Quota shortage threatens to unravel US textile deals

Thang Loi Textile and Garment company (Vigatexco) last week announced it had won a contract with a leading US partner but also expressed concerns that if the Ministry of Trade (MoT) did not help the company, it could fail to fulfil the contract due to its allocated quota being too small.
The deal with Dickies Medical is worth $12 million and calls for Vigatexco to export four million medical uniforms and two million metres of cloth. The first consignment is due to be shipped later this month. That order is for 600,000 finished products and 500,000 metres of cloth. The contract is scheduled to expire at the end of next year.
However, Vigatexco’s deputy general director Ngo Duc Hoa said that under the quota allocated by the MoT, Vigatexco received just one-third of the quantity specified in the contract with Dickies.
Last week, both Vigatexco and the importer sent petitions to the MoT asking for a larger quota allocation for the contract.
“We deserve to have priority. We have the export contract in our hand and 100 per cent of the products for export would be made of local material,” Hoa said.
Using locally-made material would bring in a lot of added value to the country, he said.
Also in its request sent to the MoT last week, Dickies’ president Charles Lee said the company had “imported roughly 3.2 million pieces of garments from Vietnam and has been satisfied with the results”.
“Unfortunately, we now face a problem with the newly enacted quota and are experiencing difficulties with our purchasing plans,” he said.
“We ask that Vigatexco be given a larger share of 2004’s quota so we will be able to follow our original plan.
“Dickies Medical will use your [Vietnam’s] decision regarding our medical uniforms as a base upon which to build our future purchasing plans.”
The petitions received a positive response from Minister of Trade Truong Dinh Tuyen.
“There would have to be a separate number of quotas spared for rewarding garment and textile enterprises which have already signed large export contracts and those using locally-made material for export products.”
Hoa said the company also had a plan to borrow quotas from enterprises that could not find contracts for export or had not used up their allocated quotas.