Finance Chairman and Bipartisan Group of Senators Ask CBP to Increase CAFTA Textile Enforcement

The Senate Finance Committee chairman, joined by four Republicans and three other Democrats, asked the head of CBP to prioritize Dominican Republic-Central America Free Trade Agreement and USMCA textile enforcement in the coming year, saying that American textile mills that are closing have said a key factor in weak demand for their yarns or fabric is "lack of effective customs enforcement."

Two of the signatories are the pair of senators from Virginia, where Parkdale Mills is closing three of its four plants in the southwest part of the state. A local article about the closures said high energy costs and old machinery were to blame.

"The United States is a significant producer of high-quality cotton. It has a well-established and sophisticated spinning industry, as well as thread, fabric, and other textile and apparel producers. Regional partners in Central America, including Costa Rica, El Salvador, Guatemala, and Mexico, have developed a cut and sew industry that employs thousands of workers and complements U.S. production. The rules and benefits established by CAFTA-DR and USMCA provide the environment for a robust and integrated regional textiles and apparel supply chain that has, in turn, developed and supported production across numerous product categories and price points, while avoiding unnecessary climate emissions," wrote Committee Chairman Sen. Ron Wyden, D-Ore., and Sens. Bill Cassidy, R-La., Thom Tillis, R-N.C., and each of South Carolina's and Virginia's two senators. (South Carolina is also home to a Parkdale Mills plant that is closing.)

"Absent robust oversight and enforcement, these same trade preferences can create a temptation to circumvent rules of origin or otherwise utilize cotton, yarn, or textiles from non-partner countries. Moreover, insufficient enforcement can create a pathway for banned Xinjiang cotton to infiltrate regional supply chains and undermine efforts to enforce the Uyghur Forced Labor Prevention Act (UFLPA)," they continued.

They asked CBP's acting commissioner to consider "Significantly increasing on-site and surprise verifications of textile facilities in the CAFTA-DR and USMCA regions," as well as offering a Spanish-language version of e-Allegations, to get more tips on circumvention.

They asked for a "comprehensive review of existing enforcement authorities and penalties for textiles and apparel," and for a strategic plan on how CBP can ensure full compliance with CAFTA-DR and USMCA.

They complained that there were only 38 inspections of factories in Central America or the Dominican Republic last year, down from 139 inspections before the COVID-19 pandemic.

"Public statistics also suggest a decline in audits, laboratory analysis, and special enforcement operations," they wrote.

A survey of fashion brands by the University of Delaware's Sheng Lu, in the department of fashion and apparel studies, found that more than 80% were sourcing in CAFTA-DR countries in 2023, and 40% intend to increase apparel buying from those countries over the next two years. However, other countries supply far more of their products, as less than 30% placed more than 10% of their orders in the CAFTA region. Lu noted that is a substantial increase in recent years; in 2021, only 10% of those surveyed bought more than 10% of their products from factories in the region.

However, his survey showed that a lack of fabrics or other inputs in CAFTA countries is an impediment to ramping up sourcing. “Allowing more flexibility in sourcing fabrics and yarns from outside CAFTA-DR” would be the most useful change, they said.

Allowing more flexibility in the rule of origin wouldn't help U.S. cotton growers or fabric or yarn mills, of course, the primary concern of the senators.