A meeting is being convened for the textile and clothing industry on March 16 in El Salvador, where the overall situation in the sector will be discussed.
From a statement issued by Proesa:
El Salvador is preparing for the third edition of the Forum of Textiles and Apparel (FOROTEX) 2016, a space where high-level international speakers present trends and strategies for competing in international markets.
Between January and October foreign sales in the sector amounted to $1.281 billion, 5.9% more than the $1.21 billion generated in the same period in 2013.
From a statement issued by the Nicaraguan agency for promoting and exporting (PRO-NICARAGUA):
Nicaragua is the second country in the framework of DR-CAFTA with the highest percentage of exports of textiles in 2014.
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.
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 Trans-Pacific agreement being negotiated by the U.S. could authorize Vietnam to get threads from China and export duty-free textiles to the North American nation.
The Ambassador of El Salvador in that country, Ruben Zamora, has already raised concerns with officials from the U.S. trade office (USTR). Zamora affirmed that representatives from textile companies have visited the U.S.
The preferential system which allows Nicaraguan textiles made with raw materials from countries outside of the DR-CAFTA to enter the U.S. without tariffs will expire at the end of 2014.
"... By the end of next year the nine-year grace period given by the United States to Nicaragua will expire, a benefit known as tariff preference level (TPL) which allows the country to export clothing made from yarn and fabrics from third countries for a maximum annual volume of one hundred million square meters." noted an article in Laprensa.com.ni.
Aggressive measures must be taken in marketing and attracting investment in order to exploit the possibilities opened by the DR-CAFTA and changes in the global market.
From Diario de Centro América:
The CAFTA-DR region has opportunities for growth
The clothing and textile sector of the country is ready to compete globally.
Opportunities in the region provided by the Free Trade Agreement between Central America, Dominican Republic and the U.S.
Between January and May sales grew by 25% compared to the same period in 2010.
The rise in sales to the U.S. was higher than to countries like El Salvador, Honduras and Guatemala, which increased by 19%, 17% and 13% respectively in the same period.
With the 25% increase, Nicaraguan exports went up from $381.1 million to $476.7 million. This increase in production is confirmation of a growth trend that has been seen for several months.
A group of Democratic senators proposed a law to eliminate tariffs on textile products from 14 Asian countries.
Textile imports from those countries currently pay up to 28% when entering the United States.
Should the proposal be approved, a very likely scenario, the Central American countries would lose the trade advantage obtained with the U.S. free trade agreement, as production costs are lower in Asian countries, because of lower social costs and cheaper energy.
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.