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Enhanced US Tax Relief Urged For Dominican Apparel Exports

by Mike Godfrey, Tax-News.com, Washington

06 October 2017


Eight years after its implementation, the Earned Import Allowance Program (EIAP) is not providing enough incentives to significantly boost Dominican apparel exports to the US market, says the US International Trade Commission (USITC).

The program offers Dominican manufacturers who produce certain products using US fabric a tax credit enabling them to export other eligible products made with non-US fabric to the US without paying duty. The program was launched in 2009 and is reviewed annually by the USITC under the terms of the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act.

The eighth annual review was submitted to the US House of Representatives Committee on Ways and Means and the US Senate Committee on Finance on September 28, 2017. It found that for the third year running, only five of the 12 registered firms are currently using the program.

It also suggested that the 2016 decline in US imports from the Dominican Republic could be attributed to increased imports from Haiti, which offers lower labor costs and trade preferences under the HOPE/HELP programs that provide more sourcing flexibility and a wider range of coverage than the EIAP program, along with a tariff preference level for woven apparel from Haiti that allows the use of third-country fabric up to a specified level.

The review repeated recommendations made the previous year, including:

  • Reducing the 2-for-1 ratio of mandatory use of US-to-foreign fabric to a 1-for-1 ratio;
  • Expanding the program coverage to include other types of fabrics and products; and
  • Lifting the requirement that dyeing and finishing the eligible fabrics must take place in the US.

TAGS: Haiti | Finance | tax | Dominica | Dominican Republic | United States | trade | Central America

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