Analysis Says Yarn Forward Crucial to CAFTA-DR Success
A consulting firm hired by the National Council of Textile Organizations published an analysis that says that adding cumulation provisions and altering the Dominican Republic-Central America Free Trade Agreement's short supply mechanism would destabilize Central America by destroying more than 247,000 jobs in apparel. "U.S. textile manufacturing and employment will be devastated through the loss of billions of dollars in exports to the CAFTA-DR region, and the loss of over 307,000 jobs in the short to medium term," the Werner International report said.
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It also said that Haiti and Mexico would lose sales to the U.S., as well, because the Dominican Republic and CAFTA production would be able to undercut them with low-cost Chinese textiles. "China and other third parties will monopolize yarn and fabric sales to the CAFTA-DR region, contradicting critical goals associated with nearshoring supply lines, greater environmental sustainability, and ensuring that goods produced under abhorrent labor practices do not enter the U.S.," the report said.
It said that the changes would provide a backdoor to Xinjiang cotton.
Even though the report expressed confidence that the administration opposes changing CAFTA's textile rules of origin, short supply and cumulation rules, it also seems to think there are those in the administration who want to liberalize the rules to bolster economic development in the Northern Triangle countries.
"Elimination or weakening of yarn forward would not help resolve the current migration flow; instead, it would exacerbate the problem by eliminating jobs in the region. It would have substantial and severe consequences in Central America and disrupt the textile and apparel sectors in Haiti, Mexico, and throughout the hemisphere," the report says.
Last year, the Office of the U.S. Trade Representative put out a statement after meeting with NCTO that said that maintaining certainty in both the CAFTA rule of origin and the short supply process "is critical to facilitating investments in the region by U.S. and Central American textile producers." After meeting with the American Apparel and Footwear Association, which is calling for a less strict rule, the office put out a statement that said that the deputy USTRs who met with them "underscored the importance of the agreement’s rules of origin in promoting investment in textile production and supporting manufacturing jobs in both Central America and the United States," and said that near-shoring apparel production should be done "in a way that strengthens the North American supply chain for textiles and apparel."