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.