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Cablegate: Apparel Sector Highlights Haiti's Economic Resilience And

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DE RUEHPU #0206 0571835
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O 261834Z FEB 10
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TO RUEHC/SECSTATE WASHDC IMMEDIATE 0407
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UNCLAS PORT AU PRINCE 000206

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E.O. 12958: N/A
TAGS: PREL PINR HA PGOV AID EAID ECON ETRD EINV KTEX
SUBJECT: APPAREL SECTOR HIGHLIGHTS HAITI'S ECONOMIC RESILIENCE AND
POTENTIAL

REF: 10 PORT AU PRINCE 120

1. (SBU) Within two weeks of the January 12 earthquake,
Haiti's garment manufacturing sector resumed exports to the US,
re-routing shipments through Dominican ports. Prior to the
earthquake, apparel assembled in Haiti accounted for three-quarters
of the country's exports, employing one-fifth of the formal sector.
Of the eighteen garment manufacturers in Port au Prince, two must
relocate and rebuild from the ground up; one factory that
completely collapsed crushed hundreds of workers inside, at least
300 of whom did not survive. Despite the loss of workers and
limited access to basic resources, including electricity, many
factories have reopened, simultaneously undertaking minor to
moderate repairs, clean-up, and reconstruction. Shipping from
Haiti resumed in less than a month, meeting customers' expectations
of having their orders filled on time. Logistics constraints,
while not wholly solved, have been overcome more quickly than
expected, and increased international support for the industry aims
to create more jobs and bolster the Haitian economy.

2. (SBU) International investors, brands, and manufacturers
who expressed interest in expanding production in Haiti before the
earthquake renewed their commitment to support the Haitian apparel
industry, taking advantage of the trade preferences of the HOPE II
Act for duty-free export to the US (reftel A). At the apparel
industry's largest trade show in Las Vegas in February, the US
Trade Representative (USTR), along with Gap Inc., Hanes Brands, and
the US Association of Importers of Textiles and Apparels announced
the Plus One for Haiti initiative, urging clothing retailers to
"buy Haitian" and source at least one percent of their total
apparel production from Haiti. Representatives from the GOH
Presidential Commission for the Implementation of HOPE (CTMO-HOPE)
are currently in Washington working with USTR on an additional HOPE
extension.

3. (SBU) Given the increased attention to Haiti, investors
are giving consideration not only to build more factories but also
to create more jobs by supporting infrastructure, such as
electricity and water, needed to sustain the industrial parks and
free trade zones that would house these factories in
Port-au-Prince, as well as other potential industrial hubs,
including Cap Haitien in the north. Representatives from
high-volume customers, such as Gap Inc. in Korea, are visiting
Haiti to explore expansion plans that originated before the
earthquake. The World Bank and IMF are conducting port assessments
specifically with respect to capacity to handle shipping containers
for garments.

4. (SBU) Comment: The apparel manufacturers in Haiti operate
on a high volume, thin margin, low capitalization basis where cash
flow is extremely important for the business to survive. Industry
representatives have told us that the garment sector wouldgreatly
benefit from a "soft loan" fund of USD 20 million for their
immediate working capital cash needs, granting concessionary loans
with an extended grace period and affordable interest rates to
enable manufacturers to operate at full capacity as soon as
possible, retain the 28,000 workers already employed, and expand
production to benefit under the special trade provisions of the
HOPE II Act. Combined with other USG initiatives bolstering the
garment sector, such a loan would send a positive signal to U.S.
retailers and producers in Haiti and the Caribbean, and should also
send an encouraging message to the more than 25,000 Haitian factory
workers who rely on garment factory jobs to provide for themselves
and their families. End comment.

5. MINIMIZE CONSIDERED
MERTEN

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