Impact of US labor laws on Vietnam’s textile industry

The US Uyghur Forced Labor Prevention Act, signed by President Joe Biden in December last year, was enacted to address the issue of alleged forced labor and human rights abuses in China's Xinjiang Uyghur Autonomous Region by imposing obligations on companies and granting the US Secretary of Commerce the authority to act against violators. As the world's second-largest textile supplier, Vietnam has been the most severely impacted among garment-exporting countries. According to US customs data up to April 2023, 80% of US$15 million worth of apparel shipments to the US held up for to UFLPA inspections were from Vietnam, and only 13% of these shipments were cleared for entry.

In this report, Hinrich Foundation research grant recipients Giang Nguyen, PhD candidate in Management at the University of Newcastle (Australia), and Thinh Gia Hoang, Senior Research Fellow at the Institute of Economics and Strategic Management in Hanoi, explore the challenges faced by Vietnam’s small and mid-sized textile enterprises under the impact of the UFLPA. Drawing from insights from interviews with senior management of affected SMEs, this analysis also sheds light on the responses emerging within the industry. It concludes with a series of recommendations for the Vietnamese government and the business community to reduce exposure to these US policies.