Tariff Rebates on Central American Goods Are Good to Go
A bill that would allow importers to receive tariff rebates on clothing imported from Central American countries this year was signed by President Bush on Aug. 17.
The Pension Protection Act of 2006, which the Senate passed earlier this month, contains amendments allowing U.S. apparel companies that import clothing made by members of the Central American Free Trade Agreement to apply for tariff refunds.
Originally, the idea was that all six Central American countries that are part of CAFTA would join the free-trade agreement at the same time this year, creating a seamless tariff program where all apparel brought into the United States would be duty and quota free.
But no countries joined until March 1, when El Salvador came on board after changing its national laws to comply with the trade agreement. But that created a tariff dilemma. Goods made in El Salvador using input materials from other Central American countries couldn’t receive duty-free status into the United States until those countries joined CAFTA. Nicaragua and Honduras joined on April 1, and Guatemala was added on July 1. The Dominican Republic and Costa Rica still are not CAFTA members.
The staggered tariff rules have created a 17 percent dip in Central American apparel coming into the United States during the first months of this year compared with last year.
“These provisions will help to stabilize production in the CAFTA-DR region and hopefully will eventually reverse the significant decline in imports of apparel from that region as well as exports of U.S. fabric to Central America,” said Kevin Burke, president and chief executive of the American Apparel & Footwear Association. —Deborah Belgum
