Apparel Sourcing Intelligence - Worldwide

Will CAFTA Pass?

US President Bush notified Congress on February 20 that he intended to sign the CAFTA Treaty, thus formally beginning the 90-day review period prior to his signature. Congress may then approve or reject the signed treaty, but cannot amend it.
Lobbyist Cal Cohen, spokesman for the pro-CAFTA Coalition for US-Central American Trade, claimed that the Administration would wait until after CAFTA is signed before deciding whether to submit implementing legislation. Cohen added “we don’t have the votes right now” to ensure Congressional approval of CAFTA.

Cumulation allowed…
Under CAFTA, The US would effectively grant duty-free and quota-free entry to apparel from the five Central American countries, with retroactive effect from January 1st. Apparel exporters from the five countries may now use without limits all types of regional, or Canadian/Mexican, woven raw materials subject to a limit of 100 million square meters equivalent (SME) in the first year, possibly raised to 200 million SME in the following years. Additionally, Nicaragua was offered duty-free exports to the US of 100 million SME made from non-CAFTA materials. After the first five years of implementation, the cap will be progressively lowered by 20 million SME every year down to 20 million in the ninth year and nothing in the tenth year. Costa Rica was offered similar arrangements for 500,000 SME for a large series of wool apparel with a US tariff reduction of 50%. The treatment will last two years before being re-negotiated by the US and Costa Rica. The draft agreement also includes a textile safeguard for three years allowing normal tariffs to be reimposed if imports "cause serious damage, or actual threat thereof, to a domestic industry."