The United States, the Dominican Republic and five Central American countries signed a trade pact in Washington on Thursday, creating the second-largest free-trade zone in Latin America for US exports.

Other signatories to the United States/Dominican Republic - Central America Free Trade Agreement (US/DR-CAFTA) are Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.

The US Congress and national legislative bodies in each of the FTA partner countries now have to consider and approve implementing legislation. 

Several leading members of Congress, including House Majority Whip Roy Blunt (R-MO) and Senate Finance Committee Charles Grassley (R-IA), have indicated that the US Congress could consider the FTA during a session after the November 2 elections.

The US textile industry has seen its exports of US yarns and fabrics to Central America climb dramatically in the past four years.

But American Apparel & Footwear Association (AAFA) president and CEO Kevin M Burke believes these gains could evaporate quickly if the trade pact is not implemented swiftly.

He says initial concerns that the FTA would be delayed until next year have already resulted in a drop of US apparel imports from the region in the first few months of 2004, eroding the market for US cotton, yarns, and fabrics.

"If Congress passes this FTA, we are encouraged to make clothing in Central America using primarily US inputs. But if Congress delays the agreement, the message is for us to make garments elsewhere using somebody else's inputs," Burke said.

Burke also noted the importance of this agreement for US footwear brands with operations in the Dominican Republic.

"Implementation of this FTA helps provide a solid base in this hemisphere that footwear companies can use as they seek to diversify from China, the current source of most US footwear imports," he stated.

Eighty percent of DR-CAFTA imports already enter the United States duty free. The deal phases out remaining tariffs over 10 years and offers expanded access for US products and services.