Some areas really miss tariffs

October 3, 2003

BY JANE REGAN
Special to The Herald


   PORT-AU-PRINCE . Chicken and rice. Sounds healthy enough. But in Haiti, where free trade has turned into a free-for-all, tons of cheap U.S. rice and poultry have proven very unhealthy for local producers.

   Haiti, the hemisphere's poorest nation, with a per capita income of less than $1 a day, is also home to the hemisphere's most open market. Neighboring Caribbean countries protect their chicken and  rice farmers with 40 percent tariffs, but foreign agribusinesses pay no more than a 5 percent tariff at Haitian ports.

   Port-au-Prince's huge Croix Bossale outdoor market was named after the hundreds of thousands of bossale or untamed African slaves sold there during the colonial era. Just like yesterday's human cargo, almost everything for sale there today comes off a boat.

   Labyrinths lead through a chaotic jumble of sacks of U.S. rice, beans and corn meal, many decorated with the Stars and Stripes. Street vendors shoo flies from the piles of chicken, pork and turkey parts, all from the United States. Cast-offs from the north and brand-new Panamanian shirts and pants are stacked next to Dominican cooking oil,
Guatemalan sugar, Venezuelan cookies and Italian tomato paste.

PRICE OF SECURITY

   Haiti can't blame its low import tariffs Š today between zero and 15 percent Š on any regional trade agreement. It was part of the deal President Jean-Bertrand Aristide made with the International Monetary Fund (IMF), Washington and other aid donors on the eve of his return to office in 1994 following three years of military rule.

   U.S. soldiers would guarantee security, Aristide was told, but financial security came at a price. The donors and lenders would open the money spigots only when the economy opened up: privatize state-owned industries, float the currency, the gourde, and cut import tariffs.

   "It was a must,'' said Marie Michelle Rey, then minister of Finance and now head of the
government office that coordinates with the 15-member Caribbean Community, the World Trade Organization (WTO) and the proposed Free Trade Area of the Americas (FTAA). "If you donÕt have an agreement with the IMF, youÕre dead in the water. You canÕt do anything.''

   Eight years later, a lot of farmers are "dead in the water'' too.

   "Directly and indirectly, when the chicken industry shut down, we lost 10,000 jobs,'' said a member of Haiti's now-defunct Agricultural Producers Association who spoke on condition of anonymity. "By 1998, it was all over.''

   At its height, Haiti's chicken agribusiness hatched 6 million eggs a year and bought thousands of tons of local corn. But suddenly the country opened itself to the cheap dark chicken and turkey meat that finicky Americans wonet buy. No tariffs, no quotas, no subsidies to local producers. American companies sold more than $17 million worth of
poultry and parts here last year alone.

   Haiti's chicken industry went beak-up.

GROWER RUINED

   "I used to work there,'' said the grizzled DieudonnI Pierre, 53, as he peered through the
locked gate at some of the 70 buildings in Thomazeau, 20 miles east of Port-au-Prince,
that were part of two poultry plants. Once full of clucking broilers, now they host only
dust and rats. "Now I make charcoal and grow some sorghum during the rainy season,'' he said.

   At her table under a broken beach umbrella in the Croix Bossale marketplace, Olide Eloie, 36, is happy to sell the American "second-hand chicken,'' as it is commonly called.

   "They sell better than Haitian chicken,'' she said, batting big black flies away from
the piles of pink legs. "I can sell a [44-pound] case in a day.''

   A Haitian chicken sells for about $5.50, but the same weight of U.S. chicken parts
sells for less than $2.50.

PRICED OFF MARKET

   The same goes for rice. Six pounds of Haitian rice sells for between $1.70 and $3, but
the American product known here as "Miami Rice'' is $1.45. Imports of U.S. rice have doubled since 1995, to 200,000 metric tons per year, making Haiti one of U.S. growers' best customers.

   "Haitian rice just can't compete,'' acknowledged economist Henri Bazin, who heads the Haitian Economists Association. "Liberalization happened here overnight. All of a sudden. Maybe it was too brutal.''

   Rey defends Haities slashing of tariffs by saying the government had no choice, and that anyway lower tariffs mean lower prices. "The consumer wins,'' Rey said.

   But only if market prices are in fact lower. In Haiti, they are not really. As Haiti's
economy ground to a halt over the past eight years, in part because the agricultural sector stagnated, the country's currency lost two-thirds of its value. That means chicken and rice cost about the same today as they did in 1995.

   And only if consumers are buying. With a contracting economy, nearly half the population malnourished and some 2.4 million people living in extreme poverty, chances are most Haitians aren't buying a lot of chicken and rice.

   To the contrary, Bazin noted, cheap imports and the governmentes failure to support peasant farmers is driving them off the land and into the cities' burgeoning slums.

   Bazin believes free trade can benefit countries that plan right, but, he noted, "You
can't compete if you don't produce.''