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Vietnam to gain with new trade pact with the US

The United States is negotiating a new trade pact with 12 Pacific Rim nations. And Vietnam looks to be the gainer in this deal. In contrast China will lose apparel market share in the US. Tariffs on products where China dominates, such as down-filled jackets and synthetic dresses, could be cut quickly, giving Vietnam an edge.

Another loser will be countries like Mexico. Right now half of US yarn and textile exports go to Mexico and other countries south of the US, where cheap labor transforms them into clothes that make it back to American shoppers, duty free. Mexico and other South American countries say their cost structure incorporates a living wage, benefits and respect for the environment while a country like Vietnam faces charges of using child and forced labor.

Clothing is a priority for Vietnam. The country could take considerable market share from China and other countries without trade preferences. Vietnam has already boosted its US-bound exports by 38 per cent since 2010 even with tariffs adding as much as a third to its costs. It’s expected to have a further rise in exports to the US while exports from Mexico, China and India would fall. 

Based on labor costs alone, US and Central American textile firms are no match for their Asian rivals, although higher labor and environmental standards sought by the new pact are expected to push up costs for Vietnam.