According to a report by Saigon Economic Times on October 8, Pham Xuan Hong, chairman of the Ho Chi Minh City Textile Association, said that in order for the Vietnamese textile industry to profit from the TPP, it needs to meet many conditions, especially rules of origin. According to the TPP rules of origin, in order for Vietnamese clothing and textiles to enjoy tariff preferences, they must follow the “start with yarn” regulations, that is, yarn, weaving, printing and dyeing and other processes must be completed in Vietnam or TPP partner countries. At present, Vietnam’s textile supporting industry is underdeveloped and can only meet 10-15% of the demand for raw and auxiliary materials. Most raw and auxiliary materials still need to be imported from non-TPP partner countries and economies such as China, South Korea, and Taiwan. Therefore, it will be difficult for Vietnam to enjoy the tariff preferences of the TPP in the short term.
According to reports, Vietnam has reached an agreement with TPP partner countries to classify some textile raw materials and auxiliary materials as “shortage goods”, including “temporary shortages” and “permanent shortages.” Within a certain period, Vietnam can enjoy tariff preferences when importing “shortage goods” from non-TPP partner countries and economies. But in fact, this period is very short. Moreover, the textile raw and auxiliary materials listed as “shortage goods” are basically not needed by Vietnam, and the raw and auxiliary materials that Vietnam needs are not included in them.
According to reports, there are currently more than 6,000 textile and garment companies in Vietnam, providing a total of more than 2.5 million jobs. In 2014, Vietnam exported US$24.5 billion in clothing and textiles. Exports from January to September this year were US$17.1 billion, a year-on-year increase of 10%, and exports for the whole year are expected to be US$28.5 billion. Foreign-invested enterprises (FDI) are the main force in exports, accounting for 60% of total textile and apparel exports. It should be noted that the added value generated in Vietnam is not high because raw materials rely on imports, and Vietnamese companies are mainly responsible for processing. In the first nine months of this year, Vietnam imported US$7 billion of fabrics and US$3.5 billion of raw and auxiliary materials for textiles and shoes. Vietnam’s shoe industry faces similar problems. Ye Chengjie, president of the Vietnam Leather Shoes and Bags Association, said that the localization rate of Vietnam’s shoe industry’s raw materials is only 50%, and the rest relies on imports, and 75% of the industry’s exports are realized by foreign companies (FDI).
According to reports, Vietnam is considered to be the biggest winner of the TPP, which will help promote the development of local spinning, weaving and printing and dyeing industries, and will also promote the faster development of the shoe industry. In fact, not many local companies can benefit and develop, and foreign companies are the biggest beneficiaries. If the situation cannot be reversed, local companies will face severe challenges. Vietnam’s textile industry has mixed feelings about joining TPP
