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Importers Seek Delay on Setting Vietnam Quota

WASHINGTON -- Eyeing huge increases in apparel and textile imports from Vietnam, importers want to put up a roadblock against a bilateral textile and apparel agreement and the quota limits it would contain.<P>Peter McGrath, chairman of the U.S....

WASHINGTON — Eyeing huge increases in apparel and textile imports from Vietnam, importers want to put up a roadblock against a bilateral textile and apparel agreement and the quota limits it would contain.

This story first appeared in the June 5, 2002 issue of WWD.  Subscribe Today.

Peter McGrath, chairman of the U.S. Association of Importers of Textiles & Apparel and president of purchasing at J.C. Penney Co., plans to meet with officials at the Office of the U.S. Trade Representative today to urge the agency not to begin negotiations on a textile-apparel pact with Vietnam.

“We need to develop trade with a country before we have consultations [leading to a bilateral textile pact],” said McGrath.

To date, there are no quotas on textiles and apparel from Vietnam, but importers are concerned the U.S. will begin consultations sooner than later. Importers have what McGrath calls an “uphill battle” because the U.S. has stated from the beginning it would negotiate a textile-apparel quota-setting pact with Vietnam.

The question is not if but when the administration will begin consultations with the U.S.’s former foe. The other big issue is whether the U.S. will tie increases in market access to improvements in labor standards, a provision Rep. Sander Levin (D., Mich.), the top Democrat on the House Trade Subcommittee, said he would fight for in a bilateral pact.

Such an approach was used by the Clinton administration when negotiating a Cambodia textile-apparel agreement. The U.S.-Vietnam bilateral trade agreement went into effect on Dec. 10, 2001, granting the Southeast Asian nation normal trade relations status and thus drastically lower tariffs.

Although it has only been six months since Vietnam was granted NTR, imports of apparel and textiles surged in the first quarter of the year by 144.8 percent to 19.9 million square meters equivalent, valued at $38 million, according to the Commerce Department.

Despite the surge, Vietnam only represents 0.13 percent of the apparel and textile import market in the U.S. It ranks as the 44th supplier of apparel and textiles to the U.S.

But the flagging domestic textile industry is closely watching a substantial increase in fabric imports from Vietnam.

“The game is to stop the U.S. from initiating the first bilateral so the country can build up its base levels as high as possible, more often than not with transshipped goods,” said Jock Nash, Washington counsel for textile giant Milliken & Co. “So when the U.S. does negotiate a bilateral, the quota percentage growth levels will be higher.”

Nash said he expects Vietnam to be a powerhouse, claiming the country is already getting a big boost from investment by Chinese companies.

“It’s time to get them to the table and start negotiations immediately,” said Nash.

U.S. trade officials claim they have not begun consultations with Vietnam, though they are watching the situation closely. Donald Foote, director of the agreements division at Commerce’s Office of Textiles & Apparel, said the Committee for the Implementation of Textile Agreements considers a variety of factors in determining whether to place quotas on apparel and textile categories, including product sensitivity, domestic employment and production, import growth and market share.

“Vietnam has a bunch of categories on the radar screen, but they are still at low levels in terms of percentage share,” Foote said.

McGrath plans to discuss the impact a bilateral textile-apparel pact will have on the growth of business, as well as the added costs to U.S. consumers.

“Quota costs continue to rise as countries trade quota and that, in turn, artificially inflates the price of products,” said McGrath. “When quotas go away [in 2005], the price of products becomes more deflationary and more damaging.”””