Analysis of the effect of the Trans-Pacific Partnership Free Trade Agreement on Vietnam apparel industry

The Trans-Pacific Partnership Agreement (TPP) was signed by twelve countries, namely Chile, New Zealand, Brunei, Singapore, the United States, Peru, Malaysia, Canada, Australia, Japan, Mexico and Vietnam. It is the first comprehensive “new generation” free trade agreement of the 21st century, covering various fields such as trade in goods and services, intellectual property rights, technical barriers, government procurement, rules of origin, standards on environment labor and state owned enterprises, etc. Rules of origin is a very complicated issue under the framework of TPP agreement, but one that is integral to the textile and apparel industry. Therefore, this study aims to analyze if the Vietnamese apparel industry can capitalize under the Trans Pacific Partnership (TPP) agreement. In this study, findings were based on published information as well as qualitative interviews with apparel firms in Vietnam. The Vietnamese apparel industry, with great dependence of imported materials (yarns and fabrics) from Republic of Korea and China, faces many potential challenges in complying with the rules of origin in the TPP agreement. Furthermore, if it is narrowed down to the level of firms, state-owned enterprises and foreign-owned companies would be the main beneficiaries from the agreements, whereas small and medium locally owned companies would be unlikely to capitalize on the export opportunities offered. Additionally, most of the products that are in major export categories would not be under free trade from year 10 on.