Vietnam Quotas Filling Fast

All eyes were on China safeguard quotas this time last year, but this year the Vietnam quota situation has the limelight. Vietnam is filling its quota levels much more rapidly than it did last year, and some categories are likely to embargo earlier than some importers may have expected.
Brenda Jacobs, an attorney specializing in apparel and textile trade with the law firm Sidley Austin LLP, said many apparel importers pulled out of Vietnam during the first quarter of last year to import more goods from China. Knowing that safeguards likely would be placed on China, U.S. firms sought to build their trade with China as much as they could while there were no restrictions, she said. But this year many orders shifted back to Vietnam, which is in the process of joining the World Trade Organization (WTO). There is a possibility that Vietnam will join the WTO by the end of November. Once the United States recognizes Vietnam as a WTO member and gives the country permanent normal trade relations status, it will eliminate quotas on Vietnamese apparel and textile imports. Jacobs said importers should approach their fourth quarter trade with Vietnam very cautiously because of uncertainty about quota carry-over rules, given that Vietnam's trading status is subject to change.
On the China front, "there is nothing shocking" about quota fill rates, said Jacobs. While many Chinese quotas probably will fill by the end of the year, they are not going to fill very early this year as they did in 2005, she said. "You can't compare what happened last year with anything," Jacobs said, noting that the uncertainty about trade with China in 2005 created abnormal surges.
-- Kathleen DesMarteau