Changes Sought In Vietnam Trade Pact
By James A. Morrissey, Washington Correspondent
September 5, 2006
As the US textile industry’s Washington-based lobbyists continue with their efforts to get modifications in the US-Vietnam bilateral trade agreement, the National Council of Textile Organizations (NCTO) issued a statement saying Vietnam’s textile and apparel imports to the United States are growing faster than those of any other country. The analysis shows Vietnam’s apparel exports are now second only to China’s in product categories where there are no quota controls. It also shows the import growth has cut into trade with the North American Free Trade Agreement (NAFTA) and the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) countries.
NCTO President Cass Johnson said the latest trade data “confirm what Vietnam itself has already predicted - that once quotas are removed, Vietnam’s state-owned and subsidized textile and apparel sector will wreak havoc in the US industry and in the NAFTA and CAFTA-DR regions.”
US Department of Commerce data show that while Vietnam’s exports to the United States grew by 30.4 percent from January to June 2006, apparel exports from CAFTA-DR countries and Mexico fell by 14 percent.
On May 31, 2006, the United States and Vietnam concluded a bilateral agreement that provides for eventual removal of textile and apparel import quotas, provided Vietnam eliminates its subsidies for its manufacturing industries, including textiles and apparel. The agreement, which is a step toward Vietnam’s eventual accession to the World Trade Organization (WTO), was attacked sharply by US textile industry interests, but it has the strong support of retailers and other importers.
The American Manufacturing Trade Action Coalition’s (AMTAC’s) Executive Director Auggie Tantillo charged at the time the agreement was reached that “it is bound to replicate the disastrous trade pattern the United States has constructed with China,” adding that because of China’s state-sponsored advantages, “their manufacturers have run roughshod over US companies in their own market.”
Pointing out the agreement will make it easier for retailers to source materials from Vietnam and open stores there, the National Retail Federation strongly endorsed the agreement.
While the agreement is in place and does not require congressional approval, US textile interests are attacking it on other fronts in an effort to get it modified.
Part of the overall picture is whether to grant permanent normal trade relations (PNTR) with Vietnam. That proposal does require congressional approval, and Sens. Elizabeth Dole, R-N.C., and Lindsey Graham, R-S.C., are blocking its consideration by the Senate as they and textile industry officials seek concessions that will protect the interest of US manufacturers.
Ultimately, Vietnam will need a multilateral agreement with WTO members, and that is another area where US textile makers could seek modifications to protect their interests. The present goal is to wrap up the multilateral negotiations and PNTR by the end of this year.