Importers wanting to use Mexican fabric to manufacture apparel in the six countries that are partners with the U.S. in the Central American Free Trade Agreement and send it to the U.S. duty free are going to have to wait a while longer.
WASHINGTON — Importers wanting to use Mexican fabric to manufacture apparel in the six countries that are partners with the U.S. in the Central American Free Trade Agreement and send it to the U.S. duty free are going to have to wait a while longer.
Cumulation, as the practice allowing materials from other regions is known, is part of the CAFTA agreement, but like some other elements of the trade pact, has yet to take force.
So far, the U.S., El Salvador, Honduras and Nicaragua are operating under the terms of the agreement, but Guatemala and the Dominican Republic still need to implement it and Costa Rica has yet to ratify it.
"The completion of the procedures necessary to implement cumulation must now receive priority attention," said importers, including Liz Claiborne Inc. and Jockey International, as well as several lobby groups, in a May 31 letter to U.S. Trade Representative-designate Susan Schwab.
The group requested that cumulation with Mexico be allowed by July 1. Mexico and Canada have duty free status on goods shipped to the U.S. under the North American Free Trade Agreement.
"It's not going to be able to happen," said Scott Quesenberry, special textile negotiator in the U.S. Trade Representative's office. "It's our intention to get CAFTA implemented as quickly as possible and the cumulation provisions are part of the CAFTA agreement."
Quesenberry said it has not been determined if CAFTA must be fully adopted by all the countries before cumulation could take effect. But that's not the only hurdle.
Mexico, a major producer of fabric, also has to sign free trade agreements with the CAFTA countries before they can use Mexican fabric and still be eligible for duty free business with the U.S.
Quesenberry said Mexico requires that its free trade agreements be approved by its Senate, which is currently in recess and isn't expected to reconvene until September.
Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel, said approval by the Mexican Senate just recently became an issue in the push for cumulation.
"There's always a new roadblock to implementation and that's the frustration among U.S. companies," Hughes said. "If its the Mexican government that's holding it up, we will pressure them. If it's the U.S. government, we'll pressure them."
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