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Guatemala Sees Future in CAFTA

NEW YORK — Free trade between Central America and the U.S. can benefit the textile and apparel industries of both nations, said Guillermo Castillo, Guatemala’s ambassador to the U.S.<BR><BR>Guatemala Thursday approved legislation needed to...

NEW YORK — Free trade between Central America and the U.S. can benefit the textile and apparel industries of both nations, said Guillermo Castillo, Guatemala’s ambassador to the U.S.

Guatemala Thursday approved legislation needed to implement the Central American Free Trade Agreement, which is awaiting an OK from Congress. CAFTA has elicited complaints from domestic firms, but Castillo stressed the intertwined nature of the two regions.

The CAFTA countries — Guatemala, Costa Rica, Nicaragua, El Salvador and Honduras, along with the Dominican Republic — buy 54 percent of North Carolina’s exports, he noted.

“If we go down, then the industry goes down here, too,” said Castillo, speaking Thursday at a breakfast seminar called “The New Central America: Solid Partners for Vertical Operations.”

Even if the Guatemalan textile and apparel industry benefits from the passage of the trade bill, the region still has to contend with competition from China, which is poised to pick up market share after the elimination of quotas by World Trade Organization countries.

Castillo said Guatemala was working on “an economic and social development plan” to strengthen the rule of law, improving infrastructure and security, and provide better education, which will all ultimately help Guatemala compete.

As the market shifts in the post-quota world, the Central American nations will have to sharpen their game and take advantage of their geographic proximity to the U.S., which allows for quicker delivery of goods.

Tony Ronayne, vice president of Western Hemisphere operations at Liz Claiborne Inc., said the region has been a vital part of the company’s supply chain for years, but must still rise to meet the challenges of the marketplace. Claiborne produces more than 250 million items annually, sourced from 250 vendors in 35 countries, Ronayne said.

“We will source with significantly fewer vendors in 10 to 15 countries instead of the current 35,” now that quotas are gone, he said.

To work with Claiborne, he said, Central American manufacturers need to deliver on quality and service and be competitive on price and tech-savvy.

This story first appeared in the March 15, 2005 issue of WWD.  Subscribe Today.