Cablegate: Vietnam: Tracking Changes in Textile/Apprel

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS HANOI 002719

SIPDIS

STATE FOR EAP/BCLTV AND EB/TPP/ABT/BTT
STATE PASS USTR FOR DSPOONER, CMILLER, EBRYAN
USDOC PASS OTEXA

E.O. 12958: N/A
TAGS: ETRD ECON KTEX VM WTO LABOR
SUBJECT: VIETNAM: TRACKING CHANGES IN TEXTILE/APPREL
EMPLOYMENT AND PRODUCTION

REF: STATE 184238

1. In response to reftel, Post provides the FY 2002 and 2003
data on the following issues pertaining to Vietnam:

Total Industrial Production:
Year USD (millions)
2002 23,800
2003 27,600

Total Textile/Apparel Production:
Year USD (millions)
2002 1,870
2003 2,200

Textile/Apparel's share of Imports/Exports (percent):
Year Imports Exports
2002 8.7 percent 16.4 percent
2003 8.1 percent 18.3 percent

Total Manufacturing Employment:
Year Employment (millions)
2002 4.07
2003 unavailable

Total Textile/Apparel Employment:
Year Employment (millions)
2002 1.6 (est.)
2003 2.0 (est.)

2. Textiles and apparel are Vietnam's second largest export
(after crude oil), earning Vietnam USD 2.73 billion in 2002
and USD 3.69 billion in 2003. Since entry-into-force of the
U.S.-Vietnam Bilateral Trade Agreement, Vietnam's exports of
textiles and garments to the United States have skyrocketed
- befitting from lower MFN rate tariffs. In 2001 Vietnam
exported about USD 50 million worth of textiles and garments
to the United States in 2001, USD 950 million in 2002 and
USD 2.5 billion in 2003. The United States and Vietnam
negotiated a bilateral textile agreement that came into
effect in May 2003, capping growth in Vietnamese exports of
textile and apparel to the United States.

3. Vietnam is in the process of acceding to the WTO, but
will not complete its accession by the time the WTO
Agreement on Textiles and Clothing (ATC) expires on January
1, 2005. For this reason, Vietnam will remain subject to
textile quotas on its exports to the United States (and
possibly Europe its second largest export market for
textiles and garments). It is not yet clear how long U.S.
companies that source textiles and garments in Vietnam will
continue to do business here - much depends on how much
progress Vietnam makes on its WTO accession and whether
Vietnam appears on track to meet its goal of acceding before
the end of 2005. Employment in the textile and garment
sector is likely to remain steady in the short term (first
half of 2005), but in the long term employment levels in
this key sector will be directly linked to Vietnam's
progress on its WTO accession and the decision of U.S.
buyers on whether to keep continue sourcing in Vietnam or
move their business to countries no longer subject to
quotas.

MARINE

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