Item 807/9802 Apparel, Interiors, Textiles

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Item 807/9802Apparel, Interiors, Textiles

• Written by
• Felicia Johnson, Kari Adams, Kristen Nelson,
  Jessica Boggs

2
Caribbean Basin Initiative

• The Caribbean Basin Initiative was enacted by the
  United States Congress in 1982-1983.
• It was principally a program to promote trade,
  and provided duty-free access to the United
  States market for about 3,000 products (4).
• The Caribbean Basin Economic Recovery Act is the
  official name for the bill. In its final
  version it excluded petroleum, and petroleum
  products, sugar, canned tuna, luggage, handbags,
  other leather goods, flat goods, rubber and
  plastic gloves, footwear, textiles, and apparel
  that was subject to the Multi-fiber Agreement,
  and watches or watch parts that were manufactured
  in communist countries from duty-free coverage
  (4).

3
Cont.

• On February 20, 1986 on the island of Grenada
  President Ronald Reagan announced that there
  would be increased access to the U.S. market for
  apparel that is assembled in the Caribbean Basin.
  This new program is referred to as 807-A and
  Super 807 (4).
• Most companies operate under the 807 clause of
  the US customs regulations that allows for
  duty-free re importation to the US of clothing
  assembled in a Caribbean Basin country using US
  cloth.

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Apparel

• Mexico and the Caribbean are the main countries
  in competition for the United States market.
• In apparel, Mexico has the largest apparel sector
  with the United States than the Caribbean Basin
  countries.

5
Cont.

• To gain non-restricted access to the United
  States market under Item 807/9802, garments must
  be made with United States fabrics and cut in the
  United States. (2).
• NAFTA and the Caribbean Basin countries trade
  account for the rise in Item 807/9802 with the
  United States, because it includes exports and
  imports. (2)

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Textiles/Interiors

• The 807-A set up by Reagan led to a significant
  drop in interiors prices they call this program
  international sub-contracting or production
  sharing.
• In home furnishings it is found that the major
  exporters are from high industry nation due to
  the capital intensive work for processing wood
  i.e. chemical dips, and forestry.
• The companies participating in the program
  receive various benefits from the host nations in
  the Caribbean and Mexico in the form of exemption
  from import duties on raw material, on machinery
  and capital goods required for assembling (8).

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Conclusion

• The 807/9802 program or production sharing in
  the United States.
• These firms supply intermediate inputs (cut
  fabric, thread buttons, and other trim) to
  extensive networks of offshore suppliers,
  typically located in neighboring countries with
  mutual trade agreements that allow goods
  assembled offshore to be re-imported with a
  tariff charged only on the value added by foreign
  labor.