The U.S. Chamber of Commerce has come out strongly in favour of extension of the Tariff Preference Level (TPL) for another 10 years at the request of the Nicaraguan textile and clothing industry.
Jodi Hanson Bond, vice president of the Americas for the International Division at the U.S. Chamber of Commerce, who was in Nicaragua to analyze the achievements of DR-CAFTA in Nicaragua in 10 years, said the textile and apparel sector contributes about 30 percent to Nicaraguan exports to the United States.
In 2004, the United States signed the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), which includes Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. Subsequently, Nicaragua was granted a TPL that allows apparel made of certain cotton and man-made fiber to enter the US duty free under CAFTA-DR if it’s assembled in Nicaragua, regardless of the origin of the fabrics.
The TPL, which is scheduled to expire on December 31, 2014, is limited to 100 million square meter equivalent units (SME) per year, according to the U.S. Department of Commerce’s Office of Textiles & Apparel (OTEXA).
In addition, the TPL contains a “unique provision for woven trousers (categories 347/348 and 647/648),” says OTEXA. Nicaraguan trouser producers must use matching amounts of US and foreign fabrics to make the trousers, and the fabrics must be matched one-for-one, and the amount of trousers that can be imported to the United States is capped.
The U.S. Chamber of Commerce very strongly supports the efforts to renew TPL for Nicaragua and the organization is ready and willing to provide any necessary assistance in Washington in the coming months, Ms. Bond said.
She added that the extension of TPL would ensure that the Nicaraguan textile industry remains an economic growth engine and employment generator.
According to her, it would be devastating to the Nicaraguan economy if the TPL is not extended.
The Nicaraguan Association of Textile and Apparel (Anitec) has estimated that the textile and apparel manufacturing sector in Nicaragua will lose about 33,000 jobs if the TPL is not extended.
Bilateral trade between the US and Nicaragua increased by 137 percent since 2005 to US$ 3.9 billion in 2013.