Miami, January 28, 2022 (By Jonathan Torres *). As Americans navigate their way into a new and unpredictable year, the challenge of inflation has yet to subside. For Floridians, this increase in prices for everyday products rose to the tune of 6.8 percent in 2021, the highest rate of inflation seen since 1982. Despite efforts by the federal government to aid supply chains and pull from strategic fuel reserves, prices continue to rise. Fortunately, Congress has a solution to reduce prices through small updates to the Central American Free Trade Agreement (CAFTA-DR) that could lower the cost of products for American consumers.
CAFTA-DR was initially designed to promote trade and enhance prosperity and stability in the Central American region. However, certain provisions, like the “rule of origin” requirement, mandate that apparel products must be made using textiles sourced from member countries in order to qualify for duty-free trade. Unfortunately, this regulation limits the market for regional apparel producers that endure both a smaller selection of materials and are subject to textile suppliers who have exercised monopolistic control over the market to drive up prices.
This onerous requirement has diminished the competitiveness of Central American garment exporters by making it more cost-effective to produce apparel in China. It also adds to the economic stagnation and instability in Central America, which inflates prices for products exported to the U.S. and forces many workers in the region to migrate to the American border in search of new opportunities.
Migrants from Central America’s Northern Triangle countries, which includes Honduras, Guatemala, and El Salvador, make up almost 40 percent of those encountered by immigration authorities. For years, the American government has tried to relieve this stress by funneling large sums of financial assistance from both the public and private sectors into the region. Unfortunately, these investments fluctuate between administrations and assistance from private businesses can be volatile.
If Congress updated the yarn forward rule of origin requirement, producers could access a wide range of new materials that could allow businesses to grow and expand their operations with less assistance. This would, in turn, stimulate more job creation in the region. Greater diversity of sourced materials would also enhance the stability of both the supply chain and the region to allow the apparel industry to better weather major disruptions like the pandemic and better compete with countries like China. Regional industries and workforces would again realize the full potential of mutually beneficial trade incentives that help build strong economic conditions.
Furthermore, by allowing regional producers to compete in the global market again, China’s position as the primary apparel exporter to the U.S. would likely slip away. Additional competition in the global market would help drive down prices for everyday American consumers, and CAFTA-DR would begin to work the way it was originally intended.
Floridians are counting on Sen. Marco Rubio to help lower prices for his constituents by revising CAFTA-DRprovisions that limit free trade. As a senior member of the Senate Committee on Foreign Relations, Rubio is acutely aware of China’s position in the global marketplace and the threat Beijing poses to the U.S. By updating the rule of origin provision in CAFTA-DR, Rubio could help advance fair competition, and do so to the benefit of American consumers.
(*) Jonathan has been heavily involved in the community’s business and political circles. He most recently served as the Gulf Coast Regional Director for US Senator Marco Rubio, overseeing 9 counties and working alongside county commissioners, city council members, chambers of commerce, and main infrastructure points such as Tampa International Airport, Port Tampa Bay, and the region’s VA hospitals. In January 2020, Jonathan jumped into entrepreneurship and started a digital content production called Falkenburg Productions.
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