US embassy cable - 04HANOI2719

UNCLAS HANOI 002719 
 
SIPDIS 
 
STATE FOR EAP/BCLTV AND EB/TPP/ABT/BTT 
STATE PASS USTR FOR DSPOONER, CMILLER, EBRYAN 
USDOC PASS OTEXA 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, KTEX, VM, WTO, LABOR 
SUBJECT: VIETNAM:  TRACKING CHANGES IN TEXTILE/APPREL 
EMPLOYMENT AND PRODUCTION 
 
REF:  STATE 184238 
 
1. In response to reftel, Post provides the FY 2002 and 2003 
data on the following issues pertaining to Vietnam: 
 
Total Industrial Production: 
Year           USD (millions) 
2002           23,800 
2003           27,600 
 
Total Textile/Apparel Production: 
Year           USD (millions) 
2002           1,870 
2003           2,200 
 
Textile/Apparel's share of Imports/Exports (percent): 
Year           Imports             Exports 
2002           8.7 percent         16.4 percent 
2003           8.1 percent         18.3 percent 
 
Total Manufacturing Employment: 
Year           Employment (millions) 
2002           4.07 
2003           unavailable 
 
Total Textile/Apparel Employment: 
Year           Employment (millions) 
2002           1.6  (est.) 
2003           2.0  (est.) 
 
2. Textiles and apparel are Vietnam's second largest export 
(after crude oil), earning Vietnam USD 2.73 billion in 2002 
and USD 3.69 billion in 2003.  Since entry-into-force of the 
U.S.-Vietnam Bilateral Trade Agreement, Vietnam's exports of 
textiles and garments to the United States have skyrocketed 
- befitting from lower MFN rate tariffs.  In 2001 Vietnam 
exported about USD 50 million worth of textiles and garments 
to the United States in 2001, USD 950 million in 2002 and 
USD 2.5 billion in 2003.  The United States and Vietnam 
negotiated a bilateral textile agreement that came into 
effect in May 2003, capping growth in Vietnamese exports of 
textile and apparel to the United States. 
 
3.  Vietnam is in the process of acceding to the WTO, but 
will not complete its accession by the time the WTO 
Agreement on Textiles and Clothing (ATC) expires on January 
1, 2005.  For this reason, Vietnam will remain subject to 
textile quotas on its exports to the United States (and 
possibly Europe its second largest export market for 
textiles and garments).   It is not yet clear how long U.S. 
companies that source textiles and garments in Vietnam will 
continue to do business here - much depends on how much 
progress Vietnam makes on its WTO accession and whether 
Vietnam appears on track to meet its goal of acceding before 
the end of 2005.  Employment in the textile and garment 
sector is likely to remain steady in the short term (first 
half of 2005), but in the long term employment levels in 
this key sector will be directly linked to Vietnam's 
progress on its WTO accession and the decision of U.S. 
buyers on whether to keep continue sourcing in Vietnam or 
move their business to countries no longer subject to 
quotas. 
 
MARINE