U.S. Tariff Commission, Economic controls and commercial policy in American Republics, 1 v. & maps, Wash., 1945-47 - sca...

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U.S. Tariff Commission, Economic controls and commercial policy in American Republics, 1 v. & maps, Wash., 1945-47 - scan only the Haiti section, (1)+26p, HC153 .U55 1946
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4-trUS-1946
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KC14 .U61e/HC125 .U55 1945

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Full Text






















This copy of a rare volume in its collections,
digitized on-site under the
LLMC Extern-Scanner Program,
is made available courtesy of the

Los Angeles County Law Library







Economic Controls and

Commercial Policy

In Haiti




One of a Series of Reports on
Economic Controls and
Commercial Policy
in the American Republics









UNITED STATES.TARIFF COMMISSION.
a'shington: 1946












UNITED STATES TARIFF COMMISSION


OSCAR B. RYDER, Chairman
LYNN R. EDMINSTER, Vice Chairman
EDGAR B. BROSSARD
E. DANA DURAND
GEORGE McGILL
E. M. WHITCOMB, Acting Secretary




Address all communications
UNITED STATES TARIFF COMMISSION
Washington 25, D. C.




FOREWORD

This is one of a series of reports on Economic Controls and Commercial Policy in the
Latin American Republics.
Other work in preparation by the Commission relating to trade problems of the American
Republics includes a series of reports under each of the following headings: Mining an"
Manufacturing Industries; Agricultural, Pastoral, and Forest Industries; and Recent
Developments in Foreign Trade.
In the preparation of this report the Commission had the services of David Lych,
Allyn C. Loosley, and other members of its staff.
Reports on Economic Controls and Commercial Policy have been completed for ed
of the countries listed below. A price indicates that the report is available by purchase
from the Superintendent of Documents, U. S. Government Printing Office, Washingtoo
25, D. C. Reports on the other countries listed may be obtained without charge fro
the Tariff Commission.
Argentina Costa Rica Mexico, 15c
Bolivia Cuba, 15c Paraguay
Brazil Dominican Republic, 10c Peru
Chile Ecuador Uruguay
Colombia Haiti, 10c Venezuela













CONTENTS




Introduction:
Haiti-a summary description --- ------------- 1
The Haitian economy ----------- 2

General character of economic controls and commercial
policy ------- ---------------------- 4

Economic controls and commercial policy before 1940:
The import tariff ------ ----------- 5
Export duties 8----------- 8
Commercial agreements -------------------------- 10
Export standards for coffee -------------------- 11
The International Sugar Agreement ------ ------- 12

Economic controls and commercial policy after the out-
break of Wrorld War II:
Modification of customs duties since 1939 -------- 15
The Inter-American Coffee Agreement ------------------ 17
The Haitian-American Agricultural Development
Corporation ---------------- --- 19
Mobilization of the domestic economy --------- 20
Export and reexport controls ---- --------- 21
Wartime financial controls ------------ 22
Rationing and price control ---- ---- -------- 22

Postwar problems relating to controls and commercial
policy --.------..---------- --------------- 24













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ECONOMIC CONTROLS AND COMMERCIAL POLICY IN HAITI


Introduction

aiti--a summary description

The Republic of Haiti -/occupies the western third of the
island of Hispaniola, which lies in the Caribbean Sea between
Cuba and Puerto Rico. Its ar6a, about 10,700 square miles, is
somewhat greater than that of the State of Maryland.

Haiti is a rugged country, nearly four-fifths of the entire
rea being mountainous. / Three principal ranges traverse the
country; these are interspersed with and flanked by a number of
ertile valleys and plains of varying size. Communication be-
teen the valleys and plains is difficult, making them, in effect,
independent economic units. Haiti possesses no less than 12
Seaports, each serving a valley or plain. N/ There are numerous
rivers in the country, most of them short; in general, they are
useful for irrigation but not for navigation.

Haiti lies wholly within the Torrid Zone, and, as in other
Omntainous tropical areas, its climate varies with the altitude.
.n toe coastal regions, where the principal centers of population
-re located, the climate is warm and equable. Rainfall varies
cocsiderably in different parts of the country; certain sections
e arid, while others receive heavy precipitation. In general,
te re are two rainy seasons, from April to June, and from Septem-
ber to November.

lie Haiti is the most densely populated of the American repub-
'* No census has been taken in Haiti, but it was estimated
tat in 1940 the population was approximately 2,663,000, or
Scut 250 persons to the square mile. Many sections of the
C try, however, are not habitable. By far the greater part
t V~C population is rural; the eight principal cities and towns
t "t er probably account for only 6 percent of the total. Port-
nce, the largest city and the capital and chief port, is





/ ficially known as Republique d'Hoiti.
i t:In the southeastern range, elevations reach 8,790 feet, and
t48e central range, about 5,600 feet. In the north the noun-
k/ Cre lower, the highest being about 4,600 feet.
spi ^te the number of ports, about three-fifths of all
Sees and about cne-third of all exports go through Port-au-
c*ie.








located in the southeastern part of the wide gulf which indents
the western end of Hispaniola. Its population is estimated to
be about 100,000. -More than nine-tenths of the people of Haiti
are Negroes, and most of the remainder are mulattoes. The
official language is French. A large part of the population,
especially that in the rural areas, speaks a French patois know
as Creole. /

The Haitian economy

Haiti is an agricultural country. Although it is mountain-
ous, the numerous valleys and the several large plains are ex-
tremely fertile, and some of the elevated lands also may be
utilized for agriculture. Large estates existed during the
colonial period, but at the present time there are only a few
plantations (sugarcane, sisal, and banana), all operated by
United States companies. Cultivation, therefore, is carried
on chiefly by individual proprietors on small holdings, using
primitive methods.

The principal export commodities are coffee, cotton, sugar,
sisal, bananas, cacao, and molasses. In 1938 these seven prod-
ucts accounted for more than nine-tenths of the value of all
exports; coffee constituted 50 percent of the total) cotton,
15 percent; and sugar, 11 percent. N/ Other export products
include goatskins, castor beans, cottonseed cake, honey, bees-
wax, cashew nuts, rum, logwood, lignumvitae, and sisal handbags.

Corn, sweetpotatoes, beans, pens, rice, End manioc, es well
as a wide variety cf other vegetables and fruits, are grown in
Haiti cniefly for domestic consumption. The country is self-
sufficient with respect to essential food requirements, although
imports of wheat flour, lard, and pickled fish supplement domes-
tic food supplies to some extent. The mineral resources of
Haiti as yet are undeveloped. There is little manufacturing in
the country except handicrafts and industries associated with te
first processing of agricultural products.








SHaiti is tne only republic of the Western Hemisphere in
which French is the official language. It is one of the two
Negro republics in the world, the other being Liberia.
2/ This brief description of the Haitian economy relEtes Pr"
cipally to the period before the outbreak of the war.
2/ For a detailed analysis of the foreign trade of Haiti 8a
well as the other countries of Latin America in the decade 199
38, see U. S. Tariff Commission, The Foreign Trade of LatnS
America (4 vols.), Report No. 146, Second series, WashingtOs,
1942.




VT~--~--r-4-'-----I14cllll~111*3~1 --- -











General Character of Economic Controls
and Commercial Policy


Governmental intervention and regulation of the economic
life of the nation is less extensive in Haiti than in most coun-
tries of Latin America. Because of Haiti' s relatively small
population and the simple character of its economy, however,
the controls employed are of considerable importance to organ-
ized productive and commercial activity within the country.
Import duties, as well as export taxes, have been used almost
exclusively for fiscal purposes, and are a dominant part of the
Government' a total revenue. In keeping with the trend in many
countries, export taxes now play a less important role than
they formerly did, though the Government still depends on thea
to a greater extent than do most Latin American countries. To
protect its foreign trade position from the effects of bilateral
trade-balancing practices employed by many other countries since
1920, Haiti has concluded a number of unconditional, unrestricted
most-favored-nation treaties- and agreements, one of which is
with the United States.

Various steps have been taken by the Government to improve
the Haitian coffee industry; chief among them have been the use
of graduated export taxes to encourage production of better
grades of coffee, the establishment of export standards, and
participation in the Inter-American Coffee Agreement. Since
1937 the exportation of sugar has been subject to quota restric-
tions in accordance with commitments made by Haiti in the Inter-
national Sugar Agreement. What may prove to be an important
influence on the economy of the country is the recently organiSed
Haitian-American Agricultural Development Corporation. This
organization, commonly known as SRADA, has undertaken numerous
projects to develop the country's resources, expand production,
diversify the economy, and raise living standards. During the
war the Government adopted various controls to stabilize the
domestic economy and, in cooperation with other countries of the
Western Hemisphere, to defeat the aggressor nations. Measures
designed to mobilize the economy for defense of the Hemisphere
provided for an increased output of essential materials, for ex
port and reexport controls to prevent the flow of supplies to
enemy nations, and for the blocking of funds of the Axis natic"
and their nationals. Rationing and price control have been
ministered with some success.









Economic Controls and Commercial Policy Before 1940

The import tariff

Import duties in Haiti are intended almost exclusively for
revenue; they are employed for the protection of domestic indus-
tries to a much smaller extent than in most countries of Latin
America. In the immediate prewar years (1937-39), about two-
thirds of the Government's revenue was derived from duties on
imports. The share was somewhat smaller in earlier years be-
Cause of the relatively greater amount of revenue formerly de-
rived from export taxes. Even at that time, however, the Govern-
ment depended much more heavily on the income from import duties
t.an did most Latin American countries. Although the compara-
tively high revenue duties which now prevail may afford inci-
dental protection, the tariff has not been designed to foster
iuidstries producing articles which can be purchased more cheaply
road. Some direct protection is given to industries produc-
ing sugar, lard substitutes, and tobacco.

Except for a few modifications, the present import tariff
as established by the Tariff Law of .1926 1/ and by a degree of
1935, which provided for a maximum schedule of duties. 2_/ Since
1935 the Haitian tariff schedule has had three columns of rates--
11 nam, inimum, and conventional. The rates of duty pre-
'ribed in the Tariff Law of 1926, together with subsequent modi-
tcations, constitute the minimum tariff, which is applied to
'Ports from countries granting most-favored-nation treatment to
R 1tia products. In the Tariff Law of 1926 the Executive was
uthoried to impose a maximum (penalty) tariff on imports from
a'tries which did not accord most-favored-nation treatment to
PHatian products. Such maximum duties could be as much as 50
Pcent higher than the minimum rates. This provision was modi-
Ped in 1935, however, when maximum rates of duty were actually
Pescaibed. At times, conventional reductions below the mini-
a (basic) column have been granted, as for certain imports from
aege between 1930 and 1936, and from the United States since
as5 1 these concessions have been extended to third countries so
Sbna required by most-favored-nation agreements, but have not
generalized to all countries.

BatiBoth specific and ad valorem rates of duty are employed in
a ;a The Tariff Act of 1926 provided for alternative ad
and specific rates on most imports, depending on which



A4i rif des Droits de Douane a l'Importation, Le Moniteur,
S9, 1926.
1" iteur, Apr. 15, 1935.








produced the greater revenue. It was intended that most items
should ordinarily be taxed at ad valorem rates, but that specific
rates should become effective during periods of falling prices.
This safeguard was provided because of the Government's heavy
reliance on import duties as a source of revenue. During the
depression of the thirties the system of alternate rates served
to stabilize Government income; because specific duties have an
increasing ad valorem equivalent during periods of falling prices,
the system served to restrict imports and thereby obviated the
need for exchange control. i/

The principal changes in the import tariff between 1926 and
the outbreak of the war were various increases in the rates of
duty and the establishment of a maximum tariff schedule in 1935.
To provide additional revenue, a surtax of 5 percent of the basic
duties was imposed on all imports in 1932; this was increased
to 10 percent in arch 1937 ./ and finally to 20 percent in
December 1937. -/ The latter increase was designed to make up
for the loss of revenue resulting from a reduction at that time
in the export tax on coffee. 4/ Inasmuch as the higher sur-
charges were' imposed after the trade agreement with the United
States became effective. surtaxes of only 5 percent are appli-
cable to items listed in schedule I of that agreement (items on
which Haiti made specific tariff commitments to the United StattW)

Since 1926 most of the changes in the tariff relating to
individual import items have been increases in rates of duty;
in 1932, 1935, 1936, and 1938, higher duties were imposed on nu-
merous articles, including matches, wheat flour, vermicelli .nd
macaroni, batteries, cotton textiles and hosiery, cement, luber,
mineral oils, soap, calfhides, electrical apparatus, gasoline,
kerosene, various iron and steel manufactures, structural iron,
lumber, leather products, fish, rice, and meat. During this
period, reduction in the rates of duty, or exemption from pay
of them, was granted to importers of only a few products, inclul
ing paper, linotype metal, packing boxes and other containers,
barbed wire, and fertilizers.

The 1935 amendment to the Tariff Law of 1926 provided for a
maxmim column in the tariff schedule in order to direct Haiti'
trade with individual countries more in conformity with the gro
ing practice of bilateral trade balancing throughout the *orldA
This action was taken after a period during which purchases frc
Japan had increased to such an extent that that country had bc.'
the second most important source of Haitian imports, although i
had taken very few of Haiti' s exports. Moreover, the Haitia
Government was faced with the threat of reprisal from nations


V The ad valorem equivalent of customs receipts from ; lll
ports increased from 30 percent in the period 1927-29 to 43 per
cent in 1931-33.
SLe loniteur, Mar. 13, 1937.
2/ Ibid., Dec. 1, 1937.
SSee the section on export duties.







which were dissatisfied with the disequilibrium in their mer-
chandise exchanges with Haiti. Inasmuch as Japan was not likely
to increase its purchases of Haitian products, the maximum sched-
ule of duties was established. The existing schedule was declared
to be the minimum tariff, and the rates of the new maximum tariff
were fixed at twice those in the minimum column. Thereafter, the
minimum rates were applied to imports from countries with which
Haiti had most-favored-nation commitments, as well as to those
from any other country which accorded unconditional most-favored-
nation treatment to Haitian products, provided that, in the fiscal
year 1932-33, it had taken at least 1 percent of Haiti's total
exports or had supplied less than one-half of 1 percent of its
imports. I/ The immediate effect of this action was to restrict
imports from Japan; in 1936 that country declined to fourth
place as a source of imports and in 1938 to sixth.

Largely as a result of the Government' s heavy use of import
duties for revenue, the national tax structure tends to be regres-
sive, the burden falling most heavily on those with low incomes.
Import duties are borne principally by consumers of cotton goods
and other textiles, flour, gasoline and kerosene, foodstuffs,
iron and steel manufactures, chemicals and pharmaceuticals,
cigarettes and tobacco, and soap. In the period 1936-39, levies
on these items accounted for about 90 percent of total receipts
from import duties. During this period total levies on imports
were equivalent on the average to about 45 percent ad valorem.
For many staples the burden of the tax was even heavier.
For example, the ad valorem equivalent for cotton goods was 49
percent; for chemicals and pharmaceuticals, 92 percent; for
flour, 93 percent; for cigarettes and tobacco, 140 percent; and
for gasoline, 150 percent.

Between 1915 and 1941 the customs service of Haiti was admin-
itered by officers chosen jointly by the Presidents of Haiti
and the United States. In 1915, after a prolonged period of
civil disorder, during which foreign creditors urged their govern-
enpts to intervene, the United States and Haiti signed a treaty
having for its object the remedying of *. the revenues
a"d finances of Haiti, the'maintenance of the tranquility of that
RPublic, and the carrying out of plans for its economic develop-
eart and prosperity." Under this arrangement a Financial Adviser
and a General Receiver were appointed, with broad powers over the
aitian budget. In addition to other things, the Haitian Govern-
wt obligated itself not to increase the public debt or tq modify
customs duties without the consent of the United States. AJ After
1933 in accordance with a new agreement with the United States,
the former services of the Financial Adviser and the General
SCceiver were carried on, in a modified form, by a Fiscal Repre-
atative nominated by the United States Government. j/ In 1941


S-oniteur, Apr. 15, 1935.
STre ea between the United States and Haiti, U. S. Treaty
es, No. 623, Washington, 1916.
a itanization ,of the Garde, Withdrawal of Military Forces
Hati and Financial Arrangeent U. executive Agreement
es, No. 46, Washington, 1933.
912I O -46-2








United States supervision of the finances of Haiti was terminated;
at this time the two Governments agreed upon procedures to pre-
serve the country's financial stability. /

Export duties

Except for the levies on coffee, Haitian export duties are
imposed almost exclusively for revenue. The duty on coffee is
designed principally to encourage the production and exportation
of improved grades; nevertheless, the revenue produced by the ta
on coffee has usually been more than four times that derived from
all other export duties combined. In the decade ending in 1939,
export duties accounted for about a fifth of the Government's total
income. Because of the policy of reducing or eliminating export
taxes, however, and, to a lesser extent, because of the recent
resort to other types of taxation, the share of the total revenue
contributed by levies on exports declined during the course of
the decade. At the beginning these duties accounted for nearly
30 percent of Government income, whereas at its close they con-
tributed only about 15 percent. This decline represents the con-
tinuation of a trend observable for many years. Before 1915 the
revenue from export duties was about equal to that from import
duties, and the two sources together accounted for more than ne-
tenths of total Government income.

The Tariff Law of 1926 provided for export-duties on more
than 30 commodities, including forest products, alcohol, cacao,
coffee, wax, copper, cotton, fruits, guano, corn, and raw sugar*
Except for sugar, which, since 1939, has been subject to a grad-
uated tax based on its selling price, the rates of duty are spe-
cific. Exports are also subject to certain minor charges, in-
cluding wharfage and weighing charges.

In recent years, especially since 1938, the Government has
pursued a policy of reducing or eliminating the burden of taxes
on certain exports. This program is consistent with the trend
in other countries; nevertheless, export taxes still account
for a greater share of Government revenue in Haiti than in most
countries of Latin America. Reductions in duty have been made
most frequently during periods of depressed prices in order to
enable Haitian exporters to compete more successfully in world
markets. By legislation effective October 1, 1929, Haiti broad-
ened its internal revenue tax system and, at the same time,
authorized the Executive to reduce or to eliminate existing ex-
port duties. 2/ In 1930 many fruits and vegetables, chiefly
minor export products not specifically enumerated in the schedule
were exempted from payment of duty. ./ From time to time, sxe3P
tion from duty has been granted temporarily to exporters of other


I/ Haitian Finances, U. S. Executive Agreement Series, No. -'
Washington, 1942.
2/ Le Moniteur, Aug. 16 and 20, 1928.
3/ Ibid., July 14, 1930.







commodities, including cacao, castor beans specified scrap metals,
corn, cottonseed, and logwood. For a few commodities, such as
guano, export duties have been increased.

In the immediate prewar years (1935-39) more than 95 percent
of the revenue from export duties was derived from the levies on
four commodities-coffee, bananas, sisal, and cotton; "coffee
alone accounted for more than 90 percent. The Tariff Law of
1926 provided for a tax of 0.30 gourde per kilogram (nearly 3
cents per pound) on exports of coffee. Reductions in this duty
were made in 1929, 1930, 1937, and 1938; these reductions were
made during a period when prices in the world market were falling,
especially after the abandonment of the Brazilian valorization
program in 1937. During this period a graduated tax system was
adopted to encourage the exportation of the better grades of
coffee, by making higher rates of duty applicable to the inferior
grades. By a law of September 1938, the export tax ranged from
0.03 gourde per kilogram (nearly one-third cent per pound) for
the best grade to 0.16 gourde per kilogram (about li cents per
Pound) for the poorer grades. /

There is a special arrangement for export duties on bananas.
In 1928, to encourage the cultivation of bananas, the Government
exempted exports from payment of duty. 2/ In 1935, however,
the Government and the Standard-Fruit and Steamship Co. entered
into a contract which gave that company the exclusive right to
export Gros Michel bananas; the company, in return, agreed to
Pay a graduated tax ranging up to 0.10 gourde (about 2 cents)
per stem, depending on its size. Because of prevailing low
Prices, no export taxes were imposed on raw and refined sugar
and molasses between 1935 and 1939. 2/

For many years the annual reports of the Financial Adviser
nd, later, of the Fiscal Representative characterized the Haitian
"POrt-tax system as uneconomic, in that it placed too great a
uden on the country's export trade. In the decade ending in
19o9, export duties were equivalent to about 18 percent of the
total value of exports. Inasmuch as Haitian export duties are
laost all specific, they tend to be regressive, and consti-
te an increased burden on exports during periods of low prices,
a exporters experience the greatest difficulty in finding
etifactory foreign markets, thus tending to aggravate the
emtry s exchange position at the very times when shortages of
change are most likely to occur. The ad valorem equivalent of
ttal taxes on exports, for example, rose sharply from about 12
Percent in the period 1924-26 to 28 percent in the depression
'aa 1933.


SIb.d., Sept. 22, 1938.
Ibid, June 21, 1928.
a rIbid., May 30, 1935, and May 12, 1938. Export duties for
tioa rere reimposed late in 1939; see the section on modifica-
of customs duties since 1939.






Commercial agreements

For a number of years after 1930 the Financial Adviser, and,
later, the Fiscal Representative, urged the Government to nego-
tiate reciprocal trade agreements with countries which had usually
purchased most of Haiti's exports. Calling attention to the
growing tendency throughout the world for countries to resort to
bilateral trade-balancing practices, and to the fact that Haiti
had employed "none of the dangerous experiments in trade con-
trol, which have led to tariff wars and trade discrimination," I
they recommended that agreements be sought on an unconditional
most-favored-nation basis in which the signatories would agree
to a mutual lowerng of their tariffs and other barriers to the
flow of trade. -/ During the unsettled period after 1929 many
countries strove to achieve a greater degree of self-sufficiency,
and attempted to maintain the stability of their currencies by
controlling trade balances through resort to tariff barriers,
import quotas, exchange.restrictions, and other measures designed
to reduce imports. Haiti sought, therefore, through commercial
agreements with other countries, to protect its export markets
and to assure equal treatment of its products. At the outbreak
of the war Haiti had in force unconditional, unrestricted most-
favored-nation treaties or agreements with the following coun-
tries: Italy (September 1, 1937), the Netherlands (January 16,
1928), Germany (August 21, 1930), the United Kingdom (November
28, 1932), the United States (April 29, 1935), Belgium-Luxem-
burg (July 30, 1936), Switzerland (January 14, 1937), Canada
(April 18, 1938), and Denmark (June 9, 1938). 2

Before 1936, Haiti's commercial policy was linked closely
to that of France, which took the greater part of its exports.
By a series of treaties between the two countries, Haiti not
only extended most-favored-nation treatment to French products,
but also granted reductions of its import duties on specified
products of importance to France, in return for minimum French
duties on coffee and other Haitian products. A commercial agree
ment of April 12, 1930, and a supplementary accord of March 10,
1934, by which reductions were made for a list of French prod-
ucts, expired on May 26, 1935, but were continued as of July 10,
1935. This agreement was denounced by France, to terminate
April 18, 1936, chiefly because Haitian imports from France fell
short of its exports thereto, but also because of a Haitian
decree reserving the retail trade of the country to persons of
Haitian origin and thus closing it to French citizens. During'
the interval following the termination of these agreements, the
Haitian maximum tariff rates were applied to French products,
and the French maximum rates to Haitian products. By a new
agreement of June 24, 1938, Haiti granted France reductions of


_/ Haiti, Annual Report of the Financial Adviser-General
Receiver, 1931-32, p. 58.
2/ See especially, Haiti, Annual Report of the Fiscal Rre-
sentative, 1933-34, pp. 51-55; 1935-36, pp. 48-52; and 1937-
38, pp. 51-55.
3/ The dates given are those upon which the respective treaties
were promulgated in Le Moniteur.








one-third of the duties on a wide range of commodities; these
were extended to the United States and other countries enjoying
most-favored-nation treatment. France also agreed to grant
Haiti an annual import quota of not less than 12 million kilo-
grams of coffee (26.5 million pounds). 1/ In addition, certain
Haitian products were accorded most-favored-nation treatment.

In the trade agreement between the United States and Haiti,
effective June 3, 1935, tariff concessions granted by Haiti to
the United States included reductions in duty on 13 tariff clas-
sifications, conditional reductions in duty on 3, end bindings
against increase in duty on 19. The reductions ranged from
one-fourth to two-thirds of the duties in effect before the
agreement. Concessions by the United States to Haiti related
almost entirely to tropical products; seven items were bound
on the free list, and reductions in duty ranging from 15 to 50
percent were granted on four products. Assurance was given
that, under the United States sugar-control program, sugar im-
Ported from Haiti and later exported with benefit of draw-back
of the import duty will not be charged against the Haitian quota.

E-xort standards for coffee

In recent years the potentialities of the Haitian coffee
industry have not been fully realized. Haitian coffee, in-
t-insically a fine product of the mild type, generally enjoys
a preferred status in world markets. Despite this fact, ex-
Ports of coffee have not increased in proportion to those
fro other countries producing mild coffee, primarily because
coffee culture in Haiti is in a retarded stage of development,
Most of the product being grown in a semi-wild state on land
"here coffee was once, systematically cultivated during the
Colonial period. Techniques of production, preparation, and
marketing have not kept pace with those in other producing
areas.

For many years the Haitian Government has endeavored to
improve the quality of coffee destined for export. The first
aPortant measure-the Coffee Code of 1929--established a sys-
Sof classifying coffee in seven grades, according to quality
and freedom from defects. 2/ At the same time, the Executive
ras authorized to regulate the cultivation, harvesting, and


SThis agreement was temporarily suspended on November 23,
after the outbreak of the European war.
/ This code was modified from time to time and was finally
ePlaced by the Coffee Code of 1942; see Le Moniteur, Nov. 16,









preparation of the product for export. Shortly thereafter,
the export tax on coffee was modified so as to apply progressively
higher rates on inferior grades, in order to encourage improve-
ment of the Haitian product and to obtain its readier acceptance
in world markets. 1 Despite this inducement, growers were slow
to improve the quality of their product, and the proportion of
inferior grades exported actually increased during some of the
years between 1929 and 1940. By the outbreak of the war, how- .
ever, substantial progress had been made, as is indicated by the
increased proportion of exports of the superior grades.

The Government program for improving the quality of Haitian
coffee was carried on with increased vigor after 1936. A sur-
vey of coffee-growing areas was undertaken by the Haitian Agri-
cultural Service with a view to introducing additional measures.
Experts from other countries were invited to study the Haitian
industry and to submit recommendations. An educational program
for growers was undertaken, and nurseries were established in
the most suitable areas. Large quantities of coffee plants were
distributed to growers, and assistance was given on care of
plants, methods of cultivation, type of soil most adaptable to
production, and related matters. Hundreds of coffee-drying
platforms were constructed, modern equipment was installed in
processing plants, additional facilities were provided for wash-
ing coffee, and several thousand portable trays were distrib-
uted to growers.

The International Sugar Agreement

Sugar is Haiti's third most important commercial crop and
export product; in the decade preceding the outbreak of the war
it accounted for about 12 percent of the total value of exports.
The sugar industry provides an important source of foreign ex-
change and Government revenue, as well as a livelihood for a
substantial part of the population.

With the decline in world trade and in the consumption of
sugar during the depression of the thirties, the plight of the
Haitian sugar industry became increasingly serious. The adverse
effects of the depression were heightened by the policy of the
principal importing countries of raising import duties on sugar
and of adopting other methods to achieve a high degree of self-
sufficiency (for themselves or their empires) in the production
of that important commodity. An increasing share of the world's
output of sugar was being marketed under some type of trade
preference, with the general effect of increasing total world
production and thereby accentuating the problem of surpluses in


I/ See the section on export duties.








countries depending on the world market. Haiti did not
benefit from any such preferential arrangement; hence, with the
shrinkage of the world "free market," the prices received for
its sugar were correspondingly lower than those received by pro-
ducers in neighboring islands, which enjoyed preferential rela-
tions with the United States, the United Kingdom, or France.
During the decade ending in 1939 the average price for Haitian
exports of sugar was only about two-thirds that received for.
Cuban sugar, and about a third that received for Puerto Rican
suar, which enjoys the advantage of free entry into the United
States. 2/

/ In the Annual Report of the Fiscal Representative, 1935-36,
the Haitian sugar Rroblem was characterized as follows: "al-
though sugar prices have improved, the values obtained by pro-
ducers who are not protected in their foreign markets by special
tariff preferences or quotas still give rise to easiness as
to the future outlook. Haiti is a low-cost sugar producer.
Unfortunately, its biggest competitors-the countries which
supply the great sugar-cohsuming nations of the world with their
requirements-are included in the economic spheres of those
countries, and they obtain preferential treatment, to the detri-
ant of the Haitian industry.
aExcept for a small quota granted by the United States to
Haiti, and amounting at present to 461 tons per year, Haiti en-
joys no tariff preferences in the large sugar-consuming coun-
tries. The domestic output must be sold at world prices, and
those prices remain depressed because the large producing coun-
tries like Cuba, and the sugar-producing colonies of the British
Elpire, are able to sell most of their production at prices
which bring a good profit, while their surplus production is
m'ped upon the world market for whatever it will bring. This
continual process of loading up the world market with ineffi-
ciently produced sugar and with sugar sold at prices under the
ral cost of production makes it exceedingly difficult for the
laitian sugar industry to obtain fair prices for its output, al-
though legitimately, in view of its low cost of production, it
abould have a fair opportunity to supply sugar to that small
Part of the sugar-consuming world not engaged in developing its
own exclusive sources of sugar supplies.
"It makes a strange commentary on the effects of nationalism
and of the growth of economic self-sufficiency to contemplate
the fact that a country like Haiti capable of manufacturing sugar
Perhaps a lower cost than any other country of the Western
atsphere, can sell its output with difficulty, and then only
ta prices which give no adequate return on the capital invested;
at supplies of one of the world's leading food commodities are
obt ed not from the countries best able to produce them, but
efficiently and by forced production from countries where costs
are reatively high, and where inefficiently produced sugar is
l, to compete only because of artificial protection of the

? See u. s. Tariff Commission, Statistics on Sugar. Washington,
a4h 1940, p. 33 rrocesse7..







By 1937 most of the world's sugar output was being sold in
controlled markets which granted preference to domestic pro-
ducers or to those in colonial areas; there remained, however,
substantial stocks for which an outlet had to be sought in the
"free market," that is, in countries which did not themselves
control the production and importation of sugar. In this mar-
ket the threat of large annual surplus stocks and resultant
economic distress increasingly became a reality. On May 6,
1937, therefore, representatives of the major sugar-producing
countries, meeting at London, signed the Ipternational Sugar
Agreement. The 21 signatory countries y1 agreed to limit, for'
a period of 5 years, their exports to the "free market." The
principal importing countries, on the other hand, gave assurances
that they would not adopt measures which would reduce the ability
of the "free market" to share in increases in their consumption
of sugar. The plan provided for the control of surplus stocks,
and contained provisions for protecting consuming countries
against an inordinate increase in prices.

Because of the unsettled conditions in Europe during the
years immediately preceding the outbreak of the war, it is dif-
ficult to appraise the results of the International Sugar Agree-
ment. The plan, however, has provided a means for bringing
greater. stability to the "free market," as well as a method for
the orderly liquidation of surplus production. Among the sig-
natories are the principal importing and the self-sufficient pro-
ducing countries, which together account for about 90 percent
of the total output of sugar and 5 percent of the total con-
sumption. 2- The London price ./ of sugar rose from about 1
cent a pound in 1936 to 1.59 cents in 1939; because of the war,
however, not all of this increase could be attributed to the new
controls, nor was the change each year consistently upward.


/ Australia India
Belgium Netherlands
Brazil Peru
China Poland
Cuba Portugal
Czechoslovakia Union of South Africa
Dominican Republic Union of Soviet Socialist Republie
France United Kingdom
Germany United States of America
Haiti Philippine Islands
Hungary Yugoslavia
2/ The original International Sugar Agreement was to remain in
force for a period of 5 years, ending September 1, 1937. EB-
cause of the war, it was necessary in most countries to suspPd
the regulations originally adopted; nevertheless, in January
1942, in order to maintain a skeletal organization and provide
the basis for a permanent control program, the International
Sugar Council voted unanimously to continue the agreement. In
1944,16 of the signatory countries voted to continue it until
August 31, 1945; more recently, pending ratification by the
signatory powers, the Council recommended its continuance for
an additional year.
2/ C.i.f. price for raw sugar.








Economic Controls and Commercial Policy After the
Outbreak of World War II

Modification of customs duties since 1939

After the outbreak of the war, customs duties on both im-
ports and exports continued to supply the greater portion of
Government income. The share thus accounted for, however, de-
clined from about 80 percent of the total in the immediate pre-
war years to 75 percent in the period 1940-43. Because of the
reduction or elimination of duties on various exports, the rela-
tive share produced by export taxes declined more rapidly than
that produced by import duties. Between 1939 and 1943 these
two sources have together accounted for three-fourths (about
14 and 61 percent, respectively) of the total revenue.

In recent years Haitian import duties have been among the
most stable in Latin America. Few changes have been made in
rates of duty, the principal change being the grant in 1943 of
animua tariff rates on imports from the American Republics. 1/
This action was taken to relieve the critical supply situation
caused by the wartime closing of important sources of imports,
as well as to foster inter-American trade. Previously, the
Products of Bolivia, Brazil, Guatemala, Nicaragua, Panama, Para-
uay, Uruguay, and Venezuela had been dutiable at the maximum
rates, which were double those in the mininu schedule.

Import duties have been modified for only a few individual
COlmodities. Higher rates of duty have been imposed on some
o~rmodities, as on flour, cement, and lumber in 1940, and
on silk in 1941. On the other hand, reductions in duties, or
exemptions from payment of them, have been granted at times to
foster domestic industries, to relieve shortages of supply, or
to encourage the importation of materials essential to the
national defense. Commodities thus affected were silk and
raon yarns and textiles (1940); wooden and steel containers
uaed in the export trade, and materials used in the needlework
hadicraft industries (1942); petroleum products and other
chbandise imported for use of the United.States armed forces
1943); tires, tubes, and automotive spare parts used by the
Haitian Transportation Co. (Societe Haitienne de Transport, S.
.I) dining equipment of all kinds (1944); new and second-
ld& bottles (1945); equipment for the construction or improve-
mCtt of airports (1945); and supplies and equipment for the
conMtry a newly established textile mill (1945).

Go port taxes, which accounted for only 11 percent of total
trnutent revenue during the first 2 years of the war, contrib-
le nearly 20 percent in 1943. The increase in total col-
"tons was attributable principally to the greater volume of

^/ j oniteur, May 19, 1943.








exports, especially after 1941, and to additional taxes imposed
on exports of sugar. Inasmuch as Haitian export duties are
generally specific, the higher unit values received for exports
in recent years have served to reduce the relative burden of
the duties; between 1939 and 1943 the total revenue from export
duties was equivalent on the average to only 10 percent ad val-
orem, compared with 15 percent during the immediate prewar years.

Duties on two of the country's most important export prod-
ucts were altered after the outbreak of the war. Because of
the further decline in prices resulting from the closing of
European markets, the tax on all types of coffee was reduced by
one-third in October 1940. 1/ After the conclusion of the Inter-
American Coffee Agreement, however, prices increased, and the
export duties established in 1938 were restored. 2/ In 1942
a supplementary tax, amounting to 5 gourdes per bag of 80 kilo-
grams (about 0.6 cent per pound) was imposed on all exports of
coffee; this tax was described as an emergency measure, effec-
tive only for the duration of the war. -2 As a result of these
measures, the total taxes on exports of coffee ranged from a
low of 0.8 cent per pound on the best grade to 1.9 cents per
pound on the inferior grades.

Export duties on sugar, which had been suspended in 1935
because of the prevailing low prices, were restored in September
1939, shortly after the outbreak of the war in Europe, prices
having recovered sufficiently to permit the collection of duties.
After 1939, therefore, exports of sugar becae subject to a
graduated tax based on the New York price. A The rates of
duty imposed in that year were increased in February 1940. After
that, exports of sugar were subject to a progressive tax wlen-
ever the New York price (ex-duty) for standard raw sugar ex-
ceeded $1.75 per 100 pounds; f the tax ranged from 0.70 gourde
per 100 kilograms (about 0.07-cent per pound) to 2.2 gourdes per
100 kilograms (about 0.2 cent per pound). Other sugar products
were taxed in proportion to their sugar content. Since June
1945, the export duty on sugar has been 13.21 percent ad val-
orem. _/

For a period of 2 years after March 23, 1942, a trade agree-
ment in force between Haiti and the Dominican Republic provided
for preferential import duties by each country on certain com-
modities important in the trade between the two republics. Haiti
granted preferential rates, averaging about 40 percent of the
previous duties, on 22 Dominican export commodities, including



I Ibid., Oct. 31, 1940.
Ibid., June 12, 1941.
Ibid., Feb. 2 and 12, 1942.
j/Ibid., Sept. 18, 1939.
960 polarization.
Le lonitear, Feb. 19, 1940; see also Ibid., Jan. 1, 1942.
Based on the f.o.b. price; see, Decree Law No. 504, k!
Moniteur, Jne 7, 1945.







food products, soap, perfumes, straw hats, matches, tobacco prod-
ucts, beer, live animals, leather, and raw cotton. / The
Dominican Republic, in turn, granted a reduction of 50 percent
of the import duty on the following Haitian export products:
Sisal bags, medicinal waters, carpets, certain novelties made of
sisal and cane, peanuts, millet, and specified brands of run.
Under this arrangement there was a marked increase in the trade
between the two countries. As in earlier years, however, im-
ports into Haiti from the Dominican Republic were much greater
than Haitian exports thereto. The agreement was denounced by
Haiti in September 1943, and was terminated on March 24, 1944.

The Inter-American Coffee Agreement

Inasmuch as Haitian exports of coffee ordinarily had gone
principally to European markets, the closing of those outlets by
the war was felt more acutely in Haiti than in most coffee-
Producing countries of Latin America. By the end of the third
quarter of 1940 the price received for exports of Haitian coffee
had declined to a low of 0.4 gourde per kilogram (about 3A cents
per pound). 2/ Prices reached this low level following an al-
most continuous decline after 1924, when Haitian exporters had
received 2.7 gourdes per kilogram (about 25 cents per pound).
This decline, accentuated by the war, reflected the generally
distressed condition of the market resulting from cumulating
annual surpluses which characterized the world coffee industry
'during most of the period. The abandonment of the coffee-
Valorization program by Brazil in 1937, together with the dis-
ruption of commercial relations with France, which had ordinarily
Purchased two-thirds of Haiti's exports of coffee, were also dis-
turbing factors. 2/ In 1940, after the outbreak of the war,
exports of-coffee from Haiti declined by nearly half; shipments
"ent principally to the United States.

Because of the demoralization of their markets and the
acncuulation of surplus stocks, the various coffee-producing
coltries of the Western Hemisphere, together with the United
States, concluded th'e Inter-American Coffee Agreement in 1940.
Ts8 was not only the first international control agreement
afecting coffee, but was also the first international commodity
agreement in which an important part was played by a major con-
B"ing country which was not also a producer. The announced
PurPose of the Inter-American Coffee Agreement is to promote the
Orderly marketing of coffee and to assure terms of trade equi-
I By an exchange of notes on April 25, 1942, between the Gov-
ernents of the United States and Haiti, the United States agreed,
Svirtue of its trade agreement with Haiti in 1935, not to claim
Benefits from the concessions granted by Haiti to the Dominican
"ePublic.
/ F.o.b., Haitian ports.
.2 For a description of the problems confronting the coffee in-
f!stry during this period and of the valorization programs adopted
or the benefit of producers, especially in Brazil, see U. S.
kriff Commission, Economic Controls and Commercial Policy in
,1. 1945 processed7.





18
table to both producers and consumers by adjusting supply to de-
mand. Markets were allocated among the 14 American producing
countries. In effect, four basic annual quotas were adopted:,
(1) An export quota for each producing country signatory to the
agreement on shipments to the United States; (2) an additional
export quota for each producing country on shipments to all
other regions; (3) an import quota on the quantity of coffee
that might be received in the United States from each producing
country in Latin America; and (4) an aggregate quota for United
States imports from sources other than the American Republics. /

The agreement provides for an Inter-American Coffee Board,
which is responsible for establishing the annual quotas. Ex-
cept in an emergency, increases or decreases in quotas may not
be made more often than once in 6 months, and no change may ex-
ceed 5 percent of the basic quotas at any given time. Each
signatory country is represented on the Board; the United States
controls 12 of the 36 votes; Brazil, 9; and Colombia, 3. The
other 12 countries each have 1 vote. ./ In the original (basic)
quota, Haiti's annual allotment for exports to the United States
was established at 275,000 bags of 60 kilograms (132 pounds)
each; its exports to the rest of the world were limited to
327,000 bags. These quotas, together with those for other pro-.
ducing countries, have been adjusted from time to time, but the
share allotted to Haiti has been about 2 percent of the total
assigned to all signatory countries. Its allotment for'ex-
ports to the United States during the quota year ending September
30, 1945 was 526,147 bags. 2/ On June 13, 1945 the Inter-
American Coffee Board adopted a resolution recommending the con-
tinuation of the coffee agreement beyond its expiration date
of September 30, 1945, but without quota provisions, except
under emergency conditions, when they might be placed in opera-
tion by at least a 95-percent vote of the Board. Pending rati-
fication of a treaty to accomplish these objectives, the agree-
ment without quotas has been continued in force by executive
agreement.

In June 1941 the National Bank of the Republic (Banque
National de la Republique d'Haiti) was authorized to establish
the regulations necessary to assure compliance with the Inter-l
American Coffee Agreement and to allocate quotas to exporters:
Thereafter, all purchases and sales involving the exportation of
coffee were subject to approval by the bank, which was also
authorized to fix minimum prices at which the various grades
could be sold. This authority was exercised almost immediatelY*


1/ This quota constitutes about 2.2 percent of the initial
basic quota for imports into the United States.
2/ The United States controls one-third of the votes of the
Inter-American Coffee Board. The consumer in the United States
is protected from unwarranted price increases by a provision in
the agreement that, in the event of an "imminent shortage," i*"
ports may be increased beyond the established quota by a one-
third vote of the Board (article 8).
/ Revised quota, June 1, 1945.
/ Le Moniteur, June 12, 1941.








To finance the control program a tax of 25 centimes (5 cents)
was imposed on each bag of coffee authorized for export. In
September 1943 a Coffee Export Control Commission (Commission
du Contingentement et du ContrJle de I*Exportation du Caf6) was
created to take over the functions exercised by the bank. I/
In June 1945 this Commission was abolished and its duties were
assigned to a department of the Ministry of Agriculture and
Labor. /

The increased quotas established by the Inter-American
Coffee Board for all producing countries on shipments to the
United States, Haiti's proximity to the United States, and its
relatively favorable shipping position during the war, stimu-
lated Haitian exports of coffee between 1940 and 1944. Despite
the loss of European markets, which formerly took most of the
country's coffee, the quantities shipped during the crop years
1942-43 and 1943-44 were more than 80 percent of average ex-
ports during the decade ending in 1939. Inasmuch as production
had fallen materially, these shipments constituted an even
greater share of the Haitian output during these 2 years than
before the war. During the first 4 years of the operation of
the Inter-American Coffee Agreement, Haiti's annual exports of
coffee increased nearly 60 percent compared with those of the
depressed year 1940, and their value increased nearly 180 per-
cent. The preponderant share of the exports have gone to the
United States. The striking rise in their value reflects the
marked recovery of prices which has taken place since the con-
clusion of the Inter-American Coffee Agreement; unit prices
received for Haitian exports of coffee during the crop year
1943-44 were 75 percent higher than in 1939-40.

The Haitan-American Agricultural Development
Corrq-aH tion

In recent years a number of countries in Latin America
have organized development corporations to promote the utili-
Zstion of their agricultural, mineral, and industrial resources.
0Ce of the first of these was the Haitian-American Agricultural
Development Corporation (Societe Haitiano-Americaine de pevelop-
Pement Agricole), which was authorized by law in 1940 2/and
formally organized in 1941. The Corporation, usually known as
SRADA, was created with an initial capitalization of 1 million
dollars, the stock being held by the Government; it was financed
Principally by the Export-Import Bank of the United States.
According to its charter, SHADA was organized to promote "th6
development and-exploitation of all agricultural and other re-
sources of and within the Republic of Haiti." The projects it
a sponsored have been designed to improve techniques of pro-
duction, diversify agriculture, expand the cultivation of basic

Ibid., Sept. 27, 1943.
2/ Ibid., June 14, 1945.
/ Ibid., June 4, 1941.









food crops, increase employment, and raise the general standard
of living. Soon after its organization, SHADA, in cooperation
with United States Government procurement agencies, undertook
to expand the production of strategic materials in Haiti.

The activities of SHADA have centered chiefly in the pro-
duction of rubber and sisal (both strategic materials), lumber,
and handicraft products. The most extensive project, now
abandoned, was the program for the production of Cryptostegia
rubber, undertaken in cooperation with the United States Rubber
Development Corporation. Original plans provided for planting
100,000 acres to the Cryptostegia vine; actually, about 70,000
acres appears to have been cleared for this purpose and nearly
30,000 acres placed under cultivation. Obstacles to the suc-
cessful cultivation of the plant, especially infestation by
the June beetle, and the success of the synthetic rubber program
in the United States led to the abandonment of the Cryptostegia
program in 1944. Another project involved extensive plantings
of Hevea rubber; it was undertaken not only to provide an
emergency supply of this strategic material but also to estab-
lish, if possible, a more permanent industry within the coun-
try. Two million seedlings were imported from the Netherlands
Indies, and more than 9,000 acres was devoted to cultivation of
rubber trees.

Various other projects were undertaken by SHADA. It
acquired 66,000 acres of land for the production of sisal, in-
cluding a plantation of 1,500 acres already under cultivation.
Operations involving the production of lumber are reported to
have progressed rapidly; three lumber mills operated by the
Corporation are producing pine lumber at a rate of 3 million
board feet annually. SHADA'S Handicrafts Division has carried
on a program to encourage the expansion of native handicraft
industries, such as embroidering, other needlework, and weav-
ing, and to develop foreign markets for their products. Tech-
nical experts from the United States have been employed to in-
struct workers and supervisors on the staff of the Corporation.
Other projects sponsored by SHADA include the maintenance of
nurseries; a research program for the development of new and
improved types of crops; cultivation, on its plantations, of
ginger, pepper, spices, and materials for the production of
essential oils; and operation of an alcohol distillery. Dur-
ing the war the Corporation was the country's largest business
enterprise. It is reported that during the height of the
Cryptostegia program it provided employment for more than 80,000
workers; in early 1945, however, it is estimated that it had
fewer than 10,000 employees.

Mobilization of the domestic economy

Haiti declared war on the Axis Powers almost immediately
after the Japanese attack on Pearl Harbor. / Shortly there-
after the Foreign Ministers of the American Republics, meeting

1/ War was declared on Japan on December 8, 1941, and on
Germany and Italy on December 12, 1941.








at Rio de Janeiro, recommended that the American Republics
mobilize their resources for the defense of the Western Hemis-
phere. The principal Haitian contributions to this program
were projects, in cooperation with United States Government
procurement agencies, for increased production of strategic
materials; measures blocking the flow of these materials to
the aggressor powers; and control over financial transactions
which might be of advantage to the enemy. The project initi-
ated by SHADA and the Rubber Development Corporation for the
increased production of rubber was one aspect of this program.
Agreements were negotiated by the Haitian Government authoriz-
ing United States agencies, including the Commodity Credit
Corporation, the U. S. Commercial Company, and the Defense
Supplies Corporation, to purchase exportable surpluses of com-
modities such as rotenone, cotton, sisal, sugar, coffee, corn,
rice, and beans.

Export and reexport controls.-To protect their domestic
economies from shortages of essential materials, and to pre-
vent wartime shipment of these commodities to Axis-controlled
nations, most of the countries of Latin America undertook dur-
ing the war to control both the exportation and reexportation
of essential food supplies and industrial materials. This
action was in accordance with recommendations for the mainte-
nance of hemispheric solidarity, made by the Foreign Ministers
of the American Republics at their meeting in kanasa in September
1939. The first important Haitian measure to implement this
policy was adopted in June 1941, when an official Committee
of Export Control (Comitg de Controle des Exportations) was
created, and the exportation of all materials usable directly
or indirectly for war purposes was expressly prohibited, ex-
cept when licensed by the Committee. Exports of these mate-
rials to the United States, however, were exempted from the
regulation. I/ This control was strengthened from time to
time during 1942 and 1943 by Government decrees designating
additional commodities which could not be exported except under
license, such as motor vehicles, bicycles, tires and tubes,
cement, gasoline, other petroleum products, and many food-
stuffs. Beginning in September 1943, whenever exports of
foodstuffs were authorized, priority was granted to the United
Nations. 2/ In October 1944 export controls were broadened
to Prohibit the reexportation, except when licensed of all
Products imported from the United States, In addition to
these measures, the exportation of specific individual com-
mOdities, coconuts (1942), soybeans (1943), pistachio nuts (1943),
designated hardwoods (1944), and poultry (1944), was restricted.

L Le Moniteur, June 2, 1941.
.2/ Some of the more important export control measures were
Laws Nos. 123, 159, 169, 266, and 324, published in Le Moniteur
on Mar. 23, 1942; June 29, 1942; July 16, 1942; Aug. 10,
1942; Nov. 26, 1942; Mar. 25, 1943; Nov. 8, 1943.
-/ Executive Decrees Nos. 308, 324, and 336, published in Le
e Sept. 27, 1943; Nov. 8, 1943; and Dec. 17, 1943.
L Le Moniteur, Oct. 31, 1944.







Wartime financial controls.-The Ministers of the American
Republics, meeting at Rio de Janeiro in January 1942, recom-
mended the adoption of measures to block the use or transfer
within the American Republics of funds and property held by
governments or nationals of countries which had committed acts
of aggression against the Western Hemisphere. Such action had
already been taken in Haiti. Controls had been established to
freeze the funds of persons and firms identified by the "pro-
claimed list" of the United States as subject to Axis influence.
All commercial, industrial, and financial activities by these
firms werq prohibited, and provision was made for their liqui-
dation. 1 Some of the properties thus affected were confis-
cated for purposes of national defense.

Other measures designed to reinforce these financial con-
trols related to the circulation of foreign currencies. The
Government decreed that for the duration of the war all money,
credit, and exchange transactions between Haiti and foreign
countries must be conducted through the National Bank of the
Republic, the Royal Bank of Canada, or authorized banking firms
controlled by citizens of the United Nations. / Likewise,
exports and imports of all foreign currency, including tat
of the United States, became subject to rigid control; -2 to
prevent the illegal exportation of gold, the National Bank was
given the exclusive right to buy and ship that metal. M

Rationing and price control

Common to all countries of Latin America during the war
was scarcity of essential materials and supplies and the rising
cost of living, resulting principally from the difficulty of
obtaining imports because of shipping shortages and wartime ex-
port controls in the belligerent countries. To protect con-
sumers and to prevent serious disruption of the domestic economy,
the Government of Haiti, like that of other countries, resorted
to rationing and price controls. In September 1939 the Executiv
was granted emergency economic powers authorizing him to take
whatever measures might be necessary for the effective protection
of consumers. .5/ Soon thereafter maxim prices were fixed for
various articles of prime necessity. / After November 1941,
price regulation was administered by the newly created Service


V/ Some of the more important measures relating to wartime
financial controls were Executive Decrees, Nos. 29, 80, 89, 93,
136, 148, 225, 260, 261, 267, 360, 361, and 365, published in L
Moniteur Sept. 8, 1941; Dec. 8, 1941; Dec. 22, 1941; Dec. 29,
1941; Jan. 8, 1942; Jan. 12, 1942; May 18, 1942; June 18,
1942; Nov. 12, 1942; Feb. 5, 1943; Feb. 12, 1943; May 3, 1943;
Feb. 25, 1944; Mar. 9, 1944; and Mar. 30, 1944.
2/ Executive Decree No. 104, Le Moniteur Jan. 22, 1942.
3/ Executive Decree No. 157, Le Moniteur, June 25, 1942 and
Oct. 22, 1942. These controls were terminated in November 1945)
see, Executive Decree No. 563, Le Moniteur, Nov. 5, 1945.
SExecutive Decree No. 194, Le Moniteur. Sept. 10, 1942.
SLe Moniteur, Sept. 14, 1939.
/ Ibid., Sept. 18, 1939.







of Commercial Control (Service du Contr$le du Commerce), which
functions under the supervision of the Secretary of Finance and
Commerce. From time to time thereafter maximum prices were
published for essential commodities, including cotton textiles,
kerosene, flour, soap, lard, cooking oil, thread, cigarettes,
newsprint, and peanuts. 1/ Rent control for commercial and
industrial establishments, as well as household dwellings, be-
came effective in February 1944. 2/

It is difficult to appraise the results of the Haitian
price-control program. Although there are no official sta-
tistics of prices or the cost of living in Haiti, there are
indications that prices for major articles of consumption have
risen substantially, the increases ranging from 25 to 100 per-
cent since the outbreak of the war. Until the early part of
1943, price-control regulations appear to have been vigorously
applied; after that time they seem to have been relaxed con-
siderably.

The wartime rationing of scarce materials involved chiefly
motor vehicles, petroleum products, and automobile tires. In
February 1942 the Secretary of Finance and Commerce published
regulations controlling the sale of automobiles, trucks, and
tires; priority was granted for purchases by the Government
and by essential industries. In April 1942 the Committee for
Rationing Petroleum Products (Comit6 pour la Mise en Commun et
la Conservation des Stocks des Produits P6troliferes) was created
to regulate the distribution of available petroleum supplies. 2/
In its early stages this regulation apparently involved chiefly
the restriction of the sale of gasoline to two-thirds the quan-
tity distributed during comparable periods in 1941. Beginning
in October 1942, the allocation of gasoline was further reduced
to 40 percent of the consumption in.1941; at the same time a
system of rationing was introduced for individual consumers.
Rationing of kerosene was initiated in October 1942 under the
supervision of the Secretary of Finance and Commerce. The dis-
tribution of other petroleum products, including gas oil ana
Diesel oil, was also controlled; and to conserve stocks of
tnese fuels the consumption of electricity was restricted. In
January 1943 the functions of the Committee for Rationing Petrol-
'eu Products were transferred to the Service of Rationing Petro)-
eum Products (Comit6 de Rationnement des Produits du Pbtrole)
which was attached to the Department of Finance and Commerce.
The rationing of petroleum products was discontinued in October
1945. After February 1943 the rationing of new and used tires
was administered by the Committee for Tire Control and Land
Transportation Organization (Comite de Controle des Pneumatiques


/ Numerous price control decrees appear in Le Moniteur after
December 1941; see, for example, the issues dated Nov. 26, 1942
nd Dec. 24, 1942.
/ Le Moniteur, Feb. 10, 1944.
1/ Executive Decree No. 127, Le Moniteur, Apr. 30, 1943; see
a1so Executive Decrees Nos. 245 and 276, Le Moniteur, Jan. 4,
1943 and May 29, 1944.
y/ Executive Decree No. 245, Le Moniteur, Jan. 4, 1943.








at de l'Organisation du Transport Terrestre). I/ As an addi-
tional conservation measure, the Government from time to time
after January 1942 required bakers to mix with wheat flour a
fixed percentage of corn, manioc, or banana flour.


Postwar Problems Relating to Controls
and Commercial Policy


The postwar pattern of economic controls and commercial
policy in Haiti probably will not differ greatly from that be-
fore 1939. A number of controls which were introduced during
the war probably will be discontinued, some perhaps soon, and
others after a period of readjustment.

The Government of Haiti has made less use of direct restric-
tions on foreign trade than almost any other country in Latin
America, there being virtually no resort to quantitative import
quotas, exchange control, bilateral trade restrictions, export
subsidies, or protective import duties. During the war the
Government did, of course, impose certain export restrictions
to assist in the war against the Axis Powers and to conserve
supplies of essential materials.

The Haitian Government depends for revenue more heavily on
customs duties (that is, levies on both imports and exports)
than most of the countries of the Western Hemisphere. Its
fiscal policy, therefore, closely resembles that of many coun-
tries of Latin America two or three decades ago, before they
embarked on a protective policy. With two-thirds of Govern-
ment revenue coming from duties on imports alone, the national
tax structure is regressive, unduly burdening individuals in the
low income groups.. The Government already has taken steps to
broaden the tax base, but it appears that more extensive changes
of this character, carefully considered, might prove to be
advantageous to the Haitian economy. Similar problems result
from export taxes, which have often served to place the com-
modities affected at a disadvantage in world markets.

The economy of Haiti has been particularly vulnerable to
restrictions which other countries have erected to the flow of
world trade since 1920. After World War I the major sugar-
consuming countries sought to achieve a high degree of self-
sufficiency, and hence world markets became increasingly closed
to Haitian sugar. The country, therefore, was faced with the
alternative of permitting its economy to find an eventual adjust-
ment in a distressed world market, or of attempting a more orderly
adjustment through control of production. After a critical period
of market dislocations, Haiti became a signatory to the Interna-
tional Sugar Agreement. As most of the consuming countries will
V Le Moniteur, Jan. 14, 1943. Previously tires were rationed
by the Comitb du Commerce des Pneus et Chambres a Air.







probably maintain their own sugar-defense measures, Haiti may
be expected to continue its rationalization program and to par-
ticipate in any future international agreement designed to sta-
bilize the world sugar market or to preserve the Republic's
relative position therein.

Although the position of the Haitian coffee industry in the
future may be enhanced materially by the recent efforts of the
Government to improve standards of grade and quality, it will be
particularly dependent on conditions of the world market and on
the control schemes maintained either by other coffee-producing
countries or by international agreement. Inasmuch as exports
of coffee from Haiti have been well maintained during the war,
despite the loss of its former principal markets, it appears
that surplus stocks which may exist in other coffee-producing
countries will concern Haiti primarily through their effect on
world prices. Any of a number of conditions may characterize
coffee-rarketing practices after the war. One possibility is
that some type of international arrangement for the control of
the coffee trade may be maintained. The Inter-American Coffee
Agreement, adopted to deal primarily with wartime conditions in
the industry, might form the basis of a more permanent control
plan, broadened, if possible, to include all the producing
countries, and all, or at least the most important, consuming
countries. Indeed, should an international control program
be maintained, its success in the long run might depend on the
support of the major coffee-consuming countries particularly
as their influence might be brought to bear upon the policies
Pursued by the control agency. One of the basic problems of
such a program would be to avoid the pitfalls into which other
commodity-control schemes have fallen-in causing the expansion
of output in areas not subject to the agreement, as well as the
encouragement of high-cost and inefficient production in the
agreement areas, with a resultant general expansion of produc-
tion and cumulating annual surpluses.

It is quite possible, of course, that the chief coffee
Producing and consuming nations may fail to agree on an inter-
national control program for the postwar period. If so,there
may be either a return to a free coffee market or a resort to
independent control measures on the part of the governments
of individual producing countries. 7 The removal of all con-
trols, national and international, would probably bring about a
Period of oversupply, depressed prices, and financial diffi-
culties in the producing countries. Although, in the long run,
freedom from artificial controls might prove advantageous to the
national interest of the several countries by restoring market
ecuilibrium and by eliminating submarginal producers, there
QOuld be strong pressure for the adoption of national coffee-

S For a description of the coffee control programs adopted
'Y Brazil and Colombia, for example, see U. S. Tariff Commis-
son, Economic Controls end Commercial Policy in Brazil, 1945
Processed/ and Economic Controls and Commercial Policy in
S1945 frocesse/.





26


restriction programs designed to mitigate the distresses of the
moment in each particular country. Such action might be taken
in one of several countries, with results which might prove to
be contrary not only to the interest of the coffee-consuming
countries but also to the interest of the coffee-producing
countries and even of the coffee producers themselves.


**


U. S. GOVERNMENT PRINTING OFFICE 0-1946