USTR Says Legislation Urgently Needed on AGOA & CAFTA-DR Textile & Apparel Provisions
Legislation is urgently needed to extend the African Growth and Opportunity Act’s (AGOA) Third-Country Fabric provision and implement corrections to the Central America -- Dominican Republic -- United States Free Trade Agreement's (CAFTA-DR) textile and apparel provisions, said the U.S. Trade Representative in a fact sheet issued May 8.
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Delay in AGOA TCF Extension Risks Collapse of AGOA Apparel Exports
USTR said AGOA’s Third Country Fabric (TCF) provision, which is set to expire in September 2012, is crucial to the continued survival of Africa’s textile and apparel industry, and has helped American retailers reduce their costs, diversify their supply chains, and provide more low-cost apparel options for U.S. consumers. USTR noted that Congress has extended the TCF provision twice with bipartisan support.
According to USTR, global sourcing decisions for apparel are typically made up to nine months in advance, so failing to extend the TCF provision now means that apparel buyers are preparing to move production out of AGOA beneficiary countries, which will likely result in significant job losses and factory closures in Africa. USTR said the potential collapse of AGOA apparel exports -- if the TCF provision is not extended -- will also have a negative impact on the cotton and textiles inputs, and would significantly weaken the prospects for the development of a viable and more vertically integrated African cotton-to-apparel value chain.
CAFTA-DR Modifications Needed on Pajama Bottoms, “Short Supply” List, Sewing Thread
USTR said legislation is also needed to implement technical corrections and modifications to the product-specific rules of origin for textile products covered under the CAFTA-DR, including modifications that, among other things, provide certainty of duty-free treatment for women’s and girls’ woven pajama bottoms and clarity as to how certain items will be treated on the textiles “short supply” list of the FTA, which will promote use of the free trade agreement.
According to the USTR, a correction on sewing thread alone would help support an estimated 1,000 jobs in the United States, Central America, and the Dominican Republic, with U.S. production located in North Carolina, Florida, South Carolina, and Alabama. USTR said the changes to CAFTA-DR FTA have the strong support of the domestic textile industry as well as U.S. importers and retailers who source from the region.
The Fact Sheet said U.S. exports of textiles and apparel to the CAFTA-DR region were $3.8 billion in the 12-month period ending February 2012, and increased 15% over the prior 12-month period. U.S. imports of textiles and apparel from the CAFTA-DR region were $8 billion in March 2011 through February 2012, 10% higher than the previous 12-month period. About 73% of those imports were made from either U.S. or regional yarns and fabrics.
(See ITT’s Online Archives 11122007 for summary of December 2011 introduction in the U.S. Senate of a bill to, among other things, extend the Third Country Fabric provision of AGOA.
See also ITT’s Online Archives 11122007 for summary of March 2011 USTR announcement that a number of changes to DR-CAFTA were agreed upon by member countries, including changes to sewing thread, nightwear, and the “short supply” provision.)