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US-Colombia apparel trade to change as FTA begins

16
May '12
The US-Colombia Free Trade Agreement (FTA) has become effective from May 15, 2012. This is going to change the nature of apparel trade between the two countries to a certain extent.

The FTA provides a permanent, two-way trade relationship between Colombia and the US and removes the uncertainties that existed in the past decade. But, the coming into force of the FTA is likely to change the nature of clothing import-exports between the two countries, as the rules of origin (RoO) and customs entry procedures under the FTA slightly differ from the earlier Colombian Andean agreement.

In the Andean agreement, the yarn-forward rule allowed 25 percent of foreign findings and trimmings. The elastic strips and sewing threads were considered findings/trimmings and hence were restricted by the 25 percent foreign findings/trimmings cap. This meant that there was no origination requirement under the Andean provisions.

Similarly, there was no restriction for elastomeric requirement under the Andean programme. However, the new FTA states that all three – elastic strips, sewing threads and elastomerics – must have to originate in either Colombia or the US.

Thus, in effect, Colombian apparels made using sewing thread from Central American countries that qualified for duty-free import into the US on May 14, would not be eligible for zero-duty entry into the US from May 15 onwards.

On the other hand, the RoO under FTA is more flexible compared to the Andean provisions in some cases. The bra rule, which had a 75 percent value-added restriction, would now follow a simple cut and sew rule. The de minimis allowance would also increase to 10 percent from the earlier 7 percent.

Fibre2fashion News Desk - India


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