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Dominican Republic - Central America - United States Free Trade Agreement to Promote U.S. and Regional Jobs through Textile and Apparel Sector

Washington, D.C. – On February 23, the Office of the United States Trade Representative announced a number of changes to the Dominican Republic – Central America – United States Free Trade Agreement (CAFTA-DR) at the Free Trade Commission meeting in San Salvador, El Salvador in order to promote U.S. and regional jobs and export opportunities. These changes will advance regional trade and economic integration in the textile and apparel sector, which is very important to regional production and employment.

The changes will also expand opportunities under the CAFTA-DR and encourage a vibrant textile and apparel supply chain in the Western Hemisphere to effectively face the challenge of competitors in Asia. Among the changes of particular significance is the clarification that certain monofilament sewing thread is now required to originate or be produced in the United States or the CAFTA-DR region in order for goods to qualify for preferential tariff treatment.

This type of sewing thread, while increasingly used within the apparel industry, had been omitted from the requirements of the original agreement. The sewing thread industry in the United States supports hundreds of jobs at technically sophisticated facilities such as Unifi Manufacturing, Inc. in North Carolina and Milliken & Company in South Carolina. With this change, these jobs, which had been at risk, will now have the potential to grow as regional usage of sewing thread increases. The other changes relate to the treatment of certain nightwear, as well as the “short supply” list in the CAFTA-DR and how several products are treated in the context of that list, including elastomeric yarns, knit waistbands and knit-to-shape components.

At the Free Trade Commission meeting, participants also agreed to increase the cumulation limits to encourage greater integration of regional production through limited reciprocal duty-free access with Mexico and potentially Canada to be used in Central American and Dominican Republic apparel, as called for under the CAFTA-DR.

The annual limits for cumulation were increased to account for the inclusion of the Dominican Republic, as provided for under the Agreement. These limits allow specific quantities of designated apparel products to enter the United States from Central America and the Dominican Republic containing inputs from Mexico and potentially Canada. The agreed changes will take effect once approved by each government party to the CAFTA-DR Agreement.

U.S. exports of textiles and apparel to the CAFTA-DR region grew by 25 percent in 2010, exceeding the growth to the world at 19 percent. The CAFTA-DR region is the third largest export market for U.S. textile and apparel products, behind NAFTA trading partners. This market represented approximately $3 billion in exports in 2010. Exports to the CAFTA-DR region comprised 16 percent of total U.S. textile and apparel exports.

U.S. imports of textiles and apparel from the CAFTA-DR region grew 14 percent in value in 2010, reaching $7 billion. CAFTA-DR is the second largest supplier of textiles and apparel after China, moving from third place behind Vietnam last year.