in Vietnam in preparation for the Trans-Pacific Partnership duty-free exports of apparel from Vietnam to the USA in accordance with the Textiles and Apparel Chapter rules of origin.
Senator Richard Burr (R-NC) asked USTR Michael Froman at the Jun 6, 2013 Senate Finance Committee hearing on the nomination, ” … a poorly negotiated TPP agreement could result in the loss of hundreds of thousands of U.S. jobs in the textile sector … If confirmed as the U.S. Trade Representative, will you support the yarn-forward rule of origin?”
Ambassador Froman replied, “The short answer is yes. We have made clear that we need clear rules of origin with yarn-forward at the center, we need rules against trans-shipments … the yarn-forward fule is a central part of our approach to textiles.” Click this link to see a C-SPAN video of the Senate Finance Committee hearing (0:27:41).
The “yarn forward” rule of origin means that all products in a garment from the yarn stage forward must be made in one of the countries that is party to the TPP agreement. In simple terms, the “yarn forward” rule means that the benefits of the agreement accrue to producers in TPP member countries rather than producers in non-TPP countries.
Perhaps in response, Mr. Nguyen Vu Tung, Deputy Chief of Mission at Vietnam’s Embassy to the USA in Washington, said at a conference on Jun 19, 2013, that the latest U.S. offer “is really, really difficult for us to accept.” Unless the two sides can reach a breakthrough, “I’m really concerned about the prospect of Vietnam to conclude the successful negotiation of TPP,” he said. According to the report, “U.S. textile producers sell billions of dollars of yarn and fabric each year to U.S. free trade partners in Latin America, where it is turned into clothing and sent back to the United States. They fear without the yarn forward rule, Vietnam will be able to shut down that trade by importing yarn and fabric from China to make clothing to ship duty-free to the United States.”
Deputy Chief of Mission Nguyen Vu Tung made the comment at a conference organized by the Woodrow Wilson Center in Washington on The Trans-Pacific Partnership: New Rules for a New Era, Jun 19, 2013 (3 hours), with opening remarks by Robert Zoellick, former U.S. Trade Representative, former U.S. Deputy Secretary of State, and former World Bank President. Click the link to see a video of the webinar.
While political leaders and diplomats discuss the Trans-Pacific Partnership rules of origin, Hong Kong, South Korean, and Australian firms are developing and planning major textiles FDI in Vietnam to produce yarn and fabric, the supporting textiles industry for apparel production.
Korea’s Kyungbang inaugurates new $40 million yarn facility in Binh Duong; plan to develop the largest yarn-spinning in Asia. When the plant is extended in its second and third phase (with registered investment of $160 million), it will be the largest mill in Asia.
Texhong has has already invested $200 million in a plant in Dong Nai Province, and committed in Jul 2012 $300 million to a factory in Quang Ninh, which should be operational in the 2nd half of 2013.
Last year Texhong said it would invest $300 million to build a new yarn factory in Quang Ninh.. When the second-phase investment is completed next year its annual capacity will more than double to 110,000 tonnes of yarn.
Hong Kong’s TAL Group to invest another $200 million in textiles and apparel in Vietnam. The fabrics and apparel at the new unit would be produced using latest technologies that do not cause pollution and the firm would ensure that environmental standards are maintained. TAL Group CEO Roger Lee announced plans for a 2nd factory in Vietnam,“especially thanks to the duty savings that we could get under TPP.” . This brings the total announced TPP-related FDI in Vietnam’s textiles/apparel sector to over $1 billion. TAL is among several companies that are investing in Vietnam in view of the benefits that the country would get as it nears the signing of the TPP.
HYOSUNG, the largest spandex producer in the world, announces plans to expand their production facility of creora® brand spandex in Vietnam in Nhon Trach, Dong Nai. Phase 1 will be operational in August and Phase 2 in November. This is to better serve needs in South East Asia as well as in anticipation of the Trans-Pacific Partnership (TPP) being approved with yarn forward rules of origin.
Australia’s Woolmark® helps develop yarn-forward wool products in Vietnam. Today there are close to 50 companies in Vietnam using Australian wool. “When we started the project, none of the manufacturing partners knew anything about wool, and some of them had never even felt it,” said AWI project manager Jimmy Jackson. Initially we ran training courses to explain wool’s properties, benefits and features for manufacturing and producing garments. The next step was to introduce the manufacturers to suppliers of Australian wool yarns. We also had to explain the Woolmark standards and requirement in terms of both wear and laundering performance. Now that the Vietnamese manufacturers are confident in producing quality wool garments, AWI will introduce them to global retail and brand buyers.