In February and March of 2022, the Office of the United States Trade Representative (USTR) organized and hosted a series of four webinars on CAFTA-DR trade in textiles and apparel. The objective was to enhance stakeholder understanding of the textile and apparel provisions of CAFTA-DR and identify opportunities for increasing and diversifying two-way trade between the United States and CAFTA-DR partner countries.
Webinar 1: Trends and Opportunities in CAFTA-DR Textile and Apparel Trade
Webinar 2: Making Use of CAFTA-DR’s Rules of Origin for Apparel
Webinar 3: The CAFTA-DR Short Supply Mechanism: What It Is and How To Use It
Webinar 4: Understanding Customs Claims and Customs Verifications in CAFTA-DR
Note: According to the 2022 USFIA Fashion Industry Benchmarking Study, US fashion companies demonstrate new excitement about increasing apparel sourcing from members of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR). More than 60 percent of respondents plan to increase apparel sourcing from CAFTA-DR members as part of their sourcing diversification strategy.
Respondents also say the exceptions to the “yarn-forward” rules of origin, such as the “short supply” and “cumulation” mechanisms, provide essential flexibility that encourages more apparel sourcing from CAFTA-DR members.
However, U.S. apparel sourcing from CAFTA-DR has yet to achieve its full potential. For example, measured in value, only 10.2% of US apparel imports came from CAFTA-DR members in May 2022 (and 9.7% year to date), almost no change from 10.6% in 2021. Meanwhile, the CAFTA-DR utilization rate for apparel imports was stagnant at about 75%-80% since 2015, meaning 20-26 percent of U.S. apparel imports from CAFTA-DR members did NOT claim preferential duty benefits every year.
Other recent studies show that the limited textile raw material supply within CAFTA-DR is a significant bottleneck preventing more U.S. apparel sourcing from the region. CAFTA-DR’s textile raw material supply problem could become even worse as the U.S. textile industry switches to making more technical textiles and less so for apparel-related fabrics and textile accessories. Many surveyed US fashion brands and retailers say that providing more meaningful flexibility in rules of origin will encourage MORE apparel sourcing from CAFTA-DR.