The bilateral trade agreement between the U.S. and Vietnam came into effect in December 2001. It appears, however, that so far order bookings for garment exports to the U.S. have not shown growth. U.S. import duties were lowered considerably, but personnel expenses in Vietnam have risen. For this reason, the competition with Chinese-made products has become intensified.

In the early 1990s, Vietnam was a country with the lowest minimum wages in Asia. Average wages for Vietnamese apparel manufacturing operators in 1995 were US$450/year, only half the wages in Indonesia and even cheaper than in China. In 1998, nevertheless, wages in Vietnam rose higher than China and moved up two times higher than Indonesia.

Even so, processing charges that Vietnamese apparel-manufacturing factories receive have declined year after year because of stiff competition with other countries. The range of decline was 20% in 1999 and 10% in 2000. It is thought that processing charges further dipped by 10% in 2001. As explained, processing charges have fallen considerably. The volume of order bookings, however, remains unchanged.