1. © Copyright AAFA. All rights reserved. 2006 CAFTA The Current Situation & Next Steps Apparel Sourcing Show Guatemala Nate Herman Director of International Trade American Apparel & Footwear Association May 2006

2. © Copyright AAFA. All rights reserved. 2006 CAFTA The Good, the Bad, and the Ugly The Good NewsThe Good News The Bad NewsThe Bad News The UglyThe Ugly How Do We Return to the Good?How Do We Return to the Good?

3. © Copyright AAFA. All rights reserved. 2006 CAFTA The Good, the Bad, and the Ugly The Good NewsThe Good News The Bad NewsThe Bad News The UglyThe Ugly How Do We Return to the Good?How Do We Return to the Good?

4. © Copyright AAFA. All rights reserved. 2006 CAFTA: The Good News El Salvador, Honduras & Nicaragua Have Implemented CAFTAEl Salvador, Honduras & Nicaragua Have Implemented CAFTA Guatemala Joining June 1Guatemala Joining June 1 Thanks to CAFTA, the region is experiencing growth this year in key categories:Thanks to CAFTA, the region is experiencing growth this year in key categories: –Swimwear Exports on Rise –Footwear Exports Up Double Digits from Some Countries –Luggage/Briefcase Exports Up

5. © Copyright AAFA. All rights reserved. 2006 CAFTA The Good, the Bad, and the Ugly The Good NewsThe Good News The Bad NewsThe Bad News The UglyThe Ugly How Do We Return to the Good?How Do We Return to the Good?

6. © Copyright AAFA. All rights reserved. 2006 CAFTA: The Bad News Almost Two Years After Agreement Signed, Only FOUR countries have joined CAFTAAlmost Two Years After Agreement Signed, Only FOUR countries have joined CAFTA –Implementation Delays Co-Production/Retroactivity IssueCo-Production/Retroactivity Issue Washington is CallingWashington is Calling Continued Uncertainty Also Caused by:Continued Uncertainty Also Caused by: –Last-Minute Deals in Washington Pocketing FabricsPocketing Fabrics SocksSocks –Technical Problems –Cumulation

7. © Copyright AAFA. All rights reserved. 2006 CAFTA: The Bad News Almost Two Years After Agreement Signed, Only FOUR countries have joined CAFTAAlmost Two Years After Agreement Signed, Only FOUR countries have joined CAFTA –Implementation Delays Co-Production/Retroactivity IssueCo-Production/Retroactivity Issue Washington is Calling…And Saying No More CAFTAWashington is Calling…And Saying No More CAFTA Continued Uncertainty Also Caused by:Continued Uncertainty Also Caused by: –Last-Minute Deals in Washington Pocketing FabricsPocketing Fabrics SocksSocks –Technical Problems –Cumulation

8. © Copyright AAFA. All rights reserved. 2006 Average Duty Collected on U.S. Apparel Imports from El Salvador 2005-2006 Source:U.S. International Trade Commission’s Trade Dataweb

9. © Copyright AAFA. All rights reserved. 2006 CAFTA: The Bad News Almost Two Years After Agreement Signed, Only FOUR countries have joined CAFTAAlmost Two Years After Agreement Signed, Only FOUR countries have joined CAFTA –Implementation Delays Co-Production/Retroactivity IssueCo-Production/Retroactivity Issue Washington is Calling…And Saying No More CAFTAWashington is Calling…And Saying No More CAFTA Continued Uncertainty Also Caused by:Continued Uncertainty Also Caused by: –Last-Minute Deals in Washington Pocketing FabricsPocketing Fabrics SocksSocks –Technical Problems –Cumulation

10. © Copyright AAFA. All rights reserved. 2006 CAFTA: The Bad News Almost Two Years After Agreement Signed, Only FOUR countries have joined CAFTAAlmost Two Years After Agreement Signed, Only FOUR countries have joined CAFTA –Implementation Delays Co-Production/Retroactivity IssueCo-Production/Retroactivity Issue Washington is Calling…And Saying No More CAFTAWashington is Calling…And Saying No More CAFTA Continued Uncertainty Also Caused by:Continued Uncertainty Also Caused by: –Last-Minute Deals in Washington Pocketing FabricsPocketing Fabrics SocksSocks –Technical Problems –Cumulation

11. © Copyright AAFA. All rights reserved. 2006 CAFTA The Good, the Bad, and the Ugly The Good NewsThe Good News The Bad NewsThe Bad News The UglyThe Ugly How Do We Return to the Good?How Do We Return to the Good?

12. © Copyright AAFA. All rights reserved. 2006 U.S. Apparel Imports from CAFTA Region Source: OTEXA, U.S. Commerce Department

13. © Copyright AAFA. All rights reserved. 2006 U.S. Apparel Imports from CAFTA Region Source: OTEXA, U.S. Commerce Department * 2006 is an annualized figure based on Jan-Mar 2006 imports.

14. © Copyright AAFA. All rights reserved. 2006 U.S. Apparel Imports from CAFTA Region Source: OTEXA, U.S. Commerce Department

15. © Copyright AAFA. All rights reserved. 2006 U.S. Textile Exports to CAFTA Region Source: OTEXA, U.S. Commerce Department

16. © Copyright AAFA. All rights reserved. 2006 CAFTA The Good, the Bad, and the Ugly The Good NewsThe Good News The Bad NewsThe Bad News The UglyThe Ugly How Do We Return to the Good?How Do We Return to the Good?

17. © Copyright AAFA. All rights reserved. 2006 CAFTA: Returning to the Good Most problems resolved when ALL countries join CAFTAMost problems resolved when ALL countries join CAFTA AAFA and Others Pushing Congress for Temporary FixAAFA and Others Pushing Congress for Temporary Fix Finish Pocketing Negotiations as Soon As Possible – Work for Congressional PassageFinish Pocketing Negotiations as Soon As Possible – Work for Congressional Passage Implement Cumulation ASAPImplement Cumulation ASAP

18. © Copyright AAFA. All rights reserved. 2006 American Apparel and Footwear Association 1601 N. Kent Street, 12 th Floor Arlington, VA 22209 703-797-9041slamar@apparelandfootwear.orgwww.apparelandfootwear.org Thank You!