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CAFTA-DR partners agree to fix technical flaws in agreement

Textile World

CAFTA-DR Partners Agree To Fix Technical Flaws In Agreement

March-April 2011

The Dominican Republic-Central America-United States (CAFTA-DR) Free Trade Commission has approved several changes to CAFTA-DR rules of origin that are expected to benefit the Western Hemisphere textile/apparel supply chain. The changes include, among others, a correction to the definition of sewing thread that adds single multifilament yarns used as sewing thread to the category — a move supported by both the National Textile Association (NTA) and the American Manufacturing Trade Action Coalition (AMTAC) — and an increase in cumulation limits that the commission says will "encourage greater integration of regional production through limited reciprocal duty-free access with Mexico and Canada to be used in Central American and Dominican Republic apparel."

"Today’s fix is a job-creating win-win for U.S. sewing thread producers and their DR-CAFTA counterparts," said Auggie Tantillo, executive director, AMTAC. "With the closing of this unintended loophole, we believe that U.S. thread producers can begin to recapture market share in the important DR-CAFTA market, leading to more jobs."Under the original agreement, regionally produced sewing thread must be used for all products, including apparel and home furnishings, that would qualify for duty-free treatment. However, under the original definition of sewing thread, single multifilament yarns used as sewing thread are not included in that requirement, allowing such yarns to be sourced from thread suppliers from outside the CAFTA-DR region.

The U.S. Trade Representative reports that in 2010, U.S. textile and apparel exports to the CAFTA-DR region rose by 25 percent, surpassing export growth to the world of 19 percent, and represented $3 billion or 16 percent of total U.S. textile and apparel exports. The region ranks third, after Mexico and Canada, in export market size for U.S. textile and apparel products. U.S. textile and apparel imports from the CAFTA-DR region totaled $7 billion in 2010, a 14-percent increase over 2009. The region ranks second after China as a textiles and apparel supplier to the United States.