As President Obama creeps closer to checking off a big-ticket item on his legislative to-do list—the Trans-Pacific Partnership (TPP)—the United States wants to pump the brakes on Vietnam’s fabric imports from China.
Vietnam is the second-largest apparel supplier to the U.S., exporting $733 million worth in February alone. But the country sources most of its raw materials from the Chinese, importing about $4.7 billion worth of fabric from the trade giant last year.
TPP is a central part of Obama’s economic legacy, a duty-free deal he’s negotiating with 11 Asia-Pacific countries (including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) that China is conspicuously absent from.
Now the Obama administration wants to reduce Vietnam’s reliance on Chinese textiles by requiring the country to source raw materials from stateside suppliers instead if the pending trade agreement goes through.
“The U.S. and Mexico are especially large textile producers,” Eliza Levy, a spokeswoman for the National Council of Textile Organizations (NCTO), told the Wall Street Journal. “Vietnam would simply have to shift its sourcing of yarns and fabrics from China to the U.S. and Mexico.”
But industry insiders insist it’s anything but simple. While the U.S. did sell $20 billion worth of textiles to international buyers last year, some say that the country’s capabilities are less than stellar. The U.S. Fashion Industry Association, for example, said American operations won’t be able to meet Vietnam’s demand, and Vietnamese business owners have complained they’re too expensive and far away to make sense.
But that’s not to say the country won’t curb its Chinese imports—it might soon produce enough fabric to meet its own needs, as companies based in China, Japan, Hong Kong, South Korea, Taiwan, Austria and Australia have set up or expanded production in Vietnam of late. In fact, nearly 20 international firms invested in the country’s garment industry in the past year, like South Korean spandex maker Hyosung Corp. Furthermore, a congressional report released last year noted that the Vietnamese textile industry could one day compete with U.S. textile exports to Mexico and Central America.