WASHINGTON — U.S. Trade Representative Rob Portman, acting as President Bush seeks support for the Central American Free Trade Agreement, has pledged that his agency will work to change a provision in the accord that permits the use of foreign pocketing and lining fabrics.
Portman sought to reassure Sen. Elizabeth Dole (Rep., N.C.), who represents a state hit by textile manufacturing job cuts, that his office will “seek an amendment to the CAFTA so that pocketing would have to originate in one of the signatory parties.”
A major roadblock to CAFTA’s passage in Congress has been opposition by the domestic textile industry. The Bush administration has made overtures in recent months to boost support for the pact among textile-state lawmakers.
The industry fought including exceptions for foreign fabrics in CAFTA and many executives take issue with three that were allowed, including a rule of origin that permits the use of foreign pocketing and lining fabrics. Many U.S. textile producers fear they will lose a significant portion of that export market as a result of the foreign fabric allowances in CAFTA.
The CAFTA region is the second-largest export market for U.S. fabric and yarn makers. In 2004, U.S. textile sales to CAFTA countries accounted for almost $4 billion in sales, representing 26 percent of industry exports.
Based on the proposed accord, all of the countries involved — Costa Rica, Nicaragua, Honduras, El Salvador, Guatemala, the Dominican Republic and the U.S. — would have to agree to the modification and hold consultations.
“We have already approached Central American trade officials and key Central American apparel producers to discuss the pocketing issue, so that there would not be a delay after implementation of CAFTA,” Portman said in a letter to Dole. “I certainly understand how serious this issue is for producers of pocketing, who are struggling to compete in a difficult environment.”
Dole said in a statement that Portman’s response was “good news for our textile industry.”
“The current rule of origin for pocketing and linings would allow these fabrics to be imported from anywhere in the world, including China,” Dole said. “I am pleased that USTR recognizes the gravity of this problem and will work for a revision to the treaty that will help save North Carolina textile jobs.”
Industry sources said the National Council of Textile Organizations are close to taking a vote on whether to support CAFTA.
Several textile executives, many of whom have business in the Central American region and would benefit from the agreement, have expressed tentative support for the deal. However, a large segment of the industry remains opposed to it.
Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, which is opposed to CAFTA, said Portman’s letter “clearly points out that the U.S. is going to need the full cooperation of other CAFTA partners.”
“If the agreement is approved, what leverage would we have to get them to make these concessions?” he said. “If they really want to fix this, they should put it in on the agenda next week when the President meets with his Central American and Dominican Republic counterparts.”
Steve Lamar, senior vice president of the American Apparel & Footwear Association, which supports CAFTA, said he is concerned about the implications of any amendments.
“If you open this up to consultations on this issue, the Central Americans could come back and ask for something,” said Lamar, adding that a change in the pocketing and lining rule of origin would be a disincentive to doing business in the region.