U.S. Apparel imports from Vietnam up 29% in Jan-Mar, while China slows

In the first three months of 2008, U.S. apparel imports from Vietnam are up 29% over the same period in 2007.

U.S. apparel imports from China dropped slightly, down 5.4%, ending the long-standing constant monthly increases. While apparel imports from Mexico dropped 13.8%, and India’s jumped 4.6%.

U.S. apparel imports from Vietnam account for 43% of total imports from Vietnam, so apparel is the most important industry sector in U.S.-Vietnam trade relations.

So there was serious concern in March 2007 that that the U.S. Department of Commerce program to monitor imports of apparel from Vietnam would create so much uncertainty and business risk that it would discourage exports from Vietnam of these products, and factories in Vietnam and U.S. importers/retailers would “move orders out of Vietnam” into other supplying countries that are not subject to this same program, resulting in sharp losses in exports and jobs.

However, thanks to Vietnam’s “export monitoring program” to prevent dumping and illegal transshipments, and based on actual experience since the program went into effect, U.S. imports of apparel from Vietnam have continued to surge.

U.S. imports of apparel from Vietnam in 2007 increased 34% and reached $ 4.4 billion, 43% of the U.S. total imports from Vietnam of $ 10.6 billion.

The removal of U.S. quotas on imports of apparel from Vietnam in January 2007, when Vietnam became a member of the WTO, contributed to this surge in U.S. imports of apparel from Vietnam.

By comparison, in 2006 U.S. imports of apparel from Vietnam were still under quota, and increased 18% in 2006 ($ 3.4 billion) over 2005 ($ 2.9 billion).

Vietnam ranked #4 as a supplier to the U.S. apparel market in 2007. It is very likely that Vietnam will surpass Mexico as a supplier in 2008, and will be “neck-and-neck” with India for the #2 position.

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 infrastructure shortages in Vietnam (lack of deepwater ports and other transport infrastructure) and growing labor issues (shortages of workers, sharply increasing labor costs, and illegal strikes).

Top 5 Suppliers of U.S. Apparel Imports 2005-2008eHere is the ranking of suppliers to the U.S. apparel market: China continues to lead with a 33.5% market share in 2007, but is losing competitiveness and may not increase market share in 2008, or could even lose market share, if present trends continue. Click here to see a report on China’s factory blues.

Mexico will continue to lose market share from 8% in 2005 to around 5% in 2008. India will be relatively constant, while Vietnam’s market share grows rapidly from 3.2% in 2005 (5th place) to between 5% and 6% in 2008, and “neck-and-neck” with India for 2nd position. Note that these are just “trend-line” projections based on actual U.S. imports in 2005, 2006, and 2007 “if present trends continue,” and do not take into account possible exchange rate movements (India’s currency appreciated in 2007), wage and other cost increases (Vietnam’s minimum wage increased about 20% in early 2008), supply disruptions, such as the many illegal strikes in Vietnam, etc.

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

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

Background information

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

Jan-Mar 2008 U.S. Imports of Apparel from Vietnam and other countries, 06 May 2008

Jan-Dec 2007 U.S. Imports of Apparel from Vietnam and other countries, 11 Feb 2008

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

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.

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.”