Political Crisis In Honduras Disrupts CAFTA-DR Trade

Trade associations representing fiber, textile and apparel manufacturers and importers have made an
urgent appeal to Secretary of State Hillary Clinton to step up diplomatic efforts to restore
commercial traffic with Honduras, as the political crisis in that country is disrupting trade
throughout the United States and Central America.

In a letter sent to Clinton, with copies to Secretary of Commerce Gary Locke and US Trade
Representative Ron Kirk, the associations said the political crisis has caused commercial traffic
to falter dramatically and, as a result, US textile and apparel plants already are being idled. The
letter said: “We urge the US government to work with the Honduran government in order to ensure
that commerce is fully restored in the region before the textile and apparel sectors of the US and
Central American region are further harmed.”

The associations pointed out that there is an interconnected manufacturing chain whereby
man-made fibers and cotton are spun into yarn at US plants and shipped to Honduras, where they are
made into fabric, and then the fabric is made into apparel in Honduras or shipped to another
Central American country. Under the Central America-Dominican Republic Free Trade Agreement
(CAFTA-DR), the apparel enters the United States duty-free. Honduras is the largest producer of
apparel products in the CAFTA-DR region, each month shipping more than 40 million garments to the
United States containing fabric made of US fiber and yarn.

The associations point out that if any of these segments is curtailed — as is happening with
Honduras — work quickly stops elsewhere.

US textile and apparel trade with CAFTA-DR countries already has fallen off as a result of
the global recession, and the associations pointed out that since January, the region has lost $1
billion in textile and apparel orders. The associations say retailers and other importers of
textiles and apparel are making contingency plans to obtain products from Asia if the disruption is
not soon resolved, and they say that will wipe out the benefits of  US/Central American trade.

Signing the letter were the American Apparel & Footwear Association, the American
Manufacturing Trade Action Coalition, the National Council of Textile Organizations, the National
Textile Association, the National Cotton Council, and the US Association of Importers of Textiles
and Apparel.

September 29, 2009