Vietnam has become Australia's largest export market for raw cotton, with imports of the commodity from Australia rising 899% to $555m between 2020 and 2021.

The relationship between China and Australia has been strained since 2020, with China imposing tariffs on Australian goods in response to Australia's call for an investigation into the origins of the coronavirus.

Vietnam has other advantages that Australian cotton producers are able to exploit, including free trade agreements, a convenient location and high demand from apparel manufacturers. Vietnam and Australia are members of three key free trade agreements, including the ASEAN-Australia-New Zealand FTA, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.

These FTAs have opened up supply chains for Vietnam's manufacturers, while also giving Australian cotton preferential import tax status. Vietnam is expected to export $46bn-$47bn of clothing and apparel in 2023, which has boosted demand for cotton imports.