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Retail industry group says apparel monitoring plan has a ''chilling effect'' on trade with Vietnam

WASHINGTON, DC – 04/26/07 – US-based retailers have sharply curtailed orders for apparel from Vietnam since the US government instituted a program of monitoring apparel imports from Vietnam, according to the Washington, DC-headquartered  National Retail Federation (NRF).

"Implementation of the monitoring program has had a chilling effect on apparel sourcing for Vietnam," said NRF Vice President and International Trade Counsel Erik Autor in testimony before a recent Commerce Department hearing on the Administration's Vietnam Textile and Apparel Import Monitoring Program.

"Pending orders from Vietnam have plummeted,” he said, adding that at least one prominent retailer has ceased all orders from Vietnam, while another has cut its orders by 80% percent, and many others have cut their orders “substantially.”

The program was started after Vietnam was granted membership in the World Trade Organization (WTO) in January as part of a deal made last year with so-called “textile state” US senators who opposed Permanent Normal Trade Relations (PNTR) status for Vietnam.

Under the deal, the Bush Administration agreed to begin monitoring of apparel imports from Vietnam and to consider self-initiation of antidumping cases if evidence is found of dumping that harms US manufacturers.

Commerce Department Assistant Secretary for Import Administration David Spooner said at a recent conference in Washington that the monitoring “has not had a negative impact on trade, citing an increase in imports from Vietnam in January.”

Autor responded to Spooner in his testimony saying that imports delivered in January were based on orders typically made six to nine months earlier – before the monitoring program went into effect.

Orders, he said, “have decreased sharply since the monitoring began, and should be reflected in decreased import deliveries this summer.”

All of the orders canceled in Vietnam have been diverted to other Asian nations rather than redirected to US manufacturers because US companies either don't make the products in question or don't make them at competitive prices, he added.

The monitoring program's threat of possible antidumping cases and after-the-fact antidumping duties is driving retailers' decisions to reduce imports from Vietnam, said Autor.

“Unlike the filling of quotas, decisions to pursue antidumping actions are not predictable, particularly in a non-market economy nation like Vietnam,” he said. "Trade remedy investigations inject a high degree of unpredictability into the sourcing equation.”

The US Commerce Department, said Autor, “should immediately narrow the scope of the monitoring program to only apparel products that are made in the United States, for which US apparel producers of those products have asked for monitoring, and for which there is clear evidence that imports from Vietnam are causing material injury to those producers.”

Retailers “must worry every day whether the Commerce Department may at some point in the future deem that the price they paid on an order was at a dumped price,” he concluded.

“The mere threat that an antidumping investigation could be undertaken on a wide range of apparel products is a serious matter and one which is forcing apparel retailers to shift sourcing elsewhere."

The National Retail Federation is the largest retail trade association in the world with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores, and grocery stores, as well as trading partners of retail goods and services.

As an industry umbrella group, NRF also represents more than 100 state, national and international retail associations.

According to the latest figures, the group’s members generated sales of $4.4 trillion in 2005.

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