WASHINGTON — The Bush Administration said it plans to negotiate a separate free-trade agreement with the Dominican Republic and eventually integrate the country into the current trade pact being negotiated with five Central American countries.

U.S. Trade Representative Robert Zoellick notified Congress Tuesday of the administration’s intent to negotiate a bilateral deal and include the Caribbean’s largest economy into the Central American Free Trade Agreement.

It is still unclear how the administration will attempt to integrate the Dominican Republic into a CAFTA trade pact. One possibility is to have parallel negotiations. Once the two trade deals are complete, the administration could try to link the Dominican Republic to the CAFTA through a provision that would allow it to receive the same benefits as El Salvador, Guatemala, Costa Rica, Nicaragua and Honduras.

All five Central American countries would have to agree on the inclusion of the Dominican Republic, according to industry experts.

The Dominican Republic, which exported $2.17 billion worth of apparel and textiles to the U.S. in 2002, has been clamoring to get into the CAFTA negotiations since the talks launched. Trade officials originally excluded the Dominican Republic from the talks because it did not belong to an existing customs union between the five Central American countries.

Importers and domestic textile groups applauded the development, but divisions run deep in how much market access the U.S. should grant to Central America.

In 2002, imports from the five countries totaled 2.86 billion square meters equivalent, with a combined value of $6.98 billion, according to the Commerce Department. Total U.S. textile exports to the five countries amounted to more than $4 billion last year.

“The U.S. exported $616 million in cut pieces and $629 million worth of textiles to the Dominican Republic last year,” said Charles Bremer, vice president of international trade at the American Textile Manufacturers Institute. “We definitely have a piece of change there.”

Bremer said the ATMI would support the inclusion as long as the U.S. negotiates strict rules of origin with the Dominican Republic and the five Central American countries. Importers oppose strict rules of origin and are lobbying for flexible rules and allowances for third-country fabric if needed.Strict rules of origin would “trap the region into using only U.S. textiles [or regional textiles],” said Peter McGrath, president of purchasing at J.C. Penney Co. “Obviously, importers are looking for more liberal rules of origin and the use of third-country fabric, which the textile industry vehemently opposes. That’s why the [tariff preference levels — allowing limited use of fabric or yarns outside of the free-trade area] issue continues to be one of the key issues.”

The U.S. has proposed a strict yarn-forward rule of origin with regional inputs, which requires yarn and fabric to be sourced within the free-trade area. However, Regina Vargo, assistant U.S. Trade Representative, wrapping up a round of talks with the five Central American negotiators in New Orleans last week, said the U.S. has not ruled out using TPLs, but will not address them until rules of origin have been negotiated.

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