US Offers Proposals For Free Trade Area Of The Americas

U.S. Trade Representative Robert B. Zoellick has proposed a bold new initiative designed to jump
start negotiations on a Free Trade Area of the Americas (FTAA) including an offer to eliminate all
US textile and apparel tariffs in five years. Zoellick said removal of textile duties would be
contingent upon other nations doing the same, but that did not satisfy US textile industry
officials and their supporters in Congress.

Rep. John Spratt (D-SC), a key member of the Congressional Textile Caucus, sharply criticized
the proposal, saying removal of tariffs will “open the floodgates to imports.” He said the US has
the largest trade deficit in history and a major portion of it is in textiles and apparel. “This
proposal would deal a stunning blow to the American textile industry and the thousands of Americans
it employs,” Spratt said.

Jock Nash, Milliken & Company’s Washington representative, blasted the proposal, saying
the administration is acting like “a drunken sailor” by giving up all of its leverage even before
negotiations get underway. “Here we are at the beginning of a negotiation and already the
administration is prepared to give up its negotiation leverage on the first day. Everyone knows
that is no way to negotiate,” Nash said.

Although Zoellick said other nations will need to to eliminate their non-tariff barriers to
trade, US textile manufacturers are more concerned about a flood of imports than they are about
market opportunities in what they say are poverty-stricken countries where people are in no
position to buy US textile and apparel imports.

In response to Zoellick’s announcement, the American Textile Manufacturers Institute (ATMI)
said the FTAA must be “fair and beneficial” to US textile manufacturer,s and that it must include a
strict yarn-forward rule of origin without exceptions that benefit non-participating countries.
ATMI also said tariff reductions must be “completely reciprocal” and that non-tariff barriers must
be eliminated.

Zoellick said the textile initiative is in part designed to help offset an anticipated flood
of imports from China once textile and apparel quotas are removed by January 2005. He said a
Western Hemisphere free trade agreement would help the participating countries to be more
competitive and could lead to a “more integrated American market” for textile and apparel imports.

The U.S. Association of Importers of Textiles and Apparel praised the proposal, saying that
elimination of tariffs encourages competition and results in lower consumer prices.

February 2003