Congress OKs Fixes To CAFTA-DR, Renews AGOA Fabric Proviso

President Barack Obama recently signed legislation to amend the Central America-Dominican Republic
Free Trade Agreement (CAFTA-DR) and renew the third-country fabric provision in the African Growth
and Opportunity Act (AGOA), among other trade-related items.

The CAFTA-DR amendments include, among other items, a redefinition of sewing thread that
adds single multifilament synthetic yarn used as sewing thread. In the original agreement, an
out-of-date definition failed to consider this thread type, which is commonly used in apparel
production, resulting in a loophole that allowed use of such yarn from non-signatory countries in
place of thread originating in the CAFTA-DR region, and leading to a loss of jobs for U.S. thread

AGOA’s third-country fabric provision, which allows lesser-developed sub-Saharan countries
to produce duty-free and quota-free apparel using fabric and yarn produced anywhere in the world,
now will continue in effect until Sept. 30, 2015. Congressional delays in renewing the provision
had led to moves by U.S. apparel companies doing business in the region to seek other production
sources, thereby threatening to cause job losses and plant closures in sub-Saharan Africa and a
negative impact on cotton and textile inputs.

September/October 2012