GAO: Haitian textile trade preference underused

GAO: Haitian textile trade preference underused    A congressional watch agency's report found that no apparel has been exported to the United States under the Haiti Earned Import Allowance Program (EIAP) so far because exporters prefer to use other existing trade preferences.
   While three companies have registered to participate in EIAP, none have earned credits and no credits have been redeemed under the program, which was initiated by Congress in 2008 Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE) II.
   EIAP allows that for every three square meters of U.S. or other qualifying fabric a firm imports into Haiti, it earns a credit to export one square meter of fabric duty-free to the United States, regardless of the fabric source. The 2010 Haiti Economic Lift Program (HELP) amended EIAP by reducing the qualifying fabric requirement from three to two.
   According to the Government Accountability Office, other trade preferences, like the duty-free rules for woven and knit apparel under HOPE II, 'offer more benefits with fewer requirements.'
   GAO said those preferences are considered by companies to be simpler and allow for fabric inputs from any source up to certain limits known as Trade Preference Levels. The share of U.S. apparel imports from Haiti entering under these HOPE and HOPE II provisions has grown from 3 percent in 2007 to about 27 percent in 2009. 'Experts indicated the EIAP was not likely to be used unless exports under other HOPE II provisions approach their limits,' GAO said.
   The Department of Commerce's Office of Textiles and Apparel (OTEXA) administers the EIAP program through an online system where firms can establish an account, deposit credits, and receive an import allowance certificate. According to participating firms, the system operates satisfactory and the program in general is well managed by OTEXA.
   To encourage more activity in EIAP, industry stakeholders suggested to GAO a reduction in the ratio of qualifying to non-qualifying fabric from 3-for-1 to 2-for-1, or 1-for-1. A ratio reduction of 2-for-1, expected to lower the average input costs, was incorporated into the HELP Act. Other suggestions from industry included allowing the use of foreign (non-U.S.) yarn in qualifying knit fabrics, allowing qualifying fabrics to be finished and dyed outside of the United States, and expanding the EIAP concept beyond apparel.
   However, GAO warned that while some of these suggested changes to EIAP may benefit Haitian apparel exports, it could be disadvantageous for certain U.S. textile producers.