HAITIAN GOVERNMENT, PRIVATE SECTOR FEAR CAFTA-DR

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