Nguyen Sinh Hy, Director of Minh Phat Trading Company said that quota allocation has never been as late as this year due to the US imposing quota restrictions on Vietnam's apparel. 

According the Ministry of Trade (MoT), the main reason for the tardiness, is that Vietnam has not completed procedures on extending the Vietnam  US Agreement on Textile and Clothing (ATC). Although the draft has been drawn up, the extended ATC has not come into force. 

According to Nguyen Hong Duong, Deputy Director General of the Trade Policy Department for America under MoT, which is responsible for negotiations on ATC extension, Vietnam has received a document requesting extension of the agreement, but there has not yet been a response from the US side. Le Quoc An, Chairman of Vietnam Textile and Apparel Association (Vitas) said that enterprises have still not heard anything regarding quota allocation, which will raise difficulties for the enterprises. 

An said that the third quarter onwards is usually reserved for negotiations and signing of contracts on export deals for the first months of the following year; however, as enterprises do not know how what their quota will be, it is difficult to negotiate with partners meaning some exporters may lose customers. The US is a key target market for Vietnam's garment industry with nearly 60% of growth rate recently. Exports to the US account for 56% of Vietnam's total export turnover. 

In order to reassure apparel exporters, the Inter-ministries of Trade and Industry have recently released a notice about basic principles in quota allocation Regarding categories which have a high level of implementation, the inter-ministries will ensure a quota volume equal to that given to enterprises in the previous year 2005.  

For 2006, 95% of quotas will be allocated in accordance with enterprise achievements over previous years; the remaining 5% will be allocated to enterprises that sign contracts with big customers. Meanwhile, preferential quotas, including those for remote areas will no longer be valid. Deputy Minister of Industry Bui Xuan Khu said that the ministries are hastening the US side regarding the ATC extension.  

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