US textile sector's addiction to protection stalls trans-Pacific pact
Washington's efforts to forge a "21st century" trade agreement with Vietnam and 10 other countries in the Asia-Pacific region are running into problems mired in the past, including a textile trade policy that American industry does not want to give up.
The US hopes to finish talks on the proposed Trans-Pacific Partnership (TPP) pact by the end of the year, but Vietnam says the sides are nowhere close on its biggest priority: market access for its clothing and footwear exports.
The latest US offer "is really, really difficult for us to accept", Nguyen Vu Tung, deputy chief of mission at Vietnam's embassy, said on Wednesday in a panel discussion at The Wilson Centre foreign policy think tank. Unless the two sides can reach a breakthrough, "I'm really concerned about the prospect of Vietnam to conclude the successful negotiation of TPP", Tung said.
The problem is decades of tariff protection for the US textile sector, which has fewer than 300,000 workers, compared to more than two million in the 1970s. While the average US tariff for imported goods is less than 2 per cent, it is 11.1 per cent for textiles and clothing, with tariffs on some clothes near 30 per cent.
Vietnam wants the US to phase out the tariffs, just as it is pressing Vietnam to eliminate tariffs on American agricultural and manufactured goods.
Washington also wants Hanoi to address a slate of "21st century" trade concerns. Those include new rules for the trade activities of Vietnam's state-owned enterprises, better protection for US intellectual property, enforceable labour and environmental provisions and more foreign participation in Vietnam's government procurement market.
"There are really difficult things for us to accept, but we go along with that because we see that accepting these … will help our economy," Tung said.
In most deals back to the 1992 North American Free Trade Agreement, Washington has insisted on a strict "yarn forward" rule of origin for clothing imports to ensure third countries such as China do not benefit. Without that, American producers fear Hanoi will be able to import yarn and fabric from China then ship clothing duty-free to the US.