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THE EFFECTS OF ILLEGAL TRADE ACROSS THE BORDER WITH THE DOMINICAN
REPUBLIC
AND GROWTH IN THE HAITIAN ECONOMY
Prepared by
Daniel Dorsainvil, Ph.D
February 2018
i
Executive Summary
Haiti faces a great many development challenges and needs to invest heavily in the areas of education,
health, and infrastructure as a means of spurring economic growth and achieving sustainable
development. The country shares the island of Quisqueya with the Dominican Republic (DR), and
unlike Haiti, that country has been able to grow its economy consistently over the past six decades and
it stands today as one of the most vibrant economies of the Central American and Caribbean regions;
the DR has a Gross Domestic Product (GDP) of $ US 73.6 billion and a GDP per capita of $ US 6,909.
Haiti on the other hand, the only Less Developed Country (LDC) of the western hemisphere, has a
GDP of $ US 8 billion and a GDP per capita of $ US 729. This stands in stark contrast with the
economic performance of its neighbor, a result that is surprising since the two countries had similar
GDP per capita as recently as the early 1960’s.
Studies point to structural measures (investment in education, and infrastructures) as one of the main
factors that explain the difference in the growth experience of the two countries.
Smuggling of merchandise goods from the DR to Haiti has grown significantly over the past fifteen years,
and today, estimates of the volume of illegal trade range from $ US 630 million to $ US 1 billion; that is
at least 8% of GDP. Revenue losses caused by these illegal activities have been estimated to range
between $ US 184 million and $ US 440 million. The availability of an additional $ US 250 million would
have kept the Haitian Treasury from running a deficit over the past five years, and the macroeconomic
environment would not have deteriorated as much as it did: high inflation and exchange rate volatility.
GDP would have also risen by an additional 1.85% had the $ US 250 million shortfall been used to
increase capital expenditures.
Specificities of the Haitian budget are such that revenues collected suffice to cover operations
expenditures but not investment expenditures; consequently, smuggling limits the ability of the central
government to invest in the country’s infrastructure and other areas that have a positive impact on
human development and growth. In an era of reduced international aid, smuggling deals a particularly
severe blow to the Haitian Treasury. Moreover, the resulting inability of the Government to provide
basic services and economic opportunity undermines its credibility and fuels political instability.
Research has identified political instability as another principal factor that caused the Haitian and DR
economies to diverge. Under those circumstances there is a lack of employment opportunity in Haiti,
and many Haitians seek opportunities elsewhere. The issue of migration is a very sensitive matter not
only for Haiti and the Dominican Republic, but also for other partners, including members of CARICOM
and the United States of America.
All the categories of smuggled goods are also produced domestically, and the illegal activity constitutes
unfair competition to local producers. As such, smuggling hinders investment, and results in job losses in
the agricultural as well as the food processing sectors. Manufacturing jobs have also been affected.
Estimates of the number of jobs affected in agriculture exceed 500.000 while those in the manufacturing
sector, apparel sector excluded, reach 60.000.
A case study for the Poultry industry shows that smuggling has the potential of wiping out great
progress achieved in that industry since 2012. There have been significant increases in:
1. the production of day-old chicks to the December 2016 figure of 200,000/month: 100% increase
over 2012.
ii
2. the production of layers to the December 2016 total of 500,000: 1000% increase over 2012.
3. the production of consistent quality poultry feeds to the December 2016 total of 2,000
MT/month:500% increase over 2012
4. the production of broilers and table eggs to the December 2016 figures of 200,000/month &
400,000/day respectively. This represents a 100% and 1000% increase respectively over 2012.
Poultry products from the DR can only enter Haiti illegally. There is a ban on poultry products from
the DR because there have been outbreaks of Avian Flu and New Castle disease in that country. One
such outbreak occurred as recently as December 2017, as reported by the Organization for Animal
Health, OIE.
The poultry industry has important backward and forward linkages to other sectors in the economy. For
instance, the Haitian Ministry of Agriculture estimates that to keep up with increased poultry
production, cereal production for feed will have to grow from 267.600 Tons in 2017 to 1.275.000 Ton
by 2034. Such a production would require 212,500 hectares. There are currently 954,600 hectares
available for agriculture in Haiti, and the majority of that area is used for growing cereals and vegetables.
According to Haiti’s Ministry of Agriculture data, 1 hectare sustains 2.79 permanent jobs. Therefore,
212,500 hectares would support 593.000 permanent jobs in agriculture under current conditions,
probably fewer with technological advances. Nevertheless, the numbers of jobs at stake are staggering.
The poultry industry entails many benefits that include:
 Creation of small-business entrepreneurship;
 Direct jobs within the industry and indirect jobs; supplying logistics support, information
technology, trading & marketing, veterinarians, carpenters, masons, engineers and builders,
supply of water tanks;
 Backward linkages to the agricultural sector for corn, sorghum, broken rice, rice hulls;
 Supply of significant quantities of manure for crops;
 Rural development and jobs for rural women, thereby reducing rural to urban migration;
 The production of many other animal feeds.
Information released by DR authorities help document additional products that enter Haiti illegally:
1) Flour;
2) Tomato ketchup and other tomato sauces;
3) Sausages;
4) Broken rice;
5) Maize (corn) groats;
6) etc…
Other important items on the smugglers’ menu are cement, cereals, and eggs.
Meanwhile, Haitian producers evoke the difficulties they experience in trying to export to the DR. Aside
from tariff; those difficulties are related to administrative constraints such as delays in obtaining import
licenses. A recent study (CLEF, 2016) commissioned by Caribbean Export Development Agency (CEDA)
found that a number of potential Haitian exports are affected by those barriers. They include:
1. Corn flour;
2. Corn flakes;
3. Chicken cubes;
iii
4. Beer and Rum.
Haitian manufacturers also claim that they face obstacles in attempting to export edible oil and soaps to
the DR.
The Haitian experience with smuggling is not unique. Scores of testimonies can be found on the
negative effect of smuggling on domestic firms (producers and importers alike) as they face unfair
competition from smuggled goods. The testimonies are often from a number of poorer countries in
Africa and Asia that, like Haiti and the Dominican Republic share common land borders.
The Ugandan revenue authorities have identified four main effects of smuggling:
 LOSS OF REVENUE
 DISTORTION OF MARKET PRICES
 COLLAPSE OF LOCAL INDUSTRIES
 UNEMPLOYMENT
The stakes involved with smuggling are so important and pervasive that the effect of illicit trade on
development was the subject of a special study commissioned by the Swedish Ministry of Foreign affairs
in 2015: Illicit Trade-Undermining Development. The report deplores that “The problem with illicit
trade in "normally legal goods" is quite different as the extent and visibility of the problem is much more
apparent in the developing world than in the developed world. Consequently the states most able to
deal with this type of illicit trade, and assist in capacity building, are not as concerned by these problems
themselves. This leads to a number of problems. As the issue is not considered of primary importance
the efforts to quantify the problem and measure its impacts have not been as robust as in the drugs
space. This relative lack of data again creates a problem, as it becomes politically very hard to set an
appropriate level of prioritization of a problem when there is a shortage of data.”
Were it not for remittances a great many Haitians would not be able to meet their basic needs for food,
shelter, and clothing. Remittances reached US2.3 billion in 2016, or about 30% of GDP. Given Haiti’s
reliance on food imports, money transfers finance, to some degree at least, smuggled goods from the
Dominican Republic. The Haitian market is attractive for certain types of basic goods because the
country has a large population base, some 11 million people, and the size of the population makes up for
low per capita income. Haiti is the second biggest destination for DR exports. In 2014, while the DR
exported $ US 1.4 billion to Haiti, Haitian exports to the DR totaled $ 4 million. Agricultural and
Agribusiness products make up about one third of all DR exports to Haiti.
As has been documented, the enactment of structural measures is an important determinant of growth,
and has been flagged as one of the chief reasons why growth in Haiti lagged far behind that of the DR. It
has also been argued that by provoking revenue losses, smuggling places constraints on a Government’s
ability to put such measures in place. Countries such as Haiti with relatively low savings have to rely on
foreign savings for investment. These savings may come as foreign aid or as foreign direct investment
(FDI). The latter can provide an important stimulus to the economy. The experience of the DR has
shown that some minimal conditions must exist to attract foreign capital. Initial growth creates the
socioeconomic and political conditions that are suitable to FDI. Financial resources are required to
initiate this growth. An effective fight against smuggling would yield some of these resources by reducing
losses in tax revenues and lifting an important constraint on domestic productive capacity.
1
1. Introduction : the imperative of growth
Haiti has not experienced a period of sustained growth since the 1970’s, and reasons to explain this
result include poor governance, political turmoil, and natural disasters. On the eastern side of Quiskeya,
the Dominican Republic that spans two thirds of the island it shares with Haiti has fared much better. It
can boast today of being one of the most vibrant economies1 of the Caribbean and Central American
regions. According to the most recent available data, the GDP of the Dominican Republic totaled $
US73.6 billion2 in 2016 while that of Haiti approached $US8 billion that same year. Each country has
roughly the same population size: nearly 11 million people. GDP per capita in the two countries were
$US6, 909 and $US729, respectively. The low per capita figure and other socio-demographic indicators
make Haiti the only Less Developed Country (LDC) of the Americas.
However, as recently as the 1960’s, the two countries had very similar income per capita; a situation
that leaves one to wonder what role the factors listed above, among others, may have played in
explaining the divergence of the two economies.
Jaramillo and Sancak (2007) have explored and analyzed the issue and have found that “initial conditions
cannot fully explain the growth divergence, but rather policy decisions have played a central role in the
growth trends of the two countries“3. They further argue that “structural policies”4, have been the key
determinant of growth in both the Dominican Republic and Haiti, followed by political stability and
1
5.5% real growth of Gross domestic Product (GDP) in the Dominican Republic compared with 2.43% for the
Caribbean region: more than twice as much for the former.
2
World Bank Development Indicators, 2010 US dollars.
3
Jaramillo, L. and Sancak, C. : Growth in the Dominican Republic and Haiti: Why has the Grass Been Greener on
One Side of Hispaniola? IMF Working Paper.
4
particularly education, investment in public infrastructure, and trade openness, financial depth,
government burden
0
2000
4000
6000
8000
10000
12000
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
DOMINICANREPUBLIC
HAITI
GDP PER CAPITA FOR HAITI AND THE DOMINICAN REPUBLIC, 1960-2009, PPP
2005 International dollars
Source: PENN WORLD TABLE 7.1
2
stabilization policies”. These findings echo those presented by Lozaya et al. (2004)5. Those authors had
cautioned that “unobserved country-specific effects can also be important to explain the growth
differences with respect to Chile. There is a group of countries, many of them located in Central
America and the Caribbean, for which country-specific factors not captured by the model’s explanatory
variables cause them to grow over 2 percentage points less than the leader”.
In keeping with those findings, it would seem appropriate to consider key policy choices made on the
western part of Quiskeya and factors that are specific to the Haitian case to understand Haitian
economic underperformance vis-à-vis its neighbor.
The obvious benefits of free-trade notwithstanding, in the 1980’s and 1990’s, Haiti adopted very liberal
trade policies and lowered its tariffs, partly on efficiency grounds, and partly because it was thought to
be an effective strategy to fight against smuggling across its border with the Dominican Republic.
Unfortunately, in the midst of a global recession, failed stabilization efforts, and poor infrastructure,
increased competition from abroad that resulted from openness would severely undermine local
production capacity, including exports; and there is no evidence that contraband had waned6. Political
instability and natural disasters did the rest. The appropriate mix of structural measures was not
present, and on that point it is reported that “The opening of the Haitian economy was not supported
by any support measures to the sectors affected by the provisions of trade policy, which in the opinion
of analysts caused Haiti to suffer from the dismantling of several production subsectors”7. (CLEF
CONSULTING, 2016).
Today, while there are efforts underway to reverse the liberal stance of the 80’s and 90’s, to at least
harmonize Haitian tariffs with those of CARICOM, smuggling along a very porous border continues to
be a threat to local producers and constitutes an impediment on much needed economic growth in
Haiti. The country is currently adopting a more measured and more strategic approach to trade
liberalization in support of stated development policies that target growth in agriculture, food and
beverage industries, manufacturing, the construction sector, and tourism. Smuggling constitutes an unfair
competition to domestic businesses as a whole and goes counter to the country’s growth objectives. In
addition, in an era of reduced international aid, it denies the Haitian Treasury resources that are needed
to address deficiencies in the areas of infrastructure, health, and education. Moreover, the resulting
inability of the Government to provide basic services and economic opportunity undermines its
credibility and fuels instability.
The case of the Dominican Republic over the past decades, doubling its GDP per capita in a twenty-year
span, serves to highlight growth potentials of which Haiti could avail itself in the coming years; Benefits
of growth are to be measured not only in terms of income and poverty reduction but also and foremost
in terms of job creation and employment opportunities. In addition to contributing to greater socio-
5
Loayza, N.; Fajnzylber, P. & César C.- ECONOMIC GROWTH IN LATIN AMERICA AND THE CARIBBEAN:
STYLIZED FACTS, EXPLANATIONS, AND FORECASTS, Central Bank of Chile, Working Papers N° 265, June
2004
6
The experience is not unique. In the Philippines, “when the government reduced the tariff rates on imported
articles, many economists and merchants expected a decline in smuggling activities. They believed the tariff
reduction would discourage illegal importation of goods since there will be fewer taxes to pay on the part of
importers. But even with reduced tariff rates, smuggling persists up to this day.” Source:
http://dumaguetemetropost.com/smuggling-p9148-99.htm
7
Author’s translation. Original text in French : « Il s`avère utile de souligner que cette ouverture de l’économie
haïtienne ne fut pas soutenue par des mesures d`accompagnement des secteurs touchés par les dispositions de
politique commerciale, ce qui selon l’opinion des analystes, conduisit à ce qu’Haïti subisse le démantèlement de
plusieurs sous-secteurs de production. »
3
political stability, higher employment speaks directly to the issue of migration, a very sensitive matter
not only for Haiti and the Dominican Republic, but also for other partners, including members of
CARICOM and the United States of America. If only all measures could be taken to support growth in
Haiti then better development outcomes would materialize and migration flows would be reduced. Our
focus here is on smuggling. The Dominican Republic does a much better job of controlling its border
than Haiti, and while there is informal trade going from Haiti to the Dominican Republic, contraband is
an issue that concerns illegal imports of goods into Haiti from the neighboring country. To understand
this point, it is worth noting that in 2014, for example, Dominican exports to Haiti totaled $US1.4
billion, while Haiti’s exports to that country had reached only $ US 4.6 million8.
The balance of the paper is structured as follows. Section 2 contains a discussion on various impacts of
smuggling while section 3 focuses on the extent of smuggling across Haiti’s border with the Dominican
Republic. In a fourth section, the effect of smuggling on the Haitian economy is analyzed using a case
study in the poultry industry. In a fifth and final section an argument is presented for why growth
attained in the short and medium terms by an effective anti-smuggling measures could put Haiti on a
more sustainable growth path.
2. The economic impact of smuggling
Smuggling involves the illegal trade that enters a country while avoiding paying applicable custom duties
and taxes. This is done either by using illegal entry points (contraband routes or trails), by concealing
contraband in other cargo, or by resorting to misclassification, undervaluation, or under declaration.
The latter three are all forms of false declarations. Misclassification involves classifying the imported
good under a heading that carries a lower tariff, while undervaluation describes a situation whereby
goods are given a lower value. Finally under declaration corresponds to a case where the wrong
quantity is declared. However, the use of illegal entry points or concealment, if undetected, may allow
entry to a country of goods that may represent health risks for the population, in addition to the
avoidance of appropriate fees.
The Ugandan revenue authorities have identified four main effects of smuggling9. They appear below.
 LOSS OF REVENUE: Smuggling is an act of tax evasion which deprives government of
revenue for public expenditure.
 DISTORTION OF MARKET PRICES : Goods which are smuggled into the country are
often sold a lot cheaper than goods brought onto market through the right procedures.
Smuggling therefore deprives traders of free competition.
 COLLAPSE OF LOCAL INDUSTRIES: A country achieves better economic growth by
developing its own industrial base. Smuggling under-cuts prices of the locally manufactured
goods thus destroying the market for local products. This leads to the collapse of local
industries.
 UNEMPLOYMENT : When there is unfair competition in the market, compounded by the
collapsing of industries, the labour market (employment base) is eroded. Many professionals,
skilled and unskilled personnel remain jobless.
8
Source : https://www.trademap.org
9
Source: https://www.ura.go.ug/download/staticContent/RGTMENU/307/313_Smuggling_and_its_Effects.doc
4
The loss of revenue has a direct impact on a country’s ability to implement structural policies,
particularly those that relate to education and contribute to improvements in human capital, a known
driver of growth and one of the pillars of sustainable development. Furthermore, revenue loss may
result in deficit financing and deterioration of the macroeconomic environment which in turns deepens
poverty by causing inflation and exchange rate volatility.
Scores of testimonies can be found on the negative effect of smuggling on domestic firms (producers and
importers alike) as they face unfair competition from smuggled goods. The testimonies are often from a
number of poorer countries in Africa and Asia that, like Haiti and the Dominican Republic share
common land borders. Examples are reproduced below.
PAKISTAN10
Thousands of industrial units have been rendered sick, due to the availability of smuggled goods
in open markets. Afghan Transit Trade is the main source of smuggling into Pakistan and its
annual volume has been estimated about five to six billion dollars, about 70% of the total
smuggling causing a revenue loss of about 2.5 to 3 billion dollars annually (which has been almost
tripled during 2008-2010) to the national exchequer.
ZIMBABWE11
Most informal traders that smuggle their goods from neighboring country like Mozambique does
(Sic) not pay tax for their goods, therefore not contributing to the (Sic) economic growth.
“And these products are then sold at very low prices, presumably because they are smuggled
without paying duties. It is not viable for a formal trader to continue operating if informal
traders like tuck-shop vendors, appear untouchable as they sell the same products that are
found in the formal trader’s shop on the informal tuck-shop trader at nominal prices.”
NIGERIA12
Investigations show that smuggling has remained a continuous threat to the existence of any
nation. For instance, the Nigerian Textile Manufacturers Association (NTMA) disclosed recently
that Nigeria loses a whopping $325 million every year due to evasion of customs duty and value
added tax by smugglers of textile materials.
Chairman NTMA, Mr. Abiodun Ogunkoya said that smugglers deny government of huge revenue
as well as pose a challenge to the industry. According to him, around 85 per cent of the $1.4
billion worth of textile materials that flood the nation annually are smuggled.
On the issue of unemployment, it is clear that when local firms face unfair competition they are less
inclined to invest and employment suffers. However, smuggling may have even more pernicious and
unsuspected effects on the labor market. Indeed, it has been found (Girma and Gezahagn, 2016) that
smuggling has a negative effect on labor rate participation and the quality of the labor force. For
instance, this research documents that smugglers are less likely to join the formal labor force once they
enter the illegal trade.
10
Source: https://lubpak.com/archives/28602
11
Source : http://newsofthesouth.com/smuggling-hindering-economic-growth/
12
Source : http://shipsandports.com.ng/why-smuggling-remains-a-threat-to-the-economy/
5
Last but not least, there are several advantages to developing a domestic industrial base. These have to
do with backward and forward linkages in the economy. The development of local processing capacity
for example stimulates agriculture, a backward linkage, while it also supports the emergence of
transport and packaging activities, a forward linkage. All those factors are important for investment,
growth, and development.
In short, smuggling results in a loss of employment and investment opportunities and hampers growth.
The stakes are so important and pervasive that the effect of illicit trade on development was the subject
of a special study commissioned by the Swedish Ministry of Foreign affairs in 2015: Illicit Trade-
Undermining Development. The report deplores that “The problem with illicit trade in "normally legal
goods" is quite different as the extent and visibility of the problem is much more apparent in the
developing world than in the developed world. Consequently the states most able to deal with this type
of illicit trade, and assist in capacity building, are not as concerned by these problems themselves. This
leads to a number of problems. As the issue is not considered of primary importance the efforts to
quantify the problem and measure its impacts have not been as robust as in the drugs space. This
relative lack of data again creates a problem, as it becomes politically very hard to set an appropriate
level of prioritization of a problem when there is a shortage of data.”
In the next section, data is provided on the extent of the illegal merchandise trade coming from the
Dominican Republic to Haiti.
3. Haiti: Trade, smuggling, and development challenges
Haiti’s low per capita GDP suggests that there is a high prevalence of extreme poverty in the country.
The country also exhibits one of the highest GINI coefficients of the Western hemisphere: 40.9 in
201213. Furthermore, a recent study has estimated that nearly 59% of the Haitian population lives14
under the poverty line. Haiti’s development challenges are enormous, and were it not for remittances a
great many Haitians would not be able to meet their basic needs for food, shelter, an clothing.
Remittances reached US2.3 billion in 2016, or about 30% of GDP.
Source: https://tradingeconomics.com/haiti/remittances
13
World Development Indicaors, World Bank
14
Pauvreté et inclusion sociale en Haïti: gains sociaux à petits pas. World Bank, 2012.
6
Studies corroborate this assertion. It was found that 81%15 of remittance recipients use the money
received on food. Therefore, one can assert, given Haiti’s reliance on food imports that money
transfers finance these imports to some degree at least; a portion of those imports coming from the
Dominican Republic are smuggled. Agricultural and Agribusiness products make up about one third of
all DR exports to Haiti.
With a population of nearly 11 million people, the Haitian market is an attractive destination for
exports, and one has to keep in mind that, individual purchasing power aside, Haiti has the fourth largest
economy of the Caribbean region. From the standpoint of a seller, Haiti makes up for its low income
with its population size, particularly if financing (remittances) is available from abroad.
COUNTRY GDP2016
(USD 2010)
POPULATION
GDP PER
CAPITA
DOMINICAN REPUBLIC 73,573,876,510 10,648,791 6,909
TRINIDAD AND TOBAGO 22,192,974,037 1,364,962 16,259
JAMAICA 13,801,803,130 2,881,355 4,790
HAITI 7,910,618,370 10,847,334 729
BAHAMAS 7,821,154,995 391,232 19,991
BARBADOS 4,629,124,472 284,996 16,243
SURINAME 4,527,379,879 558,368 8,108
GUYANA 2,925,825,406 773,303 3,784
BELIZE 1,588,184,522 366,954 4,328
SAINT LUCIA 1,451,113,155 178,015 8,152
ANTIGUA-AND-BARBUDA 1,344,373,698 100,963 13,316
GRENADA 931,118,693 107,317 8,676
SAINTKITS AND NEVIS 858,344,692 54,821 15,657
SAINT-VINCENT AND THE
GRENADINES
732,044,136 109,643 6,677
DOMINICA 506,021,854 73,543 6,881
Source: World Development Indicators, World Bank
3.1 Main imports from the World and from the Dominican Republic
Topping Haiti’s imports from the rest of the World (see Appendix 1) between 2013 and 2015 are: i)
general commodities; ii) textile products; iii) food items; iv) basic manufactured products such as
cement, iron bars, packaging material, soaps, and detergents. The import of textiles is explained by the
rebirth of the apparel industry in Haiti.
15
Orozco, M. Understanding the remittance economy in Haiti, Inter American Dialogue, a paper commissioned by
the World Bank, March 2006
7
About 30% of all exports into Haiti originated from the Dominican Republic between 2013 and 2015.
This makes that country, along with the United States, Haiti’s most important trading partner.
YEAR 2013 2014 2015
TOTAL IMPORTS ('000 USD) 3,731,890 4,213,929 3,614,056
DOMINICAN REPUBLIC 1,042,883 1,423,206 1,012,159
SHARE OF IMPORTS FROM THE
DOMINICAN REPUBLIC
28% 34% 28%
Source: Trademap, author’s computations.
Besides textiles, Haiti imports (see Appendix 2) mainly: i) processed food products, and ii) basic
manufactured goods: a) detergents; b) cement; c) iron bars from the Dominican Republic. There are
manufacturers of all these products in Haiti, and the imports constitute a direct competition to domestic
production. To the extent that some of these goods enter the Haitian market illegally by circumventing
customs, this activity amounts to unfair competition.
3.2 Measuring smuggling from the Dominican Republic
In 2015, official figures published by the Centro de Exportación e Inversión de la República Dominicana
(CEIRD) show that total Dominican exports to Haiti amounted to $ US 1 billion. However, Haitian
Custom Authorities (Administration Générale des Douanes –AGD) reported total imports of only $US
204 million from the Dominican Republic (DR) for that same year. This is about 20% of the value
registered by their Dominican counterparts. This suggests that smuggling from the DR has reached
enormous proportions, a result that is supported by a recent study16 on commercial flows between the
two countries that produced an estimate of $ US 634 million of merchandise trade by Haitian custom in
2014: that is about 8% of GDP. That estimate is partly derived from a calculation made by the Oficina
Nacional de Estadística (ONE). They found that there were about $ US 375 million of unregistered
exports to Haiti. Accordingly, they adjusted Dominican exports from about $1 billion to $ US 1.4 billion
for that year.
Most of the merchandise trade between Haiti and the DR (over 85%) transits through land at three of
four official border posts: Malpasse, Ouanaminthe, and Belladère on the Haitian side. As illustrated in
the map below, the corresponding points on the Dominican side are Jimani, Dajabòn, and Elias Piña.
16
Kett, B. Centre de Facilitation des Investissements (CFI) TRADE FLOWS BETWEEN HAITI AND THE DOMINICAN
REPUBLIC-Opportunities for Increasing Haitian Production, December 2015.
8
The level of unregistered trade is further illustrated in the table below.
Discrepancies between export and import values recorded in the
DR and Haiti at corresponding border crossings
Point of
Exit
Custom
Value
($US)
Point of
Entry
Custom
Value
($US)
RATIO VALUE
EXIT/VALUE
ENTRY
Elías Piña 78,028,786 Belladère 18,058,915 4
Dajabón 251,204,599 Ouanaminthe 19,726,862 13
Jimaní 565,500,170 Malpasse 226,525,327 2
Source: AGD, and ONE
As mentioned earlier, many of the unreported imports are items produced in Haiti. A partial list of the
unreported products released by DR authorities appears in the table below. There are agricultural as
well as food products. The list also includes manufactured products.
HS6 CODE PRODUCT LABEL
UNREPORTED
EXPORTS TO
HAITI ($ US)
110100 Wheat or meslin flour 37,398,883
210390
Sauces and preparations
nes13 and mixed
condiments and mixed
seasonings
32,003,218
210320 Tomato ketchup and other
tomato sauces
14,563,287
151519
Linseed oil and its fractions,
refined but not chemically
modified
13,217,877
392410 Tableware and kitchenware
of plastics
12,365,451
190531 Sweet biscuits 12,053,132
481910
Cartons, boxes and cases,
of corrugated paper or
paperboard
9,567,891
160100
Sausage & similar products
of meat, meat offal/blood&
food prep based on these
prod
9,161,421
340220
Surface-active prep,
washing & cleaning prep
put up for retail sale
7,729,773
392330
Carboys, bottles, flasks and
similar articles of plastics
7,685,984
10511
Fowls, live domestic
weighing not more than
185 g
7,439,176
110313 Maize (corn) groats and
meal
7,401,295
9
HS6 CODE PRODUCT LABEL
UNREPORTED
EXPORTS TO
HAITI ($ US)
100640 Rice, broken 7,221,278
310560
Fertilizers containing
phosphorus & potassium, in
packages weighing<=10 kg
6,611,334
392321
Sacks and bags (including
cones) of polymers of
ethylene
6,178,618
80310 Plantains 5,698,991
220840 Rum and tafia 5,326,744
TOTAL 196,297,609
Source: Oficina Nacional de Estadística (ONE)
Other important items on the smugglers’ menu are cement, cereals, and eggs. The Dominican Republic
provides incentives to DR producers that are exporting to Haiti. They are granted a waiver on a value-
added tax (VAT) of 18%.
Once more, given the size of the population, the Haitian market is very attractive, particularly for basic
food and manufactured products. Haiti is the second biggest destination for DR exports.
PARTNER
2014 2015 2016
Export value ($ US billion)
9.9 8.4 8.7
UNITED
STATES 4.9 4.5 4.6
HAITI 1.4 1.0 0.8
CANADA 0.9 0.7 0.8
OTHER 7.4 5.6 5.7
Meanwhile, Haitian producers evoke the difficulties they experience in trying to export to the DR. Aside
from tariff; those difficulties are related to administrative constraints such as delays in obtaining import
licenses. A recent study (CLEF, 2016) commissioned by Caribbean Export Development Agency (CEDA)
found that a number of potential Haitian exports are affected by those barriers. They include:
1. Corn flour;
2. Corn flakes;
3. Chicken cubes;
4. Beer and Rum.
Haitian manufacturers also claim that they face obstacles in attempting to export edible oil and soaps to
the DR.
10
3.3 Smuggling and the Haitian budget
There are several estimates of the revenues lost by the Haitian Treasury to smuggling. Before delving
into that issue, it would be informative to understand first the type of public expenditures smuggling
mainly affects. The Haitian budget is composed of operations and capital expenditures.
Since 2006, Haiti has been able to support its operations budget and even developed capacity to finance
part of its capital or investment expenditures. The table below shows the level of committed operations
and investment expenditures for the past five years: revenues exceed operations expenditures. It follows
that revenue losses adversely affect the Treasury’s ability to finance capital expenditures in education,
health, and infrastructure.
Haiti’s budget : main components (2013-2026)
Budget item 2013 2014 2015 2016 2017
Total Revenues (Millions of gourdes) 44,522 47,107 56,794 74,972 66,078
$ US (million) equivalent 1,018 1,034 1,089 1,144 1,054
Exchange rate (gourdes per $ US end of fiscal
year)
43.7429 45.5577 52.1417 65.5368 62.69
Income and other internal taxes 29,243 33,380 38,564 53,091 44,904
of which (TCA) 13,435 13,991 14,230 19,849 17,245
Customs 1,946 13,401 17,577 21,654 20,240
Other 14,231 326.03 652.66 225.78 934.33
Total expenditures (Commitment basis) 52,826 52,513 54,376 69,880 63,365
Operations 39,376 45,109 48,156 63,924 57,433
Capital 13,450 7,404 6,220 5,956 5,931
The figures in the previous table do not take the float (cash expenditures from previous budget cycles
that are paid in the current year) into account. Those emerge, as do net internal financing as well as
external support (of which direct budget support and debt repayment) as so-called below-the-line items.
The table below shows the cash position of the Haitian Treasury for the past five years.
2013 2014 2015 2016 2017
Central Bank Financing (billions of
gourdes)
2.7 5.3 9.9 4.5 6.6
Millions of $ US 61.7 116.3 189.9 68.7 105.3
Now, estimates of revenue losses range from $ US 184 million in 2014 (Kett, 2015) to over $ US 440
million in 2013 (Association des Industries Haïtiennes-ADIH, 2013). Kett has argued that ADIH’s
estimates of revenue losses are far too high. Be that as it may, it would also seem that Kett’s estimate
falls short in the sense that it does not take into account additional internal tax revenues such as the
“Taxe sur Chiffre d’Affaires” (T.C.A) that would have resulted from the sale of smuggled products by
formal operators in the Haitian marketplace. In addition Kett’s estimate does take undervaluation into
account either. Let us for argument sake, work with losses of about $ 250 million; they amount to
about 3.1% of Haitian GDP.
11
Using exchange rate figures from 201517, the revenue loss corresponds to nearly 13 billion gourdes,
which ceteris paribus, would have been more than enough to cover the 9.9 billion gourdes deficit
recorded in 2015. In other words, revenue losses from smuggling hinder GOH ability to finance
structural measures, and can be said to be associated with a worsening of the macroeconomic
environment (see figure below) : i) higher inflation, ii) depreciation and/or volatility of the exchange rate.
In addition, according to an International Monetary Fund (IMF) report18, a fiscal multiplier of .6 can be
assumed for the Haitian case. That multiplier measures the increase in GDP that could result from a one
gourde increase in government expenditure. Using that multiplier and assuming that capital
expenditures were increased by the 13 billion gourdes ($ US 250 million) tax shortfall, GDP would have
risen by an additional 1.85%.
3.4 Smuggling and employment in agriculture and the manufacturing sector
Growth rates for the agricultural and manufacturing sector are presented in the table below. The
agricultural sector exhibited negative growth between 2009 and 2017, while the manufacturing sector
grew at 5.2% on average over the period. However this strong showing is due to recovery that took
place in the two years following the earthquake. Growth in the sector has been rather low in
subsequent years, averaging 2.4% between FY 2012-13 and FY 2016-17.
Fiscal Year (FY)
Agriculture,
Livestock, and
Fisheries
Manufacturing
Growth rates of sectoral GDP
2009-10 - -
2010-11 -1.1% 17.8%
2011-12 -1.3% 7.1%
2012-13 4.3% 2.1%
17
52.1417 gourdes per US dollar, in September 2015.
18
Bessaha, A and and Elva Bova, E. OPTIMIZING FISCAL POLICY FOR HIGH AND INCLUSIVE GROWTH IN
HAITI-HAITI Selected Issues, IMF, Country Report No. 13/91, February 2013
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
Inflation, % change in CPI
% Change in exchange
rate.
12
Fiscal Year (FY)
Agriculture,
Livestock, and
Fisheries
Manufacturing
Growth rates of sectoral GDP
2013-14 -1.5% 2.7%
2014-15 -5.4% 4.6%
2015-16 3.1% 1.5%
2016-17 0.8% 1.0%
Average -0.1% 5.2%
According to official Haitian statistics, agriculture employed 1.2 million people in 2009, while the
industrial sector was responsible for 544,000 jobs in 2016 according to International Labor Organization
(ILO) statistics. There is no doubt that this estimate includes hundreds of thousands of informal sector
jobs. A survey19 conducted by the Haitian Institute for Statistics and Computing, Institut Haitien de
Statistique et d’Informatique (IHSI) indicates that the formal sector is responsible for about 20% of
Manufacturing Jobs. If that figure is applied to the ILO estimate, the number of formal sector
manufacturing jobs reaches about 103 thousand. The apparel industry is responsible for about 40.000 of
these jobs and the balance (some 60.000) can be imputed to light manufacturing: a) food processing such
as flour, beverages, etc. and; b) non food items such as cement, detergents, paper products, packaging,
etc.
Smuggling has taken such proportions, that the rise in that phenomenon associated with the increasing
trade deficit between Haiti and the DR cannot be overlooked as one of the factors that explains the lack
of growth in the Haitian manufacturing and agricultural sectors. Several thousand jobs have been lost
and are still threatened.
HAITIAN EXPORTS TO/IMPORTS FROM THE DR OVER TIME (‘000 000 USD)
19
Enquête sur l'Emploi et l'Economie Informelle, 2007
13
4. The economic effect of smuggling on Haitian production capacity: the poultry industry
– a case study.
About 1 million eggs are exported to Haiti from the Dominican Republic on a daily basis. These export
are illegal as there is a ban on poultry products from the DR because there have been outbreaks of
Avian Flu and New Castle disease in that country. One such outbreak occurred as recently as
December 2017, as reported by the Organization for Animal Health, OIE.
TABLE EGGS Quantity (Million units)
2012 2017
Local Production 11 146
11 146
IMPORTS
Dominican Republic 360 360
Others 40 40
400 400
GRAND TOTAL 411 546
In addition, the Dominican Republic exports 4.6 million kg of Broilers and Boiler Meat to Haiti.
Domestic production stands at about 8.4 million kg, and demand is satisfied largely by US imports.
Haiti has achieved tremendous progress in its poultry production since 2012. Namely, there have been
significant increases in:
1. the production of day-old chicks to the December 2016 figure of 200,000/month:100% increase
over 2012.
2. the production of layers to the December 2016 total of 500,000:1000% increase over 2012.
3. the production of consistent quality poultry feeds to the December 2016 total of 2,000
MT/month: 500% increase over 2012
4. the production of broilers and table eggs to the December 2016 figures of 200,000/month &
400,000/day respectively. This represents a 100% and 1000% increase respectively over 2012.
The illegal imports of poultry products from the DR can wipe out all these achievements. Apart from
potential health issues, there are significant numbers of jobs at stake. The sector employs 170.000
individuals in the DR and accounts for 70,000 jobs in Jamaica. In Haiti, there are 6,000 individuals
currently employed in poultry activities. The sector’s expansion could result in tripling the number of
direct jobs.
COUNTRY POPULATION
x 1000
MEAT
PRODUCTION
METRIC TON
(MT)
MEAT
IMPORTS
(MT)
SHELL EGG
PRODUCTION
X1000
NUMBER
OF
FARMS
EMPLOYMENT
2/
MAX.
TARIFFS
& TAXES
(%)
Barbados 278 14,392 1,106 45,600 410 1,654 184
Belize 1/ 332 19,319 365 49,068 250 1,538 40
Guyana 1/ 800 28,421 579 23,100 2815 4,740 56
Haiti 10,000 8,400 83,659 101,000 4000 6,000 33
14
COUNTRY POPULATION
x 1000
MEAT
PRODUCTION
METRIC TON
(MT)
MEAT
IMPORTS
(MT)
SHELL EGG
PRODUCTION
X1000
NUMBER
OF
FARMS
EMPLOYMENT
2/
MAX.
TARIFFS
& TAXES
(%)
Jamaica 2,800 122,231 37,315 121,853 60,000 70,000 280
T & T 1,300 70,044 7,875 54,966 510 16,300 55
D. R. 10,000 317,046 35,832 1,746,325 900 170,000 99 + 16
1/ Controls imports using a licensing regime; 2/ Employment does not include foodservice & supplier
industries.
Source: Fairman, D. -Poultry Re-Development Strategy for Haiti, June 2017
It is important to point out that the poultry industry has important backward and forward linkages to
other sectors in the economy. For instance, the Haitian Ministry of Agriculture estimates that to keep
up with increased poultry production, cereal production for feed will have to grow from 267.600 Tons
in 2017 to 1.275.000 Ton by 2034. Such a production would require 212,500 hectares. There are
currently 954,600 hectares available for agriculture in Haiti, and the majority of that area is used for
growing cereals and vegetables. According to Haiti’s Ministry of Agriculture data, 1 hectare sustains
2.79 permanent jobs. Therefore, 212,500 hectares would support 593.000 jobs in agriculture under
current conditions, probably fewer with technological advances. Nevertheless, the numbers of jobs at
stake are staggering.
The poultry industry entails many benefits that include:
 Creation of small-business entrepreneurship;
 Direct jobs within the industry and indirect jobs; supplying logistics support, information
technology, trading & marketing, veterinarians, carpenters, masons, engineers and builders,
supply of water tanks;
 Backward linkages to the agricultural sector for corn, sorghum, broken rice, rice hulls;
 Supply of significant quantities of manure for crops;
 Rural development and jobs for rural women, thereby reducing rural to urban migration;
 The production of many other animal feeds.
Given its importance for employment, one understands why the poultry industry in the Dominican
Republic, as is also the case in other countries, is highly protected. The system consists of: a) import
permits; b), high tariff protection ranging from 20-99%; c) a highly protective Tariff Rate Quota (TRQ)
regime. In addition, producers receive production subsidies, while exporters are granted export
incentives.
5. The growth - foreign direct investment (FDI) relationship: the Dominican Republic as a
model
As discussed in a previous section, the enactment of structural measures is an important determinant of
growth, and has been flagged as one of the chief reasons why growth in Haiti lagged far behind that of
the DR. It has also been argued that by provoking revenue losses, smuggling places constraints on a
Government’s ability to put such measures in place. Countries such as Haiti with relatively low savings
have to rely on foreign savings for investment. These savings may come as foreign aid or as foreign
direct investment (FDI). The latter can provide an important stimulus to the economy. But, under what
conditions will FDI come? What has been the experience in the DR? The DR has been able to attract $
15
US 24.3 billion in the past 10 years, while Haiti was only able to secure $ US 1.2 billion in the same time
frame.
YEAR
DOMINICAN
REPUBLIC
HAITI
FDI – $ US
2006 1,528,700,000 160,600,000
2007 2,252,900,000 74,500,000
2008 2,728,400,000 29,800,000
2009 1,695,300,000 55,470,000
2010 1,820,200,000 178,000,000
2011 2,197,500,000 119,000,000
2012 3,415,900,000 156,000,000
2013 1,599,900,000 161,918,586
2014 2,385,300,000 99,000,000
2015 2,227,300,000 105,680,000
2016 2,522,500,000 104,900,000
TOTAL 24,373,900,000 1,244,868,586
Certainly, Haiti has many challenges (political instability, business environment, governance issues,
etc.) to overcome. The Dominican Republic has made great strides in addressing those challenges.
However, if we refer to the assertions of Spanish Bank, Banco Santander published on its website:
“The main difficulties that foreign investors have to face in the Dominican Republic are inadequate
infrastructure, problems with the electricity supply, corruption, non-respect of contracts, disregard
for court rulings and a lack of standard procedures for customs fees on imported goods.”20 For
Haiti, there is a long road ahead to resolve similar issues. While addressing those challenges Haiti
can place its economy on the growth path taken by the DR by making appropriate investments and
policy choices. This requires scarce resources and smuggling denies the Haitian Treasury those
resources.
Statistical analysis21 suggests that the direction of causality between GDP and FDI for the DR went
from GDP to FDI. In other words, it is GDP growth that at least initially, facilitated the emergence
of FDI. It was further estimated that between 1970 and 2016, a 1% increase in GDP provoked a
2.6% increase in FDI. This implies that some minimal economic conditions must be fulfilled to
attract foreign capital. Massive FDI did not start flowing into the DR until the late 1990’s.
YEAR
FDI-NET
FLOW ($ US)
YEAR
FDI-NET
FLOW ($ US)
1970 71,600,000 1997 420,600,000
1971 65,000,000 1998 699,800,000
1972 43,500,000 1999 1,337,800,000
1973 34,500,000 2000 989,000,000
20
SOURCE: https://en.portal.santandertrade.com/establish-overseas/dominican-republic
21
Conducted as part of the implementation of a Vector Error Correction Model (VECM)
16
YEAR
FDI-NET
FLOW ($ US)
YEAR
FDI-NET
FLOW ($ US)
1974 53,600,000 2001 1,087,900,000
1975 63,900,000 2002 926,000,000
1976 60,000,000 2003 616,530,000
1977 71,500,000 2004 934,480,000
1978 63,600,000 2005 1,118,400,000
1979 17,100,000 2006 1,528,700,000
1980 92,700,000 2007 2,252,900,000
1981 79,700,000 2008 2,728,400,000
1982 (1,400,000) 2009 1,695,300,000
1983 48,200,000 2010 1,820,200,000
1984 68,500,000 2011 2,197,500,000
1985 36,200,000 2012 3,415,900,000
1986 50,000,000 2013 1,599,900,000
1987 89,000,000 2014 2,385,300,000
1988 106,100,000 2015 2,227,300,000
1989 110,000,000 2016 2,522,500,000
1990 132,800,000
1991 145,000,000
1992 179,700,000
1993 189,300,000
1994 206,800,000
1995 414,300,000
1996 96,500,000
AVERAGE 95,840,741 1,577,995,263
Initial growth is necessary to create the socioeconomic and political conditions that are suitable to
foreign investments. Financial resources are needed to initiate this growth. An effective fight against
smuggling would yield some of these resources by reducing losses in tax revenues and lifting an
important constraint on domestic productive capacity.
17
Appendix 1- Major imports from the World
Produc
t Product code
de
Product label
Imported value in
2013 in '000 USD
Imported value in
2014 in '000 USD
Imported value in
2015 in '000 USD
'TOTAL All products 3,731,890 4,213,929 3,614,056
'999999
Commodities not elsew
here specified
452,841 440,081 448,235
'100630
Semi-
milled or wholly milled r
ice, whether or not polis
hed or glazed
232,398 222,987 207,915
'521213
Woven fabrics of cotton
, containing predominant
ly, but < 85% cotton by
weight, other than those
...
154,567 170,704 162,720
'610910
T-
shirts, singlets and other
vests of cotton, knitted
or crocheted
19,286 25,074 150,958
'151190
Palm oil and its fractions
, whether or not refined
(excluding chemically m
odified and crude)
93,281 92,937 88,503
'252329
Portland cement (exclud
ing white, whether or n
ot artificially coloured)
64,925 70,908 72,788
'271019
Medium oils and prepara
tions, of petroleum or bi
tuminous minerals, not c
ontaining biodiesel, ...
57,827 140,402 65,040
'170114
Raw cane sugar, in solid
form, not containing add
ed flavouring or colourin
g matter (excluding ...
58,013 59,517 53,761
'020714
Frozen cuts and edible o
ffal of fowls of the specie
s Gallus domesticus
60,924 60,794 52,712
'210390
Preparations for sauces
and prepared sauces; mi
xed condiments and sea
sonings (excluding soya .
..
45,340 77,390 46,123
18
Produc
t Product code
de
Product label
Imported value in
2013 in '000 USD
Imported value in
2014 in '000 USD
Imported value in
2015 in '000 USD
'110100 Wheat or meslin flour 52,238 83,856 39,903
'040291
Milk and cream, concent
rated but unsweetened (
excluding in solid forms)
42,581 47,125 38,990
'100199
Wheat and meslin (exclu
ding seed for sowing, an
d durum wheat)
46,519 45,948 37,993
'190531 Sweet biscuits 31,775 43,559 27,681
'300490
Medicaments consisting
of mixed or unmixed pr
oducts for therapeutic o
r prophylactic purposes,
...
20,156 25,580 27,178
'600410
Knitted or crocheted fa
brics, of a width of > 30
cm, containing >= 5% by
weight elastomeric ...
6,326 13,613 26,640
'722790
Bars and rods of alloy st
eel other than stainless,
hot-
rolled, in irregularly wou
nd coils (excluding ...
492 26,551
'600622
Dyed cotton fabrics, knit
ted or crocheted, of a w
idth of > 30 cm (excludi
ng warp knit fabrics ...
11,671 21,335 23,989
'580631
Narrow woven fabrics o
f cotton, with a width of
<= 30 cm, n.e.s.
24,892 30,690 23,162
'392410
Tableware and kitchenw
are, of plastics
13,898 31,984 22,482
'871120
Motorcycles, incl. mope
ds, with reciprocating int
ernal combustion piston
engine of a cylinder ...
19,022 21,227 21,707
'392690
Articles of plastics and a
rticles of other materials
of heading 3901 to 391
4, n.e.s (excluding ...
8,668 16,020 20,931
19
Produc
t Product code
de
Product label
Imported value in
2013 in '000 USD
Imported value in
2014 in '000 USD
Imported value in
2015 in '000 USD
'620343
Men's or boys' trousers,
bib and brace overalls, b
reeches and shorts of sy
nthetic fibres (excluding
...
28,851 26,220 20,419
'600632
Dyed fabrics, knitted or
crocheted, of synthetic fi
bres, of a width of > 30
cm (excluding warp ...
7,023 12,174 19,385
'210690 Food preparations, n.e.s. 27,197 23,893 18,784
Source : Trademap
20
Appendix 2- Major imports from the Dominican Republic
Product code Product label
Haiti's imports from Dominican Republic in '000
USD
Value in 2013 Value in 2014 Value in 2015
'TOTAL All products 1,042,883 1,423,206 1,012,159
'521213
Woven fabrics of cotton
, containing predominantly,
but < 85% cotton by weig
Ht, otHer tHan tHose ...
154,567 170,704
162,720
'610910
T-
sHirts, singlets and otHer
vests of cotton, Knitted or
crocHeted
17,543 20,618
145,899
'252329
Portland cement (exclud
ing wHite, wHetHer or no
t artificially coloured)
55,146 64,065
64,678
'210390
Preparations for sauces
and prepared sauces; mixe
d condiments and seasonin
gs (excluding soya ...
42,224 74,052
41,863
'110100 WHeat or meslin flour
46,900 78,385
35,203
'620343
Men's or boys' trousers,
bib and brace overalls, bre
ecHes and sHorts of syntH
etic fibres (excluding ...
28,466 26,052
19,894
'210320
Tomato KetcHup and ot
Her tomato sauces 10,232 30,548
18,045
'392690
Articles of plastics and a
rticles of otHer materials
of Heading 3901 to 3914,
n.e.s (excluding ...
4,654 11,643
16,465
'392410
Tableware and KitcHen
ware, of plastics 10,482 25,940
16,147
'520819
Woven fabrics of cotton
, containing >= 85% cotton
by weigHt and weigHing <
= 200 g/m², unbleacHed ...
12,566 16,030
16,036
'151519
Linseed oil and fractions
tHereof, wHetHer or not
refined, but not cHemically
modified (excluding ...
- 27,718
14,169
'190531 Sweet biscuits
14,534 25,257
12,560
21
Product code Product label
Haiti's imports from Dominican Republic in '000
USD
Value in 2013 Value in 2014 Value in 2015
'340220
Surface-
active preparations, wasHi
ng preparations, auxiliary
wasHing preparations and
cleaning ...
9,042 16,205
11,800
'481910
Cartons, boxes and case
s, of corrugated paper or p
aperboard
11,816 20,222
11,147
'520859
Woven fabrics of cotton
, containing >= 85% cotton
by weigHt and weigHing <
= 200 g/m², printed ...
16,560 14,357
10,258
'110313
Groats and meal of mai
Ze "corn" 11,745 15,506
10,107
'721420
Bars and rods, of iron o
r non-
alloy steel, witH indentatio
ns, ribs, groves or otHer d
eformations ...
6,990 9,966
9,456
'392329
SacKs and bags, incl. con
es, of plastics (excluding t
Hose of polymers of etHyl
ene)
9,006 10,447
9,380
'160100
Sausages and similar pro
ducts, of meat, offal or blo
od; food preparations base
d on tHese products
4,476 19,244
8,679
'721410
Bars and rods, of iron o
r non-
alloy steel, not furtHer wo
rKed tHan forged (excludi
ng in irregularly ...
13,031 6,317
8,070
'721710
Wire of iron or non-
alloy steel, in coils, not plat
ed or coated, wHetHer or
not polisHed (excluding ...
7,369 15,135
7,999
'100640 BroKen rice
5,250 15,135
7,843
'600532
Dyed warp Knit fabrics
of syntHetic fibres "incl. tH
ose made on galloon Knitti
ng macHines", ...
9,806 11,477
7,546
'540110
Sewing tHread of syntH
etic filaments, wHetHer or
not put up for retail sale
6,831 7,914
7,542
22
Product code Product label
Haiti's imports from Dominican Republic in '000
USD
Value in 2013 Value in 2014 Value in 2015
'392330
Carboys, bottles, flasKs
and similar articles for tHe
conveyance or pacKaging
of goods, of ...
13,362 16,086
7,512
Source : Trademap

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THE EFFECTS OF ILLEGAL TRADE ACROSS THE BORDER WITH THE DOMINICAN REPUBLIC AND GROWTH IN THE HAITIAN ECONOMY by Dr. Daniel Dorsainvil

  • 1. THE EFFECTS OF ILLEGAL TRADE ACROSS THE BORDER WITH THE DOMINICAN REPUBLIC AND GROWTH IN THE HAITIAN ECONOMY Prepared by Daniel Dorsainvil, Ph.D February 2018
  • 2. i Executive Summary Haiti faces a great many development challenges and needs to invest heavily in the areas of education, health, and infrastructure as a means of spurring economic growth and achieving sustainable development. The country shares the island of Quisqueya with the Dominican Republic (DR), and unlike Haiti, that country has been able to grow its economy consistently over the past six decades and it stands today as one of the most vibrant economies of the Central American and Caribbean regions; the DR has a Gross Domestic Product (GDP) of $ US 73.6 billion and a GDP per capita of $ US 6,909. Haiti on the other hand, the only Less Developed Country (LDC) of the western hemisphere, has a GDP of $ US 8 billion and a GDP per capita of $ US 729. This stands in stark contrast with the economic performance of its neighbor, a result that is surprising since the two countries had similar GDP per capita as recently as the early 1960’s. Studies point to structural measures (investment in education, and infrastructures) as one of the main factors that explain the difference in the growth experience of the two countries. Smuggling of merchandise goods from the DR to Haiti has grown significantly over the past fifteen years, and today, estimates of the volume of illegal trade range from $ US 630 million to $ US 1 billion; that is at least 8% of GDP. Revenue losses caused by these illegal activities have been estimated to range between $ US 184 million and $ US 440 million. The availability of an additional $ US 250 million would have kept the Haitian Treasury from running a deficit over the past five years, and the macroeconomic environment would not have deteriorated as much as it did: high inflation and exchange rate volatility. GDP would have also risen by an additional 1.85% had the $ US 250 million shortfall been used to increase capital expenditures. Specificities of the Haitian budget are such that revenues collected suffice to cover operations expenditures but not investment expenditures; consequently, smuggling limits the ability of the central government to invest in the country’s infrastructure and other areas that have a positive impact on human development and growth. In an era of reduced international aid, smuggling deals a particularly severe blow to the Haitian Treasury. Moreover, the resulting inability of the Government to provide basic services and economic opportunity undermines its credibility and fuels political instability. Research has identified political instability as another principal factor that caused the Haitian and DR economies to diverge. Under those circumstances there is a lack of employment opportunity in Haiti, and many Haitians seek opportunities elsewhere. The issue of migration is a very sensitive matter not only for Haiti and the Dominican Republic, but also for other partners, including members of CARICOM and the United States of America. All the categories of smuggled goods are also produced domestically, and the illegal activity constitutes unfair competition to local producers. As such, smuggling hinders investment, and results in job losses in the agricultural as well as the food processing sectors. Manufacturing jobs have also been affected. Estimates of the number of jobs affected in agriculture exceed 500.000 while those in the manufacturing sector, apparel sector excluded, reach 60.000. A case study for the Poultry industry shows that smuggling has the potential of wiping out great progress achieved in that industry since 2012. There have been significant increases in: 1. the production of day-old chicks to the December 2016 figure of 200,000/month: 100% increase over 2012.
  • 3. ii 2. the production of layers to the December 2016 total of 500,000: 1000% increase over 2012. 3. the production of consistent quality poultry feeds to the December 2016 total of 2,000 MT/month:500% increase over 2012 4. the production of broilers and table eggs to the December 2016 figures of 200,000/month & 400,000/day respectively. This represents a 100% and 1000% increase respectively over 2012. Poultry products from the DR can only enter Haiti illegally. There is a ban on poultry products from the DR because there have been outbreaks of Avian Flu and New Castle disease in that country. One such outbreak occurred as recently as December 2017, as reported by the Organization for Animal Health, OIE. The poultry industry has important backward and forward linkages to other sectors in the economy. For instance, the Haitian Ministry of Agriculture estimates that to keep up with increased poultry production, cereal production for feed will have to grow from 267.600 Tons in 2017 to 1.275.000 Ton by 2034. Such a production would require 212,500 hectares. There are currently 954,600 hectares available for agriculture in Haiti, and the majority of that area is used for growing cereals and vegetables. According to Haiti’s Ministry of Agriculture data, 1 hectare sustains 2.79 permanent jobs. Therefore, 212,500 hectares would support 593.000 permanent jobs in agriculture under current conditions, probably fewer with technological advances. Nevertheless, the numbers of jobs at stake are staggering. The poultry industry entails many benefits that include:  Creation of small-business entrepreneurship;  Direct jobs within the industry and indirect jobs; supplying logistics support, information technology, trading & marketing, veterinarians, carpenters, masons, engineers and builders, supply of water tanks;  Backward linkages to the agricultural sector for corn, sorghum, broken rice, rice hulls;  Supply of significant quantities of manure for crops;  Rural development and jobs for rural women, thereby reducing rural to urban migration;  The production of many other animal feeds. Information released by DR authorities help document additional products that enter Haiti illegally: 1) Flour; 2) Tomato ketchup and other tomato sauces; 3) Sausages; 4) Broken rice; 5) Maize (corn) groats; 6) etc… Other important items on the smugglers’ menu are cement, cereals, and eggs. Meanwhile, Haitian producers evoke the difficulties they experience in trying to export to the DR. Aside from tariff; those difficulties are related to administrative constraints such as delays in obtaining import licenses. A recent study (CLEF, 2016) commissioned by Caribbean Export Development Agency (CEDA) found that a number of potential Haitian exports are affected by those barriers. They include: 1. Corn flour; 2. Corn flakes; 3. Chicken cubes;
  • 4. iii 4. Beer and Rum. Haitian manufacturers also claim that they face obstacles in attempting to export edible oil and soaps to the DR. The Haitian experience with smuggling is not unique. Scores of testimonies can be found on the negative effect of smuggling on domestic firms (producers and importers alike) as they face unfair competition from smuggled goods. The testimonies are often from a number of poorer countries in Africa and Asia that, like Haiti and the Dominican Republic share common land borders. The Ugandan revenue authorities have identified four main effects of smuggling:  LOSS OF REVENUE  DISTORTION OF MARKET PRICES  COLLAPSE OF LOCAL INDUSTRIES  UNEMPLOYMENT The stakes involved with smuggling are so important and pervasive that the effect of illicit trade on development was the subject of a special study commissioned by the Swedish Ministry of Foreign affairs in 2015: Illicit Trade-Undermining Development. The report deplores that “The problem with illicit trade in "normally legal goods" is quite different as the extent and visibility of the problem is much more apparent in the developing world than in the developed world. Consequently the states most able to deal with this type of illicit trade, and assist in capacity building, are not as concerned by these problems themselves. This leads to a number of problems. As the issue is not considered of primary importance the efforts to quantify the problem and measure its impacts have not been as robust as in the drugs space. This relative lack of data again creates a problem, as it becomes politically very hard to set an appropriate level of prioritization of a problem when there is a shortage of data.” Were it not for remittances a great many Haitians would not be able to meet their basic needs for food, shelter, and clothing. Remittances reached US2.3 billion in 2016, or about 30% of GDP. Given Haiti’s reliance on food imports, money transfers finance, to some degree at least, smuggled goods from the Dominican Republic. The Haitian market is attractive for certain types of basic goods because the country has a large population base, some 11 million people, and the size of the population makes up for low per capita income. Haiti is the second biggest destination for DR exports. In 2014, while the DR exported $ US 1.4 billion to Haiti, Haitian exports to the DR totaled $ 4 million. Agricultural and Agribusiness products make up about one third of all DR exports to Haiti. As has been documented, the enactment of structural measures is an important determinant of growth, and has been flagged as one of the chief reasons why growth in Haiti lagged far behind that of the DR. It has also been argued that by provoking revenue losses, smuggling places constraints on a Government’s ability to put such measures in place. Countries such as Haiti with relatively low savings have to rely on foreign savings for investment. These savings may come as foreign aid or as foreign direct investment (FDI). The latter can provide an important stimulus to the economy. The experience of the DR has shown that some minimal conditions must exist to attract foreign capital. Initial growth creates the socioeconomic and political conditions that are suitable to FDI. Financial resources are required to initiate this growth. An effective fight against smuggling would yield some of these resources by reducing losses in tax revenues and lifting an important constraint on domestic productive capacity.
  • 5. 1 1. Introduction : the imperative of growth Haiti has not experienced a period of sustained growth since the 1970’s, and reasons to explain this result include poor governance, political turmoil, and natural disasters. On the eastern side of Quiskeya, the Dominican Republic that spans two thirds of the island it shares with Haiti has fared much better. It can boast today of being one of the most vibrant economies1 of the Caribbean and Central American regions. According to the most recent available data, the GDP of the Dominican Republic totaled $ US73.6 billion2 in 2016 while that of Haiti approached $US8 billion that same year. Each country has roughly the same population size: nearly 11 million people. GDP per capita in the two countries were $US6, 909 and $US729, respectively. The low per capita figure and other socio-demographic indicators make Haiti the only Less Developed Country (LDC) of the Americas. However, as recently as the 1960’s, the two countries had very similar income per capita; a situation that leaves one to wonder what role the factors listed above, among others, may have played in explaining the divergence of the two economies. Jaramillo and Sancak (2007) have explored and analyzed the issue and have found that “initial conditions cannot fully explain the growth divergence, but rather policy decisions have played a central role in the growth trends of the two countries“3. They further argue that “structural policies”4, have been the key determinant of growth in both the Dominican Republic and Haiti, followed by political stability and 1 5.5% real growth of Gross domestic Product (GDP) in the Dominican Republic compared with 2.43% for the Caribbean region: more than twice as much for the former. 2 World Bank Development Indicators, 2010 US dollars. 3 Jaramillo, L. and Sancak, C. : Growth in the Dominican Republic and Haiti: Why has the Grass Been Greener on One Side of Hispaniola? IMF Working Paper. 4 particularly education, investment in public infrastructure, and trade openness, financial depth, government burden 0 2000 4000 6000 8000 10000 12000 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 DOMINICANREPUBLIC HAITI GDP PER CAPITA FOR HAITI AND THE DOMINICAN REPUBLIC, 1960-2009, PPP 2005 International dollars Source: PENN WORLD TABLE 7.1
  • 6. 2 stabilization policies”. These findings echo those presented by Lozaya et al. (2004)5. Those authors had cautioned that “unobserved country-specific effects can also be important to explain the growth differences with respect to Chile. There is a group of countries, many of them located in Central America and the Caribbean, for which country-specific factors not captured by the model’s explanatory variables cause them to grow over 2 percentage points less than the leader”. In keeping with those findings, it would seem appropriate to consider key policy choices made on the western part of Quiskeya and factors that are specific to the Haitian case to understand Haitian economic underperformance vis-à-vis its neighbor. The obvious benefits of free-trade notwithstanding, in the 1980’s and 1990’s, Haiti adopted very liberal trade policies and lowered its tariffs, partly on efficiency grounds, and partly because it was thought to be an effective strategy to fight against smuggling across its border with the Dominican Republic. Unfortunately, in the midst of a global recession, failed stabilization efforts, and poor infrastructure, increased competition from abroad that resulted from openness would severely undermine local production capacity, including exports; and there is no evidence that contraband had waned6. Political instability and natural disasters did the rest. The appropriate mix of structural measures was not present, and on that point it is reported that “The opening of the Haitian economy was not supported by any support measures to the sectors affected by the provisions of trade policy, which in the opinion of analysts caused Haiti to suffer from the dismantling of several production subsectors”7. (CLEF CONSULTING, 2016). Today, while there are efforts underway to reverse the liberal stance of the 80’s and 90’s, to at least harmonize Haitian tariffs with those of CARICOM, smuggling along a very porous border continues to be a threat to local producers and constitutes an impediment on much needed economic growth in Haiti. The country is currently adopting a more measured and more strategic approach to trade liberalization in support of stated development policies that target growth in agriculture, food and beverage industries, manufacturing, the construction sector, and tourism. Smuggling constitutes an unfair competition to domestic businesses as a whole and goes counter to the country’s growth objectives. In addition, in an era of reduced international aid, it denies the Haitian Treasury resources that are needed to address deficiencies in the areas of infrastructure, health, and education. Moreover, the resulting inability of the Government to provide basic services and economic opportunity undermines its credibility and fuels instability. The case of the Dominican Republic over the past decades, doubling its GDP per capita in a twenty-year span, serves to highlight growth potentials of which Haiti could avail itself in the coming years; Benefits of growth are to be measured not only in terms of income and poverty reduction but also and foremost in terms of job creation and employment opportunities. In addition to contributing to greater socio- 5 Loayza, N.; Fajnzylber, P. & César C.- ECONOMIC GROWTH IN LATIN AMERICA AND THE CARIBBEAN: STYLIZED FACTS, EXPLANATIONS, AND FORECASTS, Central Bank of Chile, Working Papers N° 265, June 2004 6 The experience is not unique. In the Philippines, “when the government reduced the tariff rates on imported articles, many economists and merchants expected a decline in smuggling activities. They believed the tariff reduction would discourage illegal importation of goods since there will be fewer taxes to pay on the part of importers. But even with reduced tariff rates, smuggling persists up to this day.” Source: http://dumaguetemetropost.com/smuggling-p9148-99.htm 7 Author’s translation. Original text in French : « Il s`avère utile de souligner que cette ouverture de l’économie haïtienne ne fut pas soutenue par des mesures d`accompagnement des secteurs touchés par les dispositions de politique commerciale, ce qui selon l’opinion des analystes, conduisit à ce qu’Haïti subisse le démantèlement de plusieurs sous-secteurs de production. »
  • 7. 3 political stability, higher employment speaks directly to the issue of migration, a very sensitive matter not only for Haiti and the Dominican Republic, but also for other partners, including members of CARICOM and the United States of America. If only all measures could be taken to support growth in Haiti then better development outcomes would materialize and migration flows would be reduced. Our focus here is on smuggling. The Dominican Republic does a much better job of controlling its border than Haiti, and while there is informal trade going from Haiti to the Dominican Republic, contraband is an issue that concerns illegal imports of goods into Haiti from the neighboring country. To understand this point, it is worth noting that in 2014, for example, Dominican exports to Haiti totaled $US1.4 billion, while Haiti’s exports to that country had reached only $ US 4.6 million8. The balance of the paper is structured as follows. Section 2 contains a discussion on various impacts of smuggling while section 3 focuses on the extent of smuggling across Haiti’s border with the Dominican Republic. In a fourth section, the effect of smuggling on the Haitian economy is analyzed using a case study in the poultry industry. In a fifth and final section an argument is presented for why growth attained in the short and medium terms by an effective anti-smuggling measures could put Haiti on a more sustainable growth path. 2. The economic impact of smuggling Smuggling involves the illegal trade that enters a country while avoiding paying applicable custom duties and taxes. This is done either by using illegal entry points (contraband routes or trails), by concealing contraband in other cargo, or by resorting to misclassification, undervaluation, or under declaration. The latter three are all forms of false declarations. Misclassification involves classifying the imported good under a heading that carries a lower tariff, while undervaluation describes a situation whereby goods are given a lower value. Finally under declaration corresponds to a case where the wrong quantity is declared. However, the use of illegal entry points or concealment, if undetected, may allow entry to a country of goods that may represent health risks for the population, in addition to the avoidance of appropriate fees. The Ugandan revenue authorities have identified four main effects of smuggling9. They appear below.  LOSS OF REVENUE: Smuggling is an act of tax evasion which deprives government of revenue for public expenditure.  DISTORTION OF MARKET PRICES : Goods which are smuggled into the country are often sold a lot cheaper than goods brought onto market through the right procedures. Smuggling therefore deprives traders of free competition.  COLLAPSE OF LOCAL INDUSTRIES: A country achieves better economic growth by developing its own industrial base. Smuggling under-cuts prices of the locally manufactured goods thus destroying the market for local products. This leads to the collapse of local industries.  UNEMPLOYMENT : When there is unfair competition in the market, compounded by the collapsing of industries, the labour market (employment base) is eroded. Many professionals, skilled and unskilled personnel remain jobless. 8 Source : https://www.trademap.org 9 Source: https://www.ura.go.ug/download/staticContent/RGTMENU/307/313_Smuggling_and_its_Effects.doc
  • 8. 4 The loss of revenue has a direct impact on a country’s ability to implement structural policies, particularly those that relate to education and contribute to improvements in human capital, a known driver of growth and one of the pillars of sustainable development. Furthermore, revenue loss may result in deficit financing and deterioration of the macroeconomic environment which in turns deepens poverty by causing inflation and exchange rate volatility. Scores of testimonies can be found on the negative effect of smuggling on domestic firms (producers and importers alike) as they face unfair competition from smuggled goods. The testimonies are often from a number of poorer countries in Africa and Asia that, like Haiti and the Dominican Republic share common land borders. Examples are reproduced below. PAKISTAN10 Thousands of industrial units have been rendered sick, due to the availability of smuggled goods in open markets. Afghan Transit Trade is the main source of smuggling into Pakistan and its annual volume has been estimated about five to six billion dollars, about 70% of the total smuggling causing a revenue loss of about 2.5 to 3 billion dollars annually (which has been almost tripled during 2008-2010) to the national exchequer. ZIMBABWE11 Most informal traders that smuggle their goods from neighboring country like Mozambique does (Sic) not pay tax for their goods, therefore not contributing to the (Sic) economic growth. “And these products are then sold at very low prices, presumably because they are smuggled without paying duties. It is not viable for a formal trader to continue operating if informal traders like tuck-shop vendors, appear untouchable as they sell the same products that are found in the formal trader’s shop on the informal tuck-shop trader at nominal prices.” NIGERIA12 Investigations show that smuggling has remained a continuous threat to the existence of any nation. For instance, the Nigerian Textile Manufacturers Association (NTMA) disclosed recently that Nigeria loses a whopping $325 million every year due to evasion of customs duty and value added tax by smugglers of textile materials. Chairman NTMA, Mr. Abiodun Ogunkoya said that smugglers deny government of huge revenue as well as pose a challenge to the industry. According to him, around 85 per cent of the $1.4 billion worth of textile materials that flood the nation annually are smuggled. On the issue of unemployment, it is clear that when local firms face unfair competition they are less inclined to invest and employment suffers. However, smuggling may have even more pernicious and unsuspected effects on the labor market. Indeed, it has been found (Girma and Gezahagn, 2016) that smuggling has a negative effect on labor rate participation and the quality of the labor force. For instance, this research documents that smugglers are less likely to join the formal labor force once they enter the illegal trade. 10 Source: https://lubpak.com/archives/28602 11 Source : http://newsofthesouth.com/smuggling-hindering-economic-growth/ 12 Source : http://shipsandports.com.ng/why-smuggling-remains-a-threat-to-the-economy/
  • 9. 5 Last but not least, there are several advantages to developing a domestic industrial base. These have to do with backward and forward linkages in the economy. The development of local processing capacity for example stimulates agriculture, a backward linkage, while it also supports the emergence of transport and packaging activities, a forward linkage. All those factors are important for investment, growth, and development. In short, smuggling results in a loss of employment and investment opportunities and hampers growth. The stakes are so important and pervasive that the effect of illicit trade on development was the subject of a special study commissioned by the Swedish Ministry of Foreign affairs in 2015: Illicit Trade- Undermining Development. The report deplores that “The problem with illicit trade in "normally legal goods" is quite different as the extent and visibility of the problem is much more apparent in the developing world than in the developed world. Consequently the states most able to deal with this type of illicit trade, and assist in capacity building, are not as concerned by these problems themselves. This leads to a number of problems. As the issue is not considered of primary importance the efforts to quantify the problem and measure its impacts have not been as robust as in the drugs space. This relative lack of data again creates a problem, as it becomes politically very hard to set an appropriate level of prioritization of a problem when there is a shortage of data.” In the next section, data is provided on the extent of the illegal merchandise trade coming from the Dominican Republic to Haiti. 3. Haiti: Trade, smuggling, and development challenges Haiti’s low per capita GDP suggests that there is a high prevalence of extreme poverty in the country. The country also exhibits one of the highest GINI coefficients of the Western hemisphere: 40.9 in 201213. Furthermore, a recent study has estimated that nearly 59% of the Haitian population lives14 under the poverty line. Haiti’s development challenges are enormous, and were it not for remittances a great many Haitians would not be able to meet their basic needs for food, shelter, an clothing. Remittances reached US2.3 billion in 2016, or about 30% of GDP. Source: https://tradingeconomics.com/haiti/remittances 13 World Development Indicaors, World Bank 14 Pauvreté et inclusion sociale en Haïti: gains sociaux à petits pas. World Bank, 2012.
  • 10. 6 Studies corroborate this assertion. It was found that 81%15 of remittance recipients use the money received on food. Therefore, one can assert, given Haiti’s reliance on food imports that money transfers finance these imports to some degree at least; a portion of those imports coming from the Dominican Republic are smuggled. Agricultural and Agribusiness products make up about one third of all DR exports to Haiti. With a population of nearly 11 million people, the Haitian market is an attractive destination for exports, and one has to keep in mind that, individual purchasing power aside, Haiti has the fourth largest economy of the Caribbean region. From the standpoint of a seller, Haiti makes up for its low income with its population size, particularly if financing (remittances) is available from abroad. COUNTRY GDP2016 (USD 2010) POPULATION GDP PER CAPITA DOMINICAN REPUBLIC 73,573,876,510 10,648,791 6,909 TRINIDAD AND TOBAGO 22,192,974,037 1,364,962 16,259 JAMAICA 13,801,803,130 2,881,355 4,790 HAITI 7,910,618,370 10,847,334 729 BAHAMAS 7,821,154,995 391,232 19,991 BARBADOS 4,629,124,472 284,996 16,243 SURINAME 4,527,379,879 558,368 8,108 GUYANA 2,925,825,406 773,303 3,784 BELIZE 1,588,184,522 366,954 4,328 SAINT LUCIA 1,451,113,155 178,015 8,152 ANTIGUA-AND-BARBUDA 1,344,373,698 100,963 13,316 GRENADA 931,118,693 107,317 8,676 SAINTKITS AND NEVIS 858,344,692 54,821 15,657 SAINT-VINCENT AND THE GRENADINES 732,044,136 109,643 6,677 DOMINICA 506,021,854 73,543 6,881 Source: World Development Indicators, World Bank 3.1 Main imports from the World and from the Dominican Republic Topping Haiti’s imports from the rest of the World (see Appendix 1) between 2013 and 2015 are: i) general commodities; ii) textile products; iii) food items; iv) basic manufactured products such as cement, iron bars, packaging material, soaps, and detergents. The import of textiles is explained by the rebirth of the apparel industry in Haiti. 15 Orozco, M. Understanding the remittance economy in Haiti, Inter American Dialogue, a paper commissioned by the World Bank, March 2006
  • 11. 7 About 30% of all exports into Haiti originated from the Dominican Republic between 2013 and 2015. This makes that country, along with the United States, Haiti’s most important trading partner. YEAR 2013 2014 2015 TOTAL IMPORTS ('000 USD) 3,731,890 4,213,929 3,614,056 DOMINICAN REPUBLIC 1,042,883 1,423,206 1,012,159 SHARE OF IMPORTS FROM THE DOMINICAN REPUBLIC 28% 34% 28% Source: Trademap, author’s computations. Besides textiles, Haiti imports (see Appendix 2) mainly: i) processed food products, and ii) basic manufactured goods: a) detergents; b) cement; c) iron bars from the Dominican Republic. There are manufacturers of all these products in Haiti, and the imports constitute a direct competition to domestic production. To the extent that some of these goods enter the Haitian market illegally by circumventing customs, this activity amounts to unfair competition. 3.2 Measuring smuggling from the Dominican Republic In 2015, official figures published by the Centro de Exportación e Inversión de la República Dominicana (CEIRD) show that total Dominican exports to Haiti amounted to $ US 1 billion. However, Haitian Custom Authorities (Administration Générale des Douanes –AGD) reported total imports of only $US 204 million from the Dominican Republic (DR) for that same year. This is about 20% of the value registered by their Dominican counterparts. This suggests that smuggling from the DR has reached enormous proportions, a result that is supported by a recent study16 on commercial flows between the two countries that produced an estimate of $ US 634 million of merchandise trade by Haitian custom in 2014: that is about 8% of GDP. That estimate is partly derived from a calculation made by the Oficina Nacional de Estadística (ONE). They found that there were about $ US 375 million of unregistered exports to Haiti. Accordingly, they adjusted Dominican exports from about $1 billion to $ US 1.4 billion for that year. Most of the merchandise trade between Haiti and the DR (over 85%) transits through land at three of four official border posts: Malpasse, Ouanaminthe, and Belladère on the Haitian side. As illustrated in the map below, the corresponding points on the Dominican side are Jimani, Dajabòn, and Elias Piña. 16 Kett, B. Centre de Facilitation des Investissements (CFI) TRADE FLOWS BETWEEN HAITI AND THE DOMINICAN REPUBLIC-Opportunities for Increasing Haitian Production, December 2015.
  • 12. 8 The level of unregistered trade is further illustrated in the table below. Discrepancies between export and import values recorded in the DR and Haiti at corresponding border crossings Point of Exit Custom Value ($US) Point of Entry Custom Value ($US) RATIO VALUE EXIT/VALUE ENTRY Elías Piña 78,028,786 Belladère 18,058,915 4 Dajabón 251,204,599 Ouanaminthe 19,726,862 13 Jimaní 565,500,170 Malpasse 226,525,327 2 Source: AGD, and ONE As mentioned earlier, many of the unreported imports are items produced in Haiti. A partial list of the unreported products released by DR authorities appears in the table below. There are agricultural as well as food products. The list also includes manufactured products. HS6 CODE PRODUCT LABEL UNREPORTED EXPORTS TO HAITI ($ US) 110100 Wheat or meslin flour 37,398,883 210390 Sauces and preparations nes13 and mixed condiments and mixed seasonings 32,003,218 210320 Tomato ketchup and other tomato sauces 14,563,287 151519 Linseed oil and its fractions, refined but not chemically modified 13,217,877 392410 Tableware and kitchenware of plastics 12,365,451 190531 Sweet biscuits 12,053,132 481910 Cartons, boxes and cases, of corrugated paper or paperboard 9,567,891 160100 Sausage & similar products of meat, meat offal/blood& food prep based on these prod 9,161,421 340220 Surface-active prep, washing & cleaning prep put up for retail sale 7,729,773 392330 Carboys, bottles, flasks and similar articles of plastics 7,685,984 10511 Fowls, live domestic weighing not more than 185 g 7,439,176 110313 Maize (corn) groats and meal 7,401,295
  • 13. 9 HS6 CODE PRODUCT LABEL UNREPORTED EXPORTS TO HAITI ($ US) 100640 Rice, broken 7,221,278 310560 Fertilizers containing phosphorus & potassium, in packages weighing<=10 kg 6,611,334 392321 Sacks and bags (including cones) of polymers of ethylene 6,178,618 80310 Plantains 5,698,991 220840 Rum and tafia 5,326,744 TOTAL 196,297,609 Source: Oficina Nacional de Estadística (ONE) Other important items on the smugglers’ menu are cement, cereals, and eggs. The Dominican Republic provides incentives to DR producers that are exporting to Haiti. They are granted a waiver on a value- added tax (VAT) of 18%. Once more, given the size of the population, the Haitian market is very attractive, particularly for basic food and manufactured products. Haiti is the second biggest destination for DR exports. PARTNER 2014 2015 2016 Export value ($ US billion) 9.9 8.4 8.7 UNITED STATES 4.9 4.5 4.6 HAITI 1.4 1.0 0.8 CANADA 0.9 0.7 0.8 OTHER 7.4 5.6 5.7 Meanwhile, Haitian producers evoke the difficulties they experience in trying to export to the DR. Aside from tariff; those difficulties are related to administrative constraints such as delays in obtaining import licenses. A recent study (CLEF, 2016) commissioned by Caribbean Export Development Agency (CEDA) found that a number of potential Haitian exports are affected by those barriers. They include: 1. Corn flour; 2. Corn flakes; 3. Chicken cubes; 4. Beer and Rum. Haitian manufacturers also claim that they face obstacles in attempting to export edible oil and soaps to the DR.
  • 14. 10 3.3 Smuggling and the Haitian budget There are several estimates of the revenues lost by the Haitian Treasury to smuggling. Before delving into that issue, it would be informative to understand first the type of public expenditures smuggling mainly affects. The Haitian budget is composed of operations and capital expenditures. Since 2006, Haiti has been able to support its operations budget and even developed capacity to finance part of its capital or investment expenditures. The table below shows the level of committed operations and investment expenditures for the past five years: revenues exceed operations expenditures. It follows that revenue losses adversely affect the Treasury’s ability to finance capital expenditures in education, health, and infrastructure. Haiti’s budget : main components (2013-2026) Budget item 2013 2014 2015 2016 2017 Total Revenues (Millions of gourdes) 44,522 47,107 56,794 74,972 66,078 $ US (million) equivalent 1,018 1,034 1,089 1,144 1,054 Exchange rate (gourdes per $ US end of fiscal year) 43.7429 45.5577 52.1417 65.5368 62.69 Income and other internal taxes 29,243 33,380 38,564 53,091 44,904 of which (TCA) 13,435 13,991 14,230 19,849 17,245 Customs 1,946 13,401 17,577 21,654 20,240 Other 14,231 326.03 652.66 225.78 934.33 Total expenditures (Commitment basis) 52,826 52,513 54,376 69,880 63,365 Operations 39,376 45,109 48,156 63,924 57,433 Capital 13,450 7,404 6,220 5,956 5,931 The figures in the previous table do not take the float (cash expenditures from previous budget cycles that are paid in the current year) into account. Those emerge, as do net internal financing as well as external support (of which direct budget support and debt repayment) as so-called below-the-line items. The table below shows the cash position of the Haitian Treasury for the past five years. 2013 2014 2015 2016 2017 Central Bank Financing (billions of gourdes) 2.7 5.3 9.9 4.5 6.6 Millions of $ US 61.7 116.3 189.9 68.7 105.3 Now, estimates of revenue losses range from $ US 184 million in 2014 (Kett, 2015) to over $ US 440 million in 2013 (Association des Industries Haïtiennes-ADIH, 2013). Kett has argued that ADIH’s estimates of revenue losses are far too high. Be that as it may, it would also seem that Kett’s estimate falls short in the sense that it does not take into account additional internal tax revenues such as the “Taxe sur Chiffre d’Affaires” (T.C.A) that would have resulted from the sale of smuggled products by formal operators in the Haitian marketplace. In addition Kett’s estimate does take undervaluation into account either. Let us for argument sake, work with losses of about $ 250 million; they amount to about 3.1% of Haitian GDP.
  • 15. 11 Using exchange rate figures from 201517, the revenue loss corresponds to nearly 13 billion gourdes, which ceteris paribus, would have been more than enough to cover the 9.9 billion gourdes deficit recorded in 2015. In other words, revenue losses from smuggling hinder GOH ability to finance structural measures, and can be said to be associated with a worsening of the macroeconomic environment (see figure below) : i) higher inflation, ii) depreciation and/or volatility of the exchange rate. In addition, according to an International Monetary Fund (IMF) report18, a fiscal multiplier of .6 can be assumed for the Haitian case. That multiplier measures the increase in GDP that could result from a one gourde increase in government expenditure. Using that multiplier and assuming that capital expenditures were increased by the 13 billion gourdes ($ US 250 million) tax shortfall, GDP would have risen by an additional 1.85%. 3.4 Smuggling and employment in agriculture and the manufacturing sector Growth rates for the agricultural and manufacturing sector are presented in the table below. The agricultural sector exhibited negative growth between 2009 and 2017, while the manufacturing sector grew at 5.2% on average over the period. However this strong showing is due to recovery that took place in the two years following the earthquake. Growth in the sector has been rather low in subsequent years, averaging 2.4% between FY 2012-13 and FY 2016-17. Fiscal Year (FY) Agriculture, Livestock, and Fisheries Manufacturing Growth rates of sectoral GDP 2009-10 - - 2010-11 -1.1% 17.8% 2011-12 -1.3% 7.1% 2012-13 4.3% 2.1% 17 52.1417 gourdes per US dollar, in September 2015. 18 Bessaha, A and and Elva Bova, E. OPTIMIZING FISCAL POLICY FOR HIGH AND INCLUSIVE GROWTH IN HAITI-HAITI Selected Issues, IMF, Country Report No. 13/91, February 2013 -10% -5% 0% 5% 10% 15% 20% 25% 30% Inflation, % change in CPI % Change in exchange rate.
  • 16. 12 Fiscal Year (FY) Agriculture, Livestock, and Fisheries Manufacturing Growth rates of sectoral GDP 2013-14 -1.5% 2.7% 2014-15 -5.4% 4.6% 2015-16 3.1% 1.5% 2016-17 0.8% 1.0% Average -0.1% 5.2% According to official Haitian statistics, agriculture employed 1.2 million people in 2009, while the industrial sector was responsible for 544,000 jobs in 2016 according to International Labor Organization (ILO) statistics. There is no doubt that this estimate includes hundreds of thousands of informal sector jobs. A survey19 conducted by the Haitian Institute for Statistics and Computing, Institut Haitien de Statistique et d’Informatique (IHSI) indicates that the formal sector is responsible for about 20% of Manufacturing Jobs. If that figure is applied to the ILO estimate, the number of formal sector manufacturing jobs reaches about 103 thousand. The apparel industry is responsible for about 40.000 of these jobs and the balance (some 60.000) can be imputed to light manufacturing: a) food processing such as flour, beverages, etc. and; b) non food items such as cement, detergents, paper products, packaging, etc. Smuggling has taken such proportions, that the rise in that phenomenon associated with the increasing trade deficit between Haiti and the DR cannot be overlooked as one of the factors that explains the lack of growth in the Haitian manufacturing and agricultural sectors. Several thousand jobs have been lost and are still threatened. HAITIAN EXPORTS TO/IMPORTS FROM THE DR OVER TIME (‘000 000 USD) 19 Enquête sur l'Emploi et l'Economie Informelle, 2007
  • 17. 13 4. The economic effect of smuggling on Haitian production capacity: the poultry industry – a case study. About 1 million eggs are exported to Haiti from the Dominican Republic on a daily basis. These export are illegal as there is a ban on poultry products from the DR because there have been outbreaks of Avian Flu and New Castle disease in that country. One such outbreak occurred as recently as December 2017, as reported by the Organization for Animal Health, OIE. TABLE EGGS Quantity (Million units) 2012 2017 Local Production 11 146 11 146 IMPORTS Dominican Republic 360 360 Others 40 40 400 400 GRAND TOTAL 411 546 In addition, the Dominican Republic exports 4.6 million kg of Broilers and Boiler Meat to Haiti. Domestic production stands at about 8.4 million kg, and demand is satisfied largely by US imports. Haiti has achieved tremendous progress in its poultry production since 2012. Namely, there have been significant increases in: 1. the production of day-old chicks to the December 2016 figure of 200,000/month:100% increase over 2012. 2. the production of layers to the December 2016 total of 500,000:1000% increase over 2012. 3. the production of consistent quality poultry feeds to the December 2016 total of 2,000 MT/month: 500% increase over 2012 4. the production of broilers and table eggs to the December 2016 figures of 200,000/month & 400,000/day respectively. This represents a 100% and 1000% increase respectively over 2012. The illegal imports of poultry products from the DR can wipe out all these achievements. Apart from potential health issues, there are significant numbers of jobs at stake. The sector employs 170.000 individuals in the DR and accounts for 70,000 jobs in Jamaica. In Haiti, there are 6,000 individuals currently employed in poultry activities. The sector’s expansion could result in tripling the number of direct jobs. COUNTRY POPULATION x 1000 MEAT PRODUCTION METRIC TON (MT) MEAT IMPORTS (MT) SHELL EGG PRODUCTION X1000 NUMBER OF FARMS EMPLOYMENT 2/ MAX. TARIFFS & TAXES (%) Barbados 278 14,392 1,106 45,600 410 1,654 184 Belize 1/ 332 19,319 365 49,068 250 1,538 40 Guyana 1/ 800 28,421 579 23,100 2815 4,740 56 Haiti 10,000 8,400 83,659 101,000 4000 6,000 33
  • 18. 14 COUNTRY POPULATION x 1000 MEAT PRODUCTION METRIC TON (MT) MEAT IMPORTS (MT) SHELL EGG PRODUCTION X1000 NUMBER OF FARMS EMPLOYMENT 2/ MAX. TARIFFS & TAXES (%) Jamaica 2,800 122,231 37,315 121,853 60,000 70,000 280 T & T 1,300 70,044 7,875 54,966 510 16,300 55 D. R. 10,000 317,046 35,832 1,746,325 900 170,000 99 + 16 1/ Controls imports using a licensing regime; 2/ Employment does not include foodservice & supplier industries. Source: Fairman, D. -Poultry Re-Development Strategy for Haiti, June 2017 It is important to point out that the poultry industry has important backward and forward linkages to other sectors in the economy. For instance, the Haitian Ministry of Agriculture estimates that to keep up with increased poultry production, cereal production for feed will have to grow from 267.600 Tons in 2017 to 1.275.000 Ton by 2034. Such a production would require 212,500 hectares. There are currently 954,600 hectares available for agriculture in Haiti, and the majority of that area is used for growing cereals and vegetables. According to Haiti’s Ministry of Agriculture data, 1 hectare sustains 2.79 permanent jobs. Therefore, 212,500 hectares would support 593.000 jobs in agriculture under current conditions, probably fewer with technological advances. Nevertheless, the numbers of jobs at stake are staggering. The poultry industry entails many benefits that include:  Creation of small-business entrepreneurship;  Direct jobs within the industry and indirect jobs; supplying logistics support, information technology, trading & marketing, veterinarians, carpenters, masons, engineers and builders, supply of water tanks;  Backward linkages to the agricultural sector for corn, sorghum, broken rice, rice hulls;  Supply of significant quantities of manure for crops;  Rural development and jobs for rural women, thereby reducing rural to urban migration;  The production of many other animal feeds. Given its importance for employment, one understands why the poultry industry in the Dominican Republic, as is also the case in other countries, is highly protected. The system consists of: a) import permits; b), high tariff protection ranging from 20-99%; c) a highly protective Tariff Rate Quota (TRQ) regime. In addition, producers receive production subsidies, while exporters are granted export incentives. 5. The growth - foreign direct investment (FDI) relationship: the Dominican Republic as a model As discussed in a previous section, the enactment of structural measures is an important determinant of growth, and has been flagged as one of the chief reasons why growth in Haiti lagged far behind that of the DR. It has also been argued that by provoking revenue losses, smuggling places constraints on a Government’s ability to put such measures in place. Countries such as Haiti with relatively low savings have to rely on foreign savings for investment. These savings may come as foreign aid or as foreign direct investment (FDI). The latter can provide an important stimulus to the economy. But, under what conditions will FDI come? What has been the experience in the DR? The DR has been able to attract $
  • 19. 15 US 24.3 billion in the past 10 years, while Haiti was only able to secure $ US 1.2 billion in the same time frame. YEAR DOMINICAN REPUBLIC HAITI FDI – $ US 2006 1,528,700,000 160,600,000 2007 2,252,900,000 74,500,000 2008 2,728,400,000 29,800,000 2009 1,695,300,000 55,470,000 2010 1,820,200,000 178,000,000 2011 2,197,500,000 119,000,000 2012 3,415,900,000 156,000,000 2013 1,599,900,000 161,918,586 2014 2,385,300,000 99,000,000 2015 2,227,300,000 105,680,000 2016 2,522,500,000 104,900,000 TOTAL 24,373,900,000 1,244,868,586 Certainly, Haiti has many challenges (political instability, business environment, governance issues, etc.) to overcome. The Dominican Republic has made great strides in addressing those challenges. However, if we refer to the assertions of Spanish Bank, Banco Santander published on its website: “The main difficulties that foreign investors have to face in the Dominican Republic are inadequate infrastructure, problems with the electricity supply, corruption, non-respect of contracts, disregard for court rulings and a lack of standard procedures for customs fees on imported goods.”20 For Haiti, there is a long road ahead to resolve similar issues. While addressing those challenges Haiti can place its economy on the growth path taken by the DR by making appropriate investments and policy choices. This requires scarce resources and smuggling denies the Haitian Treasury those resources. Statistical analysis21 suggests that the direction of causality between GDP and FDI for the DR went from GDP to FDI. In other words, it is GDP growth that at least initially, facilitated the emergence of FDI. It was further estimated that between 1970 and 2016, a 1% increase in GDP provoked a 2.6% increase in FDI. This implies that some minimal economic conditions must be fulfilled to attract foreign capital. Massive FDI did not start flowing into the DR until the late 1990’s. YEAR FDI-NET FLOW ($ US) YEAR FDI-NET FLOW ($ US) 1970 71,600,000 1997 420,600,000 1971 65,000,000 1998 699,800,000 1972 43,500,000 1999 1,337,800,000 1973 34,500,000 2000 989,000,000 20 SOURCE: https://en.portal.santandertrade.com/establish-overseas/dominican-republic 21 Conducted as part of the implementation of a Vector Error Correction Model (VECM)
  • 20. 16 YEAR FDI-NET FLOW ($ US) YEAR FDI-NET FLOW ($ US) 1974 53,600,000 2001 1,087,900,000 1975 63,900,000 2002 926,000,000 1976 60,000,000 2003 616,530,000 1977 71,500,000 2004 934,480,000 1978 63,600,000 2005 1,118,400,000 1979 17,100,000 2006 1,528,700,000 1980 92,700,000 2007 2,252,900,000 1981 79,700,000 2008 2,728,400,000 1982 (1,400,000) 2009 1,695,300,000 1983 48,200,000 2010 1,820,200,000 1984 68,500,000 2011 2,197,500,000 1985 36,200,000 2012 3,415,900,000 1986 50,000,000 2013 1,599,900,000 1987 89,000,000 2014 2,385,300,000 1988 106,100,000 2015 2,227,300,000 1989 110,000,000 2016 2,522,500,000 1990 132,800,000 1991 145,000,000 1992 179,700,000 1993 189,300,000 1994 206,800,000 1995 414,300,000 1996 96,500,000 AVERAGE 95,840,741 1,577,995,263 Initial growth is necessary to create the socioeconomic and political conditions that are suitable to foreign investments. Financial resources are needed to initiate this growth. An effective fight against smuggling would yield some of these resources by reducing losses in tax revenues and lifting an important constraint on domestic productive capacity.
  • 21. 17 Appendix 1- Major imports from the World Produc t Product code de Product label Imported value in 2013 in '000 USD Imported value in 2014 in '000 USD Imported value in 2015 in '000 USD 'TOTAL All products 3,731,890 4,213,929 3,614,056 '999999 Commodities not elsew here specified 452,841 440,081 448,235 '100630 Semi- milled or wholly milled r ice, whether or not polis hed or glazed 232,398 222,987 207,915 '521213 Woven fabrics of cotton , containing predominant ly, but < 85% cotton by weight, other than those ... 154,567 170,704 162,720 '610910 T- shirts, singlets and other vests of cotton, knitted or crocheted 19,286 25,074 150,958 '151190 Palm oil and its fractions , whether or not refined (excluding chemically m odified and crude) 93,281 92,937 88,503 '252329 Portland cement (exclud ing white, whether or n ot artificially coloured) 64,925 70,908 72,788 '271019 Medium oils and prepara tions, of petroleum or bi tuminous minerals, not c ontaining biodiesel, ... 57,827 140,402 65,040 '170114 Raw cane sugar, in solid form, not containing add ed flavouring or colourin g matter (excluding ... 58,013 59,517 53,761 '020714 Frozen cuts and edible o ffal of fowls of the specie s Gallus domesticus 60,924 60,794 52,712 '210390 Preparations for sauces and prepared sauces; mi xed condiments and sea sonings (excluding soya . .. 45,340 77,390 46,123
  • 22. 18 Produc t Product code de Product label Imported value in 2013 in '000 USD Imported value in 2014 in '000 USD Imported value in 2015 in '000 USD '110100 Wheat or meslin flour 52,238 83,856 39,903 '040291 Milk and cream, concent rated but unsweetened ( excluding in solid forms) 42,581 47,125 38,990 '100199 Wheat and meslin (exclu ding seed for sowing, an d durum wheat) 46,519 45,948 37,993 '190531 Sweet biscuits 31,775 43,559 27,681 '300490 Medicaments consisting of mixed or unmixed pr oducts for therapeutic o r prophylactic purposes, ... 20,156 25,580 27,178 '600410 Knitted or crocheted fa brics, of a width of > 30 cm, containing >= 5% by weight elastomeric ... 6,326 13,613 26,640 '722790 Bars and rods of alloy st eel other than stainless, hot- rolled, in irregularly wou nd coils (excluding ... 492 26,551 '600622 Dyed cotton fabrics, knit ted or crocheted, of a w idth of > 30 cm (excludi ng warp knit fabrics ... 11,671 21,335 23,989 '580631 Narrow woven fabrics o f cotton, with a width of <= 30 cm, n.e.s. 24,892 30,690 23,162 '392410 Tableware and kitchenw are, of plastics 13,898 31,984 22,482 '871120 Motorcycles, incl. mope ds, with reciprocating int ernal combustion piston engine of a cylinder ... 19,022 21,227 21,707 '392690 Articles of plastics and a rticles of other materials of heading 3901 to 391 4, n.e.s (excluding ... 8,668 16,020 20,931
  • 23. 19 Produc t Product code de Product label Imported value in 2013 in '000 USD Imported value in 2014 in '000 USD Imported value in 2015 in '000 USD '620343 Men's or boys' trousers, bib and brace overalls, b reeches and shorts of sy nthetic fibres (excluding ... 28,851 26,220 20,419 '600632 Dyed fabrics, knitted or crocheted, of synthetic fi bres, of a width of > 30 cm (excluding warp ... 7,023 12,174 19,385 '210690 Food preparations, n.e.s. 27,197 23,893 18,784 Source : Trademap
  • 24. 20 Appendix 2- Major imports from the Dominican Republic Product code Product label Haiti's imports from Dominican Republic in '000 USD Value in 2013 Value in 2014 Value in 2015 'TOTAL All products 1,042,883 1,423,206 1,012,159 '521213 Woven fabrics of cotton , containing predominantly, but < 85% cotton by weig Ht, otHer tHan tHose ... 154,567 170,704 162,720 '610910 T- sHirts, singlets and otHer vests of cotton, Knitted or crocHeted 17,543 20,618 145,899 '252329 Portland cement (exclud ing wHite, wHetHer or no t artificially coloured) 55,146 64,065 64,678 '210390 Preparations for sauces and prepared sauces; mixe d condiments and seasonin gs (excluding soya ... 42,224 74,052 41,863 '110100 WHeat or meslin flour 46,900 78,385 35,203 '620343 Men's or boys' trousers, bib and brace overalls, bre ecHes and sHorts of syntH etic fibres (excluding ... 28,466 26,052 19,894 '210320 Tomato KetcHup and ot Her tomato sauces 10,232 30,548 18,045 '392690 Articles of plastics and a rticles of otHer materials of Heading 3901 to 3914, n.e.s (excluding ... 4,654 11,643 16,465 '392410 Tableware and KitcHen ware, of plastics 10,482 25,940 16,147 '520819 Woven fabrics of cotton , containing >= 85% cotton by weigHt and weigHing < = 200 g/m², unbleacHed ... 12,566 16,030 16,036 '151519 Linseed oil and fractions tHereof, wHetHer or not refined, but not cHemically modified (excluding ... - 27,718 14,169 '190531 Sweet biscuits 14,534 25,257 12,560
  • 25. 21 Product code Product label Haiti's imports from Dominican Republic in '000 USD Value in 2013 Value in 2014 Value in 2015 '340220 Surface- active preparations, wasHi ng preparations, auxiliary wasHing preparations and cleaning ... 9,042 16,205 11,800 '481910 Cartons, boxes and case s, of corrugated paper or p aperboard 11,816 20,222 11,147 '520859 Woven fabrics of cotton , containing >= 85% cotton by weigHt and weigHing < = 200 g/m², printed ... 16,560 14,357 10,258 '110313 Groats and meal of mai Ze "corn" 11,745 15,506 10,107 '721420 Bars and rods, of iron o r non- alloy steel, witH indentatio ns, ribs, groves or otHer d eformations ... 6,990 9,966 9,456 '392329 SacKs and bags, incl. con es, of plastics (excluding t Hose of polymers of etHyl ene) 9,006 10,447 9,380 '160100 Sausages and similar pro ducts, of meat, offal or blo od; food preparations base d on tHese products 4,476 19,244 8,679 '721410 Bars and rods, of iron o r non- alloy steel, not furtHer wo rKed tHan forged (excludi ng in irregularly ... 13,031 6,317 8,070 '721710 Wire of iron or non- alloy steel, in coils, not plat ed or coated, wHetHer or not polisHed (excluding ... 7,369 15,135 7,999 '100640 BroKen rice 5,250 15,135 7,843 '600532 Dyed warp Knit fabrics of syntHetic fibres "incl. tH ose made on galloon Knitti ng macHines", ... 9,806 11,477 7,546 '540110 Sewing tHread of syntH etic filaments, wHetHer or not put up for retail sale 6,831 7,914 7,542
  • 26. 22 Product code Product label Haiti's imports from Dominican Republic in '000 USD Value in 2013 Value in 2014 Value in 2015 '392330 Carboys, bottles, flasKs and similar articles for tHe conveyance or pacKaging of goods, of ... 13,362 16,086 7,512 Source : Trademap