By  on September 18, 2007

WASHINGTON — Sourcing executives with orders in Vietnam are waiting to see if their shipments are going to become more expensive.

The answer should come later this month or next when the Commerce Department wraps up its first biannual review of trouser, shirt, underwear, swimwear and sweater imports from the country.

The review, which began last week, will determine if the U.S., at least until the next review, is going to self-initiate an antidumping case on some of the imports from Vietnam. Such a case, if it successfully works its way through the U.S. International Trade Commission, would lead to higher duties. The idea is to offset the impact of imports that are priced unfairly low due to government subsidies or currency policies.

There is no telling how steep or broad any antidumping duties might be and importers have complained that the Bush administration has not given them enough information to be able to predict what goods are most likely to be impacted.

"People are going to be watching very carefully to see what they're saying, how they say it, when they say it," said Brenda Jacobs, counsel for the U.S. Association of Importers of Textiles and Apparel. "It's all going to matter because no sourcing decision is set so long as this program is in place."

Some companies, such as Liz Claiborne, began months ago to limit their exposure to sudden price increases by contracting with multinational producers in Vietnam who can shift production to other countries as needed.

It is difficult to determine from the import statistics the government has published if any antidumping cases will be initiated. For instance, Vietnamese imports of women's and girls' cotton trousers were priced at $58.40 a dozen in February and fell for two months before rising again to $60.23 in July. Meanwhile, the total number of pairs shipped has risen and fallen over the last six months.

Dumping is determined, however, through a process that takes into account prices in the Vietnamese or similar markets. Should the review find that goods are being dumped, it must be determined if a U.S. producer of similar product is being injured.

"If [Commerce] finds that an injury analysis is warranted, the department will examine a variety of indicators pertaining to the domestic industry, including but not limited to price trends, levels of production, capacity utilization, net sales, market share, profitability, lost sales, employment and bankruptcy that may denote injury," said a Commerce spokeswoman.The department's Import Administration, under the direction of assistant secretary David Spooner, is conducting the review, which is expected to take several weeks.

Gary Ross, corporate vice president of global manufacturing and sourcing for Liz Claiborne, said it appears that the import information will not warrant an antidumping case at this review.

"It's a highly political issue and anything can happen," said Ross. "We will still be living under a cloud of uncertainty."

As Claiborne has capped its growth in Vietnam for now, a host of other countries has picked up business, including Indonesia, Sri Lanka and India, he said.

Overall, Vietnam captured 4.7 percent of the U.S. apparel market for the 12 months ended July 31, with 1.1 billion square meter equivalents, and has been picking up its growth only slightly this year.

Though smaller in every way compared with its neighbor to the north — Vietnam is home to 85 million people, while China is the world's most populous nation with 1.3 billion inhabitants — the countries raise similar concerns among U.S. producers.

Both countries have nonmarket economies that they say afford producers there unfair advantages, including a variety of governmental supports. In particular, Vietnam has certain native benefits that make it a danger to producers in the Western Hemisphere, such as a ready workforce and proximity to materials made in China.

"Vietnam has a large pool of very low-cost labor that certainly has not been tapped to the degree that it could be," said a spokesman for the American Manufacturing Trade Action Coalition. "That's nothing illegal, but it certainly is a competitive issue for everybody else out there. The industry would be remiss if we didn't give as much scrutiny to Vietnam [as possible]."

The monitoring program might have made Vietnam a less-inviting prospect, but not everyone has been deterred.

In June, financier Wilbur Ross Jr. said he would pump an additional $100 million into International Textile Group's apparel and textile facilities in the country. Ross said some companies have limited their orders to Vietnam, but maintained that the orders just went to the next lowest-cost country and wouldn't bring jobs back to the U.S."We remain happy with our ever-increasing commitment to Vietnam and regard it as a sad commentary on American politics that this monitoring program was begun without enabling legislation by either Congress or the World Trade Organization," Ross wrote in an e-mail. "We have been expanding our investments in Vietnam and intend to continue to do so because the ministers are determined to follow the Chinese model."

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