The Under Secretary of Commerce in the United States sees no need for renewal of preferential tariff arrangements, which up to now have favored Nicaragua's textile industry.
Statements by the senior official of the Obama administration fell like a bucket of cold water over textile entrepreneurs, who claim that without the renewal of TPL, production costs will increase by up to 40%.
Nicaraguan businessmen have proposed that Central America as a whole operates a preferential tariff treatment in the US for imports of textiles in the region.
After trying to negotiate, through several formats, tariff preference levels (TPL), so far unsuccessfully, textile entrepreneurs are now appealing to the union of the region to address the issue with the US once again.
The guild is analyzing looking for new markets to buy raw materials for the manufacture of textiles, if the US does not renew the tariff preferences.
The Tariff Preference Level (TPL) expires on December 31 and if it is not renewed the Nicaraguan textile industry will be looking for new suppliers such as India, China and Chile, which have lower supply than in the United States.
The possibility that the United States will not renew tariff preferences for Nicaraguan textiles at the end of the year is forcing the industry to prepare changes to their production schedule.
Although there is a possibility that the United States will grant an extension of the benefits of the Tariff Preference Level (TPL), if they are not renewed, starting January 1st, 2015 the Nicaraguan textile sector may no longer sell to United States products made from raw materials from countries that are not part of DR-CAFTA.
A bill that is being analyzed by the U.S. Congress aims to reduce the level of tariff preference to only 6% of imports from Nicaraguan textile factories.
Although the possibility exists of an extension of the current Tariff Preference Level (TPL) until 2015, American congressmen have proposed that the benefit be granted only on cotton pants, which represent the lowest proportion of Nicaraguan textile exports to the United States.
The president of the Dominican Republic has warned the U.S. government about the impact the Trans- Pacific treaty in the textile sector in the region.
From a statement by the Ministry of Foreign Affairs of the Dominican Republic:
On November 27, President Danilo Medina sent a communication to the President of the United States, Barack Obama, in which it reiterated its concern expressed during the meeting held in San José, Costa Rica, in May, in connection with the negative impact which could come from the Trans- Pacific Economic Partnership Agreement (TPP) on the textile and clothing industry in the signatory countries of the DR -CAFTA and the region, if certain special concessions that could cause changes in the management and values of hemispheric trade, and on a worldwide level.
If Asian countries like Malaysia and Vietnam get access for their textiles to the U.S. under the same conditions granted in the DR-CAFTA, the Central American textile sector will be at risk.
The Salvadoran Chamber of Textiles, Clothing and Free Zones (CAMTEX), warns of the risk posed to the sector if the Trans Pacific Partnership Agreement (TPP) comes into effect.