Sourcing Apparel from the CAFTA-DR Region—The Modern Cotton Story Podcast

Discussion questions:

  • What are the advantages and disadvantages of CAFTA-DR as an apparel-sourcing base for US fashion companies?
  • What are the key bottlenecks that prevent more apparel sourcing from CAFTA-DR members?
  • Do you support liberalizing the rules of origin or keeping the strict “yarn-forward” rules of origin in CAFTA-DR, and why?

Author: Sheng Lu

Professor @ University of Delaware

4 thoughts on “Sourcing Apparel from the CAFTA-DR Region—The Modern Cotton Story Podcast”

  1. This podcast really made me think about the implications of CAFTA-DR and whether or not it has been successful over the past few years. Listening to this podcast really helped me to understand how the short list is a key shortcut for many US fashion brands. Many brands source finished garments and textiles from Asia for much cheaper than other regions, however the tariffs they pay must be worth it. Getting items on the short list is a hack for US fashion brands as they can source these items cheaply without paying tariffs. This podcast also demonstrated how there are two schools of thought when it comes to CAFTA-DR and its efficacy. US fashion brands are against it and believe the rules should be more lenient. US textile brands favor CAFTA-DR and want it to remain in place. This makes sense to me as very few US textile companies would be motivated to keep factories in the US and invest in infrastructure here without CAFTA-DR.

    1. Caroline, this podcast also made me consider the implications of CAFTA-DR and it’s success in recent years. Only about 10% of U.S. textile and apparel sourcing came out of the CAFTA-DR region so there is definitely room for improvement. With many countries trying to reduce sourcing from Asia, CAFTA-DR should be a great alternative but it hasn’t been. We can definitely assume this is due to the two sides of the argument you bring up. The U.S. textile industry which supports strict yarn forward rules as they incentivise more investment to the CAFTA-DR region therefore leading to more factories and more yarn mills. On the other hand U.S. fashion companies support a more liberal approach because they believe as long as sourcing volume goes up more investments will come. I believe the latter, more sourcing should lead to more opportunities for growth overall. Which approach do you support?

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