Facing Antidumping Threats: Export Regulation Mechanisms for Vietnamese Apparel

Under the WTO Agreement on Garment and Textile Commodities, all WTO member countries (including the United States) had to remove import quotas on Vietnamese garments and textiles immediately after Vietnam officially joined the global trade club. However, the United States unilaterally announced a mechanism closely monitoring Vietnamese apparel from January 1, 2007 when Vietnam was admitted to the WTO. Hence, Vietnamese apparel will possibly be sued for antidumping taxes. To address this matter, the Ministry of Trade and the Ministry of Industry decided to apply a mechanism regulating apparel shipments bound for the United States to avoid antidumping cases.

 

Mr Le Danh Vinh, Deputy Minister of Trade, said the objective of this mechanism is to increase the confidence of importers, raise export value, reduce low value consignments, manage the pace of export growth, prevent illegal shipping and eradicate trade fraud. In the short term, the Ministry of Trade began granting export licences (E/L) for shipments destined for the US from May 15, 2007. Five monitored categories are shirts, trousers, swimwear, underwear and sweaters. The two ministries can adjust and shift to code monitoring or category management in different periods of time.

 

Deputy Minister Le Danh Vinh affirmed the granting of E/L is very simple and free of charge. The Government has no intention of restraining the export of large shipments; hence, exporters need not worry when receiving big orders. However, to minimise shipments of simply-made and low-value consignments to manage the export growth pace, the two ministries will generalise, negotiate and instruct exporting enterprises and the Vietnam Apparel and Textile Association to tackle particular cases, avoiding harming the majority. In case there are export categories with unchanged quantity but lower value, enterprises are still able to export simply-made and low-value products.

 

Deputy Minister of Trade Le Danh Vinh added that the US is collecting ideas for the implementation of the monitoring mechanism on Vietnamese apparel imported into the US. Under this mechanism, investigation will be made every six months and in the worst case, they can unilaterally investigate antidumping cases, applicable to one or many apparel items from Vietnam.

 

According to a report from the Industrial Economic Institute under the Ministry of Industry, Vietnamese garment and textile exports soared in the first three months of 2007, notching up over US$1 billion, up 31.1 per cent, only US$44 million less than the largest forex earner crude oil, but US$356 million more than the earnings of the third largest exporter, footwear. Vinh said these figures meant little because Vietnam joined the WTO only three months ago and this export is likely to face US antidumping action. “Therefore, we have a lot of things to do if we don’t want half of garment and textile companies go bankrupt by 2010,” Vinh pointed out.

 

The quick growth of the garment and textile industry also leads to severe competition for product sources like land, workshops and labour, among concerned enterprises.

 

At a meeting discussing measures to cope with antidumping threats to the Vietnamese garment and textile industry, Lawyer William H. Barringer from the United States warned the Vietnamese garment and textile industry to carefully prepare documents, in case of antidumping cases initiated by the United States Department of Commerce. 

 

Mr Barringer advised Vietnam to devise solutions preventing such a case. In the worst circumstance, Vietnam will have ready documentation as proof against the case.

 

According to Lawyer Barringer, to escape antidumping cases Vietnam needs to actively take part in the consultation process for the monitoring mechanism on imported Vietnamese apparels, conducted by the US Department of Commerce. Vietnam should put forward the consultation mechanism to the US Administration to regularly exchange information, and ask for Vietnamese involvement in the monitoring process to avoid possible huge damages.

 

According to Lawyer David Luff, a consultant of Multilateral Trade Assistance Project (Mutrap), the Vietnamese Government needs to immediately check its criteria to be recognised as a market economy and prepare documentations demonstrating this. It is also recommended to prepare methods of selecting an equivalent third country for antidumping defence. As for business associations, they should hire capable and experienced international arbitrators as soon as possible.

 

Mr David Luff added that in addition to efforts from managing ministries and branches, each enterprise should take initiative in diversifying its product categories, expanding its markets and closely cooperating with Vietnam Apparel and Textile Association and related importers to seek support to minimise losses.