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Amid Criticism, Vietnam Plans to Grow Apparel Sector

Country sets goals in WTO review, but its policies draw complaints.

GENEVA — Vietnam is pushing ahead with support plans to expand the country’s textile and apparel industry and is targeting exports from the sector to reach $25 billion by 2020, up from $17 billion in 2011.

But trading partners including the U.S. and China pressed Vietnam in a global forum to provide details that the development of the industry follows global trade rules.

The plans also foresee the labor force in the sector increasing to three million by 2020, up from 2.3 million in 2011, according to a World Trade Organization report compiled for a review of Vietnam’s trade regime. The WTO said the textile and apparel industry is the country’s largest, with 5,982 enterprises in 2011, mostly located in industrial parks or craft villages.

In addition, the blueprint calls for investments to improve high-quality cotton, fiber and fabric production facilities in order to decrease import dependence of these items, said the report, which was used as the benchmark for a two-day review last month.

During the WTO proceedings, China sought assurances that Vietnam’s expansion support measures would encourage trade partners to participate, and the U.S. delegation pressed for explanations that the support schemes were not based on subsidies that breached global rules on export performance or local content requirements.

Vietnam, which joined the WTO in 2007, countered that its policies were in conformity with its WTO obligations. Tran Quoc Khanh, Vietnam’s deputy minister of industry and trade, told delegates: “The radical departure from a centrally planned economy mind-set…has helped the country achieve one of the most remarkable performances internationally in economic growth. We remain resolved in furthering our international economic integration agenda through sustained and concerted liberalization efforts on the multilateral, regional and bilateral levels.”

The U.S. delegation said U.S.-Vietnam bilateral trade, initiated in 2001, has increased 150 percent since Vietnam joined the WTO. In 2012, two-way trade in all goods reached $24.9 billion, ranking Vietnam the 29th largest trading partner of the U.S. During the first seven months of this year, Vietnam’s apparel shipments to the U.S. were valued at $4.5 billion, up 12.6 percent on the same period last year, according to WTO data. Vietnam is the second-largest apparel supplier to the U.S. after China.

Pakistan critically noted that some industrial sectors, such as apparel, were granted “a high rate of protection.” The WTO report shows that in 2013, for 300 apparel lines, tariffs averaged 19.6 percent, substantially higher than the 9.3 percent average for all industrial goods. The European Union said it is concerned about “the persisting high level of influence from the state in a wide number of sectors and by the rise of trade barriers in Vietnam.” The EU added that trading partners “are not able to compete on a level playing field with Vietnamese state-owned enterprises granted special or exclusive rights privileges in Vietnam and also on markets outside Vietnam where they are in competition.”