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Program Provides Too Few Incentives to Help Boost Competitiveness of Dominican Apparel Exports, Says USITC

July 25, 2014
News Release 14-075
Inv. No. 332-503
Contact: Peg O'Laughlin, 202-205-1819
Program Provides Too Few Incentives to Help Boost Competitiveness of Dominican Apparel Exports, Says USITC

Decline in U.S. Imports of Woven Cotton Bottoms Under Program Accelerated in 2013

Five years after its implementation, the Earned Import Allowance Program (EIAP) is not providing enough incentives to help reverse the decline in Dominican apparel exports to the U.S. market, as intended, reports the U.S. International Trade Commission (USITC) in its publication Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic; Fifth Annual.

The EIAP allows apparel manufacturers in the Dominican Republic who use U.S. fabric to produce certain apparel to earn a credit that can be used to ship eligible apparel made with non-U.S.-produced fabric into the United States duty free. The Dominican Republic-Central America-United States Free Trade Agreement Implementation Act, as amended, requires the USITC, an independent, nonpartisan, factfinding federal agency, to evaluate annually the effectiveness of the EIAP program and make recommendations for improvements.

The USITC's fifth annual review was submitted to the U.S. House of Representatives Committee on Ways and Means and the U.S. Senate Committee on Finance on July 25, 2014. Highlights of the report follow.

  • Of the 12 registered firms, only 5 firms are currently using the program, down from 7 firms reported in the fourth annual review.
  • In 2013, U.S. imports of woven cotton bottoms from the Dominican Republic declined by 76 percent, by both quantity and value, compared to 2012. Also, U.S. exports to the Dominican Republic of cotton fabrics of a weight suitable for making bottoms fell for the second year in a row, declining by 25 percent by both quantity and value between 2012 and 2013.
  • The USITC received several recommendations from industry and other sources concerning improvements to the EIAP. The recommendations were the same as those received during the previous four annual reviews-1) lowering the 2-for-1 ratio of U.S. to foreign fabric to a 1-for-1 ratio; 2) expanding the program coverage to enable other types of fabrics and apparel items to be included in the EIAP; and 3) changing the requirement that dyeing and finishing of eligible fabrics occur in the United States.
  • Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic; Fifth Annual (Inv. No. 332-503, USITC Publication 4476, July 25, 2014) is available on the USITC's Internet site at http://www.usitc.gov/publications/332/pub4476.pdf.

    USITC general factfinding investigations, such as this, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, and the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subject investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding investigations reports are subsequently released to the public, unless they are classified by the requester for national security reasons.

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