MEXICO CITY — Central American textile and government officials will meet with members of Congress and the United States Trade Representative’s Office in Washington this week to request that Vietnam join the Trans-Pacific Partnership under conditions similar to those in the CAFTA-DR free-trade accord between the region and the U.S.
The meetings are due to take place today through Thursday in Washington, said Alejandro Ceballos, vice president of Guatemalan trade lobby Vestex.
The Central American delegation will include El Salvador’s vice minister of economy Luz Estrella Rodríguez; Javier Siman, who owns the regional department-store chain Siman, and members of the Central American-Dominican Republic Apparel and Textile Council, which has been lobbying against TPP.
The officials will meet with Angela Ellard, chief trade counsel and trade subcommittee staff director of the House Ways and Means Committee, and Everett Eissenstat, assistant U.S. Trade Representative for the Americas, according to Ceballos.
“We want equal conditions to the ones we have in CAFTA-DR,” the decade-long free trade accord between Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Dominican Republic with the U.S., he said. “We can’t ask the U.S. to eliminate or soften its Vietnam concessions but we can ask that Vietnam fulfills the text” it signed when the TPP’s 12 members approved the final agreement Oct. 15.
Ceballos said Vietnam’s textiles receive state subsidies and “there are no assurances they will operate as a private sector…We don’t receive any government subsidies.”
The parties will also discuss the Earned Import Allowance Program, a special provision that, relative to how much U.S. cotton it buys, enables Vietnam to import fabrics from non-TPP members.
“For every square meter of U.S. fabric they use, they get a credit to use up to 70 percent more fabric from other countries like China,” said CECATEC-DR’s executive director Karin de Leon, adding that the measure “is like the TPL in reverse,” referring to the Tariff Preference Level provision that allowed Nicaragua to import scarce raw materials outside CAFTA-DR to make garments for U.S. exports.
“Under the TPL, Nicaragua’s import benefits went down gradually,” de Leon explained. With the Earned Import Allowance Program, “import credits increase gradually until 2021 when they are capped at around 20 million equivalent square meters.”
Vietnamese textiles will also be able to reach the U.S. with a 20 to 35 percent cut in duty depending on the product involved as soon as the TPP begins operation, with tariffs gradually reaching zero in 10 years. “This is going to hurt many of our products,” de Leon insisted.
Vietnam was also granted a more flexible short-supply list than the one Central America must follow under the CAFTA-DR, she emphasized.
“It gives Vietnam more flexibility to use fabrics to make the same products we export like knits and wovens, blouses, jackets and shirts,” de Leon said. “Vietnam can use a particular fabric to make pants, shirts or anything they want whereas our [CAFTA-DR] rules are much more specific,” she noted. “If you can import, say, nylon, you can only use it to make something very specific, like a jacket.”
Ceballos said the provisions could allow Vietnam to import more cheap raw materials from China, giving it an unfair advantage over the impoverished region, which has suffered as Vietnam has climbed to a much bigger U.S. garment supplier.
On the upside, Ceballos said Vietnam’s TPP entry under a yarn-forward rule won’t hurt Central America as much as originally thought. Last year, textile executives said the sector could lose $6 billion in the first three years of TPP if Vietnam entered the block with a flexible rule of origin.
“We are not as worried [as last year] but they could still abuse the rules,” Ceballos concluded. “We just want to make sure they compete fairly.”