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Textile War Looms Between US, Vietnam - 2003-12-31

The United States and Vietnam re-established diplomatic relations in 1995, nearly two decades after Washington severed ties following the fall of Saigon and a long, bitter war. Eighteen months ago, the two countries implemented a bilateral trade agreement, dramatically lowering tariffs on Vietnamese exports in exchange for a gradual opening of the Vietnamese market. That has helped Hanoi use some American economic staples to bolster its economy in a big way. One of them is textiles, an important industry in North Carolina. And that has mill workers in the southern state, as well as political and business leaders, watching and wondering if Vietnam is now friend, or foe in a new war.

Reporter Larry Schooler traveled to Vietnam to learn how developments there are affecting life in North Carolina. In the first of two reports, he looks at the battle for control of the textile market.

This conflict lacks the bloodshed and body count of the late '60's and early 70's. But the international war for control of the textile and apparel industry has its own armies, casualties, and battlefields.

One of the front lines in this war is here: Ho Chi Minh City, once called Saigon, Vietnam's largest metropolis, with around six million people. Vietnam's developing economy has been ripe for an industry like textiles because making clothing is "labor intensive" it needs a lot of people. Opening just one garment factory creates hundreds of jobs for a product in great demand around the world.

And there are now hundreds of Vietnamese textile factories like this one in Binh Duong Province, north of Ho Chi Minh City. In just two years, the nation's textile and garment companies have exported enough shirts, pants, and sweaters to push Vietnam from the 64th largest exporter of garments in the world, to the sixth.

"The most important thing is that Vietnamese people are very highly educated, they also work very hard, and they listen," said Korean businessman B.I. Ahn.

Mr. Ahn and his wife moved to Binh Duong Province in 2002 to open a factory for Beautec Vina, to produce garments for J.C. Penney and the Gap.

More than 2000 workers man machines inside the Beautec plant, earning an average of $80 a month. That's around one-sixteenth of what a textile employee in North Carolina can make. The lower salaries allow Mr. Ahn to sell to major retailers at a much lower cost than North Carolina firms can. Unable to compete with clothing made with cheaper labor, North Carolina companies have laid off as many as 82,000 workers in 10 years.

But Vietnam's booming textile business is facing a major hurdle of its own.

In 2003, Beautec Vina filled orders at a breakneck pace. But by year's end, piles of sealed boxes were sitting on the factory floor with no place to go. In May, the U.S. and Vietnamese governments implemented quotas, or limits, on how much clothing companies in Vietnam could export to the United States. The new rules meant that by September, B.I. Ahn's young company had produced all that it could export for the year.

"Strictly speaking, if we knew that the quota system will start from May 1 in this year, we will not invest in this country," he said.

Beautec workers like 19-year-old quality inspector Nguyen Thi Vanh, worried about losing their jobs.

"I chose this factory because my family lives near here," says Miss Nguyen, who rides a bicycle to work six days a week and works a minimum of eight hours a day to get by. She's been working since the age of 14 to help support her family, who couldn't afford to keep sending her to school.

Similar stories can be heard at factories across the country. Both private and state-owned companies complain about not having enough support from the Vietnamese government.

But you won't find much sympathy for Vietnam's textile workers in North Carolina.

"People being laid off and losing houses, losing places to rent, kids are going hungry, and it ain't right," said of North Carolina's workers.

The casualties of the textile trade war with Vietnam and other Asian countries continue to pour into bankruptcy courts and the state's unemployment offices. The U.S. textile lobby and its advocates like North Carolina Governor Mike Easley and Congressman Richard Burr have asked the federal government to stop the flood of foreign-made goods. Governor Easley has written to President Bush asking him to renegotiate the Vietnam agreement to impose stricter limits on Hanoi's exports.

Meanwhile, North Carolina textile veterans remain pessimistic about the outcome of the textile trade war.

In the small Davie County town of Cooleemee, the former home of a textile mogul is now a textile museum, with exhibits about what was once the town's main industry. After a trip down memory lane, Peggy Hellard, who worked in Cooleemee's mills her whole life, says she can only watch recent developments and wonder.

"It seems like the [U.S.] government is encouraging people to go overseas to start all these jobs for people overseas and my thought is always, well, if everything is going to move there, and there are no jobs here, who's gonna buy this stuff they're bringing in," she asks.

For now, American shoppers who go to the mall or other retail outlets are buying clothes made in Vietnam. And while there are calls for changes in the trade agreement between Vietnam and the United States, analysts say that probably won't happen, and the war for the future of textile and apparel manufacturing will likely continue to claim casualties on two continents.