Washington, DC, June 29--Key members of the Board of Directors of the National Retail Federation today urged the United States Senate to move swiftly to pass legislation implementing the Dominican Republic-Central American Free Trade Agreement.
In a letter sent to the United State Senate, NRF Board members stated, “The DR-CAFTA is critical to the economic and political stability of the six countries that are hoping to cement economic ties with the United States through this agreement. DR-CAFTA will help reinforce the efforts they have undertaken to build functioning democracies, establish the rule of law, and foster economic development and growth after the terrible civil wars and unrest during the 1980s.”
“Without DR-CAFTA…the competitive pressures and changes in the industry will inevitably force a shift of investment, production, and sourcing to Asia. The result would be the elimination of tens of thousands of jobs in the apparel industry in the DR-CAFTA countries as well as the U.S. textile industry, which depends on the region as its major export market.”
As the United States and the six DR-CAFTA countries have developed an increasingly integrated supply chain and co-production relationship, the region has emerged as both one of the largest export markets for U.S. cotton growers, yarn spinners, and fabric mills, and one of the most important sourcing locations for U.S. apparel and retail companies. DR-CAFTA will help reduce prices for U.S. consumers, will create opportunities for U.S. retailers to open stores in the Dominican Republic and Central America, and will help build the partnership between the textile and apparel industries in the United States and their counterparts in the DR-CAFTA region.
DR-CAFTA includes the Dominican Republic plus the Central American nations of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Under current trade law, apparel from the region can qualify for duty-free shipment to the United State only if it is made of U.S. fabric woven from U.S. yarn, and even then only certain products are duty-free. DR-CAFTA would expand duty-free treatment to cover a wider range of products and would allow those products to be made of fabric produced in the region, along with a small quantity of fabric from Canada or Mexico. There is little textile production in the Dominican Republic or Central America, however, so as a practical matter manufacturers would still continue to use mostly U.S. textiles.
The Senate Finance Committee approved DR-CAFTA by voice vote today, and the legislation will be taken up by the Senate this week.
