MEXICO CITY — Nicaragua is clinging to hopes that the U.S. will renew its crucial tariff preference level provision and is seeking a new congressman to help resurrect it in coming weeks.
The country plans to introduce a renewable bill as part of Obama’s Trade Promotion Authority, or Fast Track, aimed at hastening U.S. free trade agreements with other countries. U.S. lawmakers have signaled the initiative could be approved in the spring.
“We remain committed to renewing the TPL and we are working on convincing a congressman to submit the bill,” said Dean Garcia, president of main trade lobby Anitec, without revealing any names.
The effort comes as U.S. Sens. Dianne Feinstein (D., Calif.) and Kay Hagan (D., N.C.), who presented bills supporting the extension last year, were unable to coax Congress to debate them in the last lame-duck session.
The TPL, which expired last December, enabled U.S. textile firms to make apparel in Nicaragua using raw materials from outside the CAFTA-DR free-trade zone. The flexibility allowed U.S. woven and knitwear exports to soar in the past decade, luring big buyers like Wal-Mart Stores Inc. and Under Armour to Nicaragua.
Nicaragua and U.S. textile firms remain united in lobbying lawmakers to revive the TPL. If it is not extended, at least 15,000 jobs will be lost as U.S. and Korean firms (which hold more than 60 percent of the industry) jump ship to Asia, according to Garcia.
Under a Plan B, the impoverished nation is moving to lure foreign investment to enable it to make its own feedstocks, he said.
This would be done by expanding tax breaks and other benefits in the so-called zona franca (free-trade zone), improving investor protection laws and slashing production and infrastructure costs.
As part of that bid, Nicaragua is overhauling its electricity sector, Garcia said. Furthermore, it recently signed the World Trade Organization’s trade facilitation agreement.
Garcia stressed Nicaragua has the “safest security” environment in Central America while a stable political and economic climate make it an ideal investment destination.
Proof of that is the upcoming, $50 billion Nicaragua Canal set to compete with Panama for passage business in the growing Atlantic-Pacific trade corridor, when and if completed in four years.
The canal “is another endorsement that we are moving in the right direction,” Garcia concluded.