Vietnam joins TPP, Central America may lose US$100 million in textile and clothing exports

Recently, some experts said that as Vietnam joins the TPP Trans-Pacific Strategic Economic Partnership Agreement (TPP), Central America will lose US$6 billion in the textile and clothing field, causing panic among countries in the region. Vietnam hopes that after joining the TPP, it will not be subject to rules of origin and enjoy zero-tariff preferential treatment immediately after the agreement is signed. However, Central American countries and US textile experts have said that this will be a disaster for the five Central American countries and the Dominican Republic, and they will be robbed of 25% of their textile and clothing export share.
In 2013, Dominica signed a free trade agreement (DR-CAFTA) with Central America and the United States. Luis Estrada, general manager of Vestex, Guatemala’s largest textile and apparel organization, said that in 2013, members of the DR-CAFTA Free Trade Agreement exported a total of $7.8 billion worth of clothing to the United States. However, if Vietnam joins the TPP and is not subject to yarn rules of origin, , these countries will lose US$1.95 billion in annual exports, and are expected to lose a total of nearly 6 billion euros in the first three years of TPP implementation.
Because DR-CAFTA member countries must abide by the rules of origin before their textiles can be sold to the United States. According to the current negotiation process, Vietnam will likely purchase raw materials from other Asian countries and then process and produce them locally for sale. To the United States.
Vestex Chairman Severino Matta said: “Unfair treatment will reduce the competitiveness of Central American countries. The treatment provided by the United States to TPP countries should be the same as that of members of the DR-CAFTA Agreement. Central American countries must comply with the supply list very strictly and provide detailed information as required. However, Vietnam wants to use a wider purchasing list. For this reason, Central American and Caribbean countries will need a long time to adjust to avoid TPP countries’ tariff reductions on exports to Central America and the Caribbean. The processing industry has had too great an impact.” Luis Estrada said: “If Vietnam joins the TPP under this condition, the losses to Central American countries will be huge. We are working hard to enable Vietnam and other countries to join the TPP under the same conditions. It’s fairer.”
Currently, DR-CAFTA member states have formed a lobbying alliance with the U.S. textile team headed by the National Council of Textile Organizations, requesting the U.S. Congress to pressure Vietnam to agree to abide by yarn rules of origin to limit the source of its raw materials. These partner countries also expressed their hope that the implementation of zero-tariff treatment will be delayed.
Relevant US administrative departments are optimistic about this. The TPP is expected to sign an agreement this year, and through communication, the participating countries can finally reach an agreement and achieve a win-win situation.
At the same time, Severino Matta said that Central American countries are working hard to develop niche market segments to avoid direct competition with Vietnam. Central America should pay special attention to the development of high-price, high-value-added synthetic fibers and the use of other higher-tech technologies. Content fabric clothing.
It is reported that the TPP now includes 12 countries, including the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Portugal, Singapore and Vietnam. Vietnam is the second largest clothing supplier after China. In the first half of 2014, Vietnam imported approximately US$7.7 billion in textile raw and auxiliary materials, a year-on-year increase of 20.6%. Among them, imported fabrics were US$4.63 billion, an increase of 17.5%; imported other textile accessories were US$1.5 billion, an increase of 30.5%; imported cotton was US$829 million, an increase of 43.7%; imported fibers were US$749 million, an increase of 3.5%. According to Vitas statistics, in the first six months, Vietnam’s imports of raw and auxiliary materials required for export textile production were approximately US$5.9 billion, a year-on-year increase of 23.3%. In 2014, the target of exporting textiles of 13 billion to 13.5 billion US dollars will be achieved, and the import of raw and auxiliary materials will continue to increase in the second half of the year. It can be seen that Vietnam has a strong dependence on imported yarn and fabrics, and it is difficult to comply with the rules of origin.