US, Vietnam Textile Bilateral Trade Talks Break Down

The United States and Vietnam have failed to reach agreement on a bilateral agreement that would
limit the growth of textile and apparel imports. When the US normalized trade with Vietnam in
December 2001 by granting it Normal Trade Relations (Ntr) status, tariff rates on garments from
Vietnam dropped from an average of 90 percent to 17 percent.

As a result, this past year, imports of apparel have grown by more than 1,000 percent, and
the American Textile Manufacturers Institute (ATMI) estimates that apparel imports are increasing
at a rate of 50 million square meters every month. The latest 12-month data show that Vietnamese
imports of apparel amounted to 315 billion square meter equivalents. Fabric and yarn imports are
insignificant, as they were virtually zero before Ntr, but they, too, are rising rapidly.

Ever since trade was normalized with Vietnam, US textile manufacturers have been pressing the
Bush administration to negotiate a bilateral textile agreement. That has run into strong opposition
from major apparel importers, including Dress Barn, Eddie Bauer, Gap, J.C. Penney, Sears and
Target. They say the ability to place apparel manufacturing orders in Vietnam is “an essential
hedge against an expected tight supply situation in 2004” as a result of quota restrictions on
imports from other countries. They contend that imports from Vietnam are replacing business from
other Asian nations and are not displacing manufacturing in the United States. 

March 2003