New Danger for Apparel Sector

On May 9, Vietnam and the US resumed negotiations on Vietnamese accession to the WTO. One of the problems facing the talks is the safeguard applied by the US to Vietnamese apparel similar to the case of China. If Vietnam fails in the negotiation, like China, quotas will be applied and Vietnamese exports to the US will suffer losses including unemployment in the garment sector.

 

Currently, the main garment export is from the private sector and foreign invested enterprises as most of related State-owned enterprises (SOEs) have been equitised. In 2005, there remained only 26 SOEs exporting some US$223 million worth of garment to the US, or 8.1 per cent of the total garment export value to the US. Furthermore, Vietnamese enterprises have to import most of the materials, 90 per cent of cotton, 100 per cent of polyester yarn, 60  per cent of short yarn, 70 per cent of textile, 100 per cent of dyeing chemicals and equipment including a significant amount from the US.

 

Vietnamese garment export to the US makes up only 3.8 per cent and stands behind several countries without safeguards imposed by the US such as Mexico, Hong Kong, India, Indonesia, and the Honduras.

 

Vietnamese enterprises will have more difficulties as the quota is almost finished and the price of materials continues to rise. To continue business activities, Vietnamese enterprises have to transform their production lines, increase quality and develop fashion fairs.
Huong Giang