On Friday morning, little more than half a day after President Clinton lifted the 19-year old embargo on U.S.-Vietnam trade, apparel manufacturers, textile producers and retailers were already beginning to eye...
On Friday morning, little more than half a day after President Clinton lifted the 19-year old embargo on U.S.-Vietnam trade, apparel manufacturers, textile producers and retailers were already beginning to eye that country as a source of product and business -- but only if it gets Most Favored Nation status.
"The lifting of the embargo is going to have a very positive impact on our business only if and when Vietnam is granted MFN," said Wally Singer, chairman and chief executive officer of Pacific Silk & Clothing Co., here. Pacific imports about 12.5 million apparel items per year, including woven shirts, jackets and bottoms, blended silk knits and 100 percent silk knits. "With the help of our partners in Hong Kong, we are beginning to look at building some knit facilities in Vietnam once there is MFN," Singer said. "That's in addition to our plan to move more of our production to China."
Richard Vetack, president of Cone Mills' textile products group, said since the company is taking an "international initiative when it comes to doing business, Vietnam will have to be part of our consideration, as the whole Pacific Rim is of interest to us."
Vetack cautioned, however, that Cone's interest is only preliminary, and that the company hasn't formulated any specific plans. However, he did say, "MFN is important to any business venture there."
J.C. Penney Co. said it may get into the act in Vietnam. A spokeswoman declined to specify the extent of Penney's interest or what types of items it may look for, but: "We see it as an opportunity to do some sourcing."
"Lifting the embargo doesn't mean a thing without MFN," said Benard Holtzman, president and chief designer of Harve Benard Ltd., a manufacturer of rtw and men's tailored clothing, noting that there's still a 90 percent duty on some apparel items. "Once MFN is granted, then we'll begin to seriously investigate our options there. Until then, there's no sense in talking about it."
At least one apparel manufacturer, though, said MFN may not be all that crucial. Andrew Postal, president of Judy Bond, said that prices, even with the heavy tariffs, might still be low enough to be attractive to U.S. traders, as Vietnamese factories push for a piece of the U.S. market."This wouldn't be the first time an Asian producer worked at cost or a little below cost to gain a share of the U.S. market," said Postal.
However, Irwin Robinson, founder and president of the Vietnam-American Chamber of Commerce, a 26-member group representing various segments of Vietnamese industries, said, "Without MFN, U.S. companies will not be able to have the assistance of the U.S. Export-Import Bank in the financing of the sale and shipment of goods to Vietnam, nor will they be able to obtain overseas investment insurance."
Like most others, he noted that the high tariffs would be damaging.
"As it stands now, despite the lifting of the embargo, Vietnam's goods will be subjected to such high U.S. import duties that effectively, trade with Vietnam will be one-way," said Robinson, a senior partner in the law firm Phillips Nizer Benjamin Krim & Ballon, here, who formed the VACC in May 1992. "The U.S. will be able to sell its goods to Vietnam, but Vietnam will be severely hampered in selling its goods to the U.S.," Robinson said.
If the White House decides to pursue MFN status, it will be up to the administration to negotiate a trade agreement with Vietnam. Congress would then have to pass implementing legislation.
An MFN proposal likely would face opposition in Congress. On the day Clinton lifted the embargo, 60 House Republicans sent him a letter imploring him to act "responsibly" and not lift the embargo until all those reported missing in action were accounted for.
However, even if and when Vietnam achieves MFN, some executives said they are still uncertain about the quality of merchandise that would initially come out of there. They also pointed out that the country's infrastructure is in need of capital infusion.
While there are more than 2,000 mill and cut-and-sew operations currently in Vietnam, Robinson noted, many are antiquated. There are also more than 60,000 roads that need to be overhauled, "and nearly every bridge along major highways needs to be inspected and fixed," he said.
Elie Tahari, owner and designer of Tahari, a ready-to-wear and sportswear company here, said, "Vietnam is a long way from developing quality products. They will be producing a lot for the mass market, but not for the types of clothing we produce."Tahari said that Vietnam -- like Hong Kong, Korea and Taiwan -- will need about 10 years to evolve into a high-quality apparel producing sector, adding that with those three countries, "eventually, it happened."
Currently, Tahari purchases most of its fabrics in Italy, where they are shipped to Korea to be made into garments.
Burlington Industries said it is not currently interested in establishing plants in Vietnam.
"As for exports, we don't see Vietnam as a major export market right now," said a Burlington spokesman. "It's not a market that's high on our priority list. Our divisions will most likely take a wait-and-see approach to see what opportunities may exist for products we make."
"The lifting of the embargo does not mean trade relations have been normalized, so we would not expect significant textile and apparel trade with Vietnam unless and until it is granted MFN status," said Henry Truslow 3rd, president of the American Textile Manufacturers Association, and president of Sunbury Textile Mills, Sunbury, Pa.
"We are concerned, however, because Vietnam is a nation of 75 million people with a state-run economy, very low wages and a significant textile and apparel industry." Truslow said. "We will recommend that the U.S. government take early action to establish quotas once Vietnam's textile and apparel imports begin to have an impact on our market."
Arthur C. Wiener, chairman and chief executive officer of Galey & Lord, said exports to Vietnam, or other Third World countries, are mainly for companies that have known brands.
--With contributions from JOYCE BARRETT and JIM OSTROFF, Washington
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