LETTER TO USTR PORTMAN FROM TRADE MINISTER ON

UNCLAS GUATEMALA 000376 SIPDIS SIPDIS DEPT PASS USTR ROBERT PORTMAN AND SUSAN SCHWAB E.O. 12958: N/A TAGS: ETRD EINV PREL EIND GT SUBJECT: LETTER TO USTR PORTMAN FROM TRADE MINISTER ON TEXTILE TRADE DURING CAFTA IMPLEMENTATION We are sending the following letter from Acting Minister of Economy Enrique Lacs to USTR Portman to ensure expeditious receipt. Begin text: Robert Portman U.S. Trade Representative 600 17th Street, N.W. Washington, DC Dear Ambassador Portman, On behalf of the Government of Guatemala, I look forward to the full implementation of the U.S.-Central American and Dominican Republic Free Trade Agreement (CAFTA) between the United States of America and Guatemala at the earliest possible date. I would like to review again an issue which has been brought to your attention previously by Ministry Marcio Cuevas and Vice President Eduardo Stein. And I myself have discussed this issue early January with Ms. Susan Schwab. Although Guatemala has not received yet the necessary comments on the approval process to implement CAFTA, we understand the U.S. is likely to enter into the agreement with only one or possibly two of its Central American partners. While we congratulate the U.S. and our Central American neighbors on the undeniable achievement of implementing CAFTA as soon as possible, one of the seemingly unanticipated consequences of this staggered implementation is the loss of current duty-free treatment for garments under the Caribbean Basin Trade Partnership Act (CBTPA). Specifically, garments produced in what will be the first of the CAFTA parties in the region will no longer be able to utilize regionally-made fabrics from U.S. yarns. As you are aware, under CBTBA the finished garments eligible for duty-free treatment are permitted to use qualifying inputs from other CBTPA beneficiaries. This is an important issue that threatens to undermine both existing customer service ties with U.S. importers and retailers, as well as industry partners in other Central American countries. Additionally, this situation would hinder - even actively harm-the CAFTA objective of encouraging greater regional integration. We ask for your immediate attention to this matter to ensure a seamless transition from CBTPA to CAFTA. This is especially important for the region's apparel industry and budding textile industry in order to continue the benefits for CBTPA within the regional countries. Ideally, the CBTPA-status of each of the CAFTA Parties will continue until such time as the Agreement is fully implemented with all Parties. We are willing to work with you towards this objective, but the timing is critically important. Sincerely, //s// Enrique Lacs Viceministro de Integracin y Comercio Exterior (acting Minister) DERHAM