U.S. and Vietnamese officials have signed a new bilateral trade agreement on the accession terms that will allow Vietnam to join the World Trade Organization after it opens more of its markets to foreign goods.
Under the agreement signed in Ho Chi Minh City, Vietnam has agreed to reduce its tariffs to 15 percent on 94 percent of U.S. manufacturing goods and 75 percent of farm products. But the pact could also help drive another nail into the coffin of the U.S. textile and apparel manufacturing sector, a spokesman for the latter said.
Since the two countries signed their first trade agreement in 2000, Vietnam’s textile and clothing exports to the United States have jumped from $49 million in 2001 to $2.9 billion in 2005, an increase of 5,700 percent.
“Although Vietnam, like China, is a non-market economy that heavily subsidizes its manufacturing base, the U.S. government failed to include adequate safeguards in the accession agreement to prevent Vietnam from engaging in predatory trade practices,” said AMTAC’s Auggie Tantillo. “The U.S. textile sector will be severely impacted as a result.”
For the agreement to take effect, the U.S. Congress must vote to grant Vietnam permanent most favored nation trade status, a move the American Manufacturers Trade Action Coalition hopes Congress will not take lightly.
“This deal is a disaster for U.S. manufacturing and the U.S. textile industry in particular,” said Tantillo, the group’s executive director and a former trade negotiator in the first Bush administration.
“The administration had to choose whether to side with U.S. industry or to give Vietnam a green light to keep violating free-market rules. Sadly, for millions of American workers, they chose to give Vietnam the green light. This agreement provides an open invitation to continue the devastating trend of outsourcing the very jobs that are so critical to our middle class.”
Tantillo said he fears the Vietnamese accession agreement will replicate the “disastrous trade pattern” the U.S. has developed with China since the latter entered the WTO in 2001. “Because of China’s state-sponsored advantages, their manufacturers have run roughshod over U.S. companies in our own market,” he noted.
“Inconceivably, we have just approved an agreement that will allow Vietnam to do the same thing. President Bush constantly preaches the concept of free markets. Yet, I am confident that history will record that the two biggest winners under his trade policy were the two countries that most egregiously ignored free market principles — China and Vietnam.”
U.S. textile industry leaders told the Bush administration they could not support any agreement with Vietnam that did not include adequate safeguards because Vietnam has a non-market communist economy with a heavily subsidized state-owned textile industry just like China.
“There are no adequate safeguards in this deal,” said Tantillo. “In its present form, we are left with no choice but to urge Congress to oppose this flawed agreement.”
Not only will the Vietnamese accession agreement further damage the U.S. textile industry, it will more than likely cause substantial job losses in Mexico and Central America, he said.
“Illegal immigration is the hottest issue on Capitol Hill right now and this deal directly will exacerbate the problem. A congressman that votes for this agreement might as well be putting his name in neon lights saying that he supports more illegal immigration.”
After the first trade agreement in 2000 opened U.S. borders to an influx of Vietnamese textile products, the United States signed a bilateral agreement in April 2003 that imposed quotas on Vietnam’s textile and apparel exports to the U.S. market.
But Vietnamese exports have continued to increase. U.S. textile and apparel exports to Vietnam have grown by only $2 million since 2001, from $10 million to $12 million annually.
U.S. officials said Vietnam has agreed to drop a $4 billion plan to expand its textile and apparel sector. But Tantillo said AMTAC believes Vietnam’s Industry Ministry still intends to invest $3 billion in developing its textile and apparel industry by 2010.
Textile and apparel products accounted for more than 44 percent of Vietnam’s $6.5 billion in total exports to the United States in 2005, according to U.S. Department of Commerce figures.
Officials from the United States, China, Japan and other Asian countries were in Vietnam for a June 1-2 meeting aimed at trying to get the Doha Development Round negotiations back on schedule for completion by the end of this year.
The United States has been under pressure to offer more reductions in its farm subsidies. But U.S. Trade Representative staff members have said the United States has made all the cuts it plans and that it’s up to the European Union and Japan to reduce their tariffs to bring the Doha Round to a successful conclusion.