U.S. Apparel Imports from Vietnam Up 22% in Jan-Sep 2008, but down across the board

the outlook for final three months is not good, as retail sales dropped sharply in October

U.S. apparel imports from Vietnam increased in the face of an overall decrease of about 2.96% in U.S. apparel imports during the first nine months of 2008, Jan – Sep.

In the “Top 5,” U.S. apparel imports from China were flat, down 0.24%, while apparel imports from Mexico were down 11%, and India and Indonesia essentially unchanged (-0.93% and +1.16%). The only strong performer besides for Vietnam was Bangladesh, with an increase of 8.4%.

U.S. retail sales in October were the worst in 35 years as consumers continued to cut spending sharply, and if this trend continues through the end of the year, total U.S. imports of apparel for 2008 may show a substantial decrease compared with 2007.

Across the U.S. retail sector, department store chains like Nordstrom Inc and specialty clothing retailers like Abercrombie & Fitch were among those hit hardest. The crisis crimped spending even among the wealthy. Sales were down at Saks Inc (- 16.6%), Nordstrom (- 15.7%), and Abercrombie & Fitch (- 20%).

Although difficult to predict in the current economic climate, U.S. imports of apparel from Vietnam in 2008 could exceed $5.0 billion, even assuming a 20% overall U.S. reduction in apparel imports in the final three months of the year.

Top 5 Suppliers of U.S. Apparel Imports 2005-2008e

Source: U.S. Department of Commerce, Office of Textiles and Apparel

U.S. apparel imports from Vietnam account for about 42% of total U.S. imports from Vietnam. From another perspective, Vietnam’s apparel exports to the U.S. accounted for about 58% of its total apparel exports, more than twice as large as exports to Europe (19%) and Japan (9%) combined, indicating the importance of the apparel sector in Vietnam’s economy and U.S.-Vietnam trade.

The U.S. Department of Commerce program to monitor imports of apparel from Vietnam has not discovered any evidence of “dumping,” thanks in large part to Vietnam’s “export monitoring program” to prevent dumping and illegal transshipments.

Market Share of Top Suppliers of U.S. Apparel Imports

Top Suppliers of Apparel Imports Share Sep 2008Vietnam ranked #4 as a supplier to the U.S. apparel market in 2007. Vietnam has now moved to the #2 position, closely followed by India, Mexico, and Indonesia, with Bangladesh slowly becoming the 6th-ranking supplier.

The major constraint on Vietnam’s apparel exports to the U.S. is no longer market access and the U.S. import monitoring program, but growing labor issues (shortages of workers, sharply increasing labor costs, and unexpected work stoppages) and infrastructure shortages in Vietnam (lack of deepwater ports and other transport infrastructure, electric power).

After U.S. quotas were removed upon Vietnam’s WTO accession in January 2007, U.S. imports of apparel from Vietnam in 2007 increased 34% and reached $ 4.6 billion, 43% of the U.S. total imports from Vietnam of $ 10.6 billion.

Background information

U.S. imports of apparel from Vietnam and other countries (by value): current month

Jan-Sep 2008 U.S. Imports of Apparel from Vietnam and other countries

Jan-Dec 2007 U.S. Imports of Apparel from Vietnam and other countries

U.S. trade with Vietnam (imports and exports)

AmCham Letter to the Prime Minister re Labor Relations, 20 May 2008

AmCham Letter to U.S. Secretary of Commerce, 12 Oct 2007

AmCham Letter to Minister of Industry and Trade re Vietnam-US Apparel Trade, 23 Aug 2007

AmCham Letter to Minister of Trade re Apparel Trade after WTO Entry 8 Feb 2007

AmCham Letter to U.S. Secretary of Commerce and U.S. Trade Representative, 6 Oct 2006

Trade Issues in U.S. Congress Since Democrats took control of Congress in January 2007, it has not approved any free trade agreements that the administration has negotiated, and it has allowed President Bush’s authority to negotiate future deals under expedited procedures to expire. Fortunately, legislation approving Vietnam’s Permanent Normal Trade Relations (PNTR) with the U.S. was approved in December 2006, before the current impasse developed.

3rd and Final Review: Insufficient evidence to initiate dumping charges against apparel imports from Vietnam, Nov 22, 2008.

Commerce Department Completes Second Review of Import Data: finds insufficient evidence of dumping to warrant self-initiating an anti-dumping investigation of apparel imports from Vietnam.

Commerce Department Completes First Review of Import Data: finds insufficient evidence of dumping to warrant self-initiating an anti-dumping investigation of apparel imports from Vietnam.

EU and China have decided on a system of joint import surveillance that will operate for one year in 2008 following the end of the import growth caps on ten categories of textiles and clothing from China. The ‘double checking system’ will track the issuing of licences for export in China and the importation of goods into the EU.

Notice received from the U.S. Department of Commerce, Jan 12, 2008 “As the commitment on monitoring certain textile and apparel imports from Vietnam will be fulfilled with the end of this Administration, we will be removing the monitoring page and the hotline from our website, effective Friday, January 16. For historical reference, the Office of Textiles and Apparel will maintain a link to the monitoring page through the Archives, accessible through its website at www.OTEXA.ita.doc.gov.”

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