The Caribbean Basin Initiative:
What Will it Mean for U.S. Cotton Apparel Trade?

The recently enacted Trade and Development Act of 2000 (TDA 2000), which provides tariff and quota preferences for apparel produced in the Caribbean Basin and sub-Saharan Africa, could significantly change U.S. trade in cotton apparel. As a result of NAFTA, Mexico has become the dominant supplier of apparel to the U.S. market, at the expense of Asian suppliers. Now, speculation centers around whether, with the new legislation, the Caribbean will emerge as a key supplier of apparel to the United States, further eroding Asia's share. 
This issue of the Textile Consumer highlights significant provisions of the legislation, which went into effect on October 1, especially as they affect cotton apparel trade between the Caribbean region and the United States.

Key Components of TDA 2000: Sub-Saharan Africa and the Caribbean Basin Initiative

The final bill signed into law has three main components:

• extension of trade benefits to sub-Saharan 
  Africa 
• extension of trade benefits to the Caribbean Basin
• provisions involving the wool trade and trade relations with select Euro-Asian countries

The first section of TDA 2000, entitled "the African Growth and Opportunity Act," is commonly known as the sub-Saharan Africa (SSA) legislation. It provides duty- and quota-free treatment for imported apparel produced from U.S. yarn and U.S. fabric in a member sub-Saharan country and for limited amounts of apparel made from African fabric. Interested countries in the region must apply for inclusion and are subject to monitoring and suspension by the President. Periodically, the United States will review the member countries for compliance with a number of social and economic mandates, including poverty reduction, human and workers' rights reform, and efforts to combat AIDS; in addition, transshipment of apparel through member countries is prohibited. Potential SSA members are 48 nations south of the Sahara, including those on the African mainland and in the Atlantic and Indian oceans. 

The second section of TDA 2000, entitled "the United States-Caribbean Basin Trade Partnership Act," is commonly known as the Caribbean Basin Initiative (CBI) legislation. It provides duty- and quota-free treatment for the following categories of garments: 

• garments cut in the U.S. and assembled in the Caribbean from U.S. fabric and U.S. yarn
• garments cut and assembled in the Caribbean from U.S. fabric and U.S. yarn and assembled with U.S. thread
• limited quantities (initially 250 million square-meter equivalents) of certain garments made from fabrics knitted in the Caribbean from U.S. yarn and garments (excluding socks) knitted to shape in the Caribbean from U.S. yarn
• a limited quantity of T-shirts (initially 4.2 million dozen) made in the Caribbean from fabric formed in the Caribbean, made from yarns formed in the United States

For the last two categories, limits will be increased 16% annually for the first four years, after which they will be subject to congressional review for further revision before 2005, when quotas will be lifted for all World Trade Organization members. As with the SSA legislation, countries must apply for inclusion and pass a U.S. review, and they are subject to suspension by the President. Potential members are all 24 nations of the Caribbean Basin except Cuba; these include all Central American and two South American countries.