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Textile Group Opposes Including Vietnam In New Trade Pact

James A. Morrissey, Washington Correspondent

The president of the National Council of Textile Organizations (NCTO) has urged the Obama administration to "re-think" including Vietnam in a proposed Trans-Pacific Partnership (TPP) agreement, claiming that including Vietnam would mean the loss of thousands of U.S. textile export-related jobs and put at risk hundreds of thousands of related apparel jobs in the Western  Hemisphere.

Testifying at a hearing on the TPP conducted by the International Trade Commission, NCTO President Cass Johnson said Vietnam has become the second-largest exporter of apparel to the United Staes -- after China -- and its exports are undercutting trade agreements with the North American and Central American nations with which the United States has free trade agreements (FTAs). While an imported garment is an imported garment, where the United States has FTAs, the apparel imports must, for the most part, be made of yarn and fabric from the participating countries.

Pointing out that key details of the agreement have not yet been negotiated, Johnson said NCTO supports a yarn-forward rule of origin, as it has in other FTAs. "This rule is important," he said, "because it ensures that the benefits of the trade agreement stay within thee region itself and not given to third party countries." He also called for strong Customs enforcement, which he says has been lacking with regard to other FTAs.

With respect to inclusion of Vietnam, Johnson said there is a "vast disparity" as to how trade is conducted between the United States and Vietnam because of Vietnam's government intervention in its "command and control economy." He said, for example, that over the last 18 months, Vietnam has devalued its currency three times in order to gain an increasing share in global export markets.

Citing what he sees as particular problems with non-marker economies, Johnson said Vietnam's apparel exports to the United States in the past four years have increased by $2 billion and China's are up by $4 billion at a time when exports from nearly every other country have gone down.

The U.S. Association of Importers of Textiles and Apparel (USAITA) did not testify at the hearing, but it has submitted comments to the U.S. Trade Representative. USAITA President Julia K. Hughes noted that the discussions of TPP are in their earliest stages, and she feels it would be a mistake to write off any country at this point. She says Vietnam, as well as all of the other countries would have to comply with terms and conditions that are eventually negotiated. She also said it would be important to have a single rule of origin covering imports from all of the participants and to avoid the sourcing complications that result from country-by-country different rules of origin. The National Retail Federation also supports a single rule of origin in new trade agreements  to help simplify sourcing.

March 9, 2010