Vietnamese textile and garment enterprises are accelerating the restructuring of their raw material supply chains to comply with the "yarn forward" rules of origin under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Data from Vietnam's Ministry of Industry and Trade show that Vietnam's textile and garment exports to the CPTPP region rose from $6.27 billion in 2018 to $8.3 billion in 2025, an increase of 33.3%, but the domestic localization rate for raw materials is only about 50%, and for fabrics about 36%. Vietnam is expected to import $15.2 billion worth of fabrics in 2025, having already imported $11.6 billion in the first nine months, most of it from China, a non-CPTPP member, making it difficult to meet the agreement's origin requirements.

Key Points

  • Vietnam's textile and garment exports to the CPTPP region grew from $6.27 billion in 2018 to $8.3 billion in 2025, up 33.3%
  • Vietnam's fabric localization rate is about 36%; fabric imports are expected to reach $15.2 billion in 2025, with $11.6 billion already imported in the first nine months
  • Vietnam's imports of raw materials and components from CPTPP member states were about $1.59 billion in 2018 and are expected to remain flat at $1.58-1.59 billion in 2025

"Yarn Forward" Becomes the Main Bottleneck

At a seminar titled "From 'Made in Vietnam' to 'Made in CPTPP': Restructuring Supply Chains to Meet Origin Requirements and Improve Resilience," Truong Van Cam, Vice Chairman and Secretary General of the Vietnam Textile and Apparel Association (Vitas), pointed out that the "yarn forward" rule of origin is the main obstacle to Vietnam's textile and garment exports to CPTPP markets. Vietnam's yarn production and supply capacity is relatively good, but dyeing, finishing and weaving remain bottlenecks. Most imported fabrics come from China, which is not a CPTPP member and therefore does not meet the rules of origin. Truong Van Cam also said that increasing imports of raw materials from within the CPTPP bloc is difficult to achieve because member states are not raw material suppliers for the industry—Vietnam imported about $1.59 billion in raw materials and components from the CPTPP bloc in 2018, and that figure is expected to show almost no growth in 2025.

Enterprises Adjust Supplier Screening Criteria

Tran Minh Hieu, General Director of TNG Investment and Trading Joint Stock Company, explained that before the CPTPP took effect, the company selected raw material suppliers mainly based on cost, quality and delivery time, and the origin of fabrics and yarns was not a decisive factor; after the CPTPP implemented the "yarn forward" rule, the company incorporated origin standards into its supplier screening criteria, re-evaluated and classified all supplier combinations, and prioritized long-term cooperation with factories that meet the rules of origin, rather than sourcing more competitively priced raw materials from outside the EU as it had in the past. The order and quotation departments now engage directly with customers from the design and sample presentation stages to predict whether origin requirements can be met. TNG has also increased investment and established strategic partnerships with domestic fabric suppliers that meet major brand standards, avoiding reliance on a single supplier.

Digital Traceability and Supply Chain Mapping

Tran Minh Hieu said that in addition to the raw materials themselves, providing complete and transparent origin certification documents is also a decisive condition. The company uses a self-developed software system to establish an origin data management process covering all stages from raw material ordering to shipment, and each batch of raw materials is assigned a QR code or ERP code upon arrival at the warehouse. Ngo Trung Khanh, Deputy Director General of the Department of Foreign Market Development and Multilateral Trade under Vietnam's Ministry of Industry and Trade, emphasized that Vietnam has signed 17 free trade agreements with nearly 70 global partners, and enterprises need to build "supply chain maps" to flexibly align with various FTAs, diversify supply sources, and enhance their ability to withstand global trade fluctuations. Truong Van Cam proposed a more feasible path to raw material self-sufficiency: enterprises could consider establishing contacts or joint ventures with manufacturers with strong textile manufacturing technology, such as those in China, Taiwan (China) and South Korea, to produce "Made in Vietnam" products in Vietnam.

For the used clothing trade, Vietnam's insufficient fabric self-sufficiency and deepening import dependence mean that the origin compliance costs for its textile exports will remain high; the trend toward localization of raw material procurement and joint venture factory construction under the CPTPP may also indirectly affect the flow of regional recycled fibers and second-hand textile raw materials.

Source: Restructuring supply chains to comply with CPTPP rules of origin. · Originally published on 2026-10-05