The United States asks Vietnam to reduce imports of Chinese textiles

The clauses exposed by the US media today add another piece of evidence to those who believe that the TPP contains China. The Wall Street Journal reported today that U.S. negotiators have asked Vietnam to significantly reduce its dependence on Chinese textiles and fill demand with U.S. textiles. Last month, Observer.com reprinted an interview conducted by Japanese media with former US Deputy Secretary of State Robert Holmitz. Holmitz admitted that the TPP would become the “Asian version of North Atlantic Treaty Organization” in terms of a framework for achieving regional stability.
The Wall Street Journal Chinese website reported on the 24th that the United States will require countries that join the new Pacific Trade Area to reduce imports from China, hoping to boost the U.S. export industry. The proposal has been opposed by businesses and government officials, who say it would disrupt global supply chains.
The U.S. Senate is expected to pass a bill on Wednesday aimed at expanding President Obama’s trade negotiation powers. Previously, the two parties in the United States were engaged in a fierce battle over the Trans-Pacific Strategic Economic Partnership (TPP). TPP supporters were under pressure to prove that the agreement would create jobs in the United States.
To this end, U.S. trade negotiators will require Vietnam, a major apparel exporter, to reduce its dependence on Chinese textiles in exchange for preferential U.S. market access. China is currently not a member of the TPP.
The purpose of this is to open up new markets in Vietnam for the US textile industry. Last year, the U.S. textile industry created about 250,000 jobs and exported $20 billion.
Eliza Levy, spokesperson of the National Council of Textile Organizations, said that the United States and Mexico are textile production superpowers, and Vietnam just needs to switch the source of yarn and fabric imports from China to the United States and Mexico.
American fashion brands opposed the move, saying it ignored the complexity of the global supply chain. Among exporters of clothing and footwear to the United States, Vietnam ranks second after China, with sales reaching US$13.1 billion last year. However, Vietnam can only supply one-fifth of its own needs with fabrics for its own use, and has to import US$4.7 billion worth of fabrics from China (equivalent to about half of its total annual imports).
Clothing brands hope that all goods produced in the new trade zone will be exempt from tariffs when entering the United States. Thanks to the trade agreement, the U.S. tariffs borne by Vietnam on many garments and footwear exported to the United States may be significantly reduced from 7% to 32% to zero.
Julia Hughes, president of the U.S. Fashion Industry Association, a trade organization representing American clothing brands, said that U.S. textile exporters are not capable of meeting Vietnam’s large demand, which makes Vietnamese garment factories still have to rely on Chinese fabrics. She said that under current regulations, Vietnam would not get much duty-free access to the United States.
The U.S. apparel industry says free trade will support the apparel industry, which employs 3 million people (including designers and retail staff). However, within Congress, the TPP has become a controversial topic due to the debate over whether free trade endangers manufacturing employment.
The U.S. negotiators insisted on their position. U.S. Deputy Assistant Trade Representative Trevor Kincaid said that this transaction will bring new opportunities to companies in the United States, including opportunities related to Vietnamese textiles and clothing. He said the U.S. government is fully focused on getting the best deal for American workers and exporters.
Vietnam has its own ideas. The country is stepping up efforts to develop a domestic textile industry that could help get around restrictions. Phan Chi Dung, a senior official at the Ministry of Industry and Trade of Vietnam, said that Vietnam is seeking to reduce its dependence on Chinese imports in the apparel industry to better benefit from the TPP. But he thinks the chances of U.S. producers filling the gap are low.
Companies from Hong Kong, South Korea and Taiwan have recently invested hundreds of millions of dollars in textile factories in Vietnam, hoping to gain tariff-free access to the U.S. market in the future.
Hong Kong-based supplier TAL Apparel Ltd., which says one-sixth of the shirts it produces is sold in the United States, is investing $240 million to build a textile factory in Vietnam, hoping to The factory can be built by 2017 to provide raw materials for the company’s two garment factories in Vietnam.
Roger Lee, CEO of TAL Garments Co., Ltd., believes that it will take five years for Vietnam’s textile industry to become self-sufficient. He said that the cost of U.S. textile suppliers is too high and too far from Asia to be competitive.
Due to concerns about rising domestic wages in China and expectations for the TPP, Chinese-funded companies have also begun to move factories to Vietnam.
Chinese clothing maker Youngor Group Co., Ltd. (Youngor Group), which operates a factory in northern Vietnam’s Nam Dinh province, is looking to source more textiles from Vietnam instead of its factories in China, hoping to export duty-free to U.S. Yu Jian, deputy general manager of Youngor Vietnam Company, said that the company’s main competitors have moved to Vietnam, and many companies are relocating.
Ou Kui, manager of Yanian Garment Co., a Chinese clothing company in Hanoi, is planning to produce zippers, buttons and other accessories.��Helping Chinese investors meet “local content” requirements.
A recent report by the U.S. Congress pointed out that if Vietnam’s textile industry expands fast enough, it may even compete with U.S. textile exports to Mexico. Mexico is also one of the countries participating in TPP negotiations.
Under pressure from American brands, the TPP will allow Vietnam to continue to purchase textiles and yarns from any country on the “insufficient supply list”, that is, raw materials that are insufficiently produced in the TPP trade area.
Hughes of the American Apparel Industry Association said that this list is too restrictive and cannot be modified in the future, which will hinder the operations of American brands.