Key textile-state House members and the Bush Administration have reached an agreement to close what were seen by US textile groups as remaining loopholes in the US-Central American-Dominican Republic Free Trade Agreement (CAFTA-DR).

The amendment covers the Nicaragua tariff preference levels (TPLs) and pocketings and linings. 

Under the agreement on pocketing, the Central American governments have agreed that pocketings and linings will now fall under the CAFTA "yarn forward" rule of origin. 

This means that Asian or Chinese pocketing and linings will not be eligible for CAFTA duty-free benefits. Pocketings and linings are currently a $100 million business for US textile companies.

Under the agreement on the Nicaraguan Tariff Preference Level (TPL), the Nicaraguan government has agreed to require that Nicaraguan trouser manufacturers increase their use of US fabric by as much as 200 per cent or $90 million if those trouser manufacturers wish to bring in trousers under the Nicaragua TPL.  

Trousers account for over half of Nicaragua's current exports of textiles and apparel to the United States with Asian fabrics accounting for two-thirds of Nicaragua's trouser exports. 

Current US exports of trouser fabric total 22 million square metres or approximately $45 million while Asian trouser fabric content totals 67 million square metres.  

Under the agreement, Nicaraguan producers who use the TPL will have to match their Asian fabric usage with new US fabric orders.

For use of man-made fibre trousers, Nicaraguan manufacturers will have to match their purchases of Asian fabric on a one-to one basis beginning the first year of CAFTA. 

For cotton trousers, in the first year of CAFTA, manufacturers will be required to buy 20 million square metres of US cotton trouser fabric in order to utilise the TPL, nearly doubling their 10.7 million square metres of current US purchases. 

This US cotton trouser purchasing requirement increases by ten million square metres each year until it reaches 50 million square metres of US fabric in the fourth year. A straight one-to-one requirement prevails in years five through ten for all Nicaraguan cotton trousers entered under the TPL.  

Under the TPL and pocketing resolutions, the parties agree to meet on an expedited basis after the agreement has gone into effect on January 1, 2006, and formally make these changes using the amendment mechanism provided in the CAFTA.

Jim Chesnutt, chairman of the National Council of Textile Organizations (NCTO) - the largest US textile industry association - said: "These changes mean that there are no longer any legitimate excuses to oppose this agreement because of textile concerns.  

"All the major issues that the textile industry has raised since the CAFTA was signed have now been resolved and NCTO has officially withdrawn the pledge it asked of Congressional members in 2003 to oppose CAFTA. "

These agreements come approximately two months after a commitment by the US government to work with NCTO and its member companies to resolve remaining issues.