US Quotas on Vietnam may be replaced by new procedures (Country Report) - Emerging Textiles

US Import data and monitoring system - Vietnam's planned regulations

US Quotas on Vietnam may be replaced by new procedures Country Report

5 January 2007

Although US quotas are removed, importing Vietnamese apparel could remain complex and hazardous. The US administration began preparing its monitoring system to rapidly impose anti-dumping duties on imports from Vietnam, if necessary. In order to avoid such sanctions, Hanoi intends regulating export quantities and prices under new procedures that are considered ineffective and burdensome by Vietnamese exporters.

There will be no embargoes on imports from Vietnam, but exporters will be subject to burdensome procedures in the post-quota period with a US threat of anti-dumping duties possibly disturbing apparel trade between the two countries.

US embargoes finally avoided

Although Vietnamese exporters underestimated the delay for eliminating quotas, Washington has found legal solutions to avoid any embargo in the past and coming weeks.

As a result of Vietnam's official entry to the WTO, US limits are being removed on January, 11.

The liberalization only covers products that are shipped from Vietnam after this date, nevertheless.

Large quantities of apparel were actually sent to the United States in the past two months, after exporters were assured of their country's admission to the WTO.

The US Commerce Department therefore issued 2007 annual limits for covering the period from 1 to 11 January. This allowed borrowing additional 2006 quotas from the following year.

Thanks to this legal solution, Washington and Hanoi were able concluding an agreement automatically granting visas for the the end of 2006 and the start of 2007.

Complex monitoring system

Paradoxically, difficulties may arise after quotas' elimination, as the US administration is implementing a monitoring system in order to possibly impose anti-dumping duties on apparel from Vietnam.

This is the result of a deal made between the US Commerce Department and Senators who wanted protecting domestic textile and apparel industries from a new surge in imports from Vietnam.

Although quotas were still in place, shipments from Vietnam rose more than 22% in the January-October period to US$2.8 billion.

Growth rates were very high for certain sensitive categories after US importers and retailers shifted sourcing from China to Vietnam.

Behind such a rise, the US textile industry also suspects a surge in illegal transshipments of Chinese products.

Swift procedure

The US administration pledged rapidly imposing anti-dumping duties, if necessary.

Since anti-dumping investigations usually require between 6 and 12 months, a permanent monitoring of US imports from Vietnam will allow saving time.

At the start of December, the US administration asked for comments about its planned monitoring program.

In their comments that were sent in the last days of 2006, US textile producers and apparel importers disagree over the way such a program should be established.

Vietnam's government also criticized a monitoring system that was never negotiated with Washington and could be in contradiction with WTO rules, it warned.

The US Commerce Department intends selecting sensitive textile categories covering a large part of imports, namely trousers, shirts, underwear, swimwear and sweaters.

Instead of covering such large categories, US importers said, the monitoring system should more precisely select products by using HS-10 digit numbers.

Production templates

In order to investigate possible dumping, the US administration intends developing "production templates".

This should help in calculating production costs by comparing with similar industries in other countries. The US textile industry suggested selecting Central American countries for such a comparison.

Data will be easily collected as a result, but Central American costs are notoriously higher than Vietnamese costs, importers said. This would inevitably lead to dumping duties.

While the US administration is preparing its monitoring system, the Vietnamese government tries also imposing a procedure to regulate exports and eliminate any threat of anti-dumping duties.

The Vietnamese administration wants supervising export volumes and prices in order to avoid any brutal surge in shipments at very low prices.

Minimum Export Prices

Export certificates (E/C) would still be needed for sensitive categories in order to monitor exported quantities.

Minimum export prices would be set and products sold below such prices would not be granted export certificates, in addition.

Since Hanoi also intends limiting illegal transshipments, certificates of origin would also be required when foreign semi-finished products are used for producing apparel.

Vietnamese exporters already criticized such a system, considering it ineffective and burdensome.