Fairness, care urged in pending trade pact

Marvin Lazaro, February 17, 2003

Washington — The American Textile Manufacturers Institute is eyeing carefully — perhaps a bit skeptically — a Bush Administration proposal to eliminate textiles and apparel duties from countries throughout the Western Hemisphere.

Fairness is at the heart of the issue for the ATMI, as well as for several suppliers.

The proposal, put forward last week by U.S. Trade Representative Robert Zoellick, formed part of the negotiations involved with the pending Free Trade Area of the Americas (FTAA) trade pact. As part of the offer to implement the

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FTAA, Zoellick proposed eliminating tariffs and trade barriers as well as making textiles and apparel duty-free from that region for five years after the agreement took effect.

The Washington-based ATMI indicated it would reserve final judgment on the FTAA until more relevant pieces of the proposal are revealed, including rules of origin.

The ATMI is urging the trade representative's office to adopt the same rules of origin that govern the North American Free Trade Agreement — the NAFTA yarn-forward rule, according to Cass Johnson, ATMI vp of international trade. That regulation prohibits countries in other regions from exporting yarns and fabrics to NAFTA members to be made into products there.

"We want to make sure that products truly are products of the free trade area," Johnson said.

"Really what the industry is looking for are rules that would minimize the damage the FTAA could cause as much as possible," he explained. "It could have more far-reaching effects than initially seen, depending on what those rules are."

The FTAA proposal also includes the elimination of import duties on the majority of industrial and agricultural imports as well as access to services, investments and government procurement sectors.

The U.S. is seeking ratification from 34 countries by Jan. 1, 2005, the same time that WTO import quotas are scheduled for elimination, producing an expected flood of goods from China. In order for U.S. tariffs to be eliminated, signatories to the FTAA must reciprocate and eliminate their tariffs.

"It is our shared hemispheric vision that free trade and openness benefits everyone and provides opportunity, prosperity and hope to all our peoples," said Zoellick. "President Bush has made the FTAA a top U.S. priority, and today we deliver with bold proposals to lower barriers throughout the region. The United States has created a detailed roadmap for free trade in the Western Hemisphere — we've put all our tariffs on the table because free trade benefits all and brings up closer together as neighbors."

"By no means is this a sure thing that it's going to pass," ATMI's Johnson added. "Latin America is a mess right now," in terms of its local economies, politics and trade practices.

The United States already has tentative FTAA agreements with Chile, Singapore and Israel. Those pacts, Johnson said, include "very good" rules of origin.

Ultimately, the ATMI's support or opposition to the FTAA would be based on the final package and reaction from members, Johnson said.

Trade suppliers, too, voiced concerns about the proposal's fairness.

Larry Queen, president of Britannica Home, said his reservations stem from the advantages that might be realized by those companies with agreements or operations in place already with South American companies.

"It worries me," Queen said. "We've been on such a kick about a global economy and this is not global. This is giving advantage to South America and certainly Mexico."

But Rich Roman, ceo and president of Revman Industries, believed that keeping the hemisphere strong is in the best interest of the United States, its economy and its consumers. As for those companies already doing business with South American firms, he asked, "You can't penalize companies for having foresight, can you?"

Roman explained that his feelings were conditional upon the rest of the FTAA being equal to all involved. If there are elements that were unfavorable to the U.S., Roman said, he would be opposed.

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