U.S. imports of apparel from Vietnam continue to surge: up nearly 30% over 2006

Vietnam’s growth rate exceeds even China’s; putting Vietnam in the top four suppliers to the U.S., behind only China, Mexico, India

There was concern in December 2006 that that the 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.

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 continue to surge in the first ten months (January-October) of 2007: up 28.6% over the same period in 2006. If this trend continues, U.S. imports of apparel from Vietnam will reach $4.5 billion this year, more than 40% of the projected U.S. total imports from Vietnam of over $10 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. The first nine months of apparel imports in 2007 (US$ 3.4 billion) already equalled total U.S. imports of apparel from Vietnam for the calendar year 2006.

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 ranks #4 as a supplier to the U.S. apparel market, up from #5 in 2006. And it is very likely that Vietnam could be #3 or even #2 in 2008, if present trends continue: $3.4 billion in 2006, $4.5 billion in 2007, $6.1 billion in 2008 … ?

The major constraint on Vietnam’s apparel exports to the U.S. is not 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 25% in 2005 and growing to over 40% in 2008, if present trends continue. Mexico losing market share from 8.1% in 2005 to 5% in 2008. India relatively constant, while Vietnam’s market share grows rapidly from 3.2% in 2005 (5th place) to 4th place in 2007, and 6% and 2nd place in 2008. Note that these are just “trend-line” projections based on actual U.S. imports in 2005, 2006, and 2007(Jan-Oct) “if present trends continue,” and do not take into account possible exchange rate changes (India’s currency appreciated in 2007), 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-Oct 2007 U.S. Imports of Apparel from Vietnam and other countries, 16 Dec 2007

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

AmCham Letter to U.S. Secretary of Commerce and U.S. Trade Representative, 6 Oct 2007

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

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

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

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 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.