US Signs Trade Pact With The Dominican Republic

A US/ Dominican Republic free trade agreement signed March 15 has been met by a mixed reaction from
textile and apparel importers and domestic manufacturers. US Trade Representative Robert B.
Zoellick praised the pact as a historic and comprehensive free trade agreement. He said it phases
out tariffs and strips away non-tariff barriers, and is expected to open new markets for a variety
of products when it is incorporated into the recently negotiated Central American Free Trade
Agreement (CAFTA) with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Zoellick said,
We are enhancing a cutting edge, modern free trade agreement between the United States and Central
America by expanding the circle of friends and neighbors who have agreed to tear down the tariff
walls that block trade.

Kevin M. Burke, president and CEO of the American Apparel and Footwear Association,
enthusiastically endorsed the agreement, saying the combined agreement, once approved by Congress,
will help US apparel and footwear companies strengthen their ties in this hemisphere and diversify
their sourcing strategies. He said US textile manufacturers will benefit from the pact because it
involved countries that predominately use US fabric and yarn. He said this will help them compete
against Asian nations.

US textile manufacturers, however, were not so excited by the agreement, and they are likely
to oppose it as they are opposed to CAFTA. While the Dominican Republic agreement and CAFTA have a
yarn forward rule of origin, it also permits what trade officials call cumulation that allows
Mexican and Canadian inputs, as well as those from Caribbean nations. US manufacturers would like
inputs to be confined to the direct participants in agreements.

Congressional approval of CAFTA and any other free trade agreements certainly is problematic,
as trade-related job losses become an increasingly contentious issue in this election year.

March 2004