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TPP's influence on Vietnamese textile & garment industry

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Kha Li Trần Hoàng

on 27 June 2014

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Transcript of TPP's influence on Vietnamese textile & garment industry

A proposed expansion of the 2005 Trans-Pacific Strategic Economic Partnership Agreement, a trade agreement among Brunei, Chile, New Zealand, and Singapore.
It seeks to manage trade, promote growth, and regionally integrate the economies of the Asia-Pacific region.
The textile and garment (T&G) industry
contributes more than 9.55% to the country’s gross domestic product (GDP) and 14.0% to the country’s export turnover
presently employs 12.0% of the national industrial workforce
Opportunities
1. DIMINISHING TARIFF.

2. CREATE MORE JOBS.

3. SUSTAINABLE DEVELOPMENT

CHALLENGES
1. Trade barrier policies, quota, textile monitoring program.

2. Strong competition from rivals of other countries.

3. Strong demand for upgrading technology, production management.

Conclusion
The End!
TPP's influence on Vietnamese textile & garment industry
Opportunities & Challenges
Japan - Negotiating March 2013
Taiwan - Announced Interest September 2013
South Korea - Announced Interest November 2013



TPP : Trans-Pacific Partnership
1. DIMINISHING TARIFF
Tariff is a tax on a good that is imposed by the importing country
If VN joins TPP there will be more Vietnamese exporting textile products:

Reason:

_

Price of products is lower, domestic demand increases and domestic supply decreases.
_ Vietnam has comparative advantages in producing textile goods
2. CREATE MORE JOBS
VN has have many potential textile markets in the world. Together with some big markets, esp US and Japan, Vietnam is about to join TPP, which helps Vietnam to export textile and garment to those countries more easily --> will create sustainable development for Vietnamese textile.
One of the biggest textile market of Vietnam is US :
3. SUSTAINABLE DEVELOPMENT

U.S. Apparel Imports

Vietnam is the second largest exporter of garments to the United States, behind China
Another big market of Vietnam is Japan. Textile and garment exports to Japan, up 20 percent to US$1.2 billion.
2. Strong competition from rivals of other countries
3. Strong demand for upgrading technology, production management
_ More profits Vietnam achieves from exporting will be spent on technology.

_ Also, the labor will drop, which creates the problem we are facing - unemployment.
Because of exporting more textile goods, it requires Vietnam to build more textile mills. Vietnam doesn’t have enough modern machines, so we have to depend on men power.
1. Trade barrier policies
_ One of barrier Vietnam has to face with when exporting textile to US: Yarn – Forward Rule - all products in a garment from the yarn stage forward must be made in one of the countries that is party to the agreement.


_ Vietnam has to spend more time adapting to this situation, as well as limit diversity of products.
_ International competition: Because of low tariff, every country in the textile industry will be likely to maximize their export profit, which means more competition in the industry.
_ Domestic competition: other countries will be sure to jump in Vietnamese textile market, which creates competition locally, as well as dumping.
Obey the rules --> In short-run, buy material from countries in TPP at expensive price >< In the long-run, have enough technology to produce ourselves.

The strong domestic competition --> lower the price of domestic good, add some policies to draw customers attention so that we will not lose our own market.
Stepping into the dream world of free trade economy:
No tariff

New jobs

The whole economy grows
Trade - offs:

The limitation of rules

Strong competition

The demand for more advanced technology
The state should adopt policies to encourage domestic production of raw materials by reducing loan interest rates for the firm, and may even produce tax-free in the early stages.
Workers need to be upgraded and invest in machinery and modern production lines to increase the competitiveness.
Full transcript