MoF hope talks will initiate the end to garment quotas

“It is thought that bilateral negotiations on lifting quota limitations for the European market will take place by February of next year,” said Bui Xuan Khu, vice minister of industry.
He added that the government hoped quota restrictions for the European market would be removed as early as 2005, even though Vietnam would not yet be a member of the WTO by then.
“Recent positive signals indicate that such preferences will be granted to Vietnam by our EU partner,” he said, adding that the success of bilateral negotiations between the EU and Vietnam on the latter’s accession into the WTO had been a positive development.
Khu said he expected that by early 2006, Vietnam would be exempted from quota limitations on exports to the US, Canada and Turkey, because by that time Vietnam would be a member of the WTO.
Meanwhile, the MoF declared that certain categories of garment and textiles exported to the US will have their quota expenses sharply reduced, allowing Vietnamese-made apparel to be more competitively priced.
Twenty-five garment types were designated as “hot” categories – including cotton coats, knit T-shirts and skirts – and will receive a 70 per cent reduction in quota fees, dropping from VND8,000 ($0.50) to VND2,400 ($0.15) per dozen items.
A source from the MoF said the reduction would cost state coffers an average of VND100 billion ($6.6 million) per year. Despite the cost to the state, Khu said the reduction was part of a comprehensive government strategy to enhance the competitiveness of Vietnam’s apparel industry.
Le Van Dao, general secretary of the Vietnam Apparel and Textile Association (VATAS), offered a further proposal. According to Dao, local enterprises “are in dire need of preferential capital from the state to increase the local content rate of Vietnamese-made apparel.”
To that end, he proposed that “the government set aside around VND3,000 billion ($192 million) per year from the Development Assistance Fund to give preferential credit to both state-owned and private garment and textile firms.”
Dao said that even credit given to textile production firms should have an interest rate of 3 per cent per year, with a 12-year duration and an initial three-year grace period.