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CAFTA Rules of Origin Causes Textile Divide

WASHINGTON — A coalition of 14 textile and fiber groups that launched a unified lobbying campaign three weeks ago is still divided on some issues when it comes to free-trade deals.<br><br>These differences surfaced over rules of origin in the...

WASHINGTON — A coalition of 14 textile and fiber groups that launched a unified lobbying campaign three weeks ago is still divided on some issues when it comes to free-trade deals.

These differences surfaced over rules of origin in the current round of trade talks with five Central American countries this week in New Orleans.

The groups, which were often divided in the past, said at a July press conference they were joining forces in calling on Washington to better protect the domestic textile industry. They jointly called on the Bush administration to invoke safeguard measures to limit Chinese imports, and also don’t want the Central American Free Trade Agreement to include tariff-preference levels. Known as TPLs, they could allow a limited use of fabric or yarns from outside the free-trade zone in garments that would still qualify for benefits.

But it became clear Thursday that unity on some points doesn’t mean they’ll speak together on all points. A fabric group said it is pushing to allow foreign yarns to be used in garments qualifying for preferred treatment under CAFTA. This is significant because the yarn spinners and fabric producers have historically been at loggerheads on rules of origin, which prevented them from working together in Washington.

The National Textile Association is seeking a “fabric-forward” rule of origin for CAFTA, which means the fabric has to be sourced within the free-trade area and among the free-trade partners, but the yarn could be sourced from third-country parties.

“My membership has to be able to source yarns worldwide,” said Karl Spilhaus, president of the NTA, in a phone interview from New Orleans. “There is such a price disparity between Asia and the U.S. on yarn.”

Spilhaus, whose organization represents weavers and knitters, said the other coalition member groups knew going into the negotiations that there were different positions on the CAFTA rule of origin.

“We didn’t address the differences,” said Spilhaus. “We addressed what unified us.”

Many of the coalition groups, including fabric groups, oppose allowing foreign yarns.

Parks Shackelford, president at the American Textile Manufacturers Institute, said he opposes allowing unlimited use of yarns from Pakistan, China or elsewhere under the trade pact.

“The manufacturing of yarn in the region is essential,” he said. “Why would we want to open any free-trade agreement to outside countries not part of that agreement?”

Other members of the coalition described the divergent opinions as a small matter.

Jock Nash, Washington trade counsel for textile titan Milliken & Co. and an NTA member, said: “I’m not getting into this food fight.”

Nash acknowledged there is a lot of resentment toward yarn spinners who pushed for and won a strict rule of origin that requires U.S. yarn in a Caribbean Basin trade bill, which effectively shut out U.S knitters, who source their yarns from all over the world.

But Nash insisted that on larger matters the groups still “speak with one voice.”

“Yarn spinners, cotton, knitters, weavers and finishers all have different takes on things but not on China and not on TPLs,” said Nash. “There is no split or division at all.”