Apparel supply to the US: Will Vietnam fix TPP issues?

14:03 | 31/08/2015 Trade

(VEN) - The short supply list is seen as a major concession to Vietnam by most potential members of the Trans-Pacific Partnership (TPP) Agreement as the garment and textile sector faced difficulties in rules of origin. However, the list may change and using the list may present challenges.

Apparel supply to the US:  Will Vietnam fix TPP issues?

The short supply list is seen as a significant step, bringing hopes for the Vietnamese garment and textile sector

If the TPP Agreement is signed, it will offer big opportunities for Vietnamese garment and textile businesses as around 60 percent of exports in this sector are promoted to the TPP most potential members. According to the Vietnam Cotton and Spinning Association (VCOSA), garment and textile sales would significantly increase to US$800 billion by 2017, US$934 billion by 2020 and US$1.664 trillion by 2030. VCOSA Vice President Nguyen Van Tuan said that the TPP Agreement and other free trade agreements would turn Vietnam into the destination for global garment and textile supply chain.

However, Vietnamese garment and textile businesses have not yet made the most of incentives from trade agreements. Although Vietnam and the US have signed many agreements, only 19 percent of Vietnamese garments and textiles enjoyed tax exemptions in 2014, an increase of three percent compared to 2013. Vietnam, which is the world’s second largest garment and textile provider in the US market, has enjoyed a mere 10-percent import duty reduction.

Most potential members of the TPP Agreement will have to make greater efforts for conclusion of negotiations. However the fashion industry has still faced difficulties in apparel rules of origin, market access and trade enforcement rules. The United States Fashion Industry Association (USFIA) President Julia K. Hughes said that the three outstanding issues were the most difficult for Vietnam and the US.

In terms of market access, duties will be phased out with a complicated schedule based on three baskets, including A Basket with duty-free from the first day, B Basket with five year graduated phase-out and duties reduced by 10 percent each year and X Basket with duty cut from the first day and duty-free after 10 years for knits and 12 years for wovens.

Julia said that Vietnam had 194 items on the short supply list, but eight were temporary. In addition, identifying product quality following rules of origin is not a simple issue. Therefore, the TPP most potential members have agreed on eliminating rules of origin.

Vietnamese garment and textile businesses are putting high expectations on the elimination of rules of origin. The short supply list is seen as a significant step, bringing hopes for the Vietnamese garment and textile sector. However, to make the most of opportunities, Vietnam needs to make greater efforts to actively seek material resources and improve management capacity.

 

Hai Linh

Theo ven.vn