Yarn Makers Fear DR-CAFTA Ruling

US yarn spinners are concerned that a recently announced US Department of Commerce (DOC) ruling
will endanger the yarn-forward rule of origin in the Dominican Republic-Central America Free Trade
Agreement (DR-CAFTA). The controversy arises from the use of compacted yarn manufactured primarily
in Asia and the ring-spun yarns made in the United States.

Under the Commercial Availability Provision of DR-CAFTA, inputs from nonparticipating countries
can be used in apparel if it is determined that fabrics, yarn or fibers are not available in
commercial quantities in a timely manner in the United States. The procedures announced by the DOC
establish criteria for requests, responses and rebuttal information with respect to short

Members of the Washington-based National Council of Textile Organizations (NCTO) are not at all
happy with the regulations, charging that they will open the door to Asian yarns when comparable
products are available in the United States. NCTO President Cass Johnson says the decision lacks
sound judgment, objectivity, and is in defiance of the evidence presented for review by US yarn

The ruling stems from a case brought by eight major US yarn producers who contend compacted
yarns from Asia should not be eligible for duty-free treatment under DR-CAFTA. On March 14, the DOC
ruled against the yarn spinners petition. Johnson contends that by doing so, the DOC has set a
precedent that threatens a significant provision in the DR-CAFTA, adding that this has troubling

March 1, 2006