Vietnam’s textile subsidies have made US producers anxious and have been a thorny issue during bilateral WTO negotiations between Vietnam and the US that have only recently come to an end.
Under the in-principle agreement with the US on Vietnam’s WTO entry, the country will repeal Decision No.55 on subsidizing the development of its textile and garment sector.
The US will remove quotas on Vietnamese textile and garment imports when Vietnam joins the World Trade Organization.
Vietnam will have five years to totally end its subsidies to the sector.
Though Vietnam will continue to implement development strategies to reach the targets set in Decision No.55, Vietnamese negotiators have pledged to remove domestic textile subsidies, including credit, assisting investment in material production, and fashion design and training, of an estimated $4 billion.
However, US producers have said that the pact was too weak and would lead to American job losses by allowing Vietnam to flood the market with heavily subsidized exports.
Chairman of the National Council of Textile Organizations, a Washington-based lobbying group, Jim Chesnutt, said that the agreement is a victory for Vietnam more than for the US, a victory for an “unbalanced and job-destroying” trade policy and a severe blow to the US textile manufactures.
Yet, US trade officials countered that Vietnam agreed to end subsidies to its textile and apparel makers, forbidden under WTO rules, by the time it joins the global trade body, and would also give the US 12 months to monitor its progress and re-impose quotas if the subsidies continue.
According to the Vietnam Textile and Garment Association, Le Quoc An, WTO entry will offer Vietnam a great host of benefits. Vietnam would be able to import more textile materials from the US to produce more goods for export to the US without the barrier of quotas.
An also said after five years of implementing Decision No.55, the sector only carried out certain small projects on dyeing cloth and textiles, and the state has not yet invested much in the sector.
He added enterprises have mobilized capital from many sources and only 8 per cent from state credit, and ending Decision No.55 would not influence production. “The Vietnamese market share for garments and textiles in the US currently stand at only 3-4 per cent with about $2.5 billion last year, compared to $70 billion per year in Chinese imports. So the agreements would not influence US textile and garment makers,” An said.
“This will create an equal competitive environment among enterprises of two countries,” he added.
Vietnam expects to earn $5.5 billion from garment and textile exports, mainly to the EU and the US in 2006, up nearly 14.6 per cent against 2005.
VIR
Vietnamese
