ITC Releases Report on Dominican Republic 2-for-1 Program

On July 24, 2015, the U.S. International Trade Commission ("USITC") published Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic.

Six years after the implementation of the Earned Import Allowance Program (EIAP), the government of the Dominican Republic and U.S. and Dominican apparel industry sources continue to indicate that the program 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; Sixth Annual Review.

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 sixth 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 24, 2015. Highlights of the report follow.

• Of the 13 registered firms, only five firms are currently using the program, the same number reported in the fifth annual review.

• In 2014, U.S. imports of woven cotton bottoms from the Dominican Republic totaled less than 8 percent of the value and quantity of imports under the program in 2010, the first full year of the program. Also, U.S. exports to the Dominican Republic of cotton fabrics of a weight suitable for making bottoms fell for the third year in a row, declining by 12 percent by quantity and 19 percent by value between 2013 and 2014.

• The recommendations offered during the sixth annual review of the EIAP were virtually the same as those received by the Commission during the previous five 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) eliminating the requirement that dyeing and finishing of eligible fabrics occur in the United States.

Clients of Agathon Associates may see more information on the Dominican Republic 2-for-1 program at http://agathonassociates.com/textile-pri/cafta-dr/dr-2-for-1.htm.