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Footwear, garment exporters put high hope on TPP
The enterprises in garment and footwear industries – the two biggest exporters of Vietnam – are expecting the opportunities to penetrate more deeply into the US market, when the Trans-Pacific Partnership TPP is signed.
With TPP, the tariffs imposed on the goods that Vietnam and TPP-member countries export to the US would decrease gradually before they are absolutely removed.
This means that when Vietnam’s garment and footwear products can be exempted from tax, it would have great competitiveness on the US market in comparison with other rivals.
However, sources have said that a new problem has arisen after the latest TPP negotiation round. The US trade representative has asked to apply the “yarn forward” principle, with which, Vietnamese garment products can only enjoy preferential tariffs when yarn and post-yarn production stages (fabric, cutting and tailoring) are done in the countries that join TPP, and only fiber could be sourced from the countries that are not the members of TPP.
Dang Phuong Dung, Secretary General of the Vietnam Textile and Apparel Association Vitas, said that if the above said principle is applied, not only Vietnamese, but the US investors in Vietnam will also not be able to get benefits from the TPP, because they only make the cutting and tailoring.
Eric Emerson, a Lawyer from the US, also told VietNamNet that changing or relaxing the “yarn forward” rule could substantially increase Vietnam’s access to the U.S. market.
The US is the biggest market for Vietnamese footwear and garment exporters which decides the development of the two important industries of Vietnam. Therefore, economists have urged the negotiation team to suggest the solutions to harmonize the interests of the involving parties and avoid disadvantages for the two Vietnamese industries.
Tran Quang Nghi, General Director of the Vietnam Textile and Garment Group Vinatex, the biggest garment producer in Vietnam, also said that the US market consumes more than 50 percent of the total export turnover of the industry.
When TPP officially takes effect, garment seems to be the industry which can most clearly enjoy the benefits from the agreement. If the negotiations succeed, up to 95 product lines of Vietnam to be exported to the US would be able to enjoy the zero tariffs.
Footwear producers also hope to boost exports to the US, once TPP takes effect. According to Nguyen Duc Thuan, President of Thai Binh Footwear Company, with TPP, it is very likely that the tariffs on Vietnamese shoes would be halved.
When commenting about TPP, experts all agree that this is for first time Vietnam joins the negotiations for multilateral FTA (free trade agreement) with such a fast pace, broad scope of issues to be touched, and a high level of commitment and complexity.
TPP is also believed to set up many stricter requirements on the environment, labor and intellectual property. However, according to the Vietnam Leather and Footwear Association Lefaso, these requirements can be well satisfied by Vietnamese companies.
Ha Duy Hung, Chair of the HCM City Leather and Footwear Association, said that TPP would bring a golden opportunity for the Vietnam’s footwear and handbag production. In 2011, Vietnam’s garment export turnover to the US reached 7.1 billion dollars, accounting for 50 percent of the total garment export turnover, an increase of 13 percent over 2010. Meanwhile, the footwear export turnover to the market reached 2 billion dollars, and handbag exports brought 700 million dollars.
vietnamnet
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