PORT-AU-PRINCE — As former President Bill Clinton looked on, Haiti’s government signed a deal with a South Korean garment manufacturer to create an industrial park that will export clothing to the United States.
The deal on the eve of the first anniversary of Haiti’s devastating earthquake will make Sae-A Trading Co. Ltd. the largest private employer in an impoverished Caribbean nation desperate for work.
Officials said it will create 20,000 jobs – though many who work in Haiti’s few existing garment factories today say their low wages are not enough to feed their families.
“I know a couple places in America that would commit mayhem to get 20,000 jobs today,” Clinton said at the gathering in a Port-au-Prince industrial park on Jan. 11.
Haitian Prime Minister Jean-Max Bellerive said the agreement will help break Haiti’s dependence on foreign aid as a substitute for a functioning economy.
“Aid had never been able to bring sustainable economic prosperity to any nation, including ours,” Bellerive said. He called the signing “the best day of my life.”
The deal was in negotiation long before the earthquake, moving forward after Clinton was named U.N. Secretary-General Ban Ki-Moon’s special envoy to Haiti in 2009 and given responsibility for increasing private investment.
Garment factories were identified as a key area for growth because, under the relatively stable rule of dictators, and before the political upheaval that followed their ouster, Haiti was an important regional manufacturer of cheap clothing and other goods.
The agreement will create an industrial park near the northern city of Cap-Haitien also open to other factories. It is scheduled to open in early 2012.
Sae-A said it will invest $78 million on equipment and agreed to adhere to International Labor Organization standards.
The United States, represented at the signing by senior State Department official Cheryl Mills, will provide $120 million for generating electricity, housing for workers and improvements to the port.
The Inter-American Development Bank will provide $50 million for building factory shells and infrastructure. The European Union is separately spending to improve roads in the region.
Haiti’s government will own the park and contract its management.
Clinton said he hopes the deal will encourage other investors to move forward with projects in Haiti.
“We took a big step in the right direction today,” he said.
Clinton identified Gap, Wal-Mart and Hanes Brands as likely major participants, as they have agreed to purchase at least one percent of their inventory from Haitian sewing factories. An expert from Gap helped consult on the deal.
Sae-A chairman Woong-Ki Kim said the deal will increase the company’s capacity. Among the company’s 20 existing factories are plants in Nicaragua, Guatemala, Indonesia and Vietnam.
There are mixed opinions about the quality of life for workers in the factories. Few Haitians have formal work and many jump at the chance to receive any regular wage.
The key report by economist Paul Collier, commissioned by Ban and quoted in press materials given out at the signing, identified Haiti’s low wages as a competitive advantage, saying it has “labor costs that are fully competitive” with China’s.
Attempts to significantly raise the minimum wage in Haiti’s factories have since been stymied.
Under a compromise law passed over street protests in 2009, Haitian garment factories must pay workers at least $3 a day — less than two-thirds the minimum wage for other jobs in the country. The Haitian congressman who championed a further increase won a rare senatorial victory as an independent against President Rene Preval’s Unity party in the Nov. 28 election.
The deal signed Jan. 11 was furthered by U.S. legislation that expanded duty-free access to the American market for Haitian textile and apparel exports through 2020. Rep. Ileana Ros-Lehtinen of Miami, the new Republican chairwoman of the House Foreign Affairs Committee, was at the signing.
The deal is one of the few significant plans toward the government’s post-quake goal of reversing decades of migration from the desiccated countryside to Port-au-Prince.
Sae-A has also been considering putting factories in a largely undeveloped area north of Port-au-Prince.
The head of a Haitian firm that was active in those negotiations also led the government’s post-quake relocation commission. He identified his company’s own land near the proposed site to put Haiti’s first official quake relocation camp, an Associated Press investigation found last year.
Built by the U.S. military, U.N. and aid groups, the camp is largely considered a failure — too remote from services and suffering floods from summer storms. Plans for further relocation camps were scrapped.