By  on October 9, 2007

WASHINGTON — More than two years after President Bush signed the Central American Free Trade Agreement, regulators are completing a tweak to the pact stipulating that pocketing fabric needs to come from one of the signatory countries if the imported apparel is to get duty free treatment.

That means producers making U.S.-bound trousers and jackets in El Salvador, Honduras, Nicaragua, Guatemala and the Dominican Republic — Costa Rica held a referendum on Sunday in which voters appeared to have narrowly approved the pact — need to make sure they're using CAFTA-made pockets if they want to keep their duty breaks.

As often happens when business plans meet changes in trade policy, timing has become an issue. It is not clear when trousers are going to be required to have native pockets to avoid duties that reach almost 17 percent for many kinds of cotton trousers and approach 30 percent for most man-made fiber trousers.

The pocketing change requires a variety of legislative changes and actions among CAFTA countries. The U.S. will be ready to move forward in November, said Scott Quesenberry, special textile negotiator in the office of the U.S. Trade Representative.

"We're hoping that the other countries are on the same time line," he said. "We don't know exactly when each country will be done with their legislative process."

Once all the countries have made the necessary changes, President Bush would have until the end of this year to issue a proclamation implementing the policy.

"We hope to give the industry as much notice as possible," said Quesenberry, who is also working to finish up other revisions, such as allowing Mexican materials into the CAFTA fold.

The more information the government makes available on when the change will take place, the better, said Stephen Lamar, executive vice president of the American Apparel & Footwear Association.

"You need to be looking at your supply chain right now to understand what these changes are going to mean to you," Lamar said.

An investigation, published last month by the U.S. International Trade Commission, found the rule change "may help to slow the decline in existing domestic production and exports of [pocketing] fabric to the DR-CAFTA region...and possibly help slow the growth in U.S. imports from Chinese and other low-priced Asian suppliers," although an overall minimal impact was expected.The commission said the U.S. produces $80 million to $200 million worth of pocketing annually, almost all of which is exported to CAFTA countries or Mexico.

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