Danilo Medina, the President of the Dominican Republic, has written to the US President Barack Obama on behalf of the DR-CAFTA countries expressing his concern about the likely negative impact that the Trans-Pacific Partnership (TPP) agreement could have on the textile and clothing industry in the DR-CAFTA region.
The DR-CAFTA region comprises of six Central American countries, viz. Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic, which have a Free Trade Agreement (FTA) with the United States.
In his letter, President Medina said the TPP could negatively impact the apparel industry in the DR-CAFTA region, if certain special concessions are given to the signatories, and it would change the direction and values of hemispheric and worldwide trade, according to a statement on the website of the Dominican Ministry of External Relations (MIREX).
The TPP is currently being negotiated by the United States with Mexico, Singapore, Peru, New Zealand, Malaysia, Chile, Brunei, Japan, Vietnam, Canada and Australia.
In his letter, President Medina expressed concern about the economic and social instability that could arise in the Central American region if the supply chain of textiles and apparel, which has been developed under the DR-CAFTA agreement, is altered.
The apparel production in the region is largely based on American yarn and fabric, and it has been instrumental in strengthening and increasing the competitiveness of the supply chain of textiles and clothing in the region. This has also contributed greatly to the attraction of foreign investment to the DR-CAFTA region, allowing its industries to increasingly offer higher value-added products, and thus create more opportunities of employment, especially for women, Mr. Medina said.
He requested the authorities in the United States to consider the TPP in terms of the ‘yarn-forward’ rule of origin for textile and clothing products, as otherwise the products that come from a country like Vietnam could have duty-free access to the US market, even though they are made using raw materials from countries like China that are not part of the TPP agreement.
Mr. Medina noted that the DR-CAFTA region is the second largest market for exports of American yarn and fabric. He added that the garments made in the Dominican Republic and the rest of the Central American region are imported by the United States, and these apparel contain about 70 percent of US raw material content.
After a fall in the levels of production and trade with the US, the region has experienced significant recovery in recent years, mainly due to the DR-CAFTA agreement. On the other hand, the US textile industry exported a record $23 billion worth of goods in 2012, ofwhich, around 70 percent was destined to the Western hemisphere, which includes members of the DR-CAFTA. The Dominican Republic was the fifth largest export market for American textiles in 2012.