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Congress OKs Fixes To CAFTA-DR, Renews AGOA Fabric Proviso

President Barack Obama recently signed legislation to amend the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) and renew the third-country fabric provision in the African Growth and Opportunity Act (AGOA), among other trade-related items.

The CAFTA-DR amendments include, among other items, a redefinition of sewing thread that adds single multifilament synthetic yarn used as sewing thread. In the original agreement, an out-of-date definition failed to consider this thread type, which is commonly used in apparel production, resulting in a loophole that allowed use of such yarn from non-signatory countries in place of thread originating in the CAFTA-DR region, and leading to a loss of jobs for U.S. thread manufacturers.

AGOA's third-country fabric provision, which allows lesser-developed sub-Saharan countries to produce duty-free and quota-free apparel using fabric and yarn produced anywhere in the world, now will continue in effect until Sept. 30, 2015. Congressional delays in renewing the provision had led to moves by U.S. apparel companies doing business in the region to seek other production sources, thereby threatening to cause job losses and plant closures in sub-Saharan Africa and a negative impact on cotton and textile inputs.

September/October 2012