Bush Aims to Iron Out CAFTA Duty Free Rules

WASHINGTON — The Bush administration plans to smooth over rough spots in procedures designed to give duty free treatment to some goods under the Central American Free Trade Agreement, even if they include materials from outside the region.

CAFTA, which promotes commerce among the U.S., El Salvador, Honduras, Nicaragua, Guatemala, the Dominican Republic and Costa Rica, generally requires that goods be made of native materials. Exceptions may be made when the necessary materials are not sold in commercially viable quantities in the region.

The process to determine commercial availability requires that companies check to determine if suitable producers exist before requesting an exception. However, there are communication problems and concerns that certain importers are not effectively looking for suppliers, while some factories are claiming to be able to meet demand when they actually don't have adequate capacity.

"There have been some frustrations on both sides of the coin," said Matt Priest, chairman of the interagency Committee for the Implementation of Textile Agreements.

Since spring 2006, when CAFTA first began to take effect, the administration has found that 19 types of fabrics and fibers qualified for exceptions.

"It provides flexibility to continue to keep business in this hemisphere," Priest said. "If something is truly not made in this region, it makes no sense to not allow them to bring something in duty free and provide some flexibility."

In the next few days, CITA will request public input on how the due diligence requirement can be adjusted to work more smoothly. Specifically, the committee is seeking comments on how businesses conducting due diligence for a commercial availability should communicate: the types of information companies can ask of potential suppliers, whether the companies should supply samples to each other and how products should be identified.