Vietnam petitions U.S. for inclusion in GSP program

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Via Bloomberg who notes that this could further swing exports away from China:

Vietnam’s government asked the U.S. in May to make it eligible for a program that promotes growth in poorer countries by axing tariffs on some imports. While there is no regulatory timetable, the target is for President George W. Bush to admit Vietnam this year, according to the U.S.-Association of Southeast Asian Nations Business Council.

“Rising production costs in other parts of Asia, especially in China, are leading manufacturers to explore alternative locations for their Asian operations,” Michael Martin, an analyst in Asian trade and finance, and Vivian Jones, a specialist in international trade and finance, both based in Washington, wrote in the report this month.

Vietnam is already attracting plenty of attention as the “next hot place” for low-cost sourcing and should they be admitted to the GSP program it will only add fuel to the fire. Still, stories of China’s demise are exaggerated, they will continue to be an important sourcing country for years to come. Many of the companies and products making the move to Vietnam are companies from Taiwan and Hong Kong seeking ever lower labor costs for low-end manufacturing while China is looking to develop higher-end manufacturing. And as I’ve mentioned before, Vietnam’s logistics infrastructure is sorely lacking when compared to China.

Here’s more from the Congressional Research Report linked to by Bloomberg:

In May 2008, Vietnam formally requested to be added to the U.S. Generalized System of Preferences (GSP) program as a “developing country.” On June 20, 2008, the office of the U.S. Trade Representative (USTR) announced that it was initiating a formal review of Vietnam’s eligibility for GSP benefits and would accept public comments on the application until August 4, 2008. Vietnam has already been accepted into several other developed-country GSP programs around the world, including Canada, the European Union (EU), and Japan. The GSP statute provides the President with the authority to designate any country a beneficiary developing country, provided the country complies with various trade policy and labor conditions. Congress does not need to act to approve GSP status for Vietnam. The President is, however, required to notify Congress of his intention. The inclusion of Vietnam into the GSP program is generally viewed as another step in the development of closer bilateral relations. Most of the public comments submitted to the USTR were supportive of approving Vietnam’s application.

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