Procedures and Strategies
August 13, 2014
“Yarn Forward” Rule of Origin
Yarn Fabric Apparel
Commercial Availability or “Short Supply”
• Benefits bilateral (FTA) trade
• Fibers, yarns or fabrics “not commercially
available” in the FTA region (US and Colombia)
can be sourced from outside the region and used
in qualifying textile and apparel goods
Short Supply Provisions under other FTAs:
Level of Trade under ATPDEA and Colombia TPA
Imports 2010 2011 2012 2013 2014
All Textiles &
$292 $264 $259 $281 $131
$242 $50 $198 $246 $114
$0.2 $0.01 $5.5 $7.7 $1.7
0.1% 0.01% 2.8% 3.1% 1.49%
Hallmarks of the Colombia TPA Short Supply Process
• You can use a fiber, yarn or fabric from a third county and still get duty-
free treatment on the apparel.
• Once a request has been accepted, CITA can make a decision within 30
• Requestors and Suppliers have to provide evidence. CITA does not
collect information – it only reviews information submitted on the
• Any textile producer, apparel producer and importer/brand or retailer
can use short supply to their advantage.
• It can be a powerful tool, if used strategically!
CAFTA Short Supply: What Doesn’t Matter!
• PRICE: CITA does NOT consider whether the product is available
outside the region at a lower price. As long as a potential supplier can
demonstrate that it can produce the subject product or one
substitutable, price is irrelevant.
• NON-MEASUREABLE CRITERIA: As long as a supplier can meet
all physical specifications included in a description, CITA does not
consider a customer’s preference or other non-measureable criteria (eg
hand and feel) as reasonable requirements.
• TERMS OF SALE: Issues regarding samples, financing and means of
delivery are considered terms of sale, and are not relevant.
Short Supply Strategies:
Factors to Consider
Whether you want to Add a product, or object to a Request to
Add a product, think carefully!
• How critical is this product for you and your customer?
• What are the opportunities/threats for US and
Colombian suppliers and existing/potential customers?
• How much flexibility is there in product specifications?
• What are the critical price points and extent of foreign
• A carefully crafted product description is
often the key to having a request approved.
• Reasonable due diligence with US and
Colombian suppliers is also a must.
• But how well you know your suppliers and
how flexible you can be in terms of product
specifications can make or break a request.
• ITS ALL ABOUT RELATIONSHIPS – with
your customers and your suppliers.
Adding a Product:
Product Description and Due Diligence are CRITICAL!
Adding a Product:
How do you start?
If you think that a product isn’t available, you
must compile evidence to support your claim.
• Describe the product:
– Reasonable specifications (industry standards)
– Reasonable deadline and quantities
– Is there a substitutable product?
• Identify potential suppliers, and contact them to confirm
whether they can or cannot supply the product.
• Collect documents to support your claim.
• You don’t have to include all the specifications that you would for a mill.
Only use the specifications that are relevant, but include ranges.
• You can start due diligence with a broader description, but if you learn
that a supplier can make some part of the range, you can narrow the
description in your Request.
• You can’t include non-measurable criteria (for example, hand and feel),
but you may be able to get the same effect using performance criteria.
• If you add performance criteria, you must cite the industry standard test
used to measure performance (ASTM, AATCC)
Don’t forget TOLERANCES!
• Some physical parameters can change after construction. Dyes and other
finishing processes can affect yarn size, thread count, colorization, and
• Even though you provide specifications based on construction parameters,
take into account how post-construction processes can affect physical
• Customs tests the entered apparel, NOT the fiber, yarn or fabric. If test
results fall outside specifications, they will deny duty-free treatment.
• CITA CANNOT MAKE ANY CHANGES to a product description once
its been submitted by a requestor. Expansion of specifications must be
made in a new Request.
Example of Product Description:
Certain Cotton/Polyester three thread circular knit fleece fabric:
Fiber content: 70—90% cotton and 10-30% polyester
Face yarn - 100% ring spun combed cotton yarn
Tie yarn - 100% multifilament polyester yarn
Fleece yarn - cotton and staple polyester yarn of no less than cotton
Machine gauge: 21
Weight: 232-271 grams/meter squared (6.85 - 8.0 ounces per square yard)
Finish: napped on one side.
1. Torque must not exceed 4% (must meet AATCC 179)
2. Vertical and horizontal shrinkage must be under 5%
3. Must meet a class-1 flammability rating
Downstream Products and Finishing
• CITA will not accept a Request if it finds that it is only an “upstream input”
and not the “downstream” product that is unavailable.
• For example, if the inquiry is for a fabric that calls for a specific yarn, if a
supplier can make the fabric but the yarn isn’t available in the CAFTA region,
a supplier will say so in its response to the requestor.
• Confirm with the supplier, but be prepared to modify your Request to ask for
the upstream input.
• In the same way, CITA also does not accept Requests where the only aspect of
the product that’s “unavailable” is a finishing process.
Tips for Product Descriptions
• Choose your Description Carefully: Craft a
product description that gets you what you need, but is
likely to get approved.
• Be flexible: Consider flexibilities of both your
suppliers and your customers.
• Tolerances: Consider obtaining independent lab
tests on garment samples to determine reasonable
Contacting Potential Suppliers
• Do your homework – find out as much about potential suppliers as you can,
before you contact them.
• US and Colombian suppliers have a stake in whether you can use third-country
(cheaper) inputs and still get duty-free treatment. Understand suppliers’
concerns, and be willing to address them.
• Remember: suppliers don’t have to currently make the product – all they have
to show is that they’re capable of making the product.
• They don’t have to make the entire range of specifications, or the entire
quantity, as long as they can demonstrate what they can do.
• Be flexible when working with suppliers – they can be a partner or a roadblock
to your success.
What must the Potential Supplier provide?
• An offer to supply the specified product or one substitutable.
• Detailed information on its production capacity and capability,
and, if applicable, information about the substitutable product.
• Must identify all sub-contractors, with information about the
• While a requestor may ask for certain information and/or a
sample (free or otherwise), suppliers are NOT required to provide
business proprietary information, or provide samples.
• Suppliers may propose another product as a substitute for
the purposes of the end use, and explain why it’s
• If you don’t think it’s a good substitute, you must tell the
supplier why it is not substitutable, using measurable
• “Customer Preference” or other non-measureable criteria
(e.g. hand and feel) are not acceptable arguments.
What if I don’t think the Supplier is capable?
If you don’t think a supplier has demonstrated its ability to
supply the product as specified, be sure to:
• Tell the supplier why you don’t think they’re capable.
• Give the supplier an opportunity to respond, and to provide
information that supports their claim.
• Address the supplier’s arguments, and answer all questions.
Tips on Due Diligence with Suppliers:
• Know your supply chain – Get a feel for what suppliers are capable
of. Don’t assume they’re not capable just because its not currently
• Work With Potential Suppliers – Most existing suppliers will
work with good customers. Many potential suppliers are eager to build
new business relationships. Be sensitive to their concerns and find
ways to address them.
• Act In Good Faith – Play it straight with suppliers and they’ll
(usually) play it straight with you.
• DON’T LEAVE QUESTIONS UNANSWERED.
Responding to Due Diligence Inquiries:
What must a Supplier provide?
REMEMBER: A requestor may ask anything they like, but….
• No business confidential information (i.e. details about equipment
names, current customers, current production schedule).
• You don’t have to supply a sample, but if you do, make sure you clearly
state if its to spec – it can be tested!
• Don’t forget about using sub-contractors!
Responding to Due Diligence Inquiries:
Tips for Suppliers
• Think about whether you want to make an Offer – is it strategically
• Make sure you respond to the initial inquiry.
• Clarify any questions about the product’s specifications and criteria,
its substitutability, and requirements for quantity and deadlines.
• Answer ALL outstanding questions from the requestor regarding
production capability and normal business practice.
• You may consult with other suppliers about the inquiry.
Filing a Request:
What do I need?
• Complete product description, no broader than was
presented during due diligence.
• Explanation of how you identified potential suppliers.
• Summary of your due diligence communications with
• Explanation whether the product may or may not be
substituted with another product.
How to File a Request under CAFTA:
• Submit electronic and original signed hard copy versions.
• If you want to hold certain information as “Confidential” you must
also prepare a “Public” version.
• You must submit an electronic copy of the “Public” version, but are not
required to submit an electronic copy of the “Confidential” version.
• Official Receipt date is the date all required versions have been
So I submitted a Request…..
• Once you submit a Request, CITA has two business days to
review the Request to see if it meets requirements.
• CITA will “Reject” a submission if its deficient in terms of
– Inadequate Due Diligence
– Improper Product Description
• If rejected, CITA will send requestor an explanation of each
• If accepted, CITA issues email notice to all interested parties.
The Request was Accepted. Now what?
• If a Request is accepted, CITA allows potential suppliers 8
business days to submit a Response with an Offer to Supply.
• The supplier must provide information demonstrating their
capability to supply the product.
• If a requestor doesn’t think the supplier has met their burden,
they can file a Rebuttal.
• Usually, if Responses and Rebuttals are filed, CITA will extend
the deadline by 14 business days, and will call a public meeting
for the parties to present their case.