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Central America wary of Vietnam's TPP inclusion

Central America is increasingly nervous about Vietnam's participation in the Trans-Pacific Partnership (TPP) trade talks, with some experts claiming its inclusion could bring losses of around $6 billion to its bread-winning textiles and apparel sector. An early entrant to the highly controversial, 12-country free trade accord, Vietnam wants flexible rules of origin and zero trade duties as soon as it is signed.

But Central American and US textile executives claim that would be a disaster, robbing the five Central American countries and the Dominican Republic, which make up the DR-CAFTA free-trade zone with the US, of 25 per cent of their exports during the TPP's first year.

In 2013, DR-CAFTA (Dominican Republic-Central American Free Trade Agreement) countries exported $7.8 billion worth of apparel to the US. Based on that figure, if Vietnam enters the TPP under its request for a non-yarn forward rule, export losses could total nearly $6 billion in the first three years of the TPP.

DR-CAFTA members have teamed with US textile lobbies to ask US Congress to pressure Vietnam to accept a yarn-forward rule of origin forcing it to limit sourcing from the TPP bloc. The partners are also asking that zero tariff benefits would be granted over a number of years.