© Copyright AAFA. All rights reserved. 2006 CAFTA The Current Situation & Next Steps Apparel...

© Copyright AAFA. All rights reserved. 2006© Copyright AAFA. All rights reserved. 2006

CAFTACAFTAThe Current Situation & Next StepsThe Current Situation & Next Steps

Apparel Sourcing ShowApparel Sourcing ShowGuatemalaGuatemala

Nate HermanNate HermanDirector of International TradeDirector of International TradeAmerican Apparel & Footwear AssociationAmerican Apparel & Footwear Association

May 2006May 2006


CAFTACAFTAThe Good, the Bad,The Good, the Bad,

and the Uglyand the Ugly

• The Good NewsThe Good News

• The Bad NewsThe Bad News

• The UglyThe Ugly

• How Do We Return to the Good?How Do We Return to the Good?


CAFTA: The Good CAFTA: The Good NewsNews

• El Salvador, Honduras & Nicaragua Have El Salvador, Honduras & Nicaragua Have Implemented CAFTAImplemented CAFTA

• Guatemala Joining June 1Guatemala Joining June 1

• Thanks to CAFTA, the region is experiencing Thanks to CAFTA, the region is experiencing growth this year in key categories:growth this year in key categories:– Swimwear Exports on RiseSwimwear Exports on Rise

– Footwear Exports Up Double Digits from Some Footwear Exports Up Double Digits from Some CountriesCountries

– Luggage/Briefcase Exports UpLuggage/Briefcase Exports Up





• The Bad NewsThe Bad News• The UglyThe Ugly



CAFTA: The Bad NewsCAFTA: The Bad News• Almost Two Years After Agreement Signed, Almost Two Years After Agreement Signed,

Only Only FOURFOUR countries have joined CAFTA countries have joined CAFTA– Implementation DelaysImplementation Delays

• Co-Production/Retroactivity IssueCo-Production/Retroactivity Issue

• Washington is CallingWashington is Calling

• Continued Uncertainty Also Caused by:Continued Uncertainty Also Caused by:– Last-Minute Deals in WashingtonLast-Minute Deals in Washington

• Pocketing FabricsPocketing Fabrics• SocksSocks

– Technical ProblemsTechnical Problems– CumulationCumulation


CAFTA: The Bad NewsCAFTA: The Bad News• Almost Two Years After Agreement Signed, Almost Two Years After Agreement Signed,

Only Only FOURFOUR countries have joined CAFTA countries have joined CAFTA– Implementation DelaysImplementation Delays


• Washington is Calling…And Saying No More Washington is Calling…And Saying No More CAFTACAFTA





Average Duty Collected on U.S. Apparel Average Duty Collected on U.S. Apparel Imports from El Salvador 2005-2006Imports from El Salvador 2005-2006

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar

Source:Source: U.S. International Trade U.S. International Trade Commission’s Trade Dataweb Commission’s Trade Dataweb


CAFTA: The Bad NewsCAFTA: The Bad News• Almost Two Years After Agreement Signed, Only Almost Two Years After Agreement Signed, Only

FOURFOUR countries have joined CAFTA countries have joined CAFTA– Implementation DelaysImplementation Delays


• Washington is Calling…And Saying No Washington is Calling…And Saying No More CAFTAMore CAFTA





CAFTA: The Bad NewsCAFTA: The Bad News• Almost Two Years After Agreement Signed, Only Almost Two Years After Agreement Signed, Only

FOURFOUR countries have joined CAFTA countries have joined CAFTA– Implementation DelaysImplementation Delays


• Washington is Calling…And Saying No More Washington is Calling…And Saying No More CAFTACAFTA


• Pocketing FabricsPocketing Fabrics

• SocksSocks

– Technical ProblemsTechnical Problems

– CumulationCumulation


U.S. Apparel Imports from CAFTA RegionU.S. Apparel Imports from CAFTA Region

CAFTA Apparel Import Market Share

15%

17%

19%

21%

23%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Source: OTEXA, U.S. Commerce DepartmentSource: OTEXA, U.S. Commerce Department


U.S. Apparel Imports from CAFTA RegionU.S. Apparel Imports from CAFTA RegionActual U.S. Imports

(In Billions of Square Meter Equivalents - SMEs)

2.5

3.0

3.5

4.0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006*


* 2006 is an annualized figure based on Jan-Mar 2006 imports.* 2006 is an annualized figure based on Jan-Mar 2006 imports.


U.S. Apparel Imports from CAFTA RegionU.S. Apparel Imports from CAFTA RegionTop U.S. Apparel Imports

% Change Jan-Apr 2005-2006

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

Hosiery

Cotton Knit Tops

M/B Woven Tops

Cotton Pants

Brassieres

Underwear

MMF Knit Tops

MMF Pants



U.S. Textile Exports to CAFTA RegionU.S. Textile Exports to CAFTA RegionPercentage of U.S. Yarn and Fabric Exports

Destined for CAFTA Countries

0%

10%

20%

30%

40%

50%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

FabricYarn



CAFTA: Returning to the GoodCAFTA: Returning to the Good

• Most problems resolved when ALL Most problems resolved when ALL countries join CAFTAcountries join CAFTA

• AAFA and Others Pushing Congress AAFA and Others Pushing Congress for Temporary Fixfor Temporary Fix

• Finish Pocketing Negotiations as Soon Finish Pocketing Negotiations as Soon As Possible – Work for Congressional As Possible – Work for Congressional PassagePassage

• Implement Cumulation ASAPImplement Cumulation ASAP


American Apparel and Footwear AssociationAmerican Apparel and Footwear Association

1601 N. Kent Street, 121601 N. Kent Street, 12thth Floor Floor

Arlington, VA 22209Arlington, VA 22209

703-797-9041703-797-9041

[email protected]@apparelandfootwear.org

www.apparelandfootwear.orgwww.apparelandfootwear.org

Thank You!Thank You!

© Copyright AAFA. All rights reserved. 2006 CAFTA The Current Situation & Next Steps Apparel...

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