US-Morocco FTA Gives Yarn-Forward Exemptions to Certain Fabrics
Date: Wednesday, March 27, 2019
Source: Sourcing Journal
The U.S. has announced an agreement with Morocco that could see more duty free imports from the country.
As part of the U.S.-Morocco Free Trade Agreement (USMFTA), the originating status rule for five classes of woven garments has been modified to allow for them to receive duty-free status. This means the country of origin for garments made with these fabrics imported from Morocco into the U.S. can be sourced from outside of Morocco or the U.S. and still be eligible for the preferential treatment, effective April 1.
The rule changes were implemented though Presidential proclamation on Dec. 21, according to the Commerce Department’s Office of Textiles & Apparel (OTEXA). On March 4, Morocco notified the U.S. that it had completed domestic procedures to allow the agreement’s rules to be changed for origin of certain apparel made with the specified fabrics, and both countries implemented the changes.
According to details provided by international trade law firm Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, in most cases, qualification of apparel for duty-free entry into the U.S. under USMFTA requires adherence to a “yarn forward” rule, which limits the benefits that can be obtained from sourcing in Morocco.
The fabrics that now qualify include women’s or girls’ cotton corduroy skirts and polyester corduroy man-made fiber blouses, shirts and blouses; women’s trousers of synthetic bi-stretch fabric containing certain percentages of polyester, rayon and spandex, and women’s trousers of woven herringbone fabric containing certain amounts of viscose rayon, polyester, cotton, wool, nylon and spandex.
Morocco had petitioned for these classifications of goods to be exempt from the yarn-forward rule on behalf of a domestic supplier because they were not commercially available in the U.S. According to OTEXA, a preliminary determination was made that agreed with that petition.
The two governments consulted on proposed changes and in February 2017, the U.S. International Trade Commission (USITA) provided advice on the lack of probable economic effects of the proposed changes. There were other fabrics that Morocco also requested a waiving of the yarn-forward rule where USITA found there was commercial availability in the U.S. and exemptions were not granted.
According to OTEXA data, the U.S. imported $136.09 million worth of apparel from Morocco in 2018, an increase of 4.24 percent from 2017. The USMFTA went into effect on Jan. 1, 2006. Duties on 95 percent of bilateral trade in industrial and consumer goods were eliminated upon entry into force, with duties on other such goods phased out in stages in the next 10 years.