After EVFTA takes effect, Vietnam’s garment industry will face the test of rules of origin
After the Vietnam-European Union Free Trade Agreement (EVFTA) takes effect, Vietnam’s garment industry is one of the main beneficiary industries. However, the Ministry of Industry and Commerce of Vietnam reminds that the garment industry must comply with the regulations before obtaining tariff preferences. Agreement on rules of origin.
According to the agreement, textile fabrics must come from Vietnam or the EU, and the cutting and sewing processes must also be carried out in the above regions. On the other hand, because South Korea has signed free trade agreements with Vietnam and the European Union respectively, Korean fabrics can also be recognized as raw materials that meet the EVFTA origin standards.
According to Pham Xuan Hong, president of the Ho Chi Minh City Garment, Textile, Embroidery and Knitting Association of Vietnam, the “starting with fabrics” stipulated in EVFTA is smaller than that of the Trans-Pacific Partnership The Comprehensive and Progressive Agreement (CPTPP) has simple “starting with yarn” provisions, but Vietnam’s textile fabric production is still limited and the price is higher than Chinese fabrics, so most Vietnamese companies choose to import fabrics from China.
After the implementation of EVFTA, Vietnam’s garment industry will face the problem of sourcing raw materials. Take Viet Thang Jean Co., Ltd. (VitaJean), a Vietnamese garment company, as an example. The EU market has always accounted for 30% of the company’s exports. However, the fabrics produced by the company come from Taiwan and China and do not meet the conditions for preferential tariffs. If we switch to Korean raw materials, we will face an increase in cost and price.
President Fan also said that many garment companies have begun to study fabrics that can be produced in Vietnam in response to EU market demand to comply with EVFTA origin regulations. At the same time, President Fan believes that the Vietnamese government should provide more measures to develop auxiliary industries and increase the self-made rate of textiles and garment products.
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