Senate Finance Committee OKs CAFTA-DR Fixes, AGOA Third-country Fabric
The CAFTA-DR amendments correct and modify product-specific rules of origin for textiles and include a correction to the definition of sewing thread to include single multifilament synthetic yarn, a type that was not included under the original definition and which is commonly used in apparel production. In the current agreement, such thread may be sourced from non-CAFTA-DR signatories, but once the amendments have passed the Senate, it must be produced within the CAFTA-DR region in order to receive duty-free treatment. This fix alone is expected to support some 1,000 jobs in the region.
The CAFTA-DR amendments also include modifications that will ensure duty-free treatment for women's and girls' woven pajama bottoms and clarify treatment of certain items on the pact's textiles short supply list.
AGOA's third-country fabric provision, set to expire Sept. 30, 2012, allows lesser-developed sub-Saharan countries to produce duty-free and quota-free apparel using fabric and yarn produced anywhere in the world. With little time left before the provision will expire, U.S. apparel companies doing business in the AGOA region have begun seeking other production sources because they must make their sourcing decisions months in advance of bringing apparel to market. Without prompt renewal of the provision, the U.S. Trade Representative warns, there could be substantial job losses and plant closures in sub-Saharan Africa, and a concomitant negative impact on cotton and textile inputs.
Committee passage of the CAFTA-DR amendments and the AGOA third-country fabric provision renewal has met with approval by both textile manufacturing and apparel sourcing interests.
Speaking about the CAFTA-DR technical fix to the sewing thread definition, Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said, "By closing this unintended loophole, U.S. thread producers can begin to recapture market share in the important DR-CAFTA region, leading to more jobs and increased U.S. exports."
"AAFA has long supported trade liberalizing efforts, like the African Growth and Opportunity Act and the U.S./Central America Free Trade Agreement," said Kevin M. Burke, president and CEO, American Apparel & Footwear Association. "The four million Americans in the U.S. apparel and footwear industry benefit from greater ability to both import and export as easily as possible, and these provisions strengthen or renew existing programs to provide for enhanced trade facilitation."
July 24, 2012