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Program Provided Too Few Incentives to Help Boost Competitiveness of Dominican Apparel Exports, Concludes USITC in Its Final Report

September 17, 2019
News Release 19-088
Contact: Peg O'Laughlin, 202-205-1819
Program Provided Too Few Incentives to Help Boost Competitiveness of Dominican Apparel Exports, Concludes USITC in Its Final Report

Ten years after its implementation, the Earned Import Allowance Program (EIAP) did not provide enough incentives to significantly boost Dominican apparel exports to the U.S. market, 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; Tenth Annual Review.

The program terminated by statute on December 1, 2018.

The EIAP allowed apparel manufacturers in the Dominican Republic who used U.S. fabric to produce certain apparel to earn a credit that could 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, required 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 10th and final 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 September 17, 2019. Highlights of the report follow.

  • Of the 13 registered firms, only four used the program in its final year, the same as the prior year.
  • In 2018, U.S. imports of woven cotton bottoms from the Dominican Republic fell 4 percent by value to just under $1.4 million in 2018, down from $1.5 million in 2017, and fell 2 percent by quantity to 150,716 SMEs in 2018 from 153,679 SMEs in 2017. The continued decline in U.S. imports under the EIAP in its final year likely reflects a significant decline in woven trouser manufacturing capacity in the Dominican Republic, a simultaneous shift by U.S. importers to Asian suppliers during the life of the program, and anticipation of the expiration of the program on December 1, 2018. The general decline in the program’s usage after U.S. imports under the EIAP peaked in 2010 may also reflect the lack of changes made to the program despite the recommendations put forth since the first annual review.
  • No new recommendations to improve the program were received during the 10th annual review of the EIAP, nor were there any known requests or efforts to extend the program beyond its expiration date. During the previous nine annual reviews, the government of the Dominican Republic, industry representatives, and users of the program consistently made three principal recommendations to improve the EIAP: 1) lower the 2-for-1 ratio of U.S. to foreign fabric to a 1-for-1 ratio; 2) expand the program coverage to enable other types of fabrics and apparel items to be included in the EIAP; and 3) change 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; Tenth Annual Review (Inv. No. 332-503, USITC Publication 4950, September 2019) is available on the USITC's Internet site at http://www.usitc.gov/publications/332/pub4950.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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