Panama FTA Approved By Congress

BOSTON — October 13, 2011 — Last evening the U.S. House voted (Roll Call Vote 782), 300 to 129, and
the U.S. Senate voted (Call Vote 162), 77 to 22 to implement the United States-Panama Free Trade
Agreement (H.R.3079).

The rule of origin for fabric is yarn forward. The rule of origin for apparel is yarn forward
for the single fabric component that determines the tariff classification of the garment. Certain
visible linings, narrow elastic fabrics, pocketing and sewing thread must also originate under
rules modeled after those of the U.S.-Dominican Republic-Central America Free Trade Agreement
(“DR-CAFTA”). Please note that a drafting error in DR-CAFTA which exempted many sewing threads from
the rule was replicated in the Panama FTA. In the case of DR-CAFTA the the U.S. and DR-CAFTA
partners have agreed to modify the sewing thread rule to cover all types of sewing thread; this
change has not yet been implemented. It is our understanding that any change to the rule in the
Panama FTA would also require negotiations between the U.S. and Panama to modify the Agreement.

Like DR-CAFTA, the Panama FTA has a single transformation rule for brassieres, woven boxers,
and woven sleep/nightwear.

Posted on October 18, 2011

Source: NTA