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Textile, garment industry hopes Pacific nations trade deal will open US market
A trade deal between Pacific nations is likely to secure full tariff waivers for Vietnamese textile and garment products in the US but insiders warn the industry will face a new challenge with regard to origin.
The nine-member Trans-Pacific Partnership is still in the negotiation stage with its sixth session held in Singapore earlier this month.
It groups Brunei, Chile, Malaysia, New Zealand, Australia, Peru, Singapore, the US, and Viet Nam.
Viet Nam is hoping to boost exports to the other eight TPP countries, particularly the massive US market.
Experts said successful TPP negotiations would see 95 lines of Vietnamese textile and garment products become tax-free in the US.
The US is already the largest market for Viet Nam, accounting for 55 per cent of its overall textile exports of US$11.2 billion last year, while textiles accounted for 43 per cent of all Vietnamese export to the US.
It is also the second largest textile exporter to the US after China but accounts for a mere 5-6 per cent of the US's imports of $95 billion.
But the zero tariff comes with a catch – only textiles made using US yarn will qualify for it.
Le Van Dao, Deputy Chairman of the Viet Nam Textile and Apparel Association, said this rule would hamper Viet Nam's efforts to enjoy zero tax since it did not produce much fabric and was only competent in making apparel.
Viet Nam itself was a large producer of yarn but exported 60-70 per cent of it, he added.
Though the TPP negotiations have yet to conclude, Vietnamese textile and garment industry is hopeful of a desirable outcome.
It has reached favourable bilateral and multilateral agreements with Japan and South Korea, managing to increase exports to Japan by more than 20 per cent last year to account for 10 per cent of that market.
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