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Garment and Textile Export Pins Hopes on FTA

Date: 6/6/2013 8:28:02 AM

The prolonged, widespread EU financial crisis has led to a continued decline in garment and textile consumption. For Vietnam, the EU was the second largest export market after the United States for years. However, Japan has surpassed the EU to become the second garment and textile export market of Vietnam.

Japan - big market

For years, the US, the EU and Japan have been Vietnam’s key garment and textile export markets. The US is the largest export market of Vietnam, followed by the EU and Japan. In 2011, Vietnam witnessed a strong jump in apparel and textile exports to South Korea, with a total turnover exceeding US$1 billion, which made South Korea the fourth largest importer of Vietnam’s garments and textiles. In 2012, Vietnam’s garment and textile exports to the US approximated US$7.6 billion, accounting for 44.7 percent of the country’s total garment and textile export turnover, followed by the EU with US$2.5 billion, or 14.6 percent of the share, Japan with more than US$2 billion, or 12 percent, and South Korea with US$1.3 billion, or nearly 8 percent.

When the global financial crisis occurred, the EU market was hardest hit. In 2011, the EU’s apparel and textile imports were worth US$260 billion but the value dropped to US$240 billion in 2012 and was forecast to slide to US$234 billion in 2013. Garment and textile exporters to the EU like China, India and Turkey witnessed huge plunges, while Vietnam suffered a slight impact. Vietnam’s garment and textile exports to the EU reached US$2.8 billion in 2011, but the turnover slumped nearly 14 percent to US$2.5 billion in 2012. In 2013, the value is projected to continue to decline to US$2.4 billion. Meanwhile, its apparel and textile exports to Japan were expected to surpass US$2.4 billion in 2013. Obviously, this is a matter of concern for exporters relying on the EU market.

According to export data in April 2013, Japan overtook the EU to become the second largest garment and textile export market of Vietnam. Powered by the Japan - Vietnam FTA which took effect in 2009, garment and textile exports to the East Asian nation surged strongly. In addition to FTA tariff cut advantages, Vietnam has also benefited from Japan’s policies on reduced imports from China. Currently, Japan spends some US$40 billion a year on textiles and clothing imports, of which more than US$31 billion is for imports from China, US$2.1 billion for the EU and more than US$2 billion for Vietnam.

FTA expectations

According to experts, economic slowdown dented consumption in the EU. However, the EU remains a potential market for garment and textile suppliers worldwide because of the attractiveness of the world’s biggest market where consumers are willing to pay much for clothes. In the past five years, Vietnam’s garment and textile growth is among the highest in the world, averaging 32 percent a year. But, its garment and textile export growth to the EU is not as high as to the US, Japan and South Korea. Vietnamese exporters and EU importers as well expect a strong growth in textile turnover when the Vietnam - EU FTA comes into force, expected in 2015. According to the Vietnam Textile and Apparel Association (Vitas), the current average tariff imposed by the EU on Vietnam’s garments and textiles is 11.7 percent. The reduction from 11.7 percent to 0 percent will certainly be the driving force for Vietnam’s strong garment and textile export growth to the EU market in the coming time.

Garment and textile companies said though exports have slowed or even declined, they still prefer exporting to the EU because Japan is well-known for strict quality requirements which demand bigger investments for technology and quality, and not all companies always meet its conditions. However, according to many businesses, Japanese importers are willing to negotiate prices with sellers.

Although one of the five biggest garment and textile producers in the world, Vietnam’s export accounts for only 4 - 5 percent of the world market share in terms of export value. Vietnam also accounts for 8 percent of market share in the US and only one percent in the EU. Among the the four largest importers of its apparels, Vietnam has the FTA with Japan and is negotiating with South Korea and the EU. The country expects the conclusion of the Trans-Pacific Strategic Economic Partnership (TPP) Agreement will boost its exports to the US. Vietnam is standing before plenty of opportunities for expanding export market shares and changing the above-mentioned modest figures.

(Source:vccinews)

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