MIAMI — Granting Caribbean Basin apparel makers free-trade benefits without the restrictive yarn-forward rule of the North American Free Trade Agreement was the hot topic here last week during the Miami Conference on the Caribbean and Latin America.
The five-day conference ended Thursday.
One of the parley’s speakers, Rep. Phil Crane (R., Ill.), incoming chairman of the House Ways and Means trade subcommittee, brought up the idea in an interview, as reported. Crane predicted Congress would vote by June to grant Caribbean Basin Initiative countries trade parity with Mexico under NAFTA. He said he favored eliminating the yarn-forward rule of NAFTA when such parity is extended to the CBI, but he added that he was unsure whether he could get a “consensus” in Congress.
Dropping the yarn-forward rule would give Caribbean manufacturers open access to foreign fabrics while their apparel would still receive free-trade status; NAFTA, for the most part, gives such status only to apparel made of fabrics and yarns originating in North America.
Proponents of dropping the yarn-forward rule from trade pacts apparently feel the expected CBI parity talks would be a good starting point, and others attending the conference offered arguments for eliminating the rule.
James Jacobsen, Kellwood Co.’s vice chairman and also a conference speaker, labeled the yarn-forward rule “too restrictive.”
NAFTA, he maintains, “is a highly protectionist agreement. We would prefer a rule that is more flexible.”
In an interview, Jacobsen said NAFTA makes insufficient provision for the use of imported fabrics when domestic fabrics are in short supply, or not available.
“Any time something is needed for the market, when something is hot, we need to move on it immediately, and that’s why it’s important to have more flexibility,” he said.
John Ermatinger, Levi Strauss & Co.’s vice president for operations and sourcing, also stressed flexibility: “Our goal is to be as expeditious as possible and really reduce the amount of logistics that are inherent when buying fabrics someplace, cutting in one place, assembling in another and bringing that back [to the U.S.], all of which evolves into a tremendous amount of lead time.”
The Levi’s executive said an integral part of the San Francisco firm’s business strategy is to slash from 18 months to 30 days the time it takes to bring a new product to market and guarantee a 72-hour delivery time to retailers for any order.
René Léon, El Salvador’s economics vice minister and chief textile negotiator, told WWD, “We would love for the U.S. to go along with a CBI parity origin rule that is less restrictive than NAFTA’s yarn-forward.
“We don’t have an industrial textile base that would allow us to produce our own fabrics and yarns, and therefore would like to have the opportunity to import fabrics from the rest of the world — from the U.S., or wherever fabric is available at the cheapest price, with the greatest variety and best quality.”
But Léon, like other boosters of CBI parity without yarn-forward, concedes the U.S. probably would balk at this change.
“We would like to present this plan to the U.S. Congress. However, we must take a pragmatic view,” he said.
“We don’t want to lose the whole [parity] program over this issue, and of course, the basic interests of the American textile industry haven’t changed.”
Miguel Ramirez Steller, executive vice president of the Puntarenas Free Trade Zone, Costa Rica, said he believes Congress will balk at dropping the yarn-forward rule for CBI parity.
But Ramirez said the U.S. will have to consider the rule’s elimination as part of the negotiations to create free trade hemisphere-wide. “Otherwise,” he said, “we will end up as one trading bloc isolated from the rest of the world.”
Larry Martin, who will become the American Apparel Manufacturers Association’s new president Jan. 1, noted during an interview from the association’s headquarters in Arlington, Va., “We want to maintain an American presence in the region. We don’t want Mexico or the CBI to be a place where cheap Chinese fabrics are married with low-cost labor for purposes of dominating our market.
When John Spratt (D., S.C.), chairman of the House Textile Caucus, was asked about the prospect of CBI parity without the yarn-forward rule, he responded, “To hell with that. I’m opposed to CBI parity in the first place.”
— Fairchild News Service