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Imports, Exports Under Dominican Republic Apparel Program See Rise in 2015

Monday, August 01, 2016
Sandler, Travis & Rosenberg Trade Report

Seven years after its implementation, the Earned Import Allowance Program is still not providing enough incentives to substantially boost apparel exports from the Dominican Republic 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 DR 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 DR, 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 in the DR using third-country fabric.

The ITC reports that activity under the EIAP increased in 2015 even though only five of 12 firms registered to participate used the program, the same as in 2014. U.S. exports to the DR of cotton fabrics of a weight suitable for making bottoms reversed a three-year slide, rising 13 percent by quantity and 11 percent by value, though they were still less than half the peak value and quantity of exports recorded in 2011. U.S. imports of woven cotton bottoms from the DR tripled by value to $8.2 million and increased more than five-fold by quantity, but U.S. industry sources described these increases as “incidental” and not attributable to EIAP. The value and quantity of such imports were still less than 25 percent and 41 percent, respectively, of what they were at their peak in 2010, and the DR’s share of the total U.S. market for cotton bottoms fell 25 percent to 0.3 percent.

The recommendations for improving the EIAP that were submitted by industry and other sources this year were virtually the same as those received during previous annual reviews, the ITC states: lowering the 2:1 ratio of U.S. to foreign fabric to 1:1, expanding the program to include other types of fabrics and apparel items, and allowing U.S. qualifying greige fabrics to be dyed and finished outside the U.S. One new recommendation was to add countries to the EIAP to foster regional integration and create further opportunities in other CAFTA-DR countries.

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