’s three Haitian factories are capable of producing about 2 million garments each month.
Haiti HOPE-HELP enjoys synergies with the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). “There’s a lot of activity in Haiti connected to the Dominican Republic, because the two countries share an island and what happens in one country often affects the other,” Lamar said. “There has been a lot of effort that to try to promote the co-production between those two countries,” an objective that has led to greater trade investment in Haiti.
“The U.S. apparel industry wants to see a politically stable and economically successful Haiti, which could serve as an emerging sourcing destination to support fashion companies’ diversification goals,” Lu added. “Given Congress and the Biden administration’s emphasis on human rights and labor practices in trade, it becomes crucial for Haiti’s political stability to ensure a smooth HOPE-HELP renewal.” Without the trade agreement, he believes that “Haiti’s garment industry and the national economy would be devastated.”
Lamar said that while quashing the unrest is the near-term objective, steps must be taken to safeguard Haiti’s commercial industries. “Trade can be a very effective tool to promote stability, peace and economic cooperation,” the AAFA lead said. “The absence of that trade exacerbates the problems that lead to longer term strife.”
“A lot of resources will be deployed to keep the lid on gang violence, but unless we can provide a stable economic future, it’s going to be really hard to migrate away from that,” he added. “It’s the wrong time to be signaling that we might not be eager to renew [HOPE-HELP].” Slow progress on the trade program’s renewal could spook enterprises looking to invest in the country’s apparel and textile sector, and damage commitments with those already doing business in Haiti. “Right now, there are a lot of companies that have a very strong commitment [to Haiti], but given the competitive pressures that exist around the world, they may not be able to hold on as long as they would like,” Lamar said.
African Coalition for Trade (ACT) president Paul Ryberg said the deteriorating security situation in Haiti has created ample concern for trade partners, but the dire circumstances also “create additional reasons for Congress to act more quickly than it might otherwise do, in order to send positive signals that companies will be able to continue to do business in Haiti.” A bill was reintroduced in Congress in December that would renew HOPE-HELP for an additional decade, and Ryberg believes it’s a sign that action on the issue is imminent.
“This is what we hope to accomplish for AGOA as well,” the Africa expert said, as “the two programs are running on parallel tracks.” But, “Congress focuses on crises—and there’s a crisis in Haiti right now.”
Ryberg said that while AGOA has few detractors on The Hill, it’s renewal is being held up by a lack of Congressional urgency. Legislators have also thrown out a slew of ideas on how to improve the program, “but at this point, they are for the most part, very amorphous—more 30,000-foot policy goals, rather than actual legislation.”
Too much waffling comes at a cost, the ACT lead said. “We are actively lobbying Congress to try to educate them on the need to act now, because the lead times are such that deals to be delivered in 2025 are being negotiated right now.” Uncertainty about the future of the trade agreement means Africa risks losing those orders, he added. “If it takes two more years to get it renewed, we will see a dramatic drop off in the level of AGOA trade, and we’ll see tens of thousands of jobs lost in Africa.”
Worrisome trends are already beginning to take shape. “If you look at the history of apparel trade under AGOA, every time it has been up for renewal, about one year out, the volume of trade starts to decline because of the uncertainty,” Ryberg said. “Unfortunately, we are seeing that right now even though we’re two years out.” In 2022, the volume of apparel trade under AGOA hit record highs, increasing by about 30 percent in Q4. “But in the first half of this year, it’s gone flat.”
For Kenya, further renewal delays could blunt progress. The country is “the largest beneficiary of new trade opportunities created by AGOA,” and is the largest exporter of apparel products under the program, Ryberg said. The trade agreement is, in fact, the singular reason for the apparel and textile manufacturing sector’s growth over the past two decades, with over 90 percent of Kenya apparel exports going to the U.S. market.
The country is continuing to funnel capital into the sector’s development. Earlier this year, the East African nation’s government said it planned to invest $1.6 million into revamping and reopening closed garment factories, as well as rebuilding its cotton farming sector. The country’s government is eager to deepen ties with the U.S., having engaged in a conceptual discussion with the U.S. Trade Representative (USTR) in February about a potential Strategic Trade and Investment Partnership (STIP). Ryberg said those efforts will be for naught if AGOA is not renewed quickly, as the STIP program would not include duty-free market access.
Congress could continue to drag its feet on the renewal process, as it has in the past, but Ryberg believes there are new factors at play. “Over the past two years, there’s been such a high level of interest in disinvestment from China that I think people are realizing that Africa is poised to become a major supplier.”
“There is always an effort to get renewal accomplished sufficiently in advance to avoid disruption,” he added. “It’s rarely successful—it usually takes up to the last minute—but this time around, with AGOA and also with Haiti HELP-HOPE, I sense a difference.”
“There’s a much greater interest in making sure that we don’t lose ground on what we’ve already accomplished,” Ryberg said. “It’s the foundation for new investment.”
