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Economic Controls and Commercial Policy In Haiti
One of a Series of Reports on Economic Controls and Commercial Policy in the American Republics
UItE STATES.TARIFF COMMISSION. Wcashington: 1946
UNITED STATES TARIFF COMMISSION
OSCAR B. RYDER, Chairman LYNN R. EDMINSTER, Vice Chairman EDGAR B. BROSSARD
E. DANA DURAND
E. M. WHITCOMB, Acting Secretary
Address all communications UNITED STATES TARIFF COMMISSION Washington 25, D. C.
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 and 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 ead of the countries listed below. A price indicates that the report is available by purcha from the Superintendent of Documents, U. S. Government Printing Office, Washingo 25, D. C. Reports on the other countries listed may be obtained without charge fhoo the Tariff Commission.
Argentina Costa Rica Mexico, 15c
Bolivia Cuba, 1 5c Paraguay
Brazil Dominican Republic, 10c Peru
Chile Ecuador Uruguay
Colombia Haiti, 1 Oc Venezuela
Haiti-a summary description 1
The Haitian economy 2
General character of economic controls and commercial policy -- 4
Economic controls and comercial policy before 1940:
The import tariff 5-- 5
Export duties 8
Commercial agreements 10
Export standards for coffee ----------11
The International Sugar Agreement 12
Economic controls and commercial policy after the outbreak of Eorld War II:
Modification of customs duties since 1939 15
The Inter-tmerican Coffee Agreement ----------------- 17
The Haitian-American Agricultural Development
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
A TL C N 7
-/e ., A A0 C E A N
G U L F ,
0 F .
-.~~t M. ,,oe
HAITI "C JaePHYSICAL MAP 9-C
ECONOMIC CONTROLS AND CONWERCIAL POLICY IN HAITI
Haiti--a s ummry description
The Republic of Haiti l-occupLes the western third of the island of Hispaniola, which lies in the Caribbean Sea between Cuba and Puerto Rico. Its ar~a, about 10,700 square miles, is somewhat greater than that of the State of Maryland.
Haiti is a rugged cptry, nearly four-fifths of the entire area being mountainous. !V Three principal ranges traverse the country; these are interspersed with and flanked by a number of fertile valleys and plains of varying size. Communication between the valleys and plains is difficult, making them, in effect, indpendent 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. In toe coastal regions, where the principal centers of population
-re located, the climate is warm and equable. Rainfall varies ccrsiderably in different parts of the country; certain sections e arid, while others receive heavy precipitation. In general, there are two rainy seasons, from April to June, and from September to November.
lie 'aiti is the most densely populated of the American repub" No census has been taken in Haiti, but it was estimated t in 1940 the population was approximately 2,663,000, or Sc7ut 250 persons to the square mile. Many sections of the C ry, however, are not habitable. By far the greater part
t V e Pultion is rural; the eight principal cities and towns tg ter probably account for only 6 percent cf thi total. Port'le, the largest city and the capital and chief port, is
ficiaily known as Rkpublique d'H,:iti.
lilt:, the southeastern range, elevations reach 8,790 feet, and te.8 central range, about 5,6X feet. In the north the mounk/e lower, the highest being about 4,600 feet.
-8spite thAe number of ports, about three-fifths of all
&nd about cne-third of all exports go through Port-au-
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 tl at in the rural areas, speaks a French patois known as Creole. A/
The Haitian economy
Haiti is an agricultural country. Although it is mountainous, the numerous valleys and the several large plains are extremely fertile, and some cf 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 cn 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 products 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, beeswax, 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 selfsufficient with respect to essential food requirements, althouo imports of wheat flour, lard, and pickled fish supplement de-5 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 toe first processing of agricultural products.
i/ Haiti 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 rel-tes Pr'" cipally to the period before the outbreak of the war.
_/ For a detailed analysis of the foreign trade of Haiti 89 well as the other countries of Latin America in the decade 1929 38, see U. S. Tariff Commission, The Foreign Trade of LatiP America (4 vols.), Report No. 146, Second beries, Weshingto,
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 countries of Latin America. Because of aiti' s relatively small population and the simple character of its economy, however, the controls employed are of considerable importance to organized 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' s 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 the 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, unrestricte most-favored-nation treaties- and agreements, one of which is with the United States.
Various steps have been taken by the Government to improre 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 restrio tions in accordance with commitments made by Haiti in the International Sugar Agreement. What may prove to be an important influence on the economy of the country is the recently org~nitSe 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. Neasureg designed to mobilize the economy for defense of the Hemisphere provided for an increased output of essential materials, for e port and reexport controls to prevent the flow of supplies to t enemy nations, and for the blocking of funds of the Axis natio and their nationals. Rationing and price control have bee6 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 industries to a much smaller extent than in most countries of Latin America. In the immediate prewar years (1937-39), about twothirds of the Government' s revenue was derived from duties on imorts. The share was somewhat smaller in earlier years beCause of the relatively greater amount of revenue formerly derived from export taxes. Even at that time, however, the Government depended much more heavily on the income from import duties tan did most Latin American countries. Although the comparatively high revenue duties which now prevail may afford incidentaI Protection, the tariff has not been designed to foster ilnusutries producing articles which can be purchased more cheaply abroad. Some direct protection is given to industries producing sugar, lard substitutes, and tobacco.
Except for a few modifications, the present import tariff "5 eStablished by the Tariff Law of .1926 .1/ and by a d eree of 1935, which provided for a maximum schedule of duties. ._/ Since 1935 the Haitian tariff schedule has had three columns of rates-11&7M minimum, and conventional. The rates of duty pre' r'bed in the Tariff Law of 1926, together with subsequent modif'catons, constitute the minimum tariff, which is applied to 1'Ports from countries granting most-favored-nation treatment to Rklt ia products. In the Tariff Law of 1926 the Executive was uthOrized to impose a maximum (penalty) tariff on imports from c'utries which did not accord most-favored-nation treatment to Haitian products. Such maximum duties could be as much as 50 P recent higher than the minimum rates. This provision was modiPre i 1935, however, when maximum rates of duty were actually scribed. At tines, conventional reductions below the mini(basic) column have been ranted, as for certain imports from
'aObetween 1930 and 1936, and from the United States since
4s these concessions have been extended to thrd countries so
g required by most-favored-nation agreements, but have not
e2eralized to an1 countries.
Rkt~ specific and ad valorem rates of duty are employed in
"ta aThe Tariff Act of 1926 provided for alternative ad
and specific rates on most imports, depending on which
k;4' .rif des Droits de Douane a l'Importation, Le Moniteur,
9-p 1,3 1926.
41itieur, 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. VC
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 tasiC duties was imposed on all impqrts in 1932; this was increased to 10 percent in arch 1937.-/ and finally to 20 percent in December 1937. V-/ 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. A/ Inasmuch as the higher surcharges were imposed after the trade agreement with the United States became effective. surtaxes of only 5 percent are applicable to items listed in schedule I of that agreement (items On which Haiti made specific tariff commitments to the United States),
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 numerous articles, including matches, wheat flour, vericelli and
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 fro pay t of them, was granted to importers of only a few products, including paper, linotype metal, packing boxes and other containero, barbed wire, and fertilizers.
The 1935 amendment to the Tariff Law of 1926 provided for a
--Im 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 crA This action was taken after a period during which purchases fW0 Japan had increased to such an extent that that country bad bseW the second most important source of Haitian imports, although it had taken very few of Haiti's exports. Moreover, the Haitian Governent was faced with the threat of reprisal fro nations
V The ad valorem equivalent of customs receipts from 11 z ports increased from 30 percent in the period 1927-29 to 43 per, cent in 1931-33.
Le Noniteur, Mar. 13, 1937.
2/Ibid., Dec.-l, 1937.
4, See the section on export duties.
which were dissatisfied with the disequilibrium in their merchandise exchanges with Haiti. Inasmuch as Japan was not likely to increase its purchases of Haitian products, the maximum schedule 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-favorednation 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. 1/ 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 regresOive, 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 ere equivalent on the average to about 45 percent ad valorem. For many staples the burden of the tax was even heavier. Foer example, the ad valorem equivalent for cotton goods was 49 Percent; for chemicals and pharmaceuticals, 92 percent; for lour, 93 percent; for cigarettes and tobacco, 140 percent; and for gasoline, 150 percent.
Between 1915 and 1941 the customs service of Haiti was adminftered by officers chosen jointly by the Presidents of Haiti and the United States. In 1915, after a prolonged period of civl disorder, during which foreign creditors urged their govern'pits to intervene, the United States and Haiti signed a treaty having for its bbject the * remedying of * the revenues "'d finances of Haiti, the'maintenance of the tranquility of that ePublic, and the carrying out of plans for its economic developat and prosperity." Under this arrangement a Financial Adviser d f General Receiver were appointed, with broad powers over the aitian budget. In addition'to other things, the Haitian Governt obligated itself not to increase the public debt or tq modify 1ustOms duties without the consent of the United States. At After 1933, in accordance with a new agreement with the United States, zte forer services of the Financial Adviser and the General Clever were carried on, in a modified form, by a Fiscal Repretlve nominated by the United States Government. ./ In 1941
=X"idaiteur, Apr. 15, 1935.
Trety Between the United States and Haiti, U. S. Treaty
aes, No. 623, Washington, 1916.
Satianization ,of the Garde. Withdrawal of Military Forces S iti and Financial Arrangement, U. S. Executive Agreement
as, No. 4 Washington, 1933.
2I20 0 46 2
United States supervision of the finances of Haiti was terminated; at this time the two Governments agreed up on procedures to preserve the country's financial stability.
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 thetal 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 contributed only about 15 percent. This decline represents the continuation 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 thanttnetenths 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 sugarExcept for sugar, which, since 1939, has been subject to a graduated tax based on its selling price, the rates of duty are sPecific. exports are also subject to certain minor charges, including 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 broadened its internal revenue tax system and, at the same time, authorized theExecutive to reduce or to eliminate existing export 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- exeP'
tion from duty has been granted temporarily to exporters of other
i/ Haitian Finances, U. S. Executive Agreement Series, o. Washington, 1942.
2/Le Moniteur, Aug. 16 and 20, 1928.
Ibid., July 14, 1930.
commodities, including cacao, castor beans specified scrap metals, corn, cottonseed, end 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 gourds per kilogram (nearly one-third cent per pound) for the best grade to 0.16 gourd. per kilogram (about l cents per POund) for the poorer grades._V
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 gourds (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 %lasses between 1935 and 1939. 21
For many years the annual reports of the Financial Adviser
ad, later, of the Fiscal Representative characterized thd Haitian "POrt-tax system as uneconomic, in that it placed too great a den on the country's export trade. In the decade ending in
1939, export duties were equivalent to about 18 percent of the tQtal value of exports. Inasmuch as Haitian export duties are slaost all specific, they tend to be regressive, and constian increased burden on exports during periods of low prices, V exporters experience the greatest difficulty in finding
tifactory foreign markets, thus tending to aggravate the
eotryls exchange position at the very times when shortages of change are most likely to occur. The ad valorem equivalent of tota taxes on exports, for example, rose sharply from about 12 Percent in the period 1924-26 to 28 percent in the depression Jar 1933.
V .bd., Sept. 22, 1938.
I" 'id June 21, 1928.
ga Ibid., May 30, 1935, and May 12, 1938. Export duties for Uar Jare reimposed late in 1939; see the section on modificaof customs duties since 1939.
For a number of years after 1930 the Financial Adviser, and, later, the Fiscal Representative, urged the Government to negotiate 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 control, which have led to tariff wars and trade discrimination," 1/ they recommended that agreements be sought on an unconditional most-favored-nation basis in which the signatories would agree to a mutual lowe ng 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 mostfavored-nation treaties or agreements with the following countries: 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-Luxemburg (July 30, 1936), Switzerland (January 14, ),937), Canada (April 18, 1938), and Denmark (June 9, 1938).21
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 products, 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, theHaitian 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 Rep_esentative. 1933-34, pp. 51-55; 1935-36, pp. 48-52; and 193738, pp. 51-55.
/ 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 kilograms 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 classifications, conditional reductions in duty on 3, end bindings against increase in duty on 19. The reductions ranged from 0one-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 imPorted from Haiti and later exported with benefit of draw-back of the import duty will not be charged against the Haitian quota.
E_Ort standards for coffee
In recent years the potentialities of the Haitian coffee industry have not been fully realized. Haitian coffee, intlInsically a fine product of the mild type, generally enjoys a preferred status in world markets. Despite this fact, exPorts 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 where 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 prove the cuality of coffee destined for export. The first important measure-the Coffee Code of 1929--established a sysOf classifying coffee in seven grades, according to quality and freedom from defects. Z/ At the same time, the Executive Ira authorized to regulate the cultivation, harvesting, and
1 This agreement was temporarily suspended on November 23, after the outbreak of the European war.
I This code was modified from time to time and was finally 'placed 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 improvement 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, however, 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 survey of coffee-growing areas was undertaken by the Haitian Agricultural 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 washing coffee, and several thousand portable trays were distributed 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 exchange 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 selfsufficiency (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. V 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 producers in neighboring islands, which enjoyed preferential relations 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 sur, which enjoys the advantage of free entry into the United
States21/ In the Annual Report of the Fiscal Representative, 1935-36,
the Haitian sugar Rroblem was characterized as follows: "although sugar prices have improved, the values obtained by producers who are not protected in their foreign markets by special tariff preferences or quotas still give rise to uneasiness as to the future outlook. Haiti is a low-cost sugar producer. Unfortunately, its biggest competitors-the countries which Supply the great sugar-cohsming nations of the world with their requirements-are included in the economic spheres of those coutries, and they obtain preferential treatment, to the detriUmt of the Haitian industry.
eExcept for a small quota granted by the United States to
Haiti, and amounting at present to 461 tons per year, Haiti enJoys no tariff preferences in the large sugar-consuming countries. The domestic output must be sold at world prices, and those prices remain depressed because the large producing countrice like Cuba, and the sugar-producing colonies of the British EaPire, are able to sell most of their production at prices
*hich bring a good profit, while their surplus production is d=Ped upon the world market for whatever it will bring. This continUal process of loading up the world market with inefficlfetly produced sugar and with sugar sold at prices under the eal eost of production makes it exceedingly difficult for the eltan sugar industry to obtain fair prices for its output, although legitimately, in view of its low cost of production, it abO,3d have a fair opportunity to supply sugar to that small Part of the sugar-consuming world not engaged in developing its ow exclusive sources of sugar supplies.
"It makes a strange commentary on the effects of nationalism end 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
Htphre can sell its output with difficulty, and then only t, Prices which give no adequate return on the capital invested; t upplies of one of the world's leading food commodities are ObUned not from the countries best able to produce theu, but efficiently and by forced production from countries where costs re relatively high, and where inefficiently produced sugaris tl, tocompete only because of artificial protection of the
Vf SeeU. S. Tariff Commission, Statistics on Sugar- Washington,
1940, p. 33 _rrocesse7.
By 1937 most of the world's sugar output was being sold in controlled markets which granted preference to domestic producers 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 sarket 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 I ternational Sugar Agreement. The 21 signatory countries iL 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 difficult to appraise the results of the International Sugar Agreement. 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 signatories are the principal importing and the self-sufficient producing countries, which together account for about 90 percent of the total output of sugar and 5 percent of the total consumption. -/ 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.
1/ Australia India
Czechoslovakia Union of South Africa
Dominican Republic Union of Soviet Socialist Republics
France United Kingdom
Germany United States of America
Haiti Philippine Islands
2/ The original International Sugar Agreement was to remain in force for a period of 5 years, endijig September 1, 1937. Because of the war, it was necessary in most countries to sUsPOd the regulations originally adopted; nevertheless, in JanuarY 194?2, 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.
./ C.i.f. price for raw sugar.
Economic Controls and Commercial Policy After the Outbreak of World War I
Modification of customs duties since 1939
After the outbreak of the war, customs duties on both imports and exports continued to supply the greater portion of Government income. The share thus accounted for, however, declined from about 80 percent of the total in the immediate prewar years to 75 percent in the period 1940-43. Because of the reduction or elimination of duties on various exports, the relative 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 minium tariff rates on imports from the American Republics. I/ 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, Paraguay, Uruguay, and Venezuela had been dutiable at the iai rates, which were double those in the Min schedule.
Import duties have been modified for only a few individual eOlmodities. Higher rates of duty have been imposed on some eormodities, as on flour, cement, and lumber in 1940, and on Bilk 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 ray Yarns and textiles (1940); wooden and steel containers Used in the export trade, and materials used in the needlework hdlcraft industries (1942); petroleum products and other
echazdise imported for use of the UntedStates armed forces '(143); tires, tubes, and automotive spare parts used by the itiart Transportation Co. (Sociiti Haitienne do Transport, S. "I Dining equipment of all kinds (194); new and secondh&Zd bottles (1945); equipment for the construction or improvemftt of airports (1945); and supplies and equipment for the ecMtry' a newly established textile mill (1945).
o Export taxes, which accounted for only 3. percent of total "ermtent revenue during the first 2 years of the war, contriblt early 20 percent in 1943. The increase in total col" ons was attributable principally to the greater volume of
/L oniteur, Kay 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 valorem, compared with 15 percent during the immediate prewar years.
Duties on two of the country's most important export products 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 InterAmerican 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 kilograms (about 0.6 cent per pound) was imposed on all exports of coffee; this tax was described as an emergency measure, effective only for the duration of the war. 1 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. The rates of duty imposed in that year were increased in February 1940. After that, exports of sugar were subject to a progressive tax wnenever the New York price (ex-duty) for standard raw sugar / exceeded $1.75 per 100 pounds; 9/ 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 valorem. _/
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 cormodities 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, 19/0.
I bid., June l-, 1941.
Ibid., Feb. 2 and 12, 1942.
j/Ibid., Sept. 18, 1939.
Le Wonitenr, Feb. 19, 1940; see also Ibid., Jan. 1, 1912.
Based on the f.o.b. price; see, Decree Law No. 504, k! Moniteur Two 7, 1945.
food products, soap, perfumes, straw hats, matches,- tobacco products, beer, live animals, leather, and raw cotton. V_/ The Dominican Republic, in turn, granted a reduction of 50 percent of the import duty on the following Haitian export products: S~sal bags, medicinal waters, carpets, certain novelties made of sisal and cane, peanuts, millet, and specified brands of rum. Under this arrangement there was a marked increase in the trade between the two countries. As in earlier years, however, imports 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 Principslly to European markets, the closing of those outlets by the war was felt more acutely in Haiti than in most coffeeProducing 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 3 cents per pound). Z/ Prices reached this low level following an al2ost 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 coffeevalorization program by Brazil in 1937, together with the disruption of commercial relations with France, which had ordinarily Purchased two-thirds of Haiti's exports of coffee, were also disturbing 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 accumulation of surplus stocks, the various coffee-producing coltries of the Western Hemisphere, together with the United States, concluded the Inter-American Coffee Agreement in 1940. T h8 was not only the first international control agreement afOecting coffee, but was also the first international comodity "remenet in which an important part was played by a major con" g 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 equiI By an exchange of notes on April 25, 1942, between the Governlents of the United States and Haiti, the United States agreed, ib'rtue of its trade agreement with Haiti in 1935, not to claim T)nefits fom the concessions granted by Haiti to the Dominican ".epublic.
F.o.b., Haitian ports.
.-/For a description of the problems confronting the coffee infmstry during this period and of the valorization programs adopted tar the benefit of producers, especially in Brazil, see U. E. riff Commission, Economic Controls and Commercial Policy in
table to both producers and consumers by adjusting supply to demand. 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. Except in an emergency, increases or decreases in quotas may not
be made more often than once in 6 months, and no change may exceed 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'exports to the United States during the quota year ending September 30, 1945 was 526,147 bags. 2/ On June 13, 1945 the InterAmerican Coffee Board adopted a resolution recommending the continuation 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 operation by at least a 95-percent vote of the Board. Pending ratification of a treaty to accomplish these objectives, the agreement without quotas has been continued in force by executive agreement.
In June 1941 the National Bank of the Republic (Banque
Nationale de la Republique d'Halti) was authorized to establish the regulations necessary to assure compliance with the Inter-1j 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"
_/ 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 onethird vote of the Board (article 8).
/ Revised quota, June 1, 1945.
./Le Woniteur, 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 lIExportation 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, stimulated 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 exPorts 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 percent. 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 conclusion 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 RaitI American Agricultural Development
In recent years a number of countries in Latin America have organized development corporations to promote the utili24tion of their agricultural, mineral, and industrial resources. one of the first of these was the Haitian-American Agricultural Development Corporation (Societ Hattiano-Am~ricaine de e'velopPement Agricole), which was authorized by law in 1940 1and formally organized in 1941. The Corporation, usually known as 5RADA, 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. Acc-Ording to Its charter, SHADA was organized to promote "th6 development and exploitation of all agricultural and other resources of and within the Republic of Haiti." The projects it ha sponsored have been designed to improve techniques of produCtion, diversify agriculture, expand the cultivation of basic
I d., Sept. 27, 1943.
./Ibid., June 14, 1945.
/fIbid., 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 production 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 successful 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 abandon-ent 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 establish, if possible, a more permanent industry within the country. Two million seedlings were iriported 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, including 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 weaving, and to develop foreign markets for their products. Technical experts from the United States have been employed to instruct 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. During 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,O00 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. Y1 Shortly thereafter the Foreign Ministers of the American Republics, meeting
i/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 Hemisphere. 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 initiated 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 authorizing United States agencies, including the Commodity Credit Corporation, the U. S. Commercial Company, and the Defense Supplies Corporation, to purchase exportable surpluses of comodities 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 prevent wartime shipment of these commodities to Axis-controlled nations, most of the countries of Latin America undertook during 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 maintenance of hemispheric solidarity, made by the Foreign Ministers of the American Republics at their meeting in klanama 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, except when licensed by the Committee. Exports of these materials to the United States, however, were exempted from the regulation./ This control was strengthened from time to tile 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, gsoline, other petroleum products, and many foodStuffs. -9 Beginning in September 1943, whenever exports of foodstuffs .were authorized, priority was granted to the United Nations. ./ In October 1944 export controls were broadened to Prohibit the reexport~tiont except when ,)icensed, of all P"Od~icts imported from the United States. In addition to these measures, the exportation of specific individual com"dities, coconuts (1942), soybeans (1943), pistachio nuts (1943), designated hardwoods (1944), and poultry (1944), was restricted.
2- Le mouiteur, June 2, 1941.
Y 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; AZg. 10, 1942; Nov. 26, 1942; Mar. 25, 1943; Nov. 8, 1943.
-/ Executive Decrees Nos. 308, 324, and 336, published in Le
-u Sept. 27, 1943; Nov. 8, 1943; and Dec. 17, 1943.
Le Wouiteur, Oct. 31, 1944.
Wartime financial -con trols. -The Minister# of the American Republics, meeting at Rio de Janeiro in January 1942, recommended 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 "proclaimed list" of the United States as subject to Axis influence. AL commercial, industrial, and financial activities by these firms werl prohibited, and provision was made for their liquidation. 1/ Some of the properties thus affected were confiscated for purposes of national defense.
Other measures designed to reinforce these financial controls 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 Vat of the United States, became subject to rigid control; 2 to prevent the illegal exportation of gold, the National Ba~nk was given the exclusive right to buy and ship that metal. .
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 export controls in the belligerent countries. To protect consumers 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 Executie was granted emergency economic powers authorizing him to take whatever measures night 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 parties financial controls were Executive Decrees, Nos. 29, 8o, 89, 93, 136, 148, 225, 260, 261, 267, 360, 361, and 365, published in k 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 19451 see, Executive Decree No. 563, Le Moniteur, Nov. 5, 1945. E xecutive Decree No. 194, Le Moniteur. Sept. 10, 1942.
Le Manit er, Sept. 14, 1939.
Ibid., Sept. 18, 1939.
of Commercial Control (Service da Contr$le du Commerce), which functions -muder 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 e household dwellings, became effective in February 1944. 2
it is difficult to appraise the results of the Haitian price-control program. Although there are no official statistics 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 percent 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 considerably.
The wartime rationing of scarce materials involved chiefly motor vehicles, petroleum products, and automobile tires. In February 1912 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. 21 In its early stages this regulation apparently involved chiefly the restriction of the sale of gasoline to two-thirds the quantity 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 umder the supervision of the Secretary of Finance and Commerce. The distribution 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 Petroleum Products were transferred to the Service of Rationing Petrg)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 an/d used tires was administered by the Committee for Tire Control and Land ?ransportation Organization (Comite de Controle des Pneumatiques
U/ Numerous price control decrees appear in Le Moniteur after December 1941; see, for example, the issues dated Nov. 26, 1942 and Dec. 24, 1942.
&/Le Moniteur, Feb. 10, 1944.
/ Executive Decree No. 127, Le Moniteur, Apr. 30, 1943; see aso Executive Decrees Nos. 245 and 276, Le Moniteur, Jan. 4, 1943 and May 29, 1944.
A/ Rxecutive Decree No. 245, Le Moniteur, Jan. 4, 1943.
at de l'Organisaton du Transport Terrestre). I/ As an additional 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 before 1939. A number of controls which were .ntroduced 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 restrictions 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 courntries of Latin America two or three decades ago, before they embarked on a protective policy. With two-thirds of Government 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 commodities 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 sugarconsuming countries sought to achieve a high degree of selfsufficiency, 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 evetual adjuStment 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 Internao tional Sugar Agreement. As most of the consuming countries will
%I Le loniteur, Jan. 14, 1943. Previously tires were ratio"ed by the Comitb du Commerce des Pneus et Chambres i Air.
probably maintain their own sugar-defense measures, Haiti may be expected to continue its rationalization program and to participate in any future international agreement designed to stabilize 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 lose 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-varketing 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 comodity-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 production and cumulating annual surpluses.
It is quite possible, of course, that the chief coffee
Producing and consuming nations may fail to agree on an international control program for the postwar period. If so,there may be either a return to a free coffee mrket or a resort to independent control measures on the part of the governments of individual producing countries. & The removal of all contrus, national and international, would probably bring about a Period of oversupply, depressed prices, and financial difficulties 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 ecuiliTiui and by eliminating submarginal producers, there Qculd be strong pressure for the adoption of national coffeeiFor a description of the coffee control programs adopted SY' Brazil and Colombia, for example, ree U. S. Tariff CommisOn, Economic Controls end Commercial Policy in Brazil, 1945 PrOesse/ and Economic Controls and Comercial Policy in
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 O-1946