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.