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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:
02.17.09
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) determined February 10 that certain woven modal-polyester fabric, as described in the petition, is not available in commercial quantities in a timely manner under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). As a result of the determination, apparel made in any of the CAFTA-DR countries from third-country subject fabric can now enter the United States or any of the other CAFTA-DR countries duty-free.
1.13.09
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) on December 2 two petitions from Hansoll Textile, Ltd., determining that certain raschel knit open work crepe fabrics, as specified in the petitions, are not available in commercial quantities under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). With CITA approval of the petitions, apparel made in any of the CAFTA-DR countries using the subject third-country fabrics would be able to enter the United States or any other CAFTA-DR country duty-free under the agreement. In related news, CITA also comments on a January 2 petition from BWA requesting that certain woven modal-polyester blend fabric made from ring-spun yarn, as specified in the petitions, be declared not available in commercial quantities under CAFTA-DR. If CITA approves the petition, apparel made in any of the CAFTA-DR countries using the subject third-country fabric would be able to enter the United States or any other CAFTA-DR country duty-free under the agreement. Comments on the petition are due January 16.
12.23.08
AAFA has received notice from the Costa Rican government that Costa Rica, as of January 1, 2009, will be in full compliance with the requirements under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). This notice opens the door for the US government to issue a Federal Register notice announcing the date of the Costa Rica's formal entry into CAFTA-DR. The Federal Register notice will also start the clock running on duty refunds.
12.06.08
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) on December 2 a petition from Swift Galey, determining that certain cotton twill fabric treated with liquid ammonia, as specified in the petition, is available in commercial quantities under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). In related news, CITA also comments on two new petitions from Hansoll Textile, Ltd., requesting that certain raschel knit open work crepe fabric, as specified in the petitions, be declared not available in commercial quantities under CAFTA-DR. If CITA approves the petitions, apparel made in any of the CAFTA-DR countries using the subject third-country fabrics would be able to enter the United States or any other CAFTA-DR country duty-free under the agreement. Comments on both petitions are due December 15.
12.02.08
President George W. Bush a proclamation November 25 implementing the so-called "DR 2:1" program. 2:1 allows for the duty-free entry of US imports of pants from the Dominican Republic made from third-country denim as long as they meet the specifications outlined under the program.
11.24.08
The government's inter-agency Committee for the Implementation of Textile Agreements (CITA) on November 12 four petitions from Fishman & Tobin, determining that certain polyester fabrics, as specified in the petitions, are not available in commercial quantities under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). As a result, apparel made in any of the CAFTA-DR countries using the subject third-country fabrics are now able to enter the United States or any other CAFTA-DR country duty-free under the agreement. With this decision, CITA has to date determined that 118 different fibers, yarns and fabrics are no longer commercially available in any of the CAFTA-DR countries.
10.14.08
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) requests comments on five October 9 petitions from Fishman & Tobin requesting that certain polyester sharkskin, stripe and mini-stripe fabrics, certain polyester/rayon/spandex gabardine fabric and certain polyester pin dot dobby fabric, as specified in the petitions, be designated as in “short supply” - not available in commercial quantities - under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). If CITA approves the petitions, apparel made in any of the CAFTA-DR countries using the subject third-country fabrics would be able to enter the United States or any other CAFTA-DR country duty-free under the agreement. Responses with offers to supply are due October 24. Rebuttal responses are due October 30.
10.06.08
Last week, Congress approved an AAFA-supported package (HR 7222) of trade provisions related to the Caribbean Basin, the Andean region and Africa. The bill makes critically important changes in the so-called third country fabric provisions in the Africa Growth and Opportunity Act (AGOA). It eliminates the unworkable abundant supply program (which will make it easier to source third country denim in Africa) and extends third country fabric provisions to Mauritius. The legislation also creates a new Earned Import Allowance Program for the Dominican Republic which will supply essential help for Dominican trouser producers and their US fabric suppliers. Also included in the legislation is a one-year extension for Colombia and Peru, and six month extensions for Bolivia and Ecuador (which may be renewed for an additional six month period), under the Andean Trade Preferences Act (ATPA). Finally, the bill contains a one-year extension for the Generalized System of Preferences (GSP) program.
10.06.08
The countries that are parties to the US/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) announced October 1 that they have extended the deadline for Costa Rica to join CAFTA-DR until January 1, 2009.
09.15.08
Costa Rica’s timely accession to the US/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) suffered another set back on September 10 when that country’s Constitutional Court rejected the last of the 13 bills needed to implement the agreement. Policy makers in Washington and San Jose are now working to assess the impact of this development. Without this bill, the United States cannot certify Costa Rica as meeting its obligations under the CAFTA-DR. If that certification cannot be made by October 1, Costa Rica will need to apply for another extension, which must be agreed to by all of the CAFTA-DR parties. For the time being, Costa Rica will remain a beneficiary of the Caribbean Basin trade preference program, which does not expire for another two years.
09.15.08
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) on September 15 announced revised rules for determining which products are not commercially available (in short supply) under CAFTA-DR. On the same day, CITA approved an August 8 petition from Sorini Samet & Associates, LLC, on behalf of Hansoll Textile Ltd, determining that certain raschel knit open work crepe fabrics, as specified in the petition, are not available in commercial quantities under CAFTA-DR. As a result, apparel made in any of the CAFTA-DR countries using the subject third-country fabrics are now able to enter the United States or any other CAFTA-DR country duty-free under the agreement. With this decision, CITA has to date determined that 112 different fibers, yarns and fabrics are no longer commercially available in any of the CAFTA-DR countries.
09.08.08
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) determined that, effective August 18, petitions from the Government of the Dominican Republic requesting that certain dobby weave, dyed twill and dyed sateen fabrics, as described in the petitions, are in short supply (not available in commercial quantities) under the US/Central America Dominican Republic Free Trade Agreement (CAFTA-DR). With these determinations, apparel made in any of the CAFTA-DR countries using the subject third-country fabrics are now able to enter the United States or any other CAFTA-DR country duty-free under the agreement.
08.11.08
On August 7, the US government confirmed that new textile and apparel trade provisions in the U.S./Central American - Dominican Republic Free Trade Agreement (CAFTA-DR) will take effect August 15. Among the many changes to the CAFTA-DR rules of origin are provisions that require originating pocket bag fabric, extend single transformation rules to selected additional articles and implement the long-awaited cumulation procedures. Attendees at an August 4 AAFA seminar in New York City (co-produced with Sandler Travis & Rosenberg) learned first hand how to take advantage of and comply with these new rules, as well as new trade preferences for Haiti.
08.11.08
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) requests comments on an August 4 petition from Badger Sportswear, Inc. requesting that certain three-yarn circular knit stretch fleece, as described in the petition, be declared in short supply (not available in commercial quantities) under the US/Central America Dominican Republic Free Trade Agreement (CAFTA-DR). Responses with offers to supply are due August 19 and rebuttal responses to offers to supply are due August 25. If the petition is approved, apparel made in any of the CAFTA-DR countries using the subject third-country fabric would be able to enter the United States or any other CAFTA-DR country duty-free under the agreement.
07.28.08
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA), on June 22, approved four petitions submitted by the Dominican Republic (DR) and declared certain corduroy and twill fabrics, as described in the subject petitions, as in "short supply." This means these fabrics are not available in commercial quantities under the United States/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). With CITA's declaration, apparel made in any of the CAFTA-DR countries using the subject third-country fabrics are now able to enter the United States or any other CAFTA-DR country duty-free under the agreement. CITA will make decisions on the other 8 pending DR petitions by August 20.
07.28.08
On July 22, the US government announced that the United States plans to implement two textile provisions under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR). The pocketing amendment and the textile cumulation provision will change the CAFTA-DR rules of origin to promote regional production. When implemented, the pocketing amendment specifies that for apparel items containing at least one pocket, the pocket bag fabric must be formed and finished in the territory of one of the CAFTA-DR parties using yarn wholly formed in the territory of one or more CAFTA-DR parties before the apparel can qualify as an originating good and thus, receive duty-free treatment under the agreement. Under the textile cumulation provision, a limited quantity of woven apparel containing Mexican or Canadian inputs are permitted to enter the United States duty-free. The new provisions will go into effect on August 15.
07.21.08
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) has approved two petitions and declared certain polyester/nylon corduroy fabrics and certain uncut polyester/nylon corduroy fabrics as in short supply meaning it is not available in commercial quantities under the United States-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA). Apparel made in any of the DR-CAFTA countries using the subject third-country fabrics can now enter the United States or any other DR-CAFTA country duty-free under the agreement.
06.23.08
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) is considering multiple short supply commercial availability petitions from Fishman & Tobin and the Government of the Dominican Republic (DR) regarding a wide variety of fabrics. Both seek a CITA judgment that the subject fabrics (as described in the petitions) are in short supply (not available in commercial quantities) under the US/Central America Dominican Republic Free Trade Agreement (DR-CAFTA). Responses with offers to supply are due June 26 for the Fishman & Tobin petitions and July 2 for the DR petitions and rebuttal responses to offers to supply are due July 2 for the Fishman & Tobin petitions and July 9 for the DR petitions. The projected date of determination of the status of the subject fabrics is due July 25 and July 31, respectively. If any of the petitions are approved, apparel made in any of the CAFTA countries using the subject third-country fabric will be able to enter the United States or any other CAFTA country duty-free under the agreement.
06.30.08
On June 27, the US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) reduced the 2008 Tariff Preference Level (TPL) for Nicaragua under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). Under CAFTA, Nicaragua agreed that for each square meter equivalent (SME) of trousers it exports made with cotton or man-made fiber, Nicaragua would export an equal amount made with US fabric and yarn. CITA reduced the TPL for 2008 by the shortfall from the “one to one commitment for cotton and man-made fiber trousers” that was specified in the agreement. The ruling decreases the amount of apparel able to enter the United States duty-free under the agreement.
06.19.08
US Customs and Border Protection requested comments for an interim rule amending the customs regulations to implement the preferential tariff treatment and other customs-related provisions of US/Dominican Republic/Central America Free Trade Agreement (DR-CAFTA). These regulations are effective as of June 13 and address issues including retroactive preferential tariff treatment for textile and apparel goods, import and export requirements, rules of origin, among many others. Comments are due by August 12.
06.16.08
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) has approved three petitions and declared certain 100% cotton woven indigo-dyed fabric as in short supply (not available in commercial quantities) under the US/Central America-Dominican Republic Free Trade Agreement (DR-CAFTA). Apparel made in any of the CAFTA countries using the subject third-country fabric will be able to enter the United States or any other CAFTA country duty-free under the agreement.
06.16.08
US Customs and Border Protection requested comments for an interim rule amending the customs regulations to implement the preferential tariff treatment and other customs-related provisions of US/Dominican Republic/Central America Free Trade Agreement (DR-CAFTA). These regulations are effective as of June 13 and address issues including retroactive preferential tariff treatment for textile and apparel goods, import and export requirements, rules of origin, among many others. Comments are due by August 12.
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.
In the second, CITA has approved a request by Rothschild & Co., Inc. and Herman Kay & Co. determining that certain wool coating fabrics containing 20 percent or more by weight of manmade staple fibers and 80 percent or less of wool, cashmere or camelhair fiber (or any combination thereof), but in no case less than 36 percent wool, cashmere or camelhair fiber (or any combination thereof), with a three percent fiber content allowance in accordance with the regulations implementing the Textile Fiber Products Identification Act with respect to fiber content tolerances (16 C.F.R. 303.43(a)), as specified in the petition, are not available in a timely manner under CAFTA. As a result of CITA's determination, apparel made in any of the CAFTA countries assembled from the specified third-country fabric can enter the or any other CAFTA country duty-free under CAFTA.
02.04.08
Costa Rica announced last week that they plan to request an extension of the February 29 deadline for joining the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). To date, the Costa Rican Congress has only passed 4 of the 13 bills necessary to implement CAFTA. It is unclear how the current CAFTA member countries can approve an extension of the deadline. It is also unclear how long of an extension will be requested.
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.
CAFTA-DR News Archive
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