ITC Report Says EIAP Program Not Helping to Boost DR Apparel Exports to U.S.
Three years after its implementation, the Earned Import Allowance Program (EIAP) is not providing enough incentives to help boost the competitiveness of Dominican apparel exports in the U.S. market, said the International Trade Commission in its report “Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic; Third Annual Review.” Although U.S. exports of cotton bottom-weight fabrics grew in 2011, the rate of growth slowed significantly from the first two years of the program.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
(The EIAP allows apparel manufacturers in the Dominican Republic who use U.S. fabric to produce apparel to earn a credit that can be used to ship eligible apparel made with non-U.S.-produced fabric into the U.S. duty free. The Dominican Republic-Central America-U.S. Free Trade Agreement Implementation Act requires the ITC, an independent, nonpartisan, factfinding federal agency, to evaluate annually the effectiveness of the EIAP program and make recommendations for improvements.)
Imports from DR Continue to Decline; Factory Closures and Layoffs Continued in 2011
The government of the Dominican Republic and U.S. and Dominican apparel industry sources indicated that, as currently structured, EIAP is not providing enough incentives to help boost the competitiveness of Dominican apparel exports in the U.S. market, the ITC said.
U.S. imports of woven cotton bottoms (pants and trousers, bib and brace overalls, breeches and shorts, and skirts and divided skirts) from the Dominican Republic continued to decline in 2011, and in the first quarter of 2012, in terms of both absolute levels and market share, the report said. While U.S. exports to the Dominican Republic of cotton fabrics of a weight suitable for making bottoms (“bottom-weight cotton fabrics”) grew during 2008--11, some of this increase, especially in the first two years of the program, consisted of foreign unfinished fabrics that were dyed and finished in the U.S. For 2010--11, the rate of growth for U.S. exports of bottom-weight cotton fabrics slowed significantly from previous years. Dominican industry sources reported that additional plants producing cotton bottoms closed and job layoffs continued in 2011, the ITC said.
Twelve companies are registered to use the EIAP, the same as a year ago; only seven of the registered firms are currently using the program, also unchanged from the second annual review.
Recommendations from Industry Include Lowering Fabric Origin Ratio Etc.
The ITC received several recommendations from industry and other sources concerning improvements to the EIAP, it said. The recommendations were the same as those offered during the first and second annual reviews. They included lowering the 2-for-1 ratio of U.S. to foreign fabric to a 1-for-1 ratio; including other types of fabrics and apparel items in the EIAP; and changing the requirement that dyeing, finishing, and printing of eligible fabrics take place in the U.S.
The report (ITC Publication 4340) is available here.