Highlights of the DR-CAFTA Implementation Bill (Part V)

A Presidential Proclamation must still be issued to amend the tariff schedule for DR-CAFTA, etc. (USTR sources have previously stated that the DR-CAFTA can enter into force for the U.S. and one or more subject countries that have approved it; the U.S. does not have to wait for all subject countries to approve the agreement. In addition, press sources have indicated that the DR-CAFTA has been approved by Guatemala, El Salvador and Honduras, but has not been approved by Costa Rica, Dominican Republic and Nicaragua, and that Nicaragua and the Dominican Republic are expected to approve the agreement within 60 days, but Costa Rica might take 1 - 2 years to approve it.)

This is Part V of a multi-part series of summaries of the Act that will highlight the provisions of this legislation, beginning to end. Part V focuses on the Act's provisions regarding Presidential proclamation authority.

(See ITT's Online Archives or 08/04/05, 08/10/05, 08/18/05, and 08/24/05 news, 05080405, 05081015, 05081810, and 05082410 for Parts I-IV respectively.)

General presidential proclamation authority. In general, the Act provides, among other things, for the President to proclaim, as part of the Harmonized Tariff Schedule (HTS), the provisions set out in Annex 4.1 of the Agreement¹ (Annex 4.1).

Modifications. The President may also proclaim modifications to what he has proclaimed regarding Annex 4.1, other than to HTS Chapters 50-63 (Textiles and textile articles). For these HTS chapters, the President may only proclaim, before the end of the 1-year period beginning on the Act's date of enactment, modifications to correct any typographical, clerical, or other nonsubstantive technical error.

Fabrics or yarns not available in commercial quantities in the U.S. In addition, the President is authorized to proclaim that a fabric or yarn is not available in commercial quantities in the U.S., thus adding it to the list in Annex 3.25 of the Agreement (Annex 3.25), in an unrestricted quantity.

Fabrics, yarns or fibers not available in commercial quantities in the CAFTA-DR countries. Notwithstanding the above instructions for Chapters 50-63, an interested entity may request the President to determine that a fabric, yarn or fiber is not available in commercial quantities in a timely manner in the CAFTA-DR countries, and to proclaim the addition of that fabric, yarn or fiber to the list in Annex 3.25 in a restricted or an unrestricted quantity.

With respect to any fabrics, yarns or fibers added to Annex 3.25 in a restricted quantity, not later than six months after it has been added, the President may eliminate the restriction if he determines that the fabric, yarn or fiber is not available in commercial quantities in a timely manner in the DR-CAFTA countries.

The Act states that if the President does not make a determination regarding the request within the time period specified in the Act, the fabric, yarn, or fiber shall be considered to be added (a "deemed approval"), in an unrestricted quantity, to the list in Annex 3.25.

The Act also provides that an interested entity may request at any time beginning six months after 1) the date the President adds a fabric, yarn or fiber to the list in Annex 3.25, or it is added to this list through the "deemed approval" provision, or 2) the date the President eliminates the restriction on the quantity imposed at the time a fabric, yarn or fiber was added to the Annex 3.25 list, that the President (i) restrict the quantity of, or (ii) remove from the list in Annex 3.25, any fabric, fiber or yarn that has been added to the list in an unrestricted quantity, or for which the President has eliminated the restriction on the quantity.

Such changes shall take effect no earlier than six months after the date on which the text of the proclamation is published in the Federal Register.

According to the Act, the President shall establish procedures governing the submission of requests to add or restrict/remove fabrics, yarns or fibers not available in commercial quantities in the CAFTA-DR countries, and provide an opportunity for interested entities to submit comments and supporting evidence before the President makes his determination on a request.

(As with many other free trade agreements and preference programs in effect, the President is expected to delegate (either officially or unofficially) this 'proclamation authority' for fabrics, yarns and/or fibers not available in commercial quantities to the Committee for the Implementation of Textile Agreements (CITA).)

DR-CAFTA is sometimes referred to as CAFTA-DR or CAFTA. It is also referred to in this summary as the Agreement.

H.R. 3045 available at http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h3045enr.txt.pdf.

Statement of Administrative Action available at http://www.ustr.gov/assets/Trade_Agreements/Bilateral/CAFTA/Transmittal/asset_upload_file816_7815.pdf.

Copy of final text of DR-CAFTA, as posted to USTR website, at http://www.ustr.gov/Trade_Agreements/Bilateral/CAFTA/CAFTA-DR_Final_Texts/Section_Index.html