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Dominican Republic Apparel Exports Continue to Fall Despite U.S. Aid Program

Wednesday, August 05, 2015
Sandler, Travis & Rosenberg Trade Report

Six years after its implementation, the Earned Import Allowance Program is still not providing enough incentives to help reverse the decline in Dominican apparel exports to the U.S. market, the International Trade Commission found in a recent annual report.

The EIAP provides an uncapped duty-free benefit for U.S. imports of certain woven cotton bottoms (pants and trousers, bib and brace overalls, breeches and shorts, and skirts and divided skirts) assembled in the Dominican Republic from third-country fabric. To qualify, the bottoms must be accompanied by a certificate documenting the purchase of certain U.S.-produced woven cotton fabric at a ratio of 2:1. Under this formula, for every two units of qualifying “wholly formed” fabric (defined as formed in the U.S. from U.S.-formed yarns) purchased for apparel production in the Dominican Republic, a one-unit credit is received that can be used toward the duty-free importation of apparel into the U.S. that has been manufactured using third-country fabric.

The ITC reports that utilization of the EIAP continued to decline in 2014. Only five of 13 firms registered to participate used the program, the same as in 2013. U.S. imports of woven cotton bottoms from the Dominican Republic totaled less than eight percent of the value and quantity of imports under the program in 2010, and U.S. exports to the DR of cotton fabrics of a weight suitable for making bottoms fell for the third year in a row, down 12 percent by quantity and 19 percent by value.

The recommendations for improving the EIAP that were submitted by industry and other sources this year were virtually the same as those received during the previous five annual reviews, the ITC states: lowering the 2-for-1 ratio of U.S. to foreign fabric to a 1-for-1 ratio, expanding the program to include other types of fabrics and apparel items, and eliminating the requirement that dyeing and finishing of eligible fabrics occur in the United States.

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