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Honduras, Nicaragua Set to Enact CAFTA

Honduras and Nicaragua were expected to fully enact the Central American Free Trade Agreement over the weekend, according to U.S. Trade Representative Rob Portman.

WASHINGTON — Honduras and Nicaragua were expected to fully enact the Central American Free Trade Agreement over the weekend, according to U.S. Trade Representative Rob Portman.

CAFTA, which provides for duty-free trade in apparel and textiles, still needs to be implemented by Guatemala and the Dominican Republic and ratified by Costa Rica. The U.S. and El Salvador have already enacted the treaty.

The countries in the region already enjoyed duty-free trade with the U.S. under the Caribbean Basin Trade Partnership Act. However, the CAFTA legislation did not foresee the staggered implementation process, causing some apparel to be levied with unexpected duties.

Right now, goods made in countries that are formally a part of CAFTA, but use materials from Guatemala, the Dominican Republic or Costa Rica, are subject to duties, in some cases higher than 30 percent.

“This is a mixed blessing,” said Stephen Lamar, senior vice president at the American Apparel & Footwear Association. “For some transactions it helps, for other transactions it doesn’t. As long as we still have some of the countries out of the fold, we’re going to have a big problem.”

Last month, Bush administration trade officials gave Congress two possible fixes that would ease the problem caused by staggered implementation, but there is no indication as to when they might be taken up, if at all.

“We will continue our work with the remaining three CAFTA-DR partners to ensure timely and full implementation of the agreement,” Portman said in a statement.