The Earned Import Allowance Program (EIAP) is not offering enough incentives to significantly boost Dominican apparel exports to the United States eight years after it was implemented, according to the US International Trade Commission (USITC). The decline is due to increased imports from Haiti and more competition from other Western hemisphere suppliers.
In 2016, US imports of woven cotton bottoms from the Dominican Republic fell 57 per cent by value to $3.5 million from $8.2 million in 2015 and fell 61 per cent by quantity to 745,000 square metre equivalents (SMEs) from 1.9 million SMEs in 2015, the USITC said In its publication ‘Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic; Eighth Annual Review’.
The review was submitted to the US House of Representatives Committee on Ways and Means and the US Senate Committee on Finance on September 28, said a recent USITC press release.
The EIAP allows apparel units in the Dominican Republic who use US fabric to manufacture certain apparel to earn a credit that can be used to ship eligible apparel made with non-US fabric into the United States duty free.
Haiti offers lower labour costs and trade preferences that provide more sourcing flexibility and coverage for a wider range of products than the EIAP. A tariff preference level (TPL) for woven apparel from Haiti allows the use of third-country fabric up to a specified level, according to the USITC review.
The Dominican Republic-Central America-United States Free Trade Agreement Implementation Act, as amended, requires the USITC, an independent, non-partisan, fact-finding federal agency, to evaluate annually the effectiveness of the EIAP program and make recommendations for improvements.
USITC recommended lowering the 2:1 ratio of US to foreign fabric to 1:1, expanding the EIAP to enable other kinds of fabrics and apparel items and changing the requirement that dyeing and finishing of eligible fabrics occur in the United States. (DS)