National Textile Association CAFTA Positions

FOR IMMEDIATE RELEASE

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NTA denounces CAFTA as threat to U.S. textile industry

BOSTON, December 18, 2003 -- The United States and four Central American nations yesterday concluded a comprehensive Free Trade Agreement (CAFTA) that will strip away barriers to trade and eliminate textile quotas and tariffs.

This regional free trade agreement will open the U.S. textile and apparel markets to a flood of imports from El Salvador, Guatemala, Honduras and Nicaragua. Costa Rica has been part of the negotiation, but withdrew in the final hours from this seriously flawed agreement.

The draft text of the agreement will be released in January. Under the Trade Act of 2002, the Administration must notify Congress at least 90 days before signing the agreement. The Administration expects to notify Congress early next year of its intent to sign the CAFTA. To become law the agreement must pass a majority vote in both the House and the Senate.

Textiles and apparel will be duty-free and quota-free immediately if they meet the Agreement's rule of origin. The agreement's benefits for textiles and apparel will be retroactive to January 1, 2004.

Details of the agreement have not been released by the government. But reports indicate that the agreement is likely to be severely inimical to U.S. textile interests.

The U.S. government acknowledges that an unprecedented provision will give duty-free benefits to apparel made in Central America from fabric woven in in Mexico or Canada. This provision, known as "CUMULATION" was identified by the NTA Board, at the Annual Meeting in Florida, as unacceptable and NTA notified the government that we would oppose CAFTA if it contained such a detrimental provision.

Reports indicate that the agreement lacks any meaningful version of SPECIAL REGIME. NTA on several occasions notified our negotiators that we would oppose any CAFTA that did not give our fabric-forming members access to yarns at globally competitive prices via a Special Regime provision modeled on that in NAFTA (but without the U.S. cutting requirement). In addition, reports indicate that BRASSIERES, BOXER SHORTS, NIGHTWEAR, and PAJAMAS will be under a "single transformation" rule of origin, meaning that foreign yarn and fabric may be used in unlimited amounts. This bra rule is extremely detrimental to U.S. knitters and is a much worse rule than that in the current CBTPA and in other recent FTAs such as those with Chile and with Singapore.

Furthermore, reports indicate that the agreement contains a Tariff Preference Level (TPL) of 100 million square meters for Nicaragua. This TPL permits foreign, non-partner countries, such as China, to get the benefits of the FTA by shipping through Nicaragua. NTA has consistently opposed TPLs in trade agreements and, along with the united textile industry coalition, told the U.S. government that TPLs would not be acceptable in this agreement.

The details of the agreement, as we understand them, clearly contravene NTA's specifically stated positions.

The National Textile Association represents companies who knit or weave fabric in the United States. For more information about NTA, see our website www.nationaltextile.org.