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Undoing Quotas: Vietnam wants entry into the WTO

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American Decorative Fabrics is showing products through Wednesday at Showtime, the semiannual fabric and leather trade show.

Granting Vietnamese textile manufacturers quota-free access to the U.S. market may be akin to pouring salt into an open wound for some U.S. companies already dealing with fierce Chinese competition.

But several exhibitors at the Showtime fabrics and leather trade show said yesterday that it would be years before Vietnam could chip meaningful market share away from high-end domestic producers and Chinese commodity producers.

Showtime, a semiannual market held in downtown High Point, typically draws about 2,500 participants. The four-day trade show ends Wednesday.

The Bush administration said last week that it would support Vietnam's entry into the World Trade Organization. Congress must approve giving Vietnam the trade status of permanent most-favored nation before the country's accession agreement goes into effect - the same path taken by China in 2001.

Gaining WTO membership means that Vietnam won't be subject to U.S. apparel and textile quotas. But it also must immediately eliminate all subsidies to its textile and apparel industries prohibited by the trade treaty.

"At this point, Vietnam has the advantage of lower-cost labor than China and India, but it does not have the production infrastructure in place to make a major dent," said Jack Cobb, the president of American Decorative Fabrics LLC, which gets its fabrics from China. Cobb also is the president of the International Textile Market Association, the sponsor of Showtime.

"It eventually could affect Pakistan, Sri Lanka, the cut-and-sew part of the Dominican Republic, but China is such a textile juggernaut," Cobb said. "And as for the U.S. textile worker, what's the difference if the production comes from Pakistan, China or Vietnam if your job is being displaced?"

The American Manufacturing Trade Action Coalition said that allowing Vietnam's textile industry to operate quota free in the U.S. market does matter to the 620,000 textile workers in the United States. The coalition opposes Vietnam's WTO candidacy.

According to the coalition, Vietnam's textile and clothing exports to the United States jumped from $49 million in 2001 to $2.9 billion in 2005 with restrictions in place.

The coalition said that the U.S. textile industry already has lost 40 percent of its jobs, or about 423,000, since January 2001 in large part because of China joining the WTO.

The pace of U.S. textile-job losses has decreased since China agreed in November to a three-year import limitation that will expire Jan. 1, 2009. But the U.S. Bureau of Labor Statistics reported yesterday that there was a loss of 4,100 apparel and textile jobs in May.

"The U.S. government failed to include adequate safeguards in the accession agreement to prevent Vietnam from engaging in predatory trade practices," the coalition said in a statement.

"This deal is a double loser," said Auggie Tantillo, the executive director of the coalition. "It will further damage the hard-hit U.S. textile industry and more than likely cause substantial job losses in Mexico and Central America."

Meanwhile, the National Retail Federation praised the accession agreement for making it easier for U.S. retailers to buy Vietnamese imports and open stores in the country.

Bill Schmidt, the director of piece-goods sales for The Robert Allen Group, said that with China's growth limitations through 2008, the timing is good for Vietnam to establish at least a foothold with U.S. retailers.

J.B. Martin Co. Inc. has made about 60 percent of its woven velvets in the United States and 40 percent in Mexico for several years, said Robert Lachow, the sales director for the company. Even as Vietnam looms as a larger competitor, Lachow expects that the company's production mix will remain steady.

"We've had to work 10 times harder than 10 years ago to provide a quality, differentiated product at a value price because of the imports," Lachow said. "We know it's working, because we're growing and we're hiring.

"We're not going to concede the middle- to better-end to any country. But for those competing in the commodity side of the business, Vietnam is bound to chip away at what's left of the U.S. industry."


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