TRALAC - Trade Law Centre

Bill on Generous Rules of Origin for Africa and Haiti Postponed in US Congress?

Tuesday, 26 September 2006

Source: Emerging Textiles. com

A proposed emergency trade law introduced recently to US Congress appears to have been suspended. The bill which would have extended and amended rules of origin for sub-Sahara African countries came under pressure from influential textile lobbyists. The groups were also concerned over a controversial addition that would allow Haiti to use fabric and yarn from countries in Asia.

A trade bill last week introduced to the US Congress extending and modifying the existing duty-free access for AGOA and ATPDEA countries looks set to be suspended under pressure from US textile groups.

Sources close to key US politicians said that a vote on the bill will now be unlikely before the end of this week when Congress closes temporarily to concentrate on the crucial November mid-term elections.

Extending access and new origin rules

The bill, introduced last week by Chairman Bill Thomas of the influential House Ways and Means committee, would have extended the current duty-free access provisions for countries in AGOA (African Growth and Opportunity Act) until 31 September 2008.

A new rule of origin was then to have been applied from 1 October 2008 allowing 50 per cent non-African content decreasing to 40 per cent by the end of 2015.

This would replace the existing third country fabric provision that allows qualifying countries to use Asian fabrics in apparel production for US export.

Controversial Haiti TPL

And, in a break with previous trade deals, the bill proposed a controversial tariff preference level (TPL) for Haiti based on added value (see box below).

This would see not only inputs from the US and Haiti, but also from a range of countries in existing trade blocs such as CAFTA, NAFTA and the CBI as well as US FTA partners.

The bill consequently ran into strong opposition from US textile makers who were especially angry at the new development for Haiti.

In a statement to press, the National Coalition of Textile Organizations (NCTO) said they were concerned that the TPL would form a loophole allowing Chinese yarn and fabric to flood the US market.

ATPDEA's extension delayed?

The possibility of extending the ATPDEA (Andean Trade Preference and Drug Eradication Act) also appears to be in trouble.

ATPDEA is due to expire on 31 December 2006 and with it, duty free access for four South American countries including Peru and Colombia.

These latter two countries have signed Free Trade Agreements with the US but which have yet to be implemented.

The chances are that Peru may not see this ratified before the end of the year while Colombia could be next year at the earliest.

This could see a loss, although temporarily, of duty-free access until the FTA's are put into law.

But a possible extension to ATPDEA which would continue duty-free access appears also to be suspended although it could be reintroduced with the AGOA extension and Haiti bill in a so-called 'lame duck' session after the elections in November.

Read a related article on legislative amendments proposed by Rep. Charles Rangel here.