The Impact of Wto Accession on Textile Industry in Vietnam

Topics: Investment, International trade, European Union Pages: 19 (6569 words) Published: December 8, 2012
Vietnam has achieve notable export success in its textile and garment industry over the past decade. However, it still received many subsidies from the government, especially export subsidies which is prohibited in the international trade once Vietnam has been an official member of WTO. It is textile and garment industry that is one of the most difficult problem in negotiation process of bilateral agreement with US. So for such a dependent-on-government industry like textile and garment industry, what would happen after removing all preferences ? Whether they could survive ? What should they do to gain benefits in such a fierce competition after WTO accession ? That is the purpose of our paper. We hope that this paper con give you a overview about the situation of textile and garment industry, as well as our point of view about troubles raising in this industry.

I. The situation of textile industry in Vietnam before WTO’s accession2 1.1 SWOT analysis of textile industry2
1.1.1 Strength2
1.1.2. Weakness3
1.1.3 Opportunities4
1.1.4. Threats5
1.2 Export subsidies of the government for textile industry6 II. The impact of WTO’s accession on export subsidies7
2.1 Rules in the agreement and Vietnam’s difficulties :7
2.1.1 Rules of WTO and effects to Vietnam:7
2.1.2 The difficulties of producers:9
2.2 Adjustment of the government and textiles producers :11 2.2.1 Adjustment of the government :12
2.2.2 Adjustment of producers13
III. Recommendation for development tendency of textile industry14 3.1 Change in the product14
3.1.1 Increase in value-added14
3.1.2 Build the brand name16
3.2 International market16
3.2.1 Reduce the risk of antidumping16
3.2.2 Market research17
3.3 Other Government Policy20
3.3.1 Reform administrative procedures20
3.3.2 Financial measures20
3.3.3 Support export20
3.3.4 Support investment21
3.3.5 Promote healthy competition21

I. The situation of textile industry in Vietnam before WTO’s accession 1.1 SWOT analysis of textile industry
In each part, we would try to go into details about some main characteristics as well as mention some other less important ones.

1.1.1 Strength

There are a lot to say about strengths of our textile industry. They can be divided into three categories: employment (industry generates employment), wages (low labor costs for employees as well as employers), and pricing (competitive pricing of exports). Textile and garment industry is labor-intensive. It requires a huge number of labor forces to generate business. Therefore, for years, the industry has created a considerable amount of jobs for young people. Unemployment decreases and living standard of certain working classes is improved. Most employees working in the textile and garment industry have low education and low skills. They graduate or even haven’t graduated from high schools and apply for jobs not requiring much previous education. As a result, they either receive low wages or nothing. In terms of employers, their salaries may be much higher comparing with other workers but they just constitute a very small proportion of the company as a whole. Aware of these, a lot of foreign investors have decided to establish their business of textile and garment in Vietnam. Since economic reform got underway, textile and garment have become the second largest export category after petroleum. The official VND/USD exchange rate is often rather high, which brings Vietnam the competitive pricing of export. Their products in foreign markets are relatively cheaper than other ones, which attracts consumers more and more.

1.1.2. Weakness
Like Strength, our country’s weaknesses in textile and garment industry can be put into 4 main points. The first one to mention is that our companies in the industry are too dependent on foreign agents and have little contact with final customers. In this form, the buyers (EU market, Japan, North America) do not...
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