The U.S. International Trade Commission said three years after its implementation, the Earned Import Allowance Program (EIAP) is not providing enough incentives to help boost the competitiveness of Dominican apparel exports in the U.S. market.
The nonpartisan, fact-finding agency reached its conclusion in the recently released report (http://www.usitc.gov/publications/332/pub4340.pdf) “Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic; Third Annual Review.”
The EIAP allows apparel manufacturers in the Dominican Republic who use U.S. fabric to produce certain apparel to earn a credit that can be used to ship eligible apparel made with non-U.S.-produced fabric into the United States duty-free. The Dominican Republic-Central America-United States Free Trade Agreement Implementation Act, as amended, requires the ITC to evaluate annually the effectiveness of the EIAP program and make recommendations for improvements.
ITC’s third annual review was submitted to the House Ways and Means and the Senate Finance committees in late July. Some of the report’s key findings are:
- As currently structured, the EIAP has not provided enough incentives to curtail the ongoing declines in the Dominican Republic’s production of woven cotton bottoms and exports.
- Although U.S. exports of cotton bottom-weight fabrics grew in 2011, the rate of growth slowed significantly from the first two years of the program.
- ITC received several recommendations from industry and other sources concerning improvements to the EIAP. The recommendations were the same as those offered during the first and second annual reviews. They included lowering the 2-for-1 ratio of U.S. to foreign fabric to a 1-for-1 ratio; including other types of fabrics and apparel items in the EIAP; and changing the requirement that dyeing, finishing, and printing of eligible fabrics take place in the United States.
