Selected Latin American Free Trade Agreements And Other Preferential Trade Arrangements Affecting Apparel Trade
Jon Fee, Diego Marquez And Bj Shannon, Alston & Bird LLP

September 2, 2014

Introduction

Latin American countries have established numerous preferential agreements governing trade in the region.  This summary reviews key features of the treatment under some of those agreements of qualifying apparel articles imported into Chile, Colombia, Mexico and Peru from Peru, Colombia, Ecuador and the Central American countries. 

Mexico-Central America Free Trade Agreement

Mexico and Central America signed a Free Trade Agreement in November of 2011.  The agreement creates a single regional agreement by combining previously existing free trade agreements between Mexico and Central American countries.  The Mexico-Central America Free Trade Agreement replaced the following agreements: (1) Mexico-Costa Rica Free Trade Agreement, (2) Mexico-Nicaragua Free Trade Agreement, and (3) Mexico-Northern Triangle (El Salvador, Guatemala, and Honduras) Free Trade Agreement.  The full text of the agreement is available (in Spanish only) at: http://www.sice.oas.org/Trade/CACM_MEX_FTA/Index_s.asp. The agreement entered into force in September of 2012 with respect to El Salvador and Nicaragua, January of 2013 with respect to Honduras, July of 2013 with respect to Costa Rica, and September of 2013 with respect to Guatemala. 
Duties have already been eliminated on all originating apparel products.  Products are originating under the agreement if they are wholly obtained or produced entirely in one or more of the parties, or if they are produced in one or more of the parties and all non-originating materials satisfy applicable tariff shift, regional value content, or other rules.  Apparel articles generally meet the applicable tariff shift rule if they are both cut or knit to shape and sewn or otherwise assembled in one or more of the parties from fabrics knit or woven in one or more of the parties from yarn formed in one or more of the parties.  This type of origin rule is sometimes referred to as a yarn forward rule.  Staple fibers, including cotton, may be of any origin. 

Only the component of the apparel article that gives the essential character for the tariff classification of the apparel article must satisfy the tariff shift feature of the origin rule.  Fabrics and yarns used for other components, as well as non-textile components, may be of any origin.  The agreement allows a tolerance under which textile materials, other than elastomeric materials classified in 5402.44 or 5404.11, used for the component that gives an apparel article its essential character and that do not satisfy the applicable tariff shift rule may be used if the weight of those materials does not exceed 10 percent of the total weight of the component.  Elastomeric materials classified in 5402.44 or 5404.11 that do not satisfy the applicable tariff shift rule can be used if the total weight of the elastomeric materials does not exceed 7 percent of the total weight of the component that gives the apparel article its essential character. 

The agreement provides for cumulation, so a producer in any one of the parties may satisfy the origin rules with materials from any of the other parties.  The agreement also provides for extended cumulation to non-party states that have established preferential trade agreements with the parties to the agreement. 
For trade between Mexico and Nicaragua,  certain men’s or boys’ cotton boxers classified in HTS 6207.11 are subject to duty-free importation under a quota if the plain woven fabric on the outside of the garment, except for the waistband, is made entirely of one or more of certain listed fabrics.

Mexico-Colombia Free Trade Agreement

Mexico, Colombia and Venezuela signed a free trade agreement in June of 1994.  The agreement went into effect in January of 1995.  Venezuela withdrew from the agreement in 2006, but the agreement between Mexico and Colombia remained in effect.  The full text of the agreement is available (in Spanish only) at http://www.sice.oas.org/Trade/go3/G3INDICE.ASP.

The agreement provides for the immediate or gradual elimination of duties on originating goods classified in certain specified tariff items.  Duties have been eliminated on all originating apparel imported into either of the parties from the other.  Products are originating under the agreement if they are wholly obtained or produced entirely in either or both of the parties, or if they are produced in either or both of the parties and all non-originating materials satisfy applicable tariff shift, regional value content, or other rules.  Apparel articles generally meet the applicable tariff shift rule if they are both cut or knit to shape and sewn or otherwise assembled in either or both of the parties from fabrics knit or woven in either or both of the parties from yarn formed in either or both of the parties. Staple fibers, including cotton, may be of any origin. Only the component of the garment that determines its classification must satisfy the tariff shift rule.
An originating apparel article may contain de minimis non-originating yarns that do not meet the necessary tariff shift, as long as the weight of such non-originating yarns used to produce the fabric that contains the material that determines the classification of the apparel article does not exceed 7 percent of the total weight of that fabric.  The agreement also provides for cumulation, so a producer in Colombia or Mexico may satisfy the origin rules with materials from either country.  Cumulation with the United States or any other countries is not permitted.

Mexico-Peru Free Trade Agreement

Mexico and Peru signed a free trade agreement in April of 2011.  That agreement entered into force in February of 2012.  The full text of the agreement is available (in Spanish only) at http://www.sice.oas.org/Trade/MEX_PER_Integ_Agrmt/MEX_PER_Ind_s.asp.  The Free Trade Agreement replaced the partial preference agreement entered into by Mexico and Peru in March of 1987.

Both parties provided duty-free treatment immediately for almost all originating apparel.  For only a couple of classifications of apparel, such as cotton denim trousers, duties will be reduced in equal states for a period of five years from the date the agreement entered into force and those duties will be eliminated at the end of the fifth year. 

Products are originating under the agreement if they are wholly obtained or produced entirely in either or both of the parties, or if they are produced in either or both of the parties and all nonoriginating materials satisfy applicable tariff shift, regional value content, or other rules. Apparel articles will meet the applicable tariff shift rule if they are both cut or knit to shape and sewn or otherwise assembled in either or both of the parties from fabrics knit or woven in either or both of the parties from yarn formed in either or both of the parties.  Staple fibers, including cotton, may be of any origin.  Only the component of the apparel article that determines its classification must satisfy the tariff shift rule.

An originating apparel article may contain non-originating yarns that do not meet the necessary tariff shift, as long as the weight of such non-originating yarns used in the component of the apparel article that determines its classification does not exceed 10 percent of the total weight of the apparel article. The agreement provides for cumulation, so a producer in Peru or Mexico may satisfy the origin rules with materials from either country.  The agreement also allows extended cumulation, meaning that producers can use materials produced in any other country with which both Peru and Mexico have free trade agreements to meet the applicable origin rules.  Since both Peru and Mexico have free trade agreements with the United States, an apparel producer in either country may use U.S. yarn or fabric to meet the applicable tariff shift rule.

Chile-Central America Free Trade Agreement

Chile signed a free trade agreement with Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua in October of 1999.  The agreement was implemented for imports into Chile from Costa Rica in February of 2002, for imports into Chile from El Salvador in June of 2002, for imports into Chile from Honduras in July of 2008, for imports into Chile from Guatemala in March of 2010, and for imports into Chile from Nicaragua in October of 2012.  The full text of the agreement is available (in Spanish only) at http://www.sice.oas.org/Trade/chicam/chicamin.asp

Chile negotiated separate duty reduction schedules with each of the Central American countries that are parties to the agreement.  Based on the respective duty reduction schedules, all originating apparel articles are now eligible for duty-free entry into Chile from Costa Rica, El Salvador and Honduras.  Most originating apparel articles are eligible for duty-free entry into Chile from Nicaragua.  The majority of originating apparel articles imported into Chile from Guatemala will be eligible for duty-free treatment five years after the date of implementation of the bilateral agreement between the two countries.  Most of the remaining textile and apparel products imported into Chile from Guatemala (certain panty hose, tights, stockings, socks and other hosiery) will be duty-free fifteen years after the date of implementation.

Products are originating under the agreement if they are wholly obtained in one or more of the parties, or if they are produced in one or more of the parties and all non-originating materials satisfy applicable tariff shift, regional value content, or other rules.  The tariff shift rules for apparel were also negotiated separately by Chile and each of the Central American countries, so the rules differ among the parties. 

With respect to Costa Rica, apparel articles are originating if components of any origin are sewn or assembled in Costa Rica.  The same rule applies generally to apparel articles in Nicaragua, except that certain apparel articles, including cotton t-shirts, cannot use non-originating knitted fabrics.  For Guatemala, apparel articles are originating if they are cut and sewn in either Guatemala or Chile with fabric woven or knit in either Guatemala or Chile from yarn of any origin.  For Honduras, knit apparel articles are originating if they are cut and sewn in Honduras or Chile with fabric knit in Honduras or Chile with yarn of any origin.  Woven apparel articles are originating if they are cut and sewn in Honduras or Chile with cotton fabric, fabric of man-made filament yarn, or fabric of man-made staple fiber woven in Honduras or Chile with yarn of any origin.  Other types of fabrics can be woven in non-party countries.  Finally, with respect to El Salvador, apparel articles are generally originating if they are cut and sewn in either El Salvador or Chile with fabric woven or knit in either El Salvador or Chile from yarn formed in either of those countries.  This rule is subject to some exceptions.  For example, certain non-originating artificial and synthetic filament yarn (other than sewing thread) may be used.  Similarly, non-originating cotton thread may be used as well.  Unlike apparel origin rules in many other agreements, the Chile-Central America free trade agreement requires that the entire apparel article, rather than the component determining classification, must meet any applicable tariff shift rule.
An apparel article may contain non-originating yarn or fabric that does not meet the necessary tariff shift, as long as the weight of the non-originating materials does not exceed 8 percent of the weight of the apparel article.  The agreement allows cumulation, so a producer in Chile, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua may generally satisfy the origin rules with materials from any of the other parties. However, where the specific rules of origin vary among the parties with respect to a particular article, the rules of origin will be applied as in effect between the countries of the importer and exporter, treating parties that do not share the specific rule of origin in common with those countries as non-parties.

Chile – Colombia Free Trade Agreement

Chile and Colombia signed a free trade agreement in November of 2006.  The agreement entered into force in May of 2009.  The agreement added to a pre-existing partial preference agreement signed by Chile and Colombia in 1993 and allows for the duty-free movement of the vast majority of bilateral commerce.  The full text of the agreement is available (in Spanish only) at  http://www.sice.oas.org/Trade/CHL_COL_FTA/CHL_COL_ind_s.asp

The agreement provides immediate or gradual duty reductions to tariff items that were excluded from the previous agreement, including apparel articles.  Most originating apparel articles are now duty-free upon entry into Chile.  Products are originating if they are wholly obtained or produced entirely in either or both of the parties, or if they are produced in either or both of the parties using non-originating materials that comply with tariff shift, regional value content, or other rules.  Apparel articles meet the required tariff shift rule if components of any origin are sewn or assembled in either or both of the parties.  Alternatively, apparel is originating, even without the required change in tariff classification, if there is a regional value content of no less than 50 percent.

The agreement contains a general 10 percent de minimis rule; but since apparel articles may be assembled with components of any origin, the de minimis rule is unnecessary for these articles.  Similarly, since apparel articles may be assembled in either country with components of any origin, there is no provision that applies origin rules only to the component of an apparel article that determines its classification.

Chile – Panama Free Trade Agreement

Chile and Panama signed a free trade agreement in June of 2006.  The agreement entered into force in March of 2008.  Originating apparel articles are now duty-free upon entry into Chile.  While some originating apparel articles are eligible for duty-free entry into Panama now, all originating apparel articles will be duty-free in Panama by January 1, 2015.  The full text of the agreement is available (in Spanish only) at http://www.sice.oas.org/Trade/CHL_PAN_FTA/Index_s.asp
Products are originating if they are wholly produced in Chile or Panama from materials wholly produced or obtained in either country, or if they are produced in Chile or Panama from non-originating materials that satisfy applicable tariff shift, regional value content, or other rules.  Apparel articles are originating if components of any origin are cut and sewn or otherwise assembled in either or both of the countries. 
The agreement allows cumulation, so materials from either Panama or Chile may be considered as originating for purposes of satisfying the applicable origin rule.  The agreement also includes a de minimis rule for apparel articles, under which the component determining classification of the apparel article may contain non-originating yarns that do not meet the necessary tariff shift as long as the total weight of those yarns does not exceed 10 percent of the total weight of the component in question.

Chile – Peru Free Trade Agreement

Chile and Peru signed a free trade agreement in August of 2006.  The agreement entered into force in March of 2009.  The agreement provides immediate or eventual duty-free entry into Chile of originating products.  Originating apparel articles are now duty-free upon entry into Chile. The full text of the agreement is available (in Spanish only) at http://www.sice.oas.org/Trade/CHL_PER_FTA/Index_s.asp.

Products are originating if they are wholly produced in Chile or Peru from materials wholly produced or obtained in Chile or Peru, or if they are produced in Chile or Peru from non-originating materials that satisfy applicable tariff shift, regional value content, or other rules.  Apparel articles generally meet the applicable tariff shift rule if they are both cut or knit to shape and sewn or otherwise assembled in either or both of the parties from fabrics knit or woven in either or both of the parties from yarn formed in either or both of the parties.  Man-made fiber filament yarn and all staple fibers, including cotton, used in the production of apparel articles may be of any origin.  Only the component of the apparel article that gives the essential character for the tariff classification of the apparel article, and any visible lining, must satisfy the tariff shift rule.  Additionally, the agreement allows the use of non-originating materials so long as the CIF value of such materials does not exceed 40 percent of the FOB value of the finished apparel.

The agreement allows cumulation, so a garment produced in Peru and imported into Chile may meet the tariff shift requirement with materials from Peru or Chile.  The agreement does not provide a de minimis rule for apparel or other articles.

Chile – Ecuador Partial Preference Agreement

Chile and Ecuador signed a partial preference agreement in December of 1994 and implemented the agreement in January of 1995.  As a result of the agreement, since January of 2000, 96.6 percent of products imported into either country from the other have been eligible for duty-free treatment.  The remaining 3.4 percent of goods are excluded from the scope of the agreement. The parties added to and strengthened the agreement in March 2008, and the resulting new provisions went into effect in January 2010.  The full text of the agreement is available (in Spanish only) at http://www.sice.oas.org/Trade/chilec/CHL_ECU_65_IND_s.asp.  Chile and Ecuador have also discussed the possibility of negotiating a free trade agreement.

Products are originating if they are wholly obtained or produced in either or both of the parties, or if they are produced in either or both of the parties and all non-originating materials satisfy applicable tariff shift, regional content value, or other rules.  Intended specific rules of origin for textiles and apparel have not yet been finalized; but the agreement establishes a transition program for such articles.  Under the transition program, non-originating materials must be transformed into an article with a new identity demonstrated by a new tariff classification.  Simple assembly and other insubstantial operations are not acceptable for this purpose.
Under the agreement's cumulation provision, materials not only from Chile and Ecuador but also from Bolivia, Colombia and Peru may be considered as originating for purposes of satisfying the applicable origin rule.  For imports into Chile, an apparel article may contain non-originating yarn or fabric that does not meet the necessary tariff shift, as long as such non-originating materials do not exceed 15 percent of the transaction value for the good. For imports into Ecuador from Chile, the limitation on non-qualifying materials is 10 percent of the transaction value for the good.

Chile – Mexico Free Trade Agreement

Chile and Mexico signed a free trade agreement in April 1998.  The free trade agreement added to a previous partial preference agreement and became effective in August 1999. The full text of the agreement is available (in Spanish only) at http://www.sice.oas.org/Trade/chmefta/indice.asp.
The agreement provides immediate or eventual duty-free treatment of originating products.  Originating apparel articles are already duty-free upon importation into either party.  Products are originating if they are wholly obtained or produced entirely in either or both parties, or if they are produced in either or both parties from non-originating materials that satisfy applicable tariff shift, regional value content, or other rules.  Apparel articles generally meet the required tariff shift rule if components of any origin are sewn or otherwise assembled in either or both of the parties.  Alternatively, apparel is originating, even without the required change in tariff classification, if there is a regional value content of no less than 50 percent when using the transaction value method or 40 percent when using the net cost method.
The agreement allows cumulation, so materials from either Mexico or Chile may be used to meet the tariff shift and regional value content rules.  The agreement does not provide a de minimis rule for apparel articles.

Panama – Peru Free Trade Agreement

Panama and Peru signed a free trade agreement in May of 2011.  The agreement entered into force in May of 2012.  The agreement provides immediate or eventual duty-free entry of originating products into either country from the other.  Some originating apparel articles are already eligible for duty-free entry into Peru or Panama, though the majority of apparel articles will be duty-free after 5 or 10 annual stages of duty reduction.  The full text of the agreement is available (in Spanish only) at http://www.sice.oas.org/Trade/PAN_PER_FTA_s/PAN_PER_ToC_s.asp#Inversión

Products are originating if they are wholly produced in Panama or Peru from materials wholly produced or obtained in Panama or Peru, or if they are produced in Panama or Peru from non-originating materials that satisfy applicable tariff shift, regional value content, or other rules. 
Apparel articles will generally meet the applicable tariff shift rule if they are both cut or knit to shape and sewn or otherwise assembled in either or both of the parties from fabrics knit or woven in either or both of the parties from yarn formed in either or both of the parties.  Staple fibers, including cotton, may be of any origin.  Sewing thread as well as certain artificial and synthetic filament yarns may also be of any origin.  Only the component of the apparel article that determines its classification must satisfy the tariff shift rule.

Several knit apparel articles have less stringent tariff shift rules requiring that the articles be cut or knit to shape and sewn or otherwise assembled from fabrics knit in either or both of the parties.  The yarn for these articles can be formed anywhere.  These articles include cotton shirts, knitted or crocheted; cotton t-shirts, singles, tank tops and similar garments, knitted or crocheted; cotton sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted; cotton babies’ garments and clothing accessories, knitted or crocheted; and other cotton garments, knitted or crocheted. 

Several woven apparel articles are also subject to less stringent tariff shift rules requiring that the articles be cut or knit to shape and sewn or otherwise assembled from fabrics woven in either or both of the parties.  The yarn for these articles can be formed anywhere.  These articles include synthetic fiber trousers, bib and brace overalls, breeches and shorts; men’s or boys’ cotton shirts; and women’s or girls’ cotton blouses, shirts and shirt-blouses.

The agreement allows cumulation, so a garment produced in Panama and imported into Peru may meet the tariff shift requirement with materials from Panama or Peru.  Additionally, materials originating in Costa Rica, El Salvador, Guatemala or Honduras will also be considered originating under this agreement as long as a free trade agreement exists in effect between Peru and those countries and as long as the materials comply with the applicable specific rules of origin under this agreement.  For textile and apparel articles, this extended cumulation applies only when the duty rate applied under this agreement is zero, as well as the duty rate applied under the free trade agreement between any of the additional parties and Peru, both for the materials and for the finished articles.  The agreement also allows for extended cumulation when both parties have free trade agreements with a third country or group of other countries. 

The agreement provides a de minimis rule which allows for an apparel article to include non-originating yarn in the component that determines the tariff classification of the article as long as the total weight of the non-originating yarn in the component does not exceed ten percent of the total weight of the component. 

Bolivia – Colombia – Ecuador – Peru

Bolivia, Colombia, Ecuador and Peru are members of the Andean Community.  The Community has established a common market within which originating goods circulate freely.  Additional information regarding the Andean Community is available at http://www.comunidadandina.org/endex.htm.
Andean Community Decision 416 (July 1997) establishes the rules of origin for determining whether a good originates in the Andean region.  An apparel article is originating if it is wholly obtained or produced entirely in one or more of the member countries, or if it is produced using non-originating materials that undergo processing in one or more of the member countries that results in a change in tariff classification or whose CIF value does not exceed 50 percent (in the case of goods produced in Colombia and Peru) or 60 percent (in the case of goods produced in Bolivia and Ecuador) of the FOB value upon exportation of the final product.

Peru has negotiated specific rules of origin for textiles and apparel with the other Andean countries based upon tariff shift rules, and those rules can be found in Resolution 506 of La Junta del Acuerdo de Cartagena (July 30, 1997).  Apparel articles imported by or from Peru meet the applicable tariff shift rule if they are both cut or knit to shape and sewn or otherwise assembled in one or more of the member countries from fabrics knit or woven in one or more of the member countries.  Only the component of the apparel article that gives the essential character for tariff classification of the apparel article must satisfy the tariff shift rule.
The agreement does not provide a de minimis rule for apparel or other articles.  The Community allows cumulation, so a producer in Bolivia, Colombia, Ecuador, or Peru may satisfy the origin rules with materials from any of the member countries.

Colombia – El Salvador – Guatemala – Honduras (Colombia – Northern Triangle) Free Trade Agreement

Colombia, El Salvador, Guatemala and Honduras signed a free trade agreement in August of 2007.  The agreement was implemented for imports into Colombia from Guatemala in November of 2009, for imports into Colombia from El Salvador in February of 2010, and for imports into Colombia from Honduras in March of 2010.  The full text of the agreement is available (in Spanish only) at http://www.sice.oas.org/TPD/COL_Norte/Text/IndexPDF_s.asp.
Apparel articles imported from El Salvador or Guatemala into Colombia are not covered by the agreement.  The agreement has eliminated duties on apparel articles originating in Honduras and imported into Colombia. 

Products are originating under the agreement if they are wholly obtained or produced entirely in the territory of one or more of the parties, or if they are produced in one or more of the parties and all nonoriginating materials satisfy applicable tariff shift, regional value content, or other rules.  Apparel articles generally meet the applicable tariff shift rule if they are both cut or knit to shape and sewn or otherwise assembled in Colombia or Honduras from fabrics knit or woven in either or both of those countries from yarn formed in either or both of those countries.  Staple fibers, including cotton, may be of any origin.  Certain artificial and synthetic filament yarns (other than sewing thread) may also be of any origin.  Only the component of the apparel article that determines its classification must satisfy the tariff shift rule.
The agreement provides for cumulation, so materials from Colombia and Honduras may be used to meet the applicable origin rule.  The agreement also allows certain materials originating in the United States or Mexico to be treated as originating in Honduras or Colombia when used to produce apparel articles traded between Honduras and Colombia.  These components include, among others, certain cotton yarns and certain yarns of synthetic and artificial staple fibers.  Additionally, certain types of nylon yarn are treated as originating in Honduras or Colombia if the yarn originates in Canada, Israel, Mexico, or the United States.
The agreement also includes a de minimis rule for apparel articles, under which the component determining classification of the apparel article may contain non-originating yarns that do not meet the necessary tariff shift as long as they do not exceed 10 percent of the weight of the apparel article.

Costa Rica – Peru Free Trade Agreement

Costa Rica and Peru signed a free trade agreement in May of 2011.  The agreement entered into force in June of 2013.  The full text of the agreement is available (in Spanish only) at http://www.sice.oas.org/Trade/CRI_PER_FTA_s/CRI_PER_ToC_s.asp.  

Both parties provided duty-free treatment immediately for all originating apparel.  Products are originating under the agreement if they are wholly obtained or produced entirely in either or both of the parties, or if they are produced in either or both of the parties and all non-originating materials satisfy applicable tariff shift, regional value content, or other rules.  Appael articles will generally meet the applicable tariff shift rule if they are both cut or knit to shape and sewn or otherwise assembled in either or both of the parties from fabrics knit or woven in either or both of the parties from yarn formed in either or both of the parties.  Staple fibers, including cotton, may be of any origin.  Sewing thread as well as certain artificial and synthetic filament yarns may also be of any origin.  Only the component of the apparel article that determines its classification must satisfy the tariff shift rule.

Several knit apparel articles have less stringent tariff shift rules requiring that the articles be cut or knit to shape and sewn or otherwise assembled from fabrics knit in either or both of the parties.  The yarn for these articles can be formed anywhere.  These articles include men’s or boys’ trousers, bib and brace overalls, breeches and shorts of synthetic fibers; men’s or boys shirts, knitted or crocheted; women’s or girls’ blouses and shirts, knitted or crocheted, of cotton or of man-made fibers; men’s or boys’ underpants and briefs; women’s or girls’ briefs and panties; t-shirts, singles, tank tops and similar garments, knitted or crocheted; cotton sweaters, pullovers, sweatshirts, waistcosts (vests) and similar articles, knitted or crocheted; babies’ garments and clothing accessories, knitted or crocheted; women’s or girls’ swimwear of synthetic fibers; other garments, knitted or crocheted, of cotton or of man-made fibers; certain panty hose. tights, and other hosiery; and certain other clothing accessories. 

Several woven apparel articles are also subject to less stringent tariff shift rules requiring that the articles be cut or knit to shape and sewn or otherwise assembled from fabrics woven in either or both of the parties.  The yarn for these articles can be formed anywhere.  These articles include overcoats, carcoats, capes, cloaks and similar coats of man-made fibers; certain suit-type jackets and blazers; certain trousers, bib and brace overalls, breeches and shorts; men’s or boys’ shirts of cotton; women’s or girls’ blouses, shirts and shirt-blouses of cotton; women’s or girls’ nightdresses and pajamas of man-made fibers; women’s or girls’ bathrobes, dressing gowns and similar articles of man-made fibers and other textile materials (but not of cotton); and certain other garments of man-made fibers classified in 6211.33 or 6211.43.  A few other woven apparel articles are originating if components of any origin are sewn or assembled in either or both of the parties.  These articles include women’s or girls’ swimwear; certain other women’s or girls’ garments of cotton classified in 6211.42; and brassieres, girdles, corsets, braces, suspenders, garters and similar articles and parts thereof, whether or not knitted or crocheted. 

An originating apparel article may contain non-originating yarns that do not meet the necessary tariff shift, as long as the weight of such non-originating yarns used in the component of the apparel article that determines its classification does not exceed 10 percent of the total weight of the component.  The agreement provides for cumulation, so a producer in Costa Rica or Peru may satisfy the origin rules with materials from either country.  The agreement also allows extended cumulation, meaning that producers can use materials produced in any other country with which both Peru and Costa Rica have free trade agreements to meet the applicable origin rules.  Producers can also use materials from El Salvador, Guatemala, Honduras and Panama, so long as a trade agreement is in place between Peru and those countries and so long as the tariff rate applied to the materials and the finished product is zero percent. 

Additional Comments

The various free trade agreements and programs existing among Latin American states offer opportunities to producers and importers in the region to compete more effectively with apparel imports from Asia and other foreign production venues.  Significantly, while these arrangements are intended primarily to benefit producers and importers in the region, some of the tariff shift, cumulation and tolerance provisions allow the use of yarns, fabrics and other materials from the United States.

The foregoing only summarizes the highlights of the various arrangements.  Participation is subject to certification and recordkeeping rules designed to confirm compliance with origin rules and other requirements.  Producers and importers are cautioned to review all of the rules applicable to their specific apparel articles in affected countries.

Antex Knitting Buhler Quality Yarns Corp.Cap Yarns, Inc.Carolina Cotton Works, Inc. - CCWCentral Textiles/Cotswold IndustriesContempora FabricsFrontier Spinning Mills, Inc.Hamrick Mills, Inc.Keer America CorporationMilliken & CompanyParkdaleSwisstex DirectZagis USA

Our mailing list
Keep in touch with us