Garment and Textile Export Still Easy

Deputy Minister of Trade Le Danh Vinh affirmed that the Ministry of Trade’s granting of export licences for garment and textile products to the United States from March 15, 2007 didn’t cause any trouble or limit export volumes for exporters.

Vietnamese garments and textiles are no longer subject to export quotas to the United States market, but the US Department of Commerce (DOC), under pressure from local producers, has raised another barrier - a mechanism supervising Vietnamese garments and textiles exported to the US to guard against dumping.

 

According to the Vietnamese Ministry of Trade, Vietnam earned US$1.6 billion from garment and textile exports in the first quarter of this year, an increase of 30 per cent on year. Mr Le Viet Toa, Deputy General Director of Viet Tien Garment Corp, worried about the overheated growth of Vietnamese garments and textiles, said the first-quarter growth meant little. Vietnam has been in the WTO for only two months, and Vietnam will hardly make quick growth as China did, because its supporting industries and material sources are limited.

 

Mr Diep Thanh Kiet, Vice Chairman of Ho Chi Minh City Association of Textile, Garment, Embroidery and Knitting, is anxious that the fast-growing export of garments and textiles will lead to a severe competition among domestic companies for shrinking production sources like land, workshops and the workforce.

 

Addressing the press after the Ministry of Trade’s decision on export licence granting, Deputy Minister of Trade Le Danh Vinh explained that this is only a temporary solution, before the Ministry of Trade and the General Department of Customs can cooperate to provide data for the supervision and regulation of garments and textiles exported to the US.

 

Deputy Minister Vinh emphasised that this mechanism will help manage export growth, ensuring sustainable development and long-term benefit to Vietnamese garment and textile exporters, especially avoiding antidumping tax which would be imposed by the US in the even uncontrolled exporting happens. “The purpose of this supervision aims to increase the confidence for [US] importers, lift the value of the exports and minimise batches of low-valued unit prices,” Vinh added.

 

Deputy Minister Le Danh Vinh also confirmed that the granting of export licence (E/L) is very simple, free of charge and trouble-free for enterprises. The Government has no intention of limiting export quantity of enterprises, and they should feel at ease receiving big orders.

 

Under a survey conducted by the Ministry of Trade and the Ministry of Industry, over 85 per cent of garment and textile companies agreed with the granting of export licences and quarterly delivery registrations.

 

An official from Ho Guom Garment Joint Stock Company, receiving the new export licence, said the application of this mechanism is essential because effective control helps prevent goods from other countries transhipping through Vietnam.

 

Economic experts said the decision of State management authorities, with a majority consensus from the business community, showed the activeness of the Vietnamese side in the process of increasing export value, ensuring the originality of goods and avoiding trade fraud in export and import activities. The consensus reflects the aim to take full use of advantages and limit negative impacts from the eradication of export quotas, in accordance with WTO commitments.

 

Speaking at a seminar on recent US antidumping cases against exports, held in Hanoi, Lawyer William H. Barringer, formerly of US law firm Vinson & Elkins LLP, also said Vietnamese application of export control mechanisms over garment and textile exports to the US market is crucial. However, Barringer explained that to make this mechanism effective, in addition to meticulous study of US market movements, Vietnam also needs accurate data on the peculiarities of the Vietnamese garment and textile industry, as well as of other countries with similar production conditions, to have suitable control measures, avoiding heavy-handed control that could negatively impact the Vietnamese garment and textile industry growth.

 

Lawyer David Luff, consultant of the Multilateral Trade Assistance Project (Mutrap), pointed out that the Vietnamese Government should immediately check its criteria to obtain market economy status. As for the Vietnam Textile and Apparel Association (Vitas), it should quickly hire international lawyers experienced in defending antidumping cases and the process of resolving trade disputes in the WTO.

 

Barringer noted Vietnam has a golden opportunity to increase export without stiff competition from its main rival, China, as this country will not be free from export quotas until 2008. He said Vietnam must grasp this chance, and more importantly Vietnam needs to build a long-term strategy to occupy the market and establish a consultation mechanism with the US government that allows the two countries to negotiate and consider commercial issues and then inform concerned companies, to avoid lawsuits. This is much better than the Vietnamese application of export licences to garments and textiles exported to the US. Granting export licences could possibly better control export quantity and prevent illegal transhipments of garments and textiles, but it would likely become an unnecessary barrier for Vietnamese exporters, Barringer added.