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New Rules Issued Governing CAFTA-DR Short Supply

James A. Morrissey, Washington Correspondent

The Committee for the Implementation of Textile Agreements (CITA) has issued new rules covering requests for duty-free treatment of apparel under the Commercial Availability Provision, (also known as short supply) in the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR).

CAFTA-DR provides a list of fabrics, yarns and fibers that the parties to the agreement have determined are not available in commercial quantities in a timely manner from suppliers in the United States or other participating countries. In those cases, components from non-participating countries may be used in apparel, and the end product will be eligible for duty-free treatment.

Under the FTA, which covers textile trade between the United States, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic, CITA has authority to establish procedures for submitting requests and for determining whether additional fabrics, yarns or fibers are in fact not available in commercial quantities.

The intent of the procedures is to foster the use of US and  CAFTA-DR products, but at the same time improve procedures for seeking exemptions.  In its notice, CITA said that, based on experience in implementing the previous procedures, it was concerned that due diligence efforts have fallen short of what was expected when the procedures were originally adopted. It  said that in the past, product descriptions may not have met recognized standards, that potential suppliers may not be adequately substantiating their claims and that CITA had not been receiving complete information.

Short supply has been a contentious issue with US textile and apparel importers and manufacturers. Mike Hubbard, vice president of the National Council of Textile Organizations, sees some improvements in the revised procedures, including the area of reasonable product specifications, a better definition of due diligence, a more specific requirement for domestic manufacturers to show they can make a product without disclosing business confidential information, and other areas. He believes CITA has gone to great lengths to protect the interests of both importers and domestic manufacturers.

The full text of the rules is available on the Office of Textiles and Apparel website: http://otexa.ita.doc.gov.

September 16, 2008