As Vietnamese made fabrics are largely still below the standards of international markets, it’s textile and garment sector is heavily dependent on imported fabrics, mostly originated from Asian countries, with China accounting for 52 percent of the imports
In the first four months of 2017, Vietnam imported 3.3 million USD worth of fabrics , up 6.75 percent from the same period last year, this was revealed by the Ministry of Trade and Industry.
Once the EU-Vietnam Free Trade Agreement comes into force, the EU will eliminate tariffs on textile and garment products from Vietnam. However, the agreement will impose long transition phase of up to 7 years for textiles and garments as it is among products sensitive to EU producers.
The move aims to cut inputs from suppliers in countries outside of the agreement.
Furthermore, the strict rules-of-origin scheme will likely stop Vietnamese manufacturers from immediately benefiting from the deal.
Vietnam will have to satisfy “double transformation” rules-of-origin in return for full-fledged tariff removal that requires weaving and sewing and all subsequent manufacturing stages to be carried out within Vietnam.