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Washington Outlook Archive
James A. Morrissey, Washington Correspondent

CAFTA Implementation Faces Another Delay

By James A. Morrissey, Washington Correspondent

Implementation of the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) faces another delay, as there still are outstanding issues including some involving textiles. Although the United States had hoped the six Central American signatories would be on board by the first of this year, it now appears the best hope is for maybe one or two to ratify the agreement by the first of March at the earliest.

Both US textile manufacturers and importers would like to see the agreement go into effect as soon as possible, as they see it as a vehicle for new market opportunities. Administration officials say the DR-CAFTA countries constitute a $16 billion market for US goods.

Negotiations are underway with Nicaragua and other countries regarding the requirement in the agreement that in order for apparel products to qualify for duty-free/quota-free treatment, they must have pockets and linings made in the United States. At the time the agreement was signed, the US government agreed to hold consultations with participating countries regarding pockets and linings, and in some cases it now appears to have become a sticky issue. However, US Trade Representative Rob Portman said last week he has received “positive feedback” from Nicaragua on the issue, while pointing out the pockets and linings requirement is “very explicit” and was put in writing before the agreement was reached. He expects other countries to conclude the agreement “on a rolling basis” as their respective legislatures ratify it.

January 1, 2006