Item 807/9802 Apparel, Interiors, Textiles Written by Felicia Johnson, Kari Adams, Kristen Nelson, Jessica Boggs 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 it’s 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). 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. 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. 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) 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). 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.