Vietnam Pact Doesn’t Please Importers, Manufacturers


By James A. Morrissey,Washington CorrespondentVietnam Pact Doesn’t PleaseImporters,

Following the longest face-to-face negotiation in the history of the US government’s textile
trade program, the United States and Vietnam have reached a textile and apparel bilateral agreement
that in the end doesn’t really please anyone. The pact was sharply criticized by the American
Textile Manufacturers Institute (ATMI) and the National Textile Association (NTA) as an abandonment
of the Bush administration’s pledge to protect the interests of the US textile industry and its
employees. Retailers and other textile and apparel importers were strongly opposed to any quotas on
Vietnam, as they view that area as a “viable alternative” to becoming too dependent on trade with
China and other Asian nations. In spite of that, however, the National Retail Federation (NRF) said
the agreement certainly was better than the unilateral quotas that would have been imposed if a
bilateral agreement could not be reached.Importers said Vietnamese apparel imports will displace
other Asian trade and should not have any impact on US textile trade with Mexico and the
Caribbean.The agreement runs until December 31, 2004, and will automatically roll over annually
until Vietnam becomes a member of the World Trade Organization (WTO), at which time all quotas will
be removed.As the negotiations neared their final stage, 35 of the nation’s largest retailers,
including JCPenney, Sears, Target and Gap, descended on Washington in a massive lobbying effort to
voice their concerns about restricting a major source of products, which could result in shortages
and higher consumer prices.On the other side of the battlefield, members of the Congressional
Textile Caucus weighed in heavily and accused US negotiators of offering quotas that were far in
excess of what was offered in the opening round of talks. They said US government officials were
“actually rewarding Vietnam for refusing to bargain in good faith during earlier negotiations.” In
addition, ATMI, NTA and members of the caucus charged that the new quota levels “include
significant levels of fraud” resulting from illegal transshipments of Chinese goods through
Vietnam. The agreement covers 38 product categories and initially will permit $1.65 billion worth
of imports, including 14 million dozens of knit shirts, and 1 million pairs of men’s and women’s
trousers — two categories that were of particular concern to the textile industry during the
negotiations. Quotas will be permitted to grow 7 percent per year for all products except wool,
which will grow at 2 percent.With respect to market access, Vietnam agreed to bind its tariffs at 7
percent for yarn, 12 percent for fabric, and 20 percent for apparel. It also agreed to refrain from
utilizing non-tariff barriers. ATMI Chairman Willis C. Moore III said he was “deeply dismayed” by
the agreement, adding that “by granting Vietnam the largest quotas in history for the most
sensitive products made by our industry, negotiators have ensured that more textile jobs will be
lost in this deeply distressed industry.”

June 2003