Seven years after its implementation, the Earned Import Allowance Program is not providing enough incentives to substantially boost Dominican apparel exports to the U.S. market as intended, the U.S. International Trade Commission reported Thursday.
The EIAP allows apparel manufacturers in the Dominican Republic who use U.S. fabric to produce certain apparel to earn a credit that can be utilized to ship eligible apparel made with non-U.S.-produced fabric into U.S. duty free. Except for stipulation such as this and under short supply requests, apparel must be made from fabric within the CAFTA countries to be eligible for duty-free import status.
Under the Central America Free Trade Agreement, USITC, an independent, nonpartisan, fact-finding federal agency, is required to evaluate annually the effectiveness of the EIAP program and make recommendations for improvements.
The USITC’s seventh annual review submitted to the House Way and Means Committee and Senate Finance Committee included several key points about the program.
The report said of the 12 registered firms, only five are using the program, the same number reported in the sixth annual review. In 2015, U.S. imports of woven cotton bottoms from the Dominican Republic tripled in value to $8.2 million from $2.7 million in 2014 and increased more than fivefold by quantity.
U.S. industry sources attributed these increases, however, to incidental larger orders rather than to incentives offered by the EIAP. The value and quantity of U.S. imports of woven cotton bottoms under the EIAP in 2015 accounted for less than 25 and 41 percent, respectively, of what they were at their peak in 2010.
U.S. exports to the Dominican Republic of cotton fabrics of a weight suitable for making bottoms rose 13 percent by quantity and 11 percent by value between 2014 and 2015.
Except for one addition, the recommendations offered during the seventh annual review of the EIAP were virtually the same as those received by the ITC during the previous six annual reviews — to lower the 2-for-1 ratio of U.S. to foreign fabric to a 1-for-1 ratio, expand the program coverage to enable other types of fabrics and apparel items to be included, and change the requirement that dyeing and finishing of eligible fabrics occur in the U.S.
The new recommendation proposed during the seventh annual review was to add countries to the EIAP to foster regional integration and create further opportunities in other CAFTA countries, which in addition to the U.S. and Dominican Republic include Honduras, Costa Rica, El Salvador, Nicaragua and Guatemala.