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Viewing cable 07HOCHIMINHCITY209, APPAREL INDUSTRY RESPONDS TO GVN EXPORT LICENSE PLAN

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Reference ID Created Released Classification Origin
07HOCHIMINHCITY209 2007-03-06 10:04 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Consulate Ho Chi Minh City
VZCZCXRO6653
PP RUEHCHI RUEHDT
DE RUEHHM #0209/01 0651004
ZNR UUUUU ZZH
P 061004Z MAR 07
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC PRIORITY 2187
INFO RUEHHI/AMEMBASSY HANOI PRIORITY 1564
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHGV/USMISSION GENEVA 0031
RUEHHM/AMCONSUL HO CHI MINH CITY 2361
UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000209 
 
SIPDIS 
 
USDOC 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS AND EB/TPP/BTA/ANA 
STATE PASS USTR DAVID BISBEE 
USDOC FOR OTEXA 
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO 
TREASURY FOR OASIA 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ETRD ECON KTEX WTRO VM
SUBJECT: APPAREL INDUSTRY RESPONDS TO GVN EXPORT LICENSE PLAN 
 
REF: HCMC-DEPT/USTR EMAIL 2/9/07 B) HCMC 1399 
 
HO CHI MIN 00000209  001.2 OF 002 
 
 
Sensitive But Unclassified. Not for Internet distribution. 
 
1. (SBU) Summary:  Representatives of the apparel industry 
based in Ho Chi Minh City report that the GVN has agreed to 
implement a system of export licenses for garments exported 
to the United States.  The HCMC branch of the American 
Chamber of Commerce proposed export licenses as a means of 
responding to the USG special textile monitoring mechanism. 
Exporters tell us that U.S. buyers continue to cut their 
orders and that the Ministry of Trade is under pressure 
from Vietnamese apparel manufacturers to respond to the USG 
monitoring mechanism.  End Summary. 
 
2. (SBU) Representatives of Vietnam's apparel industry met 
March 1 with the Ministry of Trade (MOT), the Ministry of 
Industry, the Office of Government (the Prime Minister's 
office), the Ministry of Finance and the Customs Department 
to discuss the future of Vietnamese garment exports to the 
United States in the wake of the USG commitment to monitor 
and consider self-initiating anti-dumping investigations of 
those exports.  At the meeting, the GVN shared an inter- 
ministerial circular that laid out a system of 
"supervising" garment exports to the United States.  AmCham 
members who attended the meeting said the circular sets up 
system of export licenses similar to that recommended by 
AmCham in a February 8 letter to the GVN. (Ref A)  This 
system is meant to prevent transshipment and to monitor the 
prices of garments exported to the United States in the 
"sensitive categories" covered under the USG monitoring 
mechanism. 
 
3. (SBU) According to AmCham's Apparel Committee, Minister 
of Trade Truong Dinh Tuyen said at the meeting that the GVN 
did not agree with the USG special monitoring program, but 
that the GVN wanted to establish confidence among U.S. 
importers, hence the export licensing plan.  Deputy 
Minister of Industry Bui Xuan Khu said the export license 
system would aim to ensure there would be "no subsidies, no 
transshipment and no dumping."  One U.S. buyer said the 
export license system would be based on the Electronic Visa 
Information System (ELVIS) that was used by Vietnam and 
other countries exporting to the United States when they 
were subject to apparel quotas. 
 
4. (SBU) Industry representatives told us the GVN decision 
would be helpful in the short term to mitigate uncertainty 
created by the USG commitment to Senators Dole and Graham 
to monitor apparel imports from Vietnam and consider self- 
initiating anti-dumping investigations of Vietnamese 
garment exports.  Representatives told the GVN they would 
be making decisions this month about order volumes for 
July-December 2007. 
 
5. (SBU) U.S. buyers say customers continue to cut orders 
placed in Vietnam.  MAST Industries, for example, has thus 
far shifted USD 70 million in orders from Vietnam to China 
and Cambodia.  This represents one-third of the value of 
orders placed by MAST in Vietnam in 2006.  MAST plans to 
shift all orders out of Vietnam by the end of the year 
pending further clarification from the USG regarding its 
commitment to monitor and possibly self-initiate anti- 
dumping investigations. 
 
6. (SBU) At the March 1 meeting, an MOT official told MAST 
that the MOT was under pressure to respond to the USG 
special monitoring mechanisms from Vietnamese apparel 
manufacturers, who are starting to experience the effects 
of the decline in orders.  Vietnamese apparel 
manufacturers, especially small and medium-sized companies 
located in northern Vietnam, are being hurt more than 
foreign-invested factories, MAST said.  The foreign firms 
keep orders from U.S. buyers and simply shift production 
from Vietnam to other countries.  Foreign factories located 
in Vietnam often sub-contract with Vietnamese manufacturers 
to meet order requirements, and it is these sub-contracts 
that are being lost.  MAST reported it was aware of at 
least one Vietnamese factory that had closed as a result of 
 
HO CHI MIN 00000209  002.2 OF 002 
 
 
the shift in MAST orders out of Vietnam. 
 
7. (SBU) U.S. retailers and Vietnamese apparel 
manufacturers continue to voice complaints about the USG 
special monitoring mechanisms. (Ref B)  They praised the 
GVN's willingness to be responsive to the industry with the 
export license plan and expressed the hope that it would 
minimize the "threat" of anti-dumping lawsuits.  They also 
called on the USG not to self-initiate anti-dumping 
investigations.  One U.S. buyer said the reason that 
Vietnam is so critical to U.S. retailers is that it is the 
most competitive location to source high-end apparel.  U.S. 
buyers have long praised Vietnam as a source for 
consistently high-quality garments. 
WINNICK