WASHINGTON — U.S. trade negotiators were expected to complete talks on some outstanding textile and apparel issues Wednesday, as the 12th round of U.S.-Chile free-trade negotiations came to a close in Atlanta.

This story first appeared in the October 3, 2002 issue of WWD.  Subscribe Today.

“I’m anticipating in this round of talks that Chile will narrow its export priority items [those apparel and textile products it would like the U.S. to reduce tariffs on quickly] and ask the U.S. to provide further consideration,” Regina Vargo, assistant U.S. Trade Representative for the Americas, said in a conference call with reporters.

Vargo said the U.S. has proposed a 10-year phaseout of duties on industrial products, which include textiles and apparel. The bigger issue that is still unclear, however, is what the U.S. has proposed on rules of origin for textiles and apparel.

Importers are concerned the U.S. is leaning toward a strict rule-of-origin provision, similar to one embodied in NAFTA. They claim a “yarn-forward” rule of origin is a big disincentive to sourcing in the region. Under that provision, apparel must be made of yarn and fabric sourced within the free-trade area to receive free-trade benefits.

The U.S. has proposed such a strict origin rule in the ongoing free trade negotiations with Singapore, according to sources close to those talks. Trade officials did not return phone calls at press time seeking clarification on the U.S. proposal to Chile.

On the opposite side of the debate, the domestic textile industry claims there is global overcapacity in textiles and apparel and argues against new trade pacts with more liberal rules of origin that could further burden their industry.

On Tuesday, U.S. Trade Representative Robert Zoellick said the administration was optimistic that trade deals could be concluded by the end of the year with Singapore and Chile.

“We recognize there is a lot to do,” said Vargo, noting that trade officials will participate in video conferencing in the next few months to advance the talks. “We both agree we won’t be dictated by the deadline, but we are trying hard to let that be a motivator for us.”