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CAFTA-DR partners agree to fix technical flaws in agreement

Textile World, USA

CAFTA-DR Partners Agree To Fix Technical Flaws In Agreement

1 March 2011

The Dominican Republic-Central America-United States Free Trade Commission held its first meeting last week in El Salvador. The commission celebrated the fifth anniversary of the implementation of the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) by the United States and El Salvador, and noted that the agreement has resulted in growth in two-way trade between the United States and its partners in the agreement, from $35 billion in 2005 to $48 billion in 2010.

Textiles and apparel have been important components of this trade, and the commission approved several changes to related CAFTA-DR rules of origin that are expected to benefit the Western Hemisphere textile/apparel supply chain. These 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.

"AMTAC hailed the move to correct technical errors in the agreement. "On behalf of all U.S. thread producers, we want to thank the Obama administration, especially Assistant U.S. Trade Representative for Textiles Gail Strickler and the U.W. Commerce Department’s Deputy Assistant Secretary for Textiles and Apparel Kim Glas, for their tireless commitment to fix this longstanding problem," said Auggie Tantillo, executive director, AMTAC.

"Today’s fix is a job-creating win-win for U.S. sewing thread producers and their DR-CAFTA counterparts," he added. "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.

In order for the changes to take effect, the U.S. Congress as well as legislative bodies in the other CAFTA-DR partners now must pass legislation implementing them.