[Thai Press Reports]

Thai Press Reports via NewsEdge Corporation :

Section: Regional News - The export of Vietnam 's garment and textile currently is confronting a paradox: while some export enterprises are unable to fulfil the quotas granted to them by the Ministry of Trade, others with orders are unable to implement their contracts due to limited quotas.

According to the garment and textile management board, in the first half of the year, most export categories increased by a lower rate than last year's corresponding period. In particular, cotton shirts for men and women, cotton pants for men and women, cotton and synthetic fibre underwear, which account for 75 percent of quota garment and textile export, decreased by 17-22 percent compared with the same period last year.

To combat the situation, the Ministry of Trade is planning to grant automatic visas for export enterprises which qualify for export activities and secure export contracts for big orders. Meanwhile, the ministry is also going to withdraw export quotas from enterprises which exported just 35 percent of their total quotas in the first half of the year. They can receive their quotas later if they secure export contracts.

However, the idea of granting automatic visas for export enterprises has not yet been approved. Export enterprises reasoned that with the granting they will not be able to control the volume of export items and the delivery schedule, which will cause losses for exporters.

Fraud warning in item origins On May 13, 2005 , the US decided to reimposed import quotas on three of China 's garment and textile categories. Five days later, the US announced that they will levy 7.5 percent per year on four other Chinese categories from June. At the same time, the European Union (EU) stated that the will limit China 's T-shirt and linen products if China does not adjust its export volume within 90 days.

As the opportunities become more limited for Chinese exports to the US and EU markets, it will rely on Vietnam by ordering Vietnamese enterprises to complete export contracts which they have already signed with US importers, and export to the US under the quotas the US grants to Vietnam.

Tran Thi Thu Huong, an official of the Vietnam Chamber of Commerce and Industry, warned about the situation and asked Vietnamese enterprises to not get involved in such affairs. She said that under US regulations, such production is considered fraud. If they are discovered, Vietnamese enterprises will be punished. As a result, the US will stop granting export quotas to Vietnam in the next three years.

More competition ahead According to the Vietnam Association of Garments and Textiles, when exports from China are controlled, the beneficiaries will be competitive regional rivals, including India , Bangladesh , Indonesia and Pakistan . Because these countries are already members of the World Trade Organisation (WTO), they are not subjects to quotas. Meanwhile, Vietnam , which is not yet a member of the WTO, still suffers from quotas restriction from the US . So, the quota re-imposition from China is only a little advantage for Vietnamese garment and textile products to access the US market.

In addition, while applying quotas to China , the US and EU are also considering exempting import tax for garment and textile products from tsunami-affected countries like Thailand , Indonesia , and India . This means that Vietnam will confront new competition from tsunami-hit countries in the US and EU markets.

Finally, the fact is that though China is suffering from export quotas from the US , it stills remains a big rival for Vietnam garment and textile exporters. Economic experts said that Chinese garment and textile products and leather footwear can easily penetrate the Vietnamese market through official and unofficial ways. It is not so strange when economic experts predict that in the near future, Vietnamese garment and textile products will have to compete with not only new non-quota rivals in foreign markets but also old rivals in its home market. - VOV

Thai Press Reports -- 07/21/05