Garments, textiles stand to gain from CPTPP

08:47 | 24/04/2018 Trade

(VEN) - Garments and textiles manufacturers and exporters could benefit greatly from the recently signed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) among 11 Pacific Rim economies. However the sector must make greater efforts to in order to take advantage of these opportunities.

garments textiles stand to gain from cptpp

Opportunities from new markets

Vietnam’s garment and textile exports to the CPTPP countries currently account for only 13 percent of total value, much lower than the 48 percent to the market in the United States, which is not a member of the new trade pact. Le Tien Truong, general director of the Vietnam National Textile and Garment Group (Vinatex), said that once the CPTPP comes into force this year, the garment and textile sector would have more opportunities to promote exports to member countries, especially Australia and Canada.

The global aggregate demand for garments and textiles in the past five years has not changed, reaching about US$700 billion a year. Meanwhile, apparel-producing countries are constantly introducing preferential policies to attract orders, resulting in fiercer competition in the garment and textile sector. Therefore, the enforcement of free trade agreements will help the sector target a year-on-year increase of 10 percent in export value.

Removing barriers

The CPTPP will be a strong driving force for Vietnam’s garment and textile sector by offering attractive tariff preferences. However, with strong commitments to labor and environmental standards across the Asia-Pacific region, the CPTPP will pose challenges for labor-intensive sectors.

Over the past three years, the exchange rate of the Vietnamese dong to the US dollar has been stable, while other countries have tended to devalue their domestic currencies to stimulate exports. For that reason, Vietnamese exports are often more expensive than products of other countries. In particular, the CPTPP’s rule of origin provisions are based on the yarn-forward concept, which basically states that all products in a garment, from the yarn, fabric, sewing thread and the final garment itself, must be made within the region in order to qualify for duty preference.

Le Tien Truong said that these barriers must be addressed in order to help the garment and textile sector make the most of opportunities provided by free trade agreements. He suggested that Vietnamese trade offices abroad should guide garment and textile businesses to access member markets.

Vietnam will drive towards receiving garment and textile orders with high requirements in terms of skills and techniques to enhance the sector’s added value.

Viet Nga