Textile, garment exports to Canada to likely reach US$2 billion

Vietnamese textiles and garments will enjoy tax exemption when entering Canada if they satisfy the conditions specified in the CPTPP

According to the Vietnam Trade Office in Canada, Vietnam exported textiles and garments worth more than US$1.8 billion in 2022, accounting for 12.5 percent of the CPTPP market’s total textile and garment import value, ranking third after China with a market share of 32.1 percent and Bangladesh 12.8 percent.

Tran Thu Quynh, Trade Counselor of Vietnam Trade Office in Canada, said if Vietnam does a good job in trade promotion and information for businesses, as well as creates favorable conditions for businesses to exploit the CPTPP, its textile and garment exports to Canada can reach US$2 billion in 2023.

Vietnamese textiles and garments will enjoy tax exemption when entering Canada if they satisfy the conditions specified in the CPTPP, and they will be applied to an MFN tax rate if they do not meet the agreement’s provisions. Exporters need to prepare certificates of origin, invoices and other documents to enjoy the CPTPP’s preferential tariffs.

The Vietnam Trade Office in Canada said China, Bangladesh, Cambodia, India, Indonesia, Italy, the US, Sri Lanka, Honduras and Mexico are major rivals of Vietnam in the Canadian textile and garment market.

Quynh said the CPTPP has not yet helped improve the competitiveness of Vietnamese textiles and garments as expected. Vietnamese companies have not been able to encroach on China’s market share and it is even quite difficult for them to compete with India, Indonesia, Bangladesh and Cambodia for new orders. Vietnamese businesses have not taken the initiative to participate in trade fairs and exhibitions in order to seek orders overseas.

Although they began considering moving their supply chains out from China, Canadian businesses are highly concerned about the capability to ensure and accomplish large orders and comply with security and quality regulations of other countries’ suppliers. The Ontario Ministry of Economic Development recently assessed Canadian businesses’ understanding and use of the CPTPP and found a rate considerably lower than that of other free trade agreements, Quynh said. Therefore, the CPTPP has yet to help Vietnamese enterprises attract new orders.

Canada will soon develop mechanisms to reduce textile waste, including requiring cities to make mandatory statistics of textile waste and classify textile waste. Stores (brands) must have programs to collect and exchange secondhand clothing as part of the extended producer responsibility (EPR) schemes. The textile labeling law will also be revised to increase products’ recycled fiber concentration.

Apart from being aware of environmental protection in textile consumption, both the Canadian Government and people have a high sense of fair and healthy trade, meaning they consider such factors as production conditions, labor safety and employment according to the International Labor Organization’s (ILO) regulations when buying and using a product. Quynh recommends Vietnamese textile and garment enterprises to reduce carbon emissions, apply circular production, use recycled fabrics and clean energy, ensure energy efficiency, update them on new textile and garment certifications, and comply with customers’ reporting policies.