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U.S. Threatens Unilateral Quotas on Vietnam

WASHINGTON — The U.S. is threatening to impose quotas unilaterally on apparel and textile imports from Vietnam if the negotiators meeting here can’t reach an agreement by the end of the week.<br><br>The high-stakes round of talks, which...

WASHINGTON — The U.S. is threatening to impose quotas unilaterally on apparel and textile imports from Vietnam if the negotiators meeting here can’t reach an agreement by the end of the week.

This story first appeared in the April 9, 2003 issue of WWD.  Subscribe Today.

The high-stakes round of talks, which begin today, will determine the number and size of quotas on a broad range of products that retailers such as J.C. Penney, Sears, Target and Gap produce in Vietnam. Imports from Vietnam have surged dramatically over the past year.

Government officials Tuesday reiterated the threat issued by Grant Aldonas, undersecretary for international trade at the U.S. Department of Commerce, to impose quotas on a broad range of products from Vietnam if an agreement isn’t reached. Aldonas initially made that threat at the annual meeting of the American Textile Manufacturers Institute Thursday.

Le Quoc An, chairman of the Vietnam Textile and Apparel Association and chief of Vinatex, the largest apparel firm in Vietnam called Aldonas’ warning “unfair.”

“We are in the process of negotiating and it is not reasonable to say you will impose quotas unilaterally before the talks begin,” said An.

U.S. officials are closely guarding the number and size of the quota limits it is seeking for Vietnam imports, as well as their negotiating strategy.

The U.S. can impose quotas unilaterally on Vietnam because it is not a member of the World Trade Organization.

Imposition of quotas is a must-have for the U.S. textile industry, which is alarmed at the growth in Vietnamese imports. However, importers are fighting any restrictions on quantities of this burgeoning supplier.

The potential quotas are also a divisive issue on Capitol Hill.

Several House lawmakers, advocating the importers’ position, are pressing the administration against quotas.

In a letter sent to U.S. Trade Representative Robert Zoellick last week, 23 mostly Republican House lawmakers argued against quotas, claiming U.S. companies are relying on Vietnam as an alternative source of production to China, particularly in 2004 when there will be no future years from which to borrow quotas.

Quotas will be lifted on all textile and apparel products in 146 WTO countries on Jan. 1, 2005.

Similarly, lawmakers from Southern textile states have been calling for quota restrictions to be placed immediately on Vietnam.

Importers, retailers and domestic textile mills have sent a flurry of letters to lawmakers and administration officials over the past several months to give some weight to their concerns.

For the year ended Jan. 31, apparel and textile imports from Vietnam surged more than 10 times their prior-year levels to 424.7 million square meters equivalent. Vietnam is currently the 23rd largest supplier to the U.S. with 1.1 percent share of the market in apparel and textiles.

Domestic interests are seeking to have the government restrain knit shirts, woven trousers and shirts and cotton and man-made fiber coats from Vietnam, while importers are seeking to exclude cotton knit and woven tops, cotton trousers and cotton sweaters.

Retail and import trade and lobby groups argue strongly against placing quotas on products from Vietnam, claiming that imports are taking market share away from other Asian suppliers and not from the domestic textile industry.

But the domestic industry argues Vietnam is taking market share away from the Caribbean Basin region, which is a export market for U.S. fabric and yarn.

“We want these quotas because Vietnamese imports of apparel are damaging the U.S. textile industry,” said Cass Johnson, associate vice president of international trade at the American Textile Manufacturers Institute. “Mexico and the Caribbean are losing market share in these products at the same time Vietnam is increasing market share.”

An said he has been lobbying to keep quotas off of knit tops, cotton pants, man-made fiber coats, woven shirts and man-made fiber shirts.

“Vietnam competes mostly with other Asian countries, particularly in apparel and not the U.S. industry,” claimed An. “I think the U.S. is requesting these quotas for political reasons because it wants more market access [through tariff reductions],” he said.