U.S., Vietnam agree on limiting textile

U.S., Vietnam agree on limiting textile

Martin Crutsinger, Associated Press, Washington

The U.S. administration announced a deal on Saturday to limit Vietnam's shipments of textiles and clothing to the United States, responding to complaints from American manufacturers about a flood of cheap imports.

The agreement, taking effect May 1, will place quotas on 38 categories of clothing and textiles. It is aimed at controlling a surge of shipments from Vietnam since the United States and its former enemy normalized trade relations in December 2001.

Clothing and textile shipments from Vietnam to the United States went from US$49 million in 2001 to $952 million in 2002, according to U.S. government figures.

Growth rates in some categories of clothing have been over 1,000 percent as Vietnam became America's sixth biggest foreign supplier of clothing.

While those shipments represented a bonanza for American consumers of knit shirts, pants and other items, the beleaguered U.S. textile and apparel industry complained about a flood of cheap imports from a new source.

The agreement announced on Saturday followed more than a week of intense negotiations in Washington.

It places quotas based on volume of shipments on the 38 categories involved and is expected to limit shipments for the first 12 months of the agreement to $1.65 billion, far below what shipments from Vietnam probably would have totaled this year had they not been capped.

While U.S. textile companies complained that the agreement was too lenient, the Vietnamese industry complained that it had been forced to accept the agreement under a threat that even stiffer quotas would be imposed unilaterally.

"We are totally unsatisfied," said Le Quoc An, chairman of Vietnam Textile and Garment Corp., the country's largest textile manufacturer. "They threatened to unilaterally impose the quotas if Vietnam did not agree."

U.S. trade officials, who briefed reporters on Saturday on condition their names not be used, said the agreement simply brought textile trade with Vietnam into line with other developing countries who are already under quotas as part of World Trade Organization (WTO) rules.

Current quotas faced by China and other nations are set to expire at the end of 2004, but the quota agreement the United States reached with Vietnam has a clause that will automatically continue quotas each year until Vietnam becomes a member of the WTO.

The agreement says quotas in most categories will be increased by 7 percent annually as long as they are in effect.

The boom in Vietnamese textile and clothing shipments occurred last year because the high Smoot-Hawley tariffs that Vietnam had faced as one of the few countries lacking normal trade relations with the United States dropped to the much lower tariff levels in effect for other U.S. trading partners.

While the tariffs were slashed sharply for Vietnam, the trade pact that normalized trade relations did not establish quotas. Both countries agreed to address that issue in later negotiations.

In addition to quotas, the new agreement allows U.S. Customs agents to inspect Vietnamese factories to verify production claims and for inspectors also to check to make sure Vietnam meets international labor standards.

Vietnam also agreed to abide by international rules governing worker rights and antisweatshop provisions.

Negotiations on an agreement to normalize trade with Vietnam were begun when former U.S. President Bill Clinton was in office but were not completed and ratified by Congress until President George W. Bush took office.

Clinton visited Vietnam in November 2000 in a trip that symbolized the beginning of a new era in relations between the two nations a quarter-century after the Vietnam War ended.