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

On July 25, 2014, the U.S. International Trade Commission ("USITC") published Investigation No. 332-503 USITC Publication 4476 Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic.

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.

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