HANOI: Tighter United States rules to ban imports from China’s Xinjiang are compounding pressure on Vietnam’s apparel and footwear makers, targeting a sector that has shed nearly 90,000 jobs since October in the world manufacturing hub as demand slowed.
Among garment exporters, Vietnam faced the worst hit from the Uyghur Forced Labor Protection Act (UFLPA), a Reuters review of official United States data showed. The law, in place since June, requires companies to prove they don’t use raw materials or components produced with Xinjiang’s forced labour.
The US clampdown hurts
The United States clampdown hurts as it comes on top of a drop in clothing demand from more prosperous nations that has dented industrial exports and output from the Southeast Asian manufacturing powerhouse, a leading supplier to big brands such as Gap, Nike, and Adidas.
Of the 15 million dollars worth of apparel and footwear shipments held up for UFLPA checks, more than 80 percent were from Vietnam, and only 13 percent of its cargoes cleared for entry, United States customs data up to April 3 showed.
According to the country’s industry association, Many United States importers are still optimistic. Still, their supply chains could be disrupted as Vietnam’s apparel makers depend on China for about half of their input materials.
The Vietnamese manufacturers, trade associations and the industry ministry didn’t reply to Reuters questions about the impact of UFLPA.
The value of shipments from Vietnam denied entry to the United States exceeded 2 million dollars, three times more than those from China – with the sanctions having raised exponentially in the first months of this year.
While United States controls have been far more frequent for the electronics industry, especially for solar panels which could be made with polysilicon from Xinjiang, only 1 percent of electronics cargoes checked were denied entry, as opposed to 43 percent of apparel and footwear shipments.
In total, customs checked nearly 3,600 shipments worth more than 1 billion dollars from various countries to ascertain they did not carry goods with input from forced labour in Xinjiang, United States customs data showed.
