The Rincon Grande textile company announced yesterday that it will close its operations plant in the district of Grecia before the end of the year.
Rodolfo Molina, owner of the company and president of the Textile Chamber of Costa Rica (Cateco), said that the decision was taken due to the delays in approving and starting the FTA with the US, the Isthmus and the Dominican Republic.
Costa Rica will insist that El Salvador speed up the local process for textiles regarding the agreement of association between Central America and the European Union.
"El Salvador has reservations with moving ahead with the topic of textiles and if this is not done quickly, we are going to fall behind," Minister of Foreign Trade, Marco Vinicio Ruiz, warned at a press conference on Thursday where it pointed out that the region has 90% of the tariff offer completed.
By the end of 2008, Hanesbrands is expected to substantially close plants in El Salvador, Honduras and Costa Rica, affecting 5,100 employees.
Hanesbrands Inc. in Winston-Salem, NC, continues to consolidate its U.S. and Western hemisphere operations and increase production in Asia.
The latest supply chain streamlining, expected to be completed by the end of summer 2009, will consolidate production through nine plant closures in five countries in the Western Hemisphere. The move will affect 8,100 employees, of which 875 are in the U.S. It also will complete the migration of the company's large knit-fabric textile production from the United States.
Textile companies had invested millions of dollars in creating new plants here in the hope of exporting clothing tariff-free into the Unites States.
That was before the Supreme Court’s Constitutional Chamber (Sala IV) decided that the lawmakers had missed a step in procedure and sent back the environmental law that had been passed only weeks before. Twelve similar CAFTA-enablement laws had been passed and are on the books, not without bitter debate and some difficulty, including the strenuously contested one to open telecommunications and another striking down the government insurance monopoly.
Textile companies had invested millions of dollars in creating new plants here in the hope of exporting clothing tariff-free into the Unites States.
That was before the Supreme Court’s Constitutional Chamber (Sala IV) decided that the lawmakers had missed a step in procedure and sent back the environmental law that had been passed only weeks before. Twelve similar CAFTA-enablement laws had been passed and are on the books, not without bitter debate and some difficulty, including the strenuously contested one to open telecommunications and another striking down the government insurance monopoly.
The US extended the tariff benefits and market access to textile and tuna companies for two more years - until September 2010.
These commercial advantages were established in 2000 in an expansion of the so called Caribbean Basin Initiative (CBI).
The extension of these benefits was included in the Farm Bill which was passed by the American Congress last June. The bill is a package of internal agricultural aid.
Starting August 15 the textile sector will have at its disposable new mechanisms to take greater advantage of the Free Trade Agreement with the United States.
Recent modifications to CAFTA offer new benefits to textile companies.
The first is the Textile Accumulation with Mexico and the US which will allow the private sector to produce garments with certain fabrics made in the United States and then export them to Mexico while still enjoying preferential tariffs, explained Ingrid Burgos, representative Textile Industry Chamber (Camtex).
Applying the "country of origin" clause, clothing made in Central America from Mexican textiles will not be subject to U.S. import duties.
The measure, negotiated in 2003, allows U.S. imports of up to 100 million cubic meters per year of clothing made in Central America with Mexican textiles, under the country of origin clause.
Of the 100 million cubic meters, 45 million can be pants and skirts made of cotton or synthetic materials, 20 million of blue denim, a million woolen jackets, suits and skirts, and 34 million garments classified as "other."
Accesorios Textiles S.A. invested 1.5 million dollars to provide labos to manufacturers of garments sold in the United States under the free trade agreement.
This Guatemala company is an example of the multiplier effect of free trade. Since the middle of 2006, when the agreement went into effect, it has invested more than 1.5 million dollars to buy machinery, expand facilities, and hire personnel to diversify its production.