Free trade policies claiming Haiti as a victim

After seeing food riots in April, Haiti’s problems are nowhere near being solved. Completely dependent on food imports due to trade liberalization, soil erosion and an increasing population. Mike Williams of the Atlanta-Journal Constitution explored this issue a little deeper.

It’s not completely fair to blame free trade policies for the problems facing Haiti when the country has faced widespread corruption in recent history and has many geographic limitations. Nevertheless, this is the worst case scenario of what can happen to the undeveloped world (it wouldn’t be accurate to classify Haiti as developing) when the markets are open to cheap and subsidized foreign food, causing shortages, and leading to food aid which further undercuts local producers.

Before 1950, Haiti supplied close to 80% of its own food, and exported a large amount of food. Now, much of the population has shifted away from agriculture, unable to compete, and now are unable to afford the rising cost of food. Many are so poor they have resorted to eating dirt. Due to the high cost of fertilizer, foreign competition, and food aid, most farmers have resorted to subsistence farming, leaving much of the country vulnerable. What is the result? A life expectancy under 50 years, high amounts of undernourished people and high infant mortality.

Specialization can lead to many efficiency gains, but specialization away from agriculture is a dangerous game. Food aid will only exacerbate the issue.  The best way to treat this is by governments and NGOs encouraging a return to farming, protecting the domestic industry, aid in development of successful agricultural practices and subsidizing in fertilizer, equipment and tools.  In the meantime, the west needs to look to Haiti before it pushes the developing world into trade liberalization, especially while the governments are acting to distort the market.

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7 Responses

  1. I think that free trade, truly free trade, would probably be good for the developing world. However, merely taking away tariffs and quotas is not really free trade if developed nations continue to subsidize their grain production and undercut the local market. Unfortunately, it’d be pretty well impossible to cut food subsidies (in developed nations) during a food shortage, but these market distortions are partially culpable.

  2. […] Free trade policies claiming Haiti as a victimAfter seeing food riots in April, Haiti’s problems are nowhere near being solved. Completely dependent on food imports due to trade liberalization, soil erosion and an increasing population. Mike Williams of the Atlanta-Journal … […]

  3. Support a Haiti Private Sector Development Fund

    The Haitian-American Community would like to thank the United States Congress and its government for their continued dedication to Haiti, as proven by President-elect Obama’s recently published document “RENEWING U.S. LEADERSHIP IN THE AMERICAS” and “The Case for Haiti” section.
    Under the Stewardship of the Haitian-American Chamber of Commerce, Haitian-American groups would like to request from U.S. Executive and Legislative representatives the implementation of a Haiti Private Sector Development Package to take Haiti to The Next Step.
    The Haiti Small/Medium Business (SME) Program is to address the continued stagnation of Haitian economic growth due in part to nearly non-existent financing/credit and lack of investment funds to be afforded to Small and Medium business (SMEs) enterprises in Haiti. The Haiti SME Program will effectively jump-start the Haitian economy with entrepreneurial development, the traditional backbone of a viable economy.
    The proposed Haiti SME Program and/or Haiti Fund will build and transition on the successful work established by Haiti’s more than 10,000 non-governmental organizations (NGOs, the highest per capita in the world), USAID, the Canadian International Development Agency (CIDA), the EU, among other international institutions, the Government of Haiti, the Haitian universities and vocational schools, etc…, which provide education and training to hundred of thousand of people. Unfortunately, these programs’ graduates are forced to travel to the US, Canada, France or neighboring islands to find employment. These facts underline Haiti’s need for jobs that best suit its actual realities. The Next Step IS job creation!
    Therefore, US policies pertinent “to continued provisions of more technical assistance and job training” as stated in Mr. Obama’s “The Case for Haiti”, – in the above listed document, – must move beyond the status quo. US polices towards Haiti must include funding to implement actual projects/programs to best serve Haiti’s 70 percent Agriculture-related workforce.
    The Next Step towards sustainable economic programs/projects should optimize US and Haiti businesses, – with US and/or Haitian-American enterprises in partnership with the local Haitian private sector to introduce US technology and value-added concepts for actual market growth. This strategy will serve the Haitian market, as well as reestablish Haiti as a participant within the global market economy.
    The Haiti Private Sector Development Package or Haiti Fund will effectively supplement USAID’s US$ 2 million Haiti Investment with US Federal Government Guaranteed loans/funds to secure and capitalize US businesses in Haiti and encourage US and Haitian-American Diaspora business development in Haiti.
    This Initiative can be implemented and accomplished expeditiously via existing venues and with [US] Senatorial/Congressional Mandate Guarantee of loans/funds for US and Haitian-American Businesses operating in Haiti.

    Such venues would include the following:

    • The Overseas Private Investment Corp (OPIC) and its Political Risk Insurance Program Coverage, and
    • The Import/Export Bank reestablishment of its Haiti related operations.
    • The Inter-American Investment Corporation (IIC).

    Program application will be contingent upon the following provisions:

    • Reopen Import/Export Bank to US/Haiti businesses for credit access to US/Haiti business partners with provision of US Federal Funds Guarantees and pertinent Insurance Coverage;
    • Remove restrictions and import tariffs on all Haitian Goods for export to US.
    • Propose Exceptions/Revisions of debt/equity requirements of US and Haiti businesses effective post-haste to facilitate and provide the necessary support to Haitian economic development and recovery, to streamline, expedite and facilitate the Overseas Private Investment Corporation’s (OPIC) loan approval process via the consideration and pursuance of the following:
    • Third party [US private bank(s)] authorization for loan origination, processing and approval (Best Option: This is done by the Import/Export Bank rather successfully).
    • Revision of Rules and Regulations which limit financial access and resources to US and Haiti businesses/private Sector in Haiti, which in turn includes the following:
    a. Revision/Change of OPIC interpretation of its by-laws for project funding, specifically a re-evaluation of terms such as “Economic Threat” as it pertains to US/Haiti economic ties.
    b. Provision of insurance and financial guarantees for Haiti based businesses and projects. (This is already in place, but can be strengthened to encourage investments in Haiti and provide the complementary incentives for US/Haiti market development).

    • Policy Application: [US] policies as mandated from its Executive and Legislative branches should be uniformly applicable to all pertinent federal organizations/institutions to ensure effective coordination/application towards sustainable economic progress in Haiti.
    This means that organizations such as OPIC, USAID, and IIC should follow and apply financing policies as directed and mandated by the U.S. Executive and legislative branches of government.

    We hope to count on your support.

  4. The Haitian-American Chamber of Commerce has the Haiti Private Sector Development Intiative to work to redress and contribute towards economic stability with an emphasis on agriculture.
    The Chambers’ “The Next Step…. Haiti Small and Medium Business Program” goal is to work towards job creations and food security.

    Introduction/Title Program:
    Haiti Small and Medium Business (SME) Intitiave:
    (a) To capitalize US investment in Haiti for Private Sector Development and Economic Growth,

    (b) To remove US import restrictions and tariffs on ALL Haitian goods [exported to the US].

    The SME Initiative will be a partnership between the US and Haitian private sectors groups, – with a focus on farming groups and initiatives,- with the goal to organize, expand and strengthen US and Haitian economic ties.
    Program Focus: Priority Capitalization of:
    ■ Public-Private Partnerships (or PPP’s) Programs, ■ Agricultural Development (Environmental Protection, Conservation, food security), ■ Renewable Energy Development.
    Background:

    The SME Program is a direct response to nearly non-existent financing/credit, lack of investment funds, and limited small/medium business entrepreneurial development, the traditional backbone of a viable economy. The group is a partnership between producers and manufacturers, suppliers and distributors, importers and exporters. Haiti’s current overall Private Sector Financing/Credit options are provided through the following:

    – US and EU sponsored micro-loans, which though beneficial tend to limit economic growth and expansion, with credit limits not above US$ 2,500 – and,

    – [financing/credit] afforded to exactly 15 corporations/families (according to former Haitian PM, Mr. Alexis).

    Cause:

    Haitian Small/Medium business Enterprises have either no credit options or credit options with collateral request and terms that are outrageously unaffordable. For example, – loan repayment term limit may be 2 years with rates between 20 to 30 percent. This tends to encourage economic stagnation.

    Effect:

    The SME Program will serve and capitalize an underserved business sector, – for the following:
    • To support and promote Competition, Innovation and Technology;
    • To create jobs ,- and
    • To increase income (standard of living) through improved economic prospects over the short and long-terms.

  5. Kick-ass post, good looking website, added it to my favs.

  6. Personally I don’t think that Mr. Handsome has received enough accolades for his humanitarian efforts. In my opinion a lot of celebrity do-gooders are totally phony and engage in so called good deeds merely for positive publicity. I have to say that I don’t think that George is one of the phonies out there in the world of celbrity do-gooders. I admire what he is doing for the Haitian people. I wish more celebrities were as real as he is when it comes to helping out those less fortunate in the world. So kudos to George and his desire to make this world a better place.

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