Vietnam in EU textile pact as WTO quotas near end
HANOI - Vietnam has confirmed a textile agreement with the European Union that will increase exports to the region by 25 percent and tide it over during the first year of a quota-free regime for World Trade Organisation members.
The communist country last week affirmed details of the trade pact for its second most valuable export that was concluded on February 15, trade sources said on Wednesday.
Under a provision of the 1994 Uruguay Round, textile quotas will be lifted for all WTO members at the end of 2004. Vietnam is not a member of the group, and so would not enjoy that benefit, even though it hopes to join the global group by 2005.
China, a WTO member, is Vietnam's biggest textile rival.
"No one can compete with China on price," said a foreign trade expert. "The fact that Vietnam has quotas might benefit it in the end because it will already have an official channel of exports that will give it better access to the EU market."
According to the text of the EU-Vietnam textile agreement, Vietnam is expected to earn 900 million euros from exports to the EU this year under the increased quotas, versus 600 million euros last year.
Textile imports to the EU from Vietnam will rise by about 25 percent, according to a statement from the EU at the time the pact was announced.
The pact strengthens bilateral ties, Pascal Lamy, EU Trade Commissioner said in the agreement text, calling it "a step in the direction ahead of Vietnam's accession to the WTO".
In return, Vietnam is cutting customs duties on various textile and clothing products it buys from the EU to less than half the amount it has been applying. It is also giving investment concessions in sea transport and insurance brokerages.
Textiles and garments earned Vietnam $2.7 billion in 2002, the second biggest export generator after crude oil.
Most of that came during a quota-free period to the United States, which has been cut short by a pact that limits exports to $1.7 billion to America in 2003 and increases by between two and seven percent, depending on products, annually through 2004.
The pact with the U.S. runs through end-2004, but will be automatically rolled over each year until Vietnam joins the WTO.
By Christina Toh-Pantin - Reuters - September 17, 2003.
|