On August 5, 2004, the United States signed the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), which includes Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. According to USTR, CAFTA-DR is the first Free Trade Agreement between the United States and a group of smaller, developing economies and creates new economic opportunities and market access, especially in the textile and apparel industries.
In 2011, USTR announced a number of changes to CAFTA-DR specifically related to textiles and apparel. These changes include:
- Clarification that certain monofilament sewing thread is now required to originate or be produced in the CAFTA-DR region to qualify for preferential treatment
- Clarification of Chapter notes to short-supply list for sewing thread, pocketing fabrics, and visible lining fabrics
- Treatment of women’s and girls’ woven sleep bottoms
- Treatment of knit-to-shape components
- Treatment of elastomeric yarn in fabrics on the short-supply list
- Classification of knit waistbands
- Increase in the amount of CAFTA Cumulation levels
On June 19, 2012, identical bipartisan legislation was introduced in the House (H.R. 5986) and Senate (S. 3326) to:
- Extend the African Growth & Opportunity Act (AGOA) third-country fabric provisions through 2015 and add South Sudan as an eligible beneficiary country under AGOA;
- Implement non-controversial technical corrections and modifications to the CAFTA-DR textile and apparel rules of origin provisions; and,
- Renew Presidential authority to apply import sanctions against Burma.
This legislation passed Congress on August 2, 2012, and was signed by President Obama on August 10, 2012. The fixes will go into effect 60 days after the publication of the Presidential Proclamation and the notification of the Organization of American States (OAS), on or around October 15, 2012. All CAFTA-DR countries have already approved the changes in the legislation. More information on the legislation is available from the House Ways & Means Committee here.
The United States Fashion Industry Association (USFIA) supports the implementation of these “fixes” to the CAFTA-DR agreement and applauds Congress for passing the legislation.
On June 13, 2012, the United States Association of Importers of Textiles & Apparel (USA-ITA), now USFIA, joined a multi-industry group of trade associations and other business organizations in sending a letter to the leadership of the U.S. Senate Finance Committee and U.S. House Ways & Means Committee again calling for passage of the CAFTA fixes, along with renewing the Third-Country Fabric Provision of the African Growth and Opportunity Act (AGOA). On the CAFTA fixes, the letter said:
Similarly, in March 2011, the CAFTA-DR trade ministers met in El Salvador and approved several changes related to CAFTA-DR rules of origin that will benefit the Western Hemisphere textile and apparel supply chain. This move to correct technical errors in the agreement is a job-preserving measure that will allow U.S. producers to recapture market share in the important CAFTA-DR market.
All our CAFTA-DR partners have already completed the domestic procedures necessary to make these changes take effect. Only the United States has yet to take action. Continued uncertainty prompted by this delay will undermine the trade benefits that we have already seen under the CAFTA-DR. Such action is essential to supporting the hundreds of thousands of U.S., Central American, and Dominican workers whose jobs depend on a vibrant Western Hemisphere textile and apparel supply chain.