Vietnam's dreams of huge exports to US unravel
HO CHI MINH CITY - Just a few months ago, Vietnamese garment
manufacturers
were rubbing their hands together with glee, anticipating a major
selling
spree in the US market. After all, Vietnam had finally gained normal
trade
relations status with the United States, which among other things meant
considerably reduced US tariffs on Vietnamese products.
Vietnam also expected an extended non-quota period on its goods after
the
country's Bilateral Trade Agreement (BTA) with the United States went
into
effect in late November.
Now, however, Vietnamese garment makers have their heads in their
hands.
Late last month, US officials suddenly said they were considering
cutting
short the quota-free period for Vietnamese products, and would be
imposing
quotas on these as soon as possible. The decision took Vietnamese
garment
manufacturers by surprise. Today, most say it is small comfort that
their
goods would nevertheless still enjoy low US tariffs of 3 percent,
compared
with the 40 percent slapped on products from countries without normal
trade
relations status with the United States.
"It's really disappointing, " says Nguyen Binh of Saigon Garments No 2,
one
of the firms that had been aiming to make a mark in the US market. "We
had
expected the BTA to increase the volume of our exports to the United
States," he adds. "Now that quota barriers have been reset, that volume
will
be largely smaller." Binh also remarks, "Trade with the United States,
like
political relations, is really not easy."
In truth, the local garment industry may have wanted too much too soon.
This
is despite repeated warnings of some senior Vietnamese officials to
take
things slowly, and for local businesses to do their homework first
before
making an attempt to venture into the US market.
"Speaking frankly, I do not think we are yet in a position to take full
advantage of the pact," Planning and Investment Minister Tran Xuan Gia
even
said recently. "Not all industries are properly prepared and many
enterprises don't even understand the content of the agreement."
Such words contrast with those uttered by Vietnam Garment and Textile
Corp
(Vinatex) officials soon after the trade pact was signed last year.
Indeed,
Vinatex deputy director Vu Duc Thinh had even said that Vietnam was
"well
placed" to take orders, which he said would be redirected from previous
"source countries" that were now regarded as politically unstable such
as
Pakistan, Turkey, Indonesia and the Philippines.
Vinatex chair Le Quoc An, who had spent at least two years preparing to
enter the US market, also announced that the US Textile Garment and
Leather
Shoes Association had a plan to come to Vietnam in January to continue
discussions for cooperation programs. He said as well that "US
delegations"
had "signed contracts for exports with Vinatex". At the time, Vinatex
had
struck a deal with the US-based transnational DuPont, which would
supply
materials and modern technology to the Vietnamese firm to help improve
production standards and make Vinatex's goods suitable for the US
market.
Vinatex had also opened offices in Hong Kong and New York in
anticipation of
an influx of new clients from abroad. Predicted An: "Our target of US$1
billion in exports to the American market is achievable."
Other Vietnamese companies were also busy inking contracts with US
firms. At
least three companies based here in Ho Chi Minh City, for instance,
secured
contracts to export a total of 5 million shirts and trousers in the
second
quarter of 2002. In Hanoi, a number of firms clinched contracts to
supply a
total of 1 million polo shirts and 48 million pairs of underwear to US
clients.
These days, though, many in the garments industry are wondering if the
officially set targets for garments and textiles exports to the United
States would be revised in the wake of the recent US announcement.
Current textile and garment exports to the United States are only about
$50
million per year. Officials had expected this to increase to $200
million
this year. By 2005, the predictions were that the garment exports to
the
United States alone would grow to some $1.5 billion.
Meanwhile, some industry observers say local garments manufacturers
would do
well to take advantage of the seminars being given by the Vietnam
Chamber of
Commerce and Industry (VCCI) regarding the US market. As it is, they
say,
too many Vietnamese clothing firms have gone full tilt into the US
market
without sufficient market information or even buyer contacts.
An online newsletter published by Mekong Sources, a US consulting firm
based
in Vietnam, warns, "There will be nothing easy about exporting textile
and
garment products to the USA."
"[Suppliers] will quickly understand why there are so many lawyers in
America," it also says. "Manufacturers who want to sell textile and
garment
products to US buyers must run a gamut of rules and regulations."
By Tran Dinh Thanh Lam - Inter Press Service - March 08, 2002.
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