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Nov.30, 2015

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INTERNATIONAL MARITIME IMPORTING | EXPORTING | PORTS | CARRIERS | BREAKBULK | GLOBAL LOGISTICS www.joc.com THE JOURNAL OF COMMERCE 29 By Greg Knowler CHINA MAY LOSE its entire Vietnamese apparel market in addition to being effec- tively cut off from U.S. trade because of yarn rules within the Trans-Pacific Partnership. One of the elements of the TPP's textiles and apparel section is the so-called yarn for- ward rule, which will have specific impact on countries such as China, Vietnam and Malay- sia. Under this provision, only yarn made by TPP members can be sold to the TPP markets such as the U.S. and Japan, according to Chris Devonshire-Ellis of foreign investment firm Dezan Shira and Associates. The deal, agreed upon in October but still facing a vote in the U.S. Congress, intends to effectively eliminate tariffs on specific goods traded between 12 TPP member nations: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zea- land, Peru, Singapore, the U.S. and Vietnam. China wasn't invited to join the U.S.- led trade pact in what is widely seen as an attempt to curb the mainland's rising influence in Asia. Instead, Beijing is work- ing on its own Asia equivalent, leading a 16-nation trade agreement known as the Regional Comprehensive Economic Part - nership. After initially objecting to the TPP, China has since said it is open to joining the agreement. The yarn forward rule means Vietnam will be able to provide low-cost manufactur- ing at an equivalent current productivity ratio of about 70 percent of that achievable in China, Devonshire-Ellis wrote in a com- mentary. But the Vietnam textiles industry ANOTHER SAD YARN FOR CHINA TRADE An apparel requirement in the Trans-Pacific Partnership could deal the latest blow to Chinese exports "TPP membership can be expected to add 15 percent to Vietnam's GDP value."

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