Dominican Republic Apparel Import Program Set to Expire this Year

Expires December 1, 2018

According to Office of Textiles and Apparel (OTEXA), which is housed under The International Trade Association,  The Dominican Republic Earned Import Allowance Program is scheduled to expire Dec. 1 after being in effect for ten years.  The Dominican Republic 2 for 1 Earned Import Allowance Program (DR 2-for-1 Program) is part of the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR).  The Department of Commerce states that entries of qualifying apparel after Dec. 1 may no longer use allowances to qualify for duty-free treatment under this program.

Background:

The Earned Import Allowance Program (EIA) provides duty-free entry from the Dominican Republic into the United States for certain apparel. For every two square meter equivalent (SME) of apparel assembled using U.S. yarn and fabric allows one SME to enter the U.S. duty-free using third party yarn and fabric.

According to Sandler, Travis & Rosenberg Trade Report, “The International Trade Commission recently reported that activity under the program fell precipitously for the second straight year in 2017. This decline was attributed to increased imports from Haiti, which offers lower labor costs and trade preferences under the HOPE/HELP programs; increased competition from other Western Hemisphere suppliers; a significant drop in woven trouser manufacturing capacity in the DR; a shift by U.S. importers to Asian suppliers; and uncertainty surrounding the program’s renewal.

Industry and other sources have recommended improving the program by lowering the 2:1 ratio of U.S. to foreign fabric to 1:1, expanding the program to include other types of fabrics and apparel items, and allowing U.S. qualifying greige fabrics to be dyed and finished outside the U.S.”