CAFTA-DR Partners Agree To Fix Technical Flaws In Agreement

The Dominican Republic-Central America-United States Free Trade Commission held its first meeting
last week in El Salvador. The commission celebrated the fifth anniversary of the implementation of
the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) by the United States and El
Salvador, and noted that the agreement has resulted in growth in two-way trade between the United
States and its partners in the agreement, from $35 billion in 2005 to $48 billion in 2010.

Textiles and apparel have been important components of this trade, and the commission
approved several changes to related CAFTA-DR rules of origin that are expected to benefit the
Western Hemisphere textile/apparel supply chain. These changes include, among others, a correction
to the definition of sewing thread that adds single multifilament yarns used as sewing thread to
the category – a move supported by both the National Textile Association (NTA) and the American
Manufacturing Trade Action Coalition (AMTAC) – and an increase in cumulation limits that the
commission says will “encourage greater integration of regional production through limited
reciprocal duty-free access with Mexico and Canada to be used in Central American and Dominican
Republic apparel.

“AMTAC hailed the move to correct technical errors in the agreement. “On behalf of all U.S.
thread producers, we want to thank the Obama administration, especially Assistant U.S. Trade
Representative for Textiles Gail Strickler and the U.W. Commerce Department’s Deputy Assistant
Secretary for Textiles and Apparel Kim Glas, for their tireless commitment to fix this longstanding
problem,” said Auggie Tantillo, executive director, AMTAC.

“Today’s fix is a job-creating win-win for U.S. sewing thread producers and their DR-CAFTA
counterparts,” he added. “With the closing of this unintended loophole, we believe that U.S. thread
producers can begin to recapture market share in the important DR-CAFTA market, leading to more
jobs.”Under the original agreement, regionally produced sewing thread must be used for all
products, including apparel and home furnishings, that would qualify for duty-free treatment.
However, under the original definition of sewing thread, single multifilament yarns used as sewing
thread are not included in that requirement, allowing such yarns to be sourced from thread
suppliers from outside the CAFTA-DR region.

In order for the changes to take effect, the U.S. Congress as well as legislative bodies in
the other CAFTA-DR partners now must pass legislation implementing them.

March 1, 2011