The Central American participants in the DR-CAFTA trade agreement have negotiated a deal that will provide them with compensation for the use of regional textiles instead of Asian textiles in the manufacture of clothes for the United States market. This is the result of a concession that was granted to the textile manufacturers of the state of North Carolina in order to lessen that state’s resistance to the DR-CAFTA treaty. In the case of the Dominican Republic, this negotiation is still pending, according to some sources, but other sources close to the free zone sector are saying that the DR is currently engaged in its own negotiations on this issue.
As reported by Hoy, the Central American republics agreed to change the rule of origin for the textiles used in the production of coats and pants, and this means that they will not use cloth from Asia to make pockets for these garments. This, in turn, means an increase in cost, and this is the compensation that the Central American countries are looking for. The United States Trade Representative, Robert Portman, obtained the concession last April, when the White House was struggling to get the legislation approved by the US Congress. Elizabeth Dole, the Republican senator from North Carolina was the author of the proposal. Textile interests in North Carolina were against the use of Asian textiles in articles from the DR-CAFTA area. According to what was negotiated by the other members of the DR-CAFTA agreement, any garment that is produced using textiles, yarn or cotton from the region will enter the US at a 0% tariff rate from the start of 2006.
Another agreement that was reached will allow the importation of fibers or raw material that can be processed and later included as cloth in clothes destined for the US market. The deal also contemplates the use of cloth made in the US from raw materials obtained on the world market. In this case the tariffs will only be applied to the value added by the manufacturing nation.