Export Turnover of Vietnamese Textiles and Garments to the US Market.

Vietnam. This market also clearly demonstrates the superiority as well as promising potential for current and future textile and garment exports. Vietnamese textile and garment enterprises have only started this potential market in the last 10 years. In 1996, the export turnover to this market only reached a very low level of 9.1 million USD. This is an insignificant number compared to the export turnover of Vietnam's textile and garment to other markets such as the Japanese market of 248 million USD, the EU market of 225 million USD. At that time, no one could confirm that this was a promising market, including economic experts. From the period of 1996-2000, the growth rate of turnover of this market was quite low, sometimes even decreasing (in 2001- 44.6 million USD, compared to 49.5 million USD in 2000). Compared to the 70 billion USD that the US spends to import textiles and garments each year, this number is really nothing. Explaining why the US market is a large consumer market for leather shoes and garments, but the amount of garments we export to this market is so small. The answer is simple and everyone knows it; it is because the relationship between Vietnam and the US has just started to normalize, so Vietnamese businesses are gradually getting used to the market and at the same time do not have important information and contacts to increase exports to this market, so during this time our activities in this market are mainly exploratory.

In 2000, our country officially signed the Vietnam-US trade agreement, the import tax rate of Vietnamese textiles and garments to the US market decreased by 10 times. Since 2002, we have had the Vietnam-US textile and garment agreement with most-favored-nation (MFN) treatment for Vietnamese textile and garment exports, so Vietnam's export turnover has increased sharply (900 million USD). This record increase has made the US the largest textile and garment import market of Vietnam, surpassing both the EU and Japan, which have long been our traditional markets.

Table 9: Export turnover of Vietnamese textiles to the US market.

Unit: million USD

Year

2002	2003	2004	2005	2006	2007	2008
Value	975	1975	2240	2450	3152	4292	5500

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Source: VINATEX statistics in 2008

Faced with the situation of strong increase in export turnover to the US market, the US has signed the Vietnam - US textile agreement, which includes the US applying quotas to Vietnam's textile exports, starting from 2003. According to this agreement, the value of textiles managed by quotas in 2003 includes 25 groups of goods and 38 specific items as follows:

Table 10: Textile and garment products managed by quota.

Cat product group

Item	Unit	Quota 2003
200	Sewing thread, yarn for retail	Kg	300,000
301	Yarn, combed cotton	Kg	680,000
332	Cotton socks	Dozen	1,000,000
333	Men's suit jacket	Dozen	36,000
334/335	Men's and women's cotton jacket	Dozen	675,000
338/339	Men's and women's cotton knitted shirts	Dozen	14,000,000
340/640	Men's woven cotton and silk shirts create	Dozen	2,000,000
341/641	Woven cotton and synthetic fiber shirts	Dozen	762,698
342/642	Short skirt made of cotton and synthetic fibers	Dozen	554,654
345	Cotton sweater	Dozen	300,000
347/348	Cotton pants for men and women	Dozen	7,000,000
351/651	Cotton and synthetic sleepwear	Dozen	582,000
352/652	Cotton and synthetic underwear	Dozen	1,850,000
359/659-c	Overalls	Kg	325,000
359/659-s	Swimwear	Kg	525.00
434	Men's wool coat	Dozen	16,200
435	Women's wool coat	Dozen	40,000
440	Men's and women's wool shirts	Dozen	2,500
447	Men's wool pants	Dozen	52,500
448	Women's wool pants	Dozen	32,000
620	Other synthetic filament fabrics	m2	6,364,000
632	Synthetic fiber material	Dozen	500,000
638/639	Men's and women's knitted shirts made of artificial silk	Dozen	1,271,000
645/646	Synthetic fiber sweater	Dozen	200,000
647/648	Men's and women's synthetic fiber pants	Dozen	1,973,318

Source: Saigon Economic Times No. 72/2003.

To implement the agreement, on April 28, 2003, the Ministry of Trade (now the Ministry of Industry and Trade) issued Document No. 0962/TM-XNK guiding implementation, according to which enterprises must report in detail and accurately on their production capacity and scale to

as a basis for comparing quotas and granting quotas for textiles and garments exported to the United States in 2003. The document also strictly prohibits textile and garment exporting enterprises from using textile and garment export certificates to export to the United States or using fabrics from other countries to export Vietnamese goods. The initial steps of implementing the agreement like this facilitate management in implementing the agreement. However, enterprises are worried about whether such quotas can meet export needs? And how to use the quotas effectively? The concerns of enterprises are completely justified, because through the practice of the EU textile and garment agreement, these two issues have always emerged. And just as enterprises worry, the lack of quotas for export has pushed many enterprises into a difficult situation. Quotas are limited, but the export speed of textiles and garments by enterprises in the first 5 months of 2003 was so high that the quota value to be assigned to enterprises in the last 7 months of the year was only about 600 million USD, of which there were very few or no remaining CATs, forcing enterprises to have appropriate solutions to deal with this situation.

Quotas are a hot issue in the period when Vietnam is not yet a member of the WTO, quality is an issue throughout the process of Vietnam's international economic integration. Currently, Vietnamese products exported to the US market must be assessed by an auditing company to comply with the SA 8000 standard. This is a completely new requirement for Vietnamese enterprises. Vietnam Textile and Garment Corporation currently has 28 enterprises implementing the ISO 9000 quality management system, 2 enterprises implementing ISO 14000 and 4 enterprises implementing SA 8000. In the immediate future, the US requires enterprises to comply with SA 8000 when they do not have a certificate, in order to meet the conditions and working environment of workers. On the other hand, currently, 81.2% of Vietnamese textile and garment products do not have the name of the manufacturing facility, raw material composition, or product brand, so when exported to the US market, they are rejected and returned, causing great damage to Vietnamese export enterprises.

Indeed, the road to America is difficult and arduous. As soon as the tariff barriers are removed, a non-tariff “wall” is built up, solidly.

more, more persistent. The clearest evidence is the application of quotas to Vietnam right after seeing that the growth rate of textile and garment exports to the US tended to increase. This quota was applied until 2007, and until Vietnam became a member of the WTO, this quota regime was abolished, then the US textile and garment monitoring program began to be initiated.

The US market is one of the target markets not only for Vietnamese enterprises but also for enterprises of other countries. The fastest way to strongly penetrate this target market is for our country to quickly join the WTO to benefit from the abolition of textile import quotas and the reduction of import tariffs within the bloc. This is the period that Vietnamese enterprises are looking forward to and also have to face many new challenges in the regional and international markets. Although this mechanism only evaluates the export volume of Vietnamese textiles to the US every 6 months, it significantly affects the export growth rate of this item, hinders investment, and improves the production capacity of domestic and foreign textile enterprises, preventing American customers from placing orders in Vietnam. Experts believe that without this monitoring mechanism, our textile exports to the US would have increased even more in 2007. The Vietnamese Ministry of Industry and Trade believes that this market still has potential risks because the monitoring program is still maintained and will continue to evaluate the data for the next 6 months in March 2008. The US Department of Commerce has not taken any specific actions to reduce the negative impact of the monitoring program on Vietnam's textile exports, such as not reducing the items subject to monitoring and not stating specific criteria and conditions as a basis for self-initiated anti-dumping investigations of Vietnamese textiles. The US monitoring mechanism was maintained until the end of 2008. According to the textile export data to the US in the first 9 months of 2008 announced by the US Customs, the average monthly export price of Vietnam has tended to decrease and the export volume has tended to increase. In addition, the US political factor has increased the risk of making importers more hesitant to place orders in Vietnam, significantly hindering the growth rate of Vietnam's textile export in the coming years. Not only is the export turnover reduced, our textile industry is also facing the risk of being sued for anti-dumping. It can be said that the purpose of

The US textile monitoring policy is nothing more than initiating an anti-dumping lawsuit against our textiles when they are exported to the US market. From August 2007 to January 2008, the US Department of Commerce has been promoting an anti-dumping lawsuit against Vietnamese textiles that were exported in the previous period. The Vietnamese textile industry, especially textile enterprises exporting to the US, are very worried about this situation, because, although it has joined the World Trade Organization (WTO), Vietnam's economy is still considered a non-market economy, so when investigating the price situation of Vietnamese textiles, the US side will not base on the data we provide but will take data from some countries with economies similar to Vietnam for comparison. Fortunately, in this lawsuit, the US Department of Commerce did not have enough evidence to conduct an anti-dumping investigation on Vietnamese textile exports. However, speaking at a press conference announcing this decision, the Assistant Secretary of the US Department of Commerce in charge of import and export management said that the US Department of Commerce will continue to implement its commitment to inspect imported goods from Vietnam to ensure that Vietnamese textiles and garments are not dumped into the US market and threaten to compete with US manufacturers. This is an act that demonstrates the US Department of Commerce's lack of goodwill, clearly showing protection of the US textile and garment industry, breaking the principle of fair competition between economies set forth by the WTO. To combat this situation, I think the first thing we need to do is for Vietnamese businesses to cooperate closely with major US importers, carry out orders of high quality and price, and pay attention to avoid accepting simple, low-value orders that affect the average price of the whole country, which is the basis for the US to initiate anti-dumping lawsuits. In addition, we should not consider proving a market economy as just satisfying external requirements. The recognition of a market economy is often only political. Vietnam needs to develop a market economy for its own internal needs. Only worrying about proving to the international community that we are a market economy so that lawsuits can achieve good results is only technical and coping. Let the markets be better connected, businesses will no longer be discriminated against or given excessive favors, only then will the economy develop in accordance with its inherent supply and demand.

3.2. EU market.

The EU market is a "promised land" for Vietnam when the legal framework for the market has been fully opened, and moreover, the EU also provides Vietnam with a generalized tariff preference mechanism (GSP) for developing countries. Textiles and garments are the main export items being exported in large quantities to this market. Especially in 2005, the EU abolished quotas for Vietnamese textiles and garments, the opportunity for Vietnam to export to this market is really huge. In 2007, the annual export turnover of Vietnamese textiles and garments reached about 7.8 billion USD, an increase of about 31% compared to 2006, in which the EU market is one of the three main export markets of Vietnam. Vietnam's textile and garment exports to the EU increased rapidly after 1992, when Vietnam and the EU established trade relations with each other. In 1996, the export turnover to this market reached 223 million USD. In 1997, despite the general crisis in the region, the export turnover of textiles and garments to the EU still increased to 336 million USD. This figure also increased significantly during the period 1998-2001, increasing from 504 million USD to 617 million USD. But in 2002, this figure was only 553 million USD. In 2003, although it increased, it only reached 612 million USD. However, in 2004, the export turnover of textiles and garments to this market grew again with 684.5 million USD, although still far below the target of 1 billion USD. In 2005, the EU abolished quotas, Vietnamese textiles and garments were freely exported to the EU. This was a great opportunity for Vietnamese textiles and garments to promote their competitiveness in a fair and maximum manner. In 2006, the industry's total export turnover reached 5.864 billion USD, a 20% increase compared to 2005. Of which, the EU market reached 1.243 billion USD (accounting for 20%). In 2007, it was 1.432 billion USD and in 2008, it was 1.8 billion USD 11 .

The competitiveness of this enterprise is increasingly enhanced, according to the WB's assessment, some Vietnamese textile products are assessed as having good quality and competitive prices. Vietnamese workers are highly appreciated for their training, discipline, diligence and dexterity. This is a strength of Vietnamese textiles. The situation of textile exports hiding under famous brands still exists, but looking at

11 http://www.tin247.com/January 21, 2008.html

The Vietnamese textile and garment brand is also gradually proving its prestige and quality in the international market. Vietnamese textile and garment products are considered to have a competitive advantage in "average" markets. Products exported to the EU are increasingly diverse in types, adding new potential items such as sweaters, sweatshirts, socks, etc. Designs, shapes, and colors are richer. Vietnam has invested in brainpower and creativity in products. The force participating in exports is increasingly expanding. The number of enterprises participating in exports to the EU market has increased with strategies to increase production scale and further expand the market. The market structure is also expanding. Vietnamese textile and garment products have appeared in most EU member countries, and are promoted in the Eastern European market. The two main forms of Vietnam's exports to the EU market are export processing (accounting for 70%) and direct export at FOB prices, accounting for only 30%. The processing form is exporting through an intermediary country, mainly through NICs countries with developed textile and garment industries - with the position of the ordering party. EU importers play the role of foreign owners and are the main source of raw materials. Full-package export under FOB means that Vietnamese manufacturing enterprises can negotiate the supply of domestic and foreign raw materials at low prices. This form brings higher actual profits, helping enterprises better access the market and world trends.

Vietnam's membership in the WTO will create more favorable conditions for exporters to access the large EU market. However, the reality seems to be unworthy of the inherent potential of the textile industry. Textile exports to the EU have not been high since the US market was established. Each year, it reaches about 0.5 billion USD compared to the new US market (1.7-3 billion USD). Before the US market was established, the EU was a large market for Vietnam. This is because businesses have focused too much on the US market and "neglected" the EU market.

The abolition of quotas to the EU market is a good thing, but in reality it is not as expected by businesses and policy makers. The abolition of quotas means reducing difficulties for exporting businesses to have equal competitive conditions. However, with demanding customers like the EU,

Vietnamese businesses still have to be cautious because the quality and requirements of the EU market are more complex and sophisticated than the US market.

Vietnam's textile and garment industry is still facing many difficulties and challenges to develop sustainably in the EU market. The first difficulty comes from within the textile and garment industry, especially when the supporting industries have not developed accordingly. Due to the lack of supporting industries, Vietnam's textile and garment products are almost dependent on the world market for both export and import. Up to now, in addition to the advantage of labor, the rest must be imported at a large rate such as: 100% of machinery, equipment, spare parts, 100% of chemical fibers, 90% of natural cotton fibers mainly imported from the US, 70% of all kinds of fabrics, 67% of textile fibers are also imported. Accessories such as sewing thread, construction mex, zippers must also be imported from 30-70% of total demand. As of 2006, the total production capacity of Vietnam's raw materials industry was: cotton fiber 10,000 tons/year (5% of demand), synthetic fiber 50,000 tons (30% of demand), short staple fiber 260,000 tons (60% of demand). For dyeing and weaving production, knitted fabric 150,000 tons (60% of demand), weaving 680 million m2 (30% of demand) 12. From the above data, it can be seen that Vietnam's textile industry is walking on "other people's feet". This is one of the main reasons limiting the international competitiveness of Vietnamese textile enterprises compared to textile exporting powers such as China, India, and Pakistan.

The entire textile and garment industry currently has about 2,000 enterprises, of which state-owned enterprises account for 0.5%; FDI accounts for 25% and the majority are private enterprises and joint stock companies. In terms of scale, most of Vietnam's textile and garment enterprises are small and medium-sized. With that scale, if they do not cooperate with some large enterprises, it will be difficult for these enterprises to survive, let alone compete internationally. Reality shows that wherever quotas are removed, Vietnamese textile and garment products lose or decrease their market share, and enterprises lack good managers, lack market access skills and low labor productivity, so they cannot compete on par with Bangladesh, Sri Lanka, Thailand, Indonesia and other textile and garment powerhouses.

12 http://www.tin247.com/10/03/2007.html

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