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U.S./Central America Free Trade Agreement (CAFTA-DR)The Issue:
On August 2, 2005, President Bush signed into law the U.S./Central America - Dominican Republic Free Trade Agreement (CAFTA-DR) with five countries in Central America (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua) and the Dominican Republic. Attention has since turned to implementation, which the Administration has implemented on a “rolling” basis, in which each country accedes once it has completed all necessary domestic approval measures. Under this program, CAFTA-DR entered into force for El Salvador on March 1, 2006, Honduras and Nicaragua on April 1, 2006, Guatemala on July 1, 2006, and the Dominican Republic on March 1, 2007. Costa Rica, where newly inaugurated President Oscar Arias remains firmly committed to this trade agreement, is hoping to approve the agreement so it can enter into force with respect to that country by the end of 2007. Rolling implementation has created considerable disruption, particularly in scenarios involving the co-production of an article among several Central American countries. In early August 2006, the President signed into law a bill that provides retroactive duty free treatment to rectify some of the co-production problems. That bill also provided proclamation authority so the President could make future modifications to CAFTA-DR dealing with such areas as pocketing, the Nicaragua TPL, socks, and short supply. Deals to amend the agreement on pocketing have already been agreed to with all six countries. An effective date of implementation of those side deals remains to be seen. In addition, the Administration has sought deals with each of the countries on socks, and continues to hint that it may use the sock safeguard, particularly in connection with imports from Honduras, in the future. Work also continues to secure full implementation of the agreement’s cumulation provisions, which permit the use of Mexican inputs in certain CAFTA-DR garments. One requirement of the cumulation provisions – a customs cooperation deal between the United States and Mexico – was completed in January 2007. Other requirements may be completed by the end of the year possibly enabling this program to take effect in late 2006 or early 2007. AAFA on the Issue: AAFA strongly supported congressional passage of CAFTA-DR and now urges swift and full implementation of this FTA with all five Central American countries and the as a way to strengthen the footwear, textile and apparel trade partnership. The Latest News:
02.19.08
The government's inter-agency Committee for the Implementation of Textile Agreements (CITA) on February 15 approved two short supply requests under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). In the first, CITA has approved a request by Columbia Sportswear Company, determining that certain composite fabric consisting of a woven face fabric and knit backing fabric laminated together by means of a chemical adhesive and classified under HTS subheading 6001.22, as specified in the petition, are not available in commercial quantities in a timely manner under CAFTA.
01.22.08 Late Friday, January 18, the Bush Administration announced its intention to impose a safeguard (in the form of increased tariffs) on cotton socks from Honduras. Administration and Honduran officials will now spend the next 60 days in consultations on this issue. The action, pursuant to the CAFTA-DR, could take effect as early as April 2008 and last until December 2008. If invoked, the safeguard could result in the reimposition of a 13.5 percent tariff on cotton sock imports from Honduras.
01.07.08
President George W. Bush issued a proclamation December 27 announcing that the pocketing and cumulation changes to the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) are now law. Despite Bush's proclamation, the pocketing and cumulation provisions won't be implemented until the Office of the US Trade Representative (USTR) issues a separate Federal Register notice with the effective implementation date. This notice is expected shortly.
Meanwhile, AAFA submitted comments January 2 to the US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) on the CAFTA short supply process. In its comments, AAFA noted the importance of a well functioning and quick short supply mechanism for the overall health of the agreement. Among other things, AAFA noted that CITA should not reject petitions unless the supplier is able to produce samples that meet the petitioner's requirements. To date, 22 requests have been submitted under the CAFTA short supply process. Of those 22 petitions, 19 have been wholly or partially approved, 2 have been denied, and 1 is currently pending. Along those lines, CITA requests comments on a December 21 petition from Columbia Sportswear requesting that certain composite fabrics consisting of a woven face fabric and knit backing fabric laminated together by means of a chemical adhesive classified under 6001.22 of the Harmonized Tariff Schedule of the United States (HTS), as described in the petition, be declared in short supply under CAFTA. If CITA approves the petition, apparel made in any of the CAFTA countries using the subject third-country fabric would be able to enter the United States or any other CAFTA country duty-free under the agreement. Comments are due January 10. |
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