The Legal Enviroment in Haiti

The Legal environment of Haiti can be difficult to navigate when bringing a new business into the country because many of the policies are not fully developed and are many times handled in an informal manner. This is including financial transactions, which can cause the credit for new business ventures to be severely constrained. International businesses may have difficulties initially entering the market in Haiti because they are accustomed to following strict policies for commercial businesses to be considered legal. The lack of structure in the legal environment can cause obvious complications among the business environment. The business environment in Haiti is not favorable for maintaining occupational activities because of the insecure atmosphere that has taken control of society, and has continued to escalate since the traumatizing earthquake in 2010. The majority of the workforce has been unemployed since the incident or completing casual jobs to obtain income for the family. The laws originally established for the protection of property rights are not frequently enforced and there are very few laws pertaining to property protection that are considered modern from a legal standpoint to work successfully for commercial practices. Above all, the legal system is highly dysfunctional. The traditional way to handle legal issues among commercial partners would be to take the problem to court, but in Haiti most illegal business situations will never see a court room. It is common for some disputes to be dropped without any final solution. If the parties involved in the dispute have sufficient funds they can use their money to purchase the outcome that will satisfy the needs of their business. Another important problem throughout the industry for consumer goods is, smuggling. To avoid taxes items will be discretely brought across the border illegally. At this point these items are accounting for a large portion of consumer goods in the market. The legal system in Haiti is still struggling to develop a successful system. It could be difficult for Pfizer to accommodate their business in a developing society, but their level of need may outweigh other issues.

Taxes are mandatory as in every country and must be paid to the government despite economic instabilities. The following facts pertain to the current tax system in Haiti:

·         The top income and corporate tax rates are 30 percent

·         Other taxes include a value-added tax (VAT) and a capital gains tax, with the overall tax burden estimated to be around 11 percent of GDP

·         Government spending has reached a level exceeding 20 percent of total domestic output

·         Public debt stands at around 20 percent of GDP

·         The trade weighted average tariff rate is 5.1 percent, with overall trade freedom blocked by non-tariff barriers

The amount of merchandise that Haiti imports into the country has minimally declined from $2.107 billion in 2008 to 2.023 billion in 2009. The major imports include; food, manufactured goods, machinery and transport equipment, fuel and raw materials. The United States is Haiti’s largest partner for importing into the country and is responsible for 30% of all the imports into Haiti. The United States mostly imports rice and wheat among other food items. Haiti imported more than $325 million in rice, wheat, meat, poultry and other food items from the United States in 2008. Some of the other import connections are Netherlands Antilles at 10.6%, Dominican Republic at 23.3% and of course China at 4.5%.

Top 10 Imports from the United States:

1. Rice … US$199.3 million, up 79.3% from 2007 (21.1% of US exports to Haiti)
2. Wheat… $64.6 million, up 68.6% (6.8%)
3. Pharmaceutical preparations … $40.3 million, up 66.8% (4.3%)
4. Meat and poultry … $33.8 million, up 26.4% (3.6%)
5. Other foods… $26.8 million, up 51.9% (2.8%)
6. Cotton fiber cloth… $21.9 million, up 25.3% (2.3%)
7. Oilseeds and food oils… $19.79 million, up 102% (2.1%)
8. Excavating machinery … $19.78 million, up 258.5% (2.1%)
9. Trucks, buses and special purpose vehicles … $18.3 million, up 132.2% (1.9%)
10. Unmanufactured agriculture industry products … $16 million, up 157.4% (1.7%).

Haiti also participates in local manufacturing and exports goods to its main trade partner, the United States. In 2008, Haiti exported $415.3 million in apparel and household items. Merchandise made from wool and cotton such as apparel and household goods is responsible for more than three quarters of exports to the United States. Despite its underdeveloped nature, Haiti has been a successful partner in importing and exporting consumer goods with the United States.