Textile Exports may be driven fast through exports in Latin America

Indian Textile exporters may take advantage of opportunities offered by various U.S free trade agreements to increase their export sales to Latin America and other regions. These agreements generally include restrictive rules of origin for textiles and apparel that require the use of inputs manufactured in the United States or the applicable U.S FTA partner in order from the finished goods to benefit from preferential duty treatment (typically duty free) upon importation into the U.S . However ,these agreements also provide limited flexibilities that allow the use of mainland Chinese and other non –originating inputs in certain instances.

For example, most U.S FTAs , including those with Central America and the Dominican Republic (DR-CAFTA),Canada and Mexico(NAFTA) ,Australia ,Bahrain, Chile,Morocco,Peru and Singapore, allow the use of foreign silk yarn ,flax yarn ,woven silk fabric and woven flax fabric in apparel production. This flexibility is not especially significant, however, because these countries do not specialize in the manufacture of silk or flax clothing. Foreign wool yarn may also be used in apparel production under the DR-CAFTA.

Perhaps more significant for textile manufacturers are rules of origin included in DR-CAFTA that allow the use of foreign yarns and fabrics in the manufacturer of certain apparel , provided the apparel is cut and sewn or otherwise assembled in one or more DR-CAFTA countries.This includes :brassieres of HTSUS subheading 6212.10; woven cotton and man-made fiber boxers classified under 6207.11 , 6207.19.9010, 6208.91.30 ,6208.92.0030 and 6208.92.0040:pajamas and nightwear classified under HTSUS 6207.21 ,6207.22 ,6207.91.3010, 6207.99.8510,6208.21 AND 6208.22: Certain woven girls ‘dresses ;infants’ cotton woven dresses classified under HTSUS 6209.20.10: women’s woven wool anoraks classified under HTSUS 6202.91.2011;MENS AND BOYS woven suite type jackets subject to wool restraints classified under HTSUS 6203.39.9020; women’s and girl’s woven wool man-made fiber water resistant jackets classified under HTSUS 6202.93.45; certain women’s and girl’s cotton coats in category 335; certain women’s and girl’s man-made fiber suites in category 644; women’s and girl’s woven wool jackets classified under HTSUS 6211.41.0055;women’s and girl’s woven synthetic suit type jackets with 36 percent or more of flax classified under HTSUS 6204.33.20; women’s and girl’s ‘other woven suit –type jackets classified under HTSUS 6204.39.80; and certain men’s woven dress shirts classified under HTSUS6205.20.2016 and 6205.30.2010.

The DR-CAFTA also allows the use of foreign yarns and fabrics in the manufacture of travel goods classified under HTSUS 4202.12 , 4202.22 , 4202.32 and 4202.92. Several FTA’S also include special tariff preference levels , or TPLs, for apparel made with foreign yarns and fabrics .The DR-CAFTA includes TPLs for certain wool apparel and astectomy swimsuits form Costa Rica and a more commercially significant TPL for shipments of up to 100 million square meters equivalent per year of cotton , man-made fiber and certain wool apparel from Nicaragua, although this provision is slated to expire at the end of 2014 and reductions to the TPL can be made in the interim if Nicaragua does not ship certain amounts of trousers made from u.s. YARNS AND FABRICS. The U.S FTAs with Bahrain, Chile, Morocco, Singapore and Canada/Mexico also include similar provisions. The only TPLs that are heavily utilized year after year are those for Mexican cotton and man-made fiber apparel under the DR-CAFTA.

Moreover, a considerable number of fibers, yarns and fabrics have been determined to be in short supply under the DR-CAFTA and other FTAs and can therefore be imported from anywhere for use in apparel production. On the one hand ,certain inputs deemed to be in short supply(e.g,certain velveteen, corduroy , batiste , and tweed fabrics, among others) are typically included in the text of every agreement negotiated by the United States.In addition,U.S FTAs routinely incorporate a mechanism that allows interested parties to petition for the inclusion of additional inputs in an existing short supply list. The text of the DR-CAFTA originally included a fairly long list of short supply inputs and many more have been added since then.

Textile manufacturers should also consider the opportunities offered by several U.S unilateral preferential trade agreements, particularly those with sub-Saharan Africa and Haiti. The African growth and opportunity act includes a TPL that allows the importation into the U.S apparel made in lesser –developed SSA counties with foreign fabric, up to a certain limit (this limit totals 856 million SME during the year ending 30 September 2009 and was only 27.4 percent utilized through 21 august 2009).U.S apparel imports from Haiti may also incorporate foreign fabrics and benefit from duty-free treatment, provided certain requirements are met.

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