The way ahead for an effective trade environment

Brussels, Belgium – 5 February 2016 – The Federation of the European Sporting Goods Industry (FESI) is welcoming the release of the text of the Free Trade Agreement (FTA) between the EU and Vietnam, today.

“FESI is pleased that negotiating parties have taken the proposals of the sporting goods industry into account by integrating measures such as immediate duty removal for most footwear from our sector and an accelerated duty removal schemes for leather sports shoes“ stated FESI Secretary – General, Alberto Bichi. “ We have supported the negotiations throughout the process and are endorsing a rapid implementation process” , he continued.

A fully operative EU-Vietnam FTA will open considerable opportunities in terms of improving services to EU-consumers and in facilitating market access for the European sporting goods industry. Vietnam’s steady economic growth over the last years and its beneficial demographics (over 92 million inhabitants, of which 43% younger than 25 years) make it an attractive developing export market for the EU and the sporting goods sector. Moreover, Vietnam is one of the top sourcing countries for sporting goods world-wide, manufacturing products such as athletic footwear, sports-apparel and sport accessories.

FESI

ASEAN garment products likely to flood the Vietnamese market and directly compete with domestic products following the country’s accession to the ASEAN Economic Community (AEC) and Trans Pacific Partnership (TPP) treaty due to which Vietnamese textile and garment companies might face a huge challenge.

According to Nguyen Thi Dien, chairwoman and executive director of the An Phuoc Shoes Sewing and Embroidering Company, the customers will support domestic goods but the most important factor to retain Vietnamese clients is to assure quality.

Since competition with garment products from other ASEAN countries would be unavoidable, local companies should improve their quality and expand models to strengthen their competitiveness.

Since 1995 Viet Tien Garment Joint Stock Corporation has set up a distribution chain with 1,390 shops and agents around Viet Nam. Besides the famous Viet Tien brand name, the corporation also owns various fashion brands for both adults and children.

With over 200 shops, Blue Exchange has a big market share of garments for young people.

Hong Ve Dung, deputy general director of the Viet Nam Garment and Textile Corporation, said that in recent years demand for garment products has increased by 10 – 15 percent annually.

Promoting new design, strengthening brands and expanding the distribution system are the best ways to cope with the effects of the free trade agreements.

Dung said that local companies hope for lower interest rates to cut their expenditure and improve their competitiveness.

An Phuoc has kept its growth target of 15 -17 percent, despite the fact that the market is set to become more competitive, This year it plans to open 10 more shops to add to its 105 existing ones.

Yarnandfibers

01/02/2016

Quote from: “http://www.yarnsandfibers.com/news/textile-news/vietnam-garment-firms-improve-quality-trade-deals-impend#.VrRiL9J95dh“

VOV.VN – Vietnam’s clothing and textiles industry has recorded average annual growth of 15% over the past five years and experts anticipate this trend to continue in the near term with gross export revenue reaching a record high US$30 billion by 2020.

Substantially, all of the past growth has been thanks to foreign manufacturers relocating existing facilities to the Southeast Asian nation to take advantage of lower labour costs and capitalize on the benefits of free trade agreements (FTAs).

More specifically, the EU, the second largest export market, accounts for a 20% share of the Vietnam clothing and textile export market. A recently signed free Vietnam- EU trade deal is projected to result in billions of dollars of increased exports through 2020.

A second free trade deal between the Republic of Korea (RoK) and Vietnam is also projected to positively boost the industry’s exports by billions of US dollars as well as a third trade pact with the Eurasian Customs Union (ECU).

Of course the earnings on these increased sales will inure primarily to foreign invested businesses and their shareholders— and to Vietnam in terms of increased numbers of good middle-income paying jobs.

According to official statistics, the industry currently employs 7.7 million workers in roughly 4,000 companies and the continued projected growth over the next few years readily translates into thousands more good paying jobs for Vietnamese workers.

FTAs generally benefit foreign invested companies in Vietnam through reduced preferential tariffs, less expensive raw materials and supplies, and loosening of other restrictive trade barriers.

As a result of these free trade agreements and the potentiality of the much talked about Trans Pacific Partnership (TPP), it is widely reported in the global media that foreign investors, especially Chinese, are now attempting to corner the Vietnam clothing and textile market.

The media reports say, they are purchasing domestic companies mostly small factories comprised of production workshops, a security room, a canteen and break room located in cities and industrial zones with advantageous transport conditions.

The trend has gathered momentum to such an extent that the view is emerging that foreign invested companies, and not Vietnam’s domestic clothing and textile industry, would benefit more from the TPP than the domestic economy, should it ever materialize.

With their powerful financial capability and experience, foreign clothing and textile manufacturers are taking over Vietnam’s domestic businesses precisely to position themselves to benefit from the TPP.

About 70% of Vietnam’s clothing and textile exports are currently produced by foreign invested companies, which demonstrates their large operating scale and the big role they play in the industry.

In time, the reports say, foreign owned companies will make up an even larger percentage of the industry, while Vietnamese domestic businesses will continue to dwindle in number and see their market share shrink.

VOV

30/01/2016

Quote from: “http://english.vov.vn/investment/are-foreigners-cornering-vietnams-clothing-and-textile-market-311371.vov“

The New Zealand government on Tuesday released the legally verified text of the controversial Trans-Pacific Partnership (TPP) trade deal as opposition mounted ahead of next month’s signing ceremony.

The text was the final version of the agreement, which would be signed by ministers of the 12 participating nations in Auckland on Feb. 4, Trade Minister Todd McClay said in a statement. As depository of the agreement, New Zealand would also release French and Spanish versions of the text.

Immediately after the signing, the New Zealand government would submit the TPP text to parliament, along with the National Interest Analysis (NIA), and the legislative changes required to implement the agreement would go through normal parliamentary procedures.

Also on Tuesday, the government released the NIA, drawn up by the Ministry of Foreign Affairs and Trade, which analyzed the impact of the TPP on New Zealand. “It finds that entering TPP would be in New Zealand’s national interest, adding an estimated 2.7 billion NZ dollars (1.74 billion U.S. dollars) to GDP by 2030,” said McClay.

The main opposition Labor Party said the gains were “marginal” at less than 1 percent of GDP and compromised New Zealand’s sovereignty. “This analysis confirms the Trans Pacific Partnership will prevent future governments making laws in the interest of New Zealand,” Labor leader Andrew Little said in a statement.

The NIA was “tired old spin” pushed out in the face of growing opposition to the TPP and failed to shed light on the TPP’s effects on other issues such as aspects of the public health system, he said. Auckland University law professor Jane Kelsey said the NIA was “a totally predictable cheerleading exercise that talks up the supposed gains and largely ignores the huge downsides” of the TPP.

The “flimsy NIA” contrasted to the careful and detailed analysis in five peer reviewed expert papers on the implications of the TPP that showed the deal had no net benefit for New Zealand, Kelsey said in a statement.

The expert papers said the TPP could inflict significant constraints on the New Zealand economy and environment as well as other areas. Organizers of a protest march against the TPP in Auckland on Feb. 4 said they were expecting thousands of people to turn out.

Xinhua Finance

26/01/2016

Quote from: “http://en.xinfinance.com/html/World/2016/191242.shtml“

HA NOI  (VNS) — Domestic small- and medium-sized enterprises (SMEs) would enjoy many benefits from the Trans-Pacific Partnership (TPP) and Viet Nam-EU Free Trade Agreement (EVFTA), said economist Pham Chi Lan.

Lan told a conference on TPP and EVFTA held in Ha Noi yesterday that SMEs would be facilitated in trade liberalisation and connection in the region while expanding their global value chain as well as maximising competitive advantages.

Tariff barriers relating to export items will be removed, resulting in lower import costs and more diversified supply. In addition, Vietnamese enterprises will have a fair playing field both inside and outside the country, which could help protect investors.

According to the Viet Nam Trade Promotion Agency under the Ministry of Industry and Trade, the TPP will have clear impacts on the economy as the country’s GDP, which could increase by 11 per cent while exports could be 28 per cent higher. Export turnover of key products such as garment and textile, leather shoes and seafood could surge in the next 10 years.

After EVFTA comes into effect, 99 export tariffs from Viet Nam to the markets of 500 million people would be removed in the next 7 to 10 years. The agreement is expected to grow Viet Nam’s annual export turnover by four to six per cent.

Howver, the TPP and EVFTA would also pose challenges for businesses. The tariff cuts could make imported goods flood Viet Nam with cheaper prices.

This could make local enterprises face with fierce competition. On the other hand, goods exports would have to meet strict requirements for certificate of origin (C/O), anti-dumping issues, subsidiaries and trade defence tools, the agency said.

Claudio Dordi, the technical assistance team leader of the European Trade Policy and Investment Support Project (EU-MUTRAP) pointed out that Vietnamese enterprises should focus on C/O principles for garment and textile products, thus increasing added-value. The businesses should also improve the quality and safety of their products, following international hygiene, especially those from EU.

He proposed that the Government should provide clear information to companies on deadlines and detail of the EVFTA as well as other trade pacts.

In addition, Viet Nam should have a clear strategy at the national and local levels to promote quality management and building brand names.

Big firms optimistic too

The annual report on Viet Nam’s economy 2016 released by Viet Nam Report Company showed that big local companies are optimistic about the impact of the TPP.

The survey collected ideas from more than 1,000 big companies nationwide.

With the expected economic growth rate of 6.7 per cent and CPI of less than five per cent, nearly a half of surveyed firms felt optimistic about their business in the first quarter of 2016 and the next five years. 

VNS/WTO Center

26/01/2016

Quote from: “http://wtocenter.vn/news/vn-smes-benefit-tpp-and-evfta“

The Trans-Pacific Partnership aims to create the world’s biggest free-trade area, bringing together 12 Pacific Rim countries including the United States, Singapore, Japan and Australia.

Trans-Pacific Partnership (TPP) leaders pose for a family photo prior to a meeting on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Summit in Manila on Nov 18, 2015. (Photo: AFP/SAUL LOEB)

AFP/Channel New Asia

21/01/2016

Quote from: “http://www.channelnewsasia.com/news/business/tpp-deal-to-be-signed-off/2443696.html“

HCM CITY  (VNS) — Vietnamese garment and textile firms are increasing their investments in locally made raw materials in an effort to satisfy strict rules of origin set by free trade agreements of which Viet Nam is a member.

“The garment and textile sector has depended on imported raw materials for a long time, under FTAs that the country has already signed or will sign, we cannot rely on imported sources any longer,” Bui The Kich, chairman of Dong Nai Garment Corporation, said.

On average, the garment and textile sector has to import about 70 per cent of raw materials, he said.

The domestic content rate at his company has increased to 45 per cent, thanks to investments in producing nonwoven materials, he said.

Last year the company also invested VND300 billion (US$13.39 million) in building the Hung Long Industrial Complex in Dong Nai Province, targeting to become a concentrated garment and textile place, he said.

Vu Duc Giang, chairman of the Viet Nam Textile and Garment Association (Vitas), and chairman of Garment 10 Joint Stock Company, said domestic garment firms had been encouraged to invest in yarn, weaving and dye, but the safest and most suitable way was a capital contribution or purchase of a stake in domestic and foreign firms to ensure material supply sources.

In its investment plan for this year, the company plans to work with its partners to produce yarn, he said, adding that this would ensure material supply for products for export and domestic sale.

Nguyen Hong Giang, general secretary of the Viet Nam Cotton and Spinning Association, said Viet Nam enjoyed high export growth last year with total export revenue of $28 billion, but the domestic supply of raw materials and accessories was very modest.

For instance, the country needs about 8.5 billion metres of fabric annually, but it produces only three billion metres.

The supply of domestic fabric has not kept pace with demand, while both the yarn-forward rule of origin under the Trans Pacific Partnership (TPP), and the fabric forward rule of origin under the Viet Nam – EU free trade agreement require intensive local supply, he said.

Therefore, to be able to enjoy benefits from FTAs, Viet Nam must quickly increase capacity for fabric production.

Dang Phuong Dung, Vitas’s general secretary, said to maximise benefits from FTAs, besides Government support, domestic firms should invest more in upgrading their production technology, designs and quality to gain a firm foothold in the world market.

She called for closer co-operation among domestic garment makers and raw material and accessory producers.

According to the Ministry of Industry and Trade, Vietnamese garments have to pay an average tariff duty of between 12-30 per cent when exporting to the US and EU.

For example, exports worth $10 billion require a tariff duty of $1.7 billion.

Once the TPP comes into force, tariffs will fall to zero, enhancing Vietnamese garments’ competitiveness, the ministry said.

According to Vitas, rules of origin, including the yarn–forward rule of origin, of FTAs will pose a business challenge, but in the long term this will motivate businesses to improve investment strategies and adjust production to meet market demand.

Each firm must establish its own supply chain or join hands with counterparts to form a supply chain in order to add more value to their products as well as improve competitive capacity, Vitas said.

With tariff advantages under free trade agreements, the garment and textile sector expects to enjoy export growth of more than 20 per cent this year, according to the association. — VNS

Vietnamnews

19/01/2016

Quote from: “http://vietnamnews.vn/economy/281359/firms-to-seek-local-suppliers.html“