GAO Reports Modest Use of EIAP to Export Apparel from Haiti to U.S.
The Government Accountability Office has issued a report finding that in 2011, for the first time since the Earned Import Allowance Program (EIAP) for Haiti was established in 2008, one company has opted to use the EIAP to export apparel from Haiti to the U.S. GAO states that the use of the EIAP continues to be modest due to the availability of other, more flexible trade preferences.
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(Congress passed the Haitian Hemispheric Opportunity through Partnership Encouragement (HOPE) Act in 2006 to give preferential access to U.S. imports of Haitian apparel. In 2008, Congress amended HOPE to, in part, create the "3-for-1" EIAP, whereby for every 3-square-meter equivalent (SME) of qualifying fabric a firm imports to Haiti, the firm would be allowed to earn a credit to export 1 SME of apparel produced in Haiti to the U.S. duty-free, regardless of the source of the fabric. In 2010, the Haiti Economic Life Program (HELP) Act amended the EIAP to a more advantageous "2-for-1" exchange ratio since no apparel was exported under the original 3-for-1 model.)
EIAP represents 0.07% of total apparel exports. The value of the EIAP exports (about $350,000) represents 0.2 percent of total apparel exports under the amended HOPE Act (HOPE II), and only 0.07 percent of total apparel exports from Haiti to the U.S. under all preference programs based on year-to-date data as of August 2011.
Exporters are using HOPE, CBTPA instead. According to GAO, even after it was amended to a more advantageous ratio, the level of EIAP use continues to be modest. GAO attributes low EIAP participation to the availability of other more flexible provisions, such as other HOPE and HOPE II provisions and the Caribbean Basin Trade Partnership Act (CBTPA), which continues to be the most common trade preference used to export Haitian apparel to the U.S. The primary provisions used under these programs are the HOPE II Knit Apparel, Woven Apparel, and Value-Added Restraint Limit provisions and the CBTPA T-shirt Restraint Limit program.
Apparel producers have stated that they did not expect participation in EIAP to increase significantly unless certain provisions of HOPE II and the CBTPA, which are subject to volume caps, begin to approach their limit1. Additionally, exporters considered HOPE II provisions other than the EIAP simpler and more advantageous because firms can import most types of apparel duty-free, regardless of the fabric’s source, without being required to purchase any kind of qualifying inputs or to register for a program.
1As of December 12, 2011, the 2011 TPL for the HOPE Knit Apparel Restraint Limit was 5.31% filled, the Woven Apparel Restraint Limit was 9.00% filled, and the Value Added Restraint Limit was 4.69% filled. The TPL for CBTPA T-Shirts was 11.60% filled.
(See ITT's Online Archives 10061812 for summary of a June 2010 GAO report which found that no apparel was exported to the U.S. under the Haiti HOPE II EIAP.)
(GAO-12-204R, dated 11/30/11)