Textile Group Opposes Including Vietnam In New Trade Pact

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