WASHINGTON — U.S. and Central American negotiators, facing intense pressure from battle-scarred domestic groups, are expected to tackle thorny textile and apparel trade issues today and Wednesday in Houston in an effort to advance the free-trade...
WASHINGTON — U.S. and Central American negotiators, facing intense pressure from battle-scarred domestic groups, are expected to tackle thorny textile and apparel trade issues today and Wednesday in Houston in an effort to advance the free-trade pact.
Importers, retailers and apparel manufacturers ratcheted up the pressure on U.S. Trade Representative Robert Zoellick and his five Central American counterparts late last week in advance of the Central America Free Trade Agreement talks, while textile groups continued to voice their concerns aboutthe trade deal between the U.S. and Nicaragua, Guatemala, Costa Rica, El Salvador and Honduras.
“Unless there are significant improvements in this flexibility of raw-material availability, the advantage of proximity to market will be diminished with the inevitable outcome of a significant shift in apparel sourcing away from the region,” said a group of four importer, retailer and apparel manufacturer associations in one letter, deeming the talks a “CAFTA negotiation crisis.”
Textile groups, on the other hand, continued to oppose any flexibility in rule of origin, which they contend should contain U.S.-only yarn and fabric.
“We are done compromising,” said Charles Bremer, vice president of international trade at the American Textile Manufacturers Institute. “We just compromised 20,000 more jobs in the last two months.”
Negotiators are trying to complete the CAFTA negotiations by the end of the year, and the round in Houston this week is considered critical. CAFTA faces a tough battle for passage in Congress next year, with expected battles over labor and environmental issues.
U.S. negotiators could make decisions in Houston on an array of controversial issues affecting rules of origin, any of which could be deal breakers, according to industry sources. Industry experts expect the U.S. to aggressively negotiate two contentious areas and leave the lightning-rod issue of tariff preference levels, a provision that allows the use of a specified amount of fabric or yarn from any country, such as China, in apparel production in Central America and still gives duty-free entry to the U.S., until the last round slated for December.
Many expect U.S. trade officials to announce the USTR’s findings on whether another concept known as “cumulation” is legal, whether it is compatible with World Trade Organization rules and whether the U.S. will agree to it. The Central Americans put forward the proposal on cumulation, which allows companies to use fiber, yarn and fabric inputs from any country that has a free-trade deal with the U.S. or Central America, such as Jordan, Mexico or sub-Saharan Africa, in apparel production in the region and receive duty-free entry into the U.S.The “short supply” list is also expected to trigger a heated battle in Houston. At the last round of negotiations, the Central Americans proposed a short supply list containing 47 items. The U.S. has already deemed 24 of those items — in other trade arrangements — to be in “short supply,” which means they cannot be manufactured in the U.S. in a timely or commercial manner and can therefore be imported from anywhere in the world.
The Central Americans want to expand the cumulative list with 23 new items, but many U.S. textile groups oppose the list, claiming the bulk of the items, including cotton and nylon yarns and corduroy fabrics, are produced in the U.S. and should not be deemed in “short supply.”
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