VIETNAM FRETS OVER ANTI-DUMPING POLITICS DESPITE CONFIDENCE

UNCLAS SECTION 01 OF 02 HANOI 001731 SIPDIS STATE PASS USTR FOR DBISBEE USDOC FOR 4430/MAC/ASIA/OPB/VLC/HPPHO SENSITIVE SIPDIS E.O. 12958: N/A TAGS: KTEX ECON EIND ETRD ETTC VM SUBJECT: VIETNAM FRETS OVER ANTI-DUMPING POLITICS DESPITE CONFIDENCE IN ITS NUMBERS REF: (A) HANOI 1654; (B) HCMC 995 HANOI 00001731 001.2 OF 002 ¶1. (SBU) Summary: The Vietnamese government (GVN) and apparel industry are confident that the data gathered by the Department of Commerce's import monitoring program will vindicate their claims that the country is not dumping apparel exports to the United States. In his meetings with concerned GVN and apparel sector audiences in Hanoi, Import Administration Assistant Secretary David Spooner underscored that the facts and the figures, not politics, will guide the program's first report, due in early November. End summary. CONFIDENCE IN THE NUMBERS... -------------- ¶2. (SBU) In meetings in Hanoi on September 26 and 27, GVN and apparel industry representatives told A/S Spooner that the data gathered and reported so far by the Commerce Department shows that apparel exports' growth has been moderate and prices have not dipped below market averages. They claimed that Vietnam's aggressive anti-dumping stance --which includes monitoring its own exports and lobbying the U.S. textile and retail sectors -- should ensure a clean sheet for Vietnam when Commerce issues its first import monitoring report. A/S Spooner told his interlocutors that he expected to issue the report no later than the first week of November, ahead of the U.S. trade mission to Vietnam led by Commerce Secretary Carlos Gutierrez. SIPDIS ¶3. (SBU) According to the Ministry of Industry and Trade (MOIT) and the Vietnam Textile and Apparel Association (VITAS),first-half 2007 apparel exports to the United States were up by 20% over the same period in 2006, and below the 26% growth in Vietnam's other apparel export markets. "The increase this year is moderate, and is indeed lower than when we had quotas," MOIT Minister Vu Huy Hoang said. Meanwhile, VITAS Chairman Le Quoc An pointed that Vietnam's average price of $3/sq. mt. was double that of China. MOIT Vice-Minister Bui Xuan Khu added that many if not most of the garments that Vietnam exports to the United States are in categories where the U.S. market depends almost exclusively on imports. ...AND IN ITS ANTI-DUMPING EFFORTS -------------- ¶4. (SBU) The GVN and the apparel sector also cited their efforts in reaching out to U.S. businesses. VITAS Chairman An told A/S Spooner that a joint GVN-apparel industry delegation had met in Washington in September with representatives from the National Council of Textile Organizations (NCTO) to assuage the NCTO's fears of direct competition with Vietnam's exporters. While in Washington, the delegation also met with Import Monitoring staff from the Department of Commerce and offered data from Vietnam's own internal monitoring mechanisms, which the Vietnamese claim is wholly consistent with the Commerce numbers published so far. The delegation also lobbied the American Apparel and Footwear Association, the National Retail Federation, and the Retail Industry Leaders Association, among others. CONCERNS ABOUT THE POLITICAL DEBATE -------------- ¶5. (SBU) Despite the GVN and apparel sector's confidence in the numbers, they expressed concerns that politics would play a role in Commerce's review of the data. A/S Spooner underscored that the report would be factual and that there was "no secret deal to keep Vietnamese imports out." At an industry roundtable, the apprehensive GM of a garment factory in the outskirts of Hanoi summed up the general feeling by saying: "The data doesn't concern me, what worries me is the political debate over the data." A/S Spooner acknowledged a deteriorating political climate on trade liberalization but admitted that to date no domestic apparel company had claimed market injury by Vietnamese imports. "Our commitment was to monitor imports not to initiate [an anti-dumping] case." ¶6. (SBU) Both the GVN and the apparel manufacturers restated their preoccupation with the monitoring program's potential chilling effect on orders. Many Vietnamese businesses complained that customers in the United States have refrained from placing orders for fears of anti-dumping measures. For their part, Minister Huong and his deputies cautioned against disruptions in a sector that employs directly over two million workers. COMMENT -------------- ¶7. (SBU) Although the first report of the import monitoring group is HANOI 00001731 002.2 OF 002 still pending, the GVN and the textile sector are confident that there is no dumping. A/S Spooner's visit was timely in setting the record straight that politics will not play a role in the report. ¶8. (U) A/S Spooner cleared this cable. MICHALAK