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Dominican apparel exports to the US languish despite EIAP

Eight years back the United States introduced the Earned Import Allowance Program (EIAP) meant to boost Dominican apparel exports to the US. 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. But the program wasn’t implemented effectively. For the third year running, only five of the 12 registered firms are currently using the program.

The 2016 decline in US imports from Dominican Republic has been 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.

Recommendations for making EIAP more effective include 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.