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23 May 2012 02:17AM

US Congress Passed FTAs With Korea, Panama and Colombia

14 Oct 11 ,  EmergingTextiles
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The US Congress just passed three free trade agreements with Colombia, Panama and South Korea which had been stuck in the legislative process for years. The duty-free access offered to Colombian apparel will also be extended until 2013. Colombian apparel exports to the US were severely hit after US Congress earlier failed extending the preferential treatment.

 

The US Congress finally cleared three trade agreements with Panama, South Korea and Colombia, offering a duty-free access to most products from the three origins, under specific rules of origin.

 

The three FTAs (Free Trade Agreements) were stalled for years in the legislative process, with various lobbies successfully blocking their ratification.

 

Obstacles were finally overcome, but this will not significantly affect the way textiles and apparel are being sourced from by US buyers.

 

Panama and South Korea are -and will probably stay- negligible suppliers of apparel to the US market.

 

The main difference will be with Colombia, although not for the duty-free agreement which will not really modify the Colombian access to the US territory.

 

A series of Colombian products, including apparel, benefited for years from a duty-free treatment at US borders, provided the textile materials were produced in Colombia or in the United States.

 

This preferential treatment, known as ATPDEA, was however not extended by the US Congress for the current year, finally expiring by the end of last February.

 

Colombian apparel exports to the US consecutively slided in the first part of the year.

 

According to US import data, Colombian shipments were down 20% in volume terms in the January-July period, while still losing 3% in US$ terms.

 

The FTA with Colombia was not only passed by the US Congress, but the ATPDEA was also retroactively extended from last February up to 2013.

 

In the meantime, the FTA will have been implemented by both countries.

 

Rules of origin offered by the new FTA being similar to US requirements under ATPDEA, Colombian sales to the US market should not surge.

 

However, the FTA offers long-term prospects to Colombia's clothing industry and exports will no more be disrupted by last-minute uncertainty over extension by the US Congress of the duty-free preferential treatment, as experienced several times in the past years.

 

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