Ms. Lisa M. Barton Secretary

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Tharsis Salomon lopez Ministro de Economla

UNITED STATES INTERNATIONAL TRADE COMMISSION 500 E Street SW, Washington, DC 20436 202-205-2000

Dear Secretary Barton:

San Salvador, February 15,2016.

REF: CARTA/DATC0/186/2016.

On behalf of El Salvador, we would like to submit our comments regarding the Trans-pacific Partnership Agreement: Likely Impact on the US. Economy and on Specific Industry Sectors, investigation reference No. TPA-1 05-001. After making a thorough analysis with the textile and apparel industry, we are deeply concerned by concessions that have seemingly been made to Vietnam with respect to textile and apparel provisions, and their impact on the CAFT A-DR region and our export partners in the U.S. textile industry.

According to OTEXA' s Major Shippers Report, in 2015 the CAFT A DR traded $8.16 billion in apparel merchandise with the United States, evidence of the important supply chain we have built in the Western Hemisphere.

With the elimination of more duties to the U.S. market under TPP, we believe some Asian members exports will increase exponentially at the expense of jobs and exports from our region. In 2011, US textile and apparel exports to the CAFTA-DR region were $3.8 billion, but in 2015, this fell to $3.3 billion. Still, as of 2015, 13.98% of all US textiles and apparel exports go to the CAFT A DR Region.

We see the general yam-forward principle in the rules of origin as a positive aspect of the agreement, along with the number of sensitive items included in the 1 0/1 2-year basket for duty phase-out.

Nevertheless, we believe the initial duty reduction of 35% for most textile and apparel products is too steep. This initial duty reduction may cause a rapid shift in production away from the well-established Western Hemisphere supply chain, with negative consequences for both Central American manufacturers as well as American small and medium-sized enterprises invested in trade with CAFTA­DR partners. Therefore, many of the intended benefits that seem to be offered by long term duty phase outs are quite negated by this initial large duty reduction.

Alameda Juan Pablo II y Calle Guadalupe Edlficio C1 - C2 Centro de Gob1erno, San Salvador, El Salvador, C.A.

Telefono (PBX)· (503) 2590- 5600

Tharsis Salomon Lopez Ministro de Economla

According to initial estimates from the CAFf A region, the result of the transfer of production orders that may be lost during the first year of the entry into force of the agreement could be between 15% and 18% of industrial employment in the CAFfA-DR region.

Secondly, we are concerned that some protections that have been built into the market access provisions in order to protect the Western Hemisphere textile and apparel supply chain can be implemented in such a manner so as to circumvent them.

Specifically, we are referring to three products of great importance to the CAFf A-DR region, where in the TPP negotiation an artificial separation was made within the product at the HTS 8-digit level (where CAFf A-DR main export products would fall under the (B) Category), thus affording longer phase outs to CAFT A sensitive products coming from Asia.

HTS Description Total CAFTA BASKET Imports 2014

6110.20.20A Sweaters, knitted or crocheted, of cotton, nesoi. ElF 6110.20.20B Pullovers and similar articles, knitted or crocheted, 1,159,733,508

of cotton, nesoi. US6

6110.30.30A Sweaters, pullovers and similar articles, knitted or ElF

crocheted, of acrylic fibers, nesoi. 6110.30.30B Sweaters, pullovers and similar articles, knitted or

1 ,006,872,134 crocheted, of manmade fibers other than acrylic,

US6 nesm

6205.20.20A Men's or boys' shirts, not knitted or crocheted, of ElF

cotton, nesoi EX-OUT: dress shirts 159,533,256

6205.20.20B Men's or boys' shirts, not knitted or crocheted, of cotton, nesoi EX-OUT: other shirts

USll

SOURCE: ITC.

Correctly implementing and rigorously enforcing these preference provisions will be critical to ensuring that the CAFfA-DR region has time to adapt to these new conditions under TPP.

Thirdly, many of the items included on the TPP's permanent Short Supply List are already made in large quantities in the CAFT A-DR region. Their inclusion on the TPP Short Supply List will almost certainly result in the duty-free treatment for products made in China, who is not party to the TPP, affecting the trade and investment climate in the CAFfA-DR region. These products included velveteen fabrics, cut pile corduroy fabrics, woven jacquard fabrics, flannel fabrics, cotton woven fabrics for men's and boys' dress shirts, circular knit fabrics made with tri-blend yarns, among others.

Alameda Juan Pablo II y Calle Guadalupe Edificio C1 - C2, Centro de Gob1erno, San Salvador, El Salvador, C.A

Telefono (PBX): (503) 2590- 5600

Tharsis Salomon Lopez Ministro de Economla

Fourthly, we are concerned by the inclusion of certain products on the list of Single Transformation products and Earned Import Allowance program. Allowing exceptions to the Rules of Origin for products under the Single Transformation or Earned Import Allowance programs will almost assuredly result in duty-free treatment for third party inputs used by other TPP members. The DR- CAFTA production of woven pants included in the Import Allowance Programs represents about 20% of its total trade with the United States, for example.

Lastly, we are thankful for important provisions in the TPP tying implementation of the agreement to certain regulations of state-owned enterprises and the mandating of appropriate customs controls. With these important mandates in place, we strongly urge the implementing Administration to ensure that these rules are properly implemented and strictly monitored as per the TPP Agreement.

We appreciate your attention to our concerns, considering that the textile and apparel industry is one of the main sectors that stimulates the economy and employment in our country.

Sincerely,

Alameda Juan Pablo II y Calle Guadalupe Edific1o C1 - C2, Centro de Gobierno, San Salvador, El Salvador, C.A.

Teletono (PBX)· (503) 2590- 5600