WASHINGTON — U.S. and Dominican Republic trade officials are hunkered down here this week in an attempt to conclude a free-trade pact.

Negotiators are hammering out key issues such as whether to extend benefits to apparel coproduced in Haiti and whether to allow apparel production links to Mexico and Canada.

Regina Vargo, Assistant U.S. Trade Representative for the Americas, addressing an audience of business- and trade-association executives at the U.S. Chamber of Commerce Monday, claimed she is optimistic the talks can be completed by the end of the week, though she claimed the discussions have been “highly unusual.”

The U.S. plans to integrate the free-trade pact with the Dominican Republic into the recently completed Central American Free Trade Agreement with Costa Rica, Nicaragua, El Salvador, Guatemala and Honduras.

CAFTA will face a tough battle on Capitol Hill in this election year and there is speculation about whether Congress will even take up the trade legislation. Many Democrats have already denounced CAFTA for inadequate labor and environmental rules and the key will be how House Republicans from southern textile states will weigh the agreement in the run-up to the November presidential election.

Negotiators are working through complex mechanisms to link the Dominican Republic to CAFTA and give the country many of the same benefits the five Central American countries secured. Vargo stressed that a main objective is to consolidate into the trade agreement the benefits the Dominican Republic currently enjoys under the current preferential trade program known as the Caribbean Basin Trade Partnership Act.

“The first principle is that we don’t want anyone left in a position that is not as advantageous as before,” said Vargo. “That has been our attitude toward the market access component of the negotiations.”

Under CBPTA, the Dominican Republic has set up apparel coproduction with Haiti along the border in a free-trade zone, and one of the outstanding issues this week is whether to extend the same duty-free benefits to apparel made in Haiti to the FTA.

“In the textile and apparel sector, Haiti is the kind of issue that suggests there is something unique we hadn’t looked at in the earlier [CAFTA] negotiations,” said Vargo. “It is important we come up with good solutions for those kinds of issues.”The other critical issue this week is “cumulation” and whether the U.S. will allow the Dominican Republic to use fabrics from Mexico and Canada and still receive duty-free entry to the U.S. CAFTA contains such a provision.

“This a technical situation and we have been aware of it from the very beginning, but there is an interest on all sides, including U.S. mills with investments in Mexico which want to sell fabrics to the Dominican Republic,” Arturo Peguero, president of the Dominican Republic Association of Free Zones, said in an interview after the conference.

He added the Dominican Republic imported $2.3 billion worth of U.S. fabrics last year. The country, which sent 758.3 million square meters equivalent of apparel and textiles to the U.S. in 2003, valued at $2.12 billion, produced 1.8 percent of the apparel and textiles imported into the U.S., according to the Commerce Department.

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