Changes Sought In Vietnam Trade Pact

As the US textile industry’s
Washington-based lobbyists continue with their efforts to get modifications in the US-Vietnam
bilateral trade agreement, the National Council of Textile Organizations (NCTO) issued a statement
saying Vietnam’s textile and apparel imports to the United States are growing faster than those of
any other country. The analysis shows Vietnam’s apparel exports are now second only to China’s in
product categories where there are no quota controls. It also shows the import growth has cut into
trade with the North American Free Trade Agreement (NAFTA) and the Central American-Dominican
Republic Free Trade Agreement (CAFTA-DR) countries.

NCTO President Cass Johnson said the latest trade data “confirm what Vietnam itself has
already predicted — that once quotas are removed, Vietnam’s state-owned and subsidized textile and
apparel sector will wreak havoc in the US industry and in the NAFTA and CAFTA-DR regions.”

US Department of Commerce data show that while Vietnam’s exports to the United States grew
by 30.4 percent from January to June 2006, apparel exports from CAFTA-DR countries and Mexico fell
by 14 percent.

On May 31, 2006, the United States and Vietnam concluded a bilateral agreement that provides
for eventual removal of textile and apparel import quotas, provided Vietnam eliminates its
subsidies for its manufacturing industries, including textiles and apparel. The agreement, which is
a step toward Vietnam’s eventual accession to the World Trade Organization (WTO), was attacked
sharply by US textile industry interests, but it has the strong support of retailers and other

The American Manufacturing Trade Action Coalition’s (AMTAC’s) Executive Director Auggie
Tantillo charged at the time the agreement was reached that “it is bound to replicate the
disastrous trade pattern the United States has constructed with China,” adding that because of
China’s state-sponsored advantages, “their manufacturers have run roughshod over US companies in
their own market.”

Pointing out the agreement will make it easier for retailers to source materials from
Vietnam and open stores there, the National Retail Federation strongly endorsed the agreement.

While the agreement is in place and does not require congressional approval, US textile
interests are attacking it on other fronts in an effort to get it modified.

Part of the overall picture is whether to grant permanent normal trade relations (PNTR) with
Vietnam. That proposal does require congressional approval, and Sens. Elizabeth Dole, R-N.C., and
Lindsey Graham, R-S.C., are blocking its consideration by the Senate as they and textile industry
officials seek concessions that will protect the interest of US manufacturers.

Ultimately, Vietnam will need a multilateral agreement with WTO members, and that is another
area where US textile makers could seek modifications to protect their interests. The present goal
is to wrap up the multilateral negotiations and PNTR by the end of this year.

September 5, 2006