The below chart shows that a “new normal” may have been achieved after the removal of U.S. apparel import quotas for WTO members in 2005, and for Vietnam in 2007, when Vietnam became a WTO member. U.S. apparel imports from “Other Countries” dropped by more than one-third, from $46.5 billion to $30.5 billion between 2005 and 2010; U.S. apparel imports from China nearly doubled from $22.4 billion in 2005 to $40.7 billion in 2011; and U.S. apparel imports from “2nd Tier Countries” increased by 37% from $20.3 billion to $27.9 billion in 2011. Since 2010~2011, it seems that a new equilibrium may have been reached, with the outlook for China’s apparel exports growth to the U.S. to decrease slowly over time, as more companies join the “leaving China” movement, while exports from the “2nd Tier Countries” and “Other Countries” increase slowly. Indonesia, where FDI doubled to $20 billion in 2011, Bangladesh, which recently hosted an AmCham Hong Kong apparel sourcing delegation accounting for $5.8 billion/yr, and Myanmar are seen as the most promising FDI destinations for those “leaving China.” Based on recent trends, U.S. apparel imports from Vietnam would increase, but the proposed doubling of the minimum wage by 2015 could reverse that trend.
Preferential Market Access : Vietnam’s WTO accession in 2007 and earlier preferential market access to Japan, the EU since 1992, and the United States since 2001 have played a key role in promoting the sector. Currently, Vietnam faces preferential market access to Japan, where it has enjoyed duty-free market access since 2009 in the context of the Vietnam-Japan EPA, as well as to the EU, where Vietnam enjoys GSP status. However, in the U.S. market (Vietnam’s most important export market), Vietnam’s apparel exports face MFN tariffs. Vietnam’s export development has also been influenced by the growth of regional trade arrangements. Vietnam’s most important regional trade agreement is ASEAN, which it joined in 1995 (the same year that WTO accession talks formally began). Exports to ASEAN have been duty free since 2009. One of the principal objectives of tariff elimination within ASEAN is to stimulate the development of a regionally integrated industry, with individual countries differentiating in terms of product mix, design, and quality. As a member of ASEAN, Vietnam is part of the ASEAN-China Free Trade Agreement (ACFTA). ACFTA was signed in 2002 and is being implemented in stages. ASEAN also has a trade agreement with Korea.
In summary, the 2013 Minimum Wage levels for the private sector, effective Jan 1, 2013, are:
- 2.350.000 vnd/month for enterprises in Region I
- 2.100.000 vnd/month for enterprises in Region II
- 1.800.000 vnd/month for enterprises in Region III
- 1.650.000 vnd/month for enterprises in Region IV
For reference, the State Sector Minimum Wage is 1.150.000 vnd/month, effective Jul 1, 2013.