QUOTAS AND DESIGNATION CRITERIA COMPLICATE CBI ENHANCEMENT

  
Implementation of the CBI enhancement legislation passed earlier this year by Congress will begin on October 1. In anticipation of the legislation, which greatly expands benefits to participating countries, US Customs is preparing the administrative processes necessary to allow the entry of new categories of textiles and apparel as well as duty-free treatment of other goods.

Apparel knit in CBI countries from regional fabric will be subject to a global quota; congressional opposition combined with unreliable data caused the Clinton administration to avoid using country quotas. Apparel made from US fabric in any of the 24 CBI-designated countries will enter the US duty free. The textile and apparel industry prefers an informal control system among producers whereby exports to the US market of apparel knit from regional fabric will be allocated by country. The industry is working on proposing such a system; without it, countries will be treated on a first come, first served basis. It is not clear how the producers will police their internal agreement on export allocations and whether the US government will play a role. Policing is important to discourage countries/companies from exporting large amounts of textiles or apparel early in the year to gobble up as much of the global quota as possible. Unfortunately, data on textile and apparel imports from CBI countries is of poor quality and the source of much disagreement. When the US set the global quotas, they were intended to be generous enough to accommodate all potential exports. Since then, however, industry sources have expressed the opinion that the quotas are in fact restrictive.

Present and future CBI members are aware that they must meet designation criteria drawn from the original 1983 legislation and this year's CBI enhancement. The criteria have been submitted to the US embassies in the region for comment and also have been opened to public opinion. So far, about 140 comments have been received, some of them reportedly quite long. Among the more sensitive issues for designation include: respect for intellectual property rights, especially in Guatemala and the Dominican Republic; intellectual property treatment equal to TRIPS under the WTO; labor issues in Guatemala and other countries; government procurement procedures; cooperation with the US on narcotics interdiction; expropriations of American properties in Nicaragua and Jamaica; and a new issue, the failure of seven Caribbean countries to implement the Inter-American Covenant Against Corruption negotiated under the auspices of the OAS.

Final action to comply with the designation criteria will probably not be possible by September, when the White House is scheduled to issue a presidential proclamation designating the CBI countries by the October 1 deadline. The US will likely insist on credible commitments and specific steps to comply with the designation criteria in the future and implement follow-up procedures.

For more information, see: www.ustr.gov