Why was the textile industry concerned about CAFTA?
CAFTA generally requires that if a Central American garment is to come into the U.S. duty-free, it must be made of fabric produced in the CAFTA region (in the U. S. or one of the Central American countries). There were three exceptions to this rule-of-origin that concerned us: (1) pockets and linings could be sourced anywhere in the world; (2) Nicaragua had the right to source up to 100 Million square meters of material anywhere in the world (called the Nicaraguan Tariff Preference Level or Nicaraguan TPL); and (3) Mexico was defined as being in the region even though they are not a party to CAFTA and a cumulation concept written into CAFTA would allow them to sell up to 100 million square meters of fabric into the region. With each of these three exceptions, the concern was that China would be the source of the fabricfor pockets and linings, for Nicaraguas TPL and for a high percentage of the material that would come through Mexico. Q: So what changed? A: US Trade Representative (USTR
