Over the last fifteen years, Vietnam has emerged as a notable case study showcasing how effective trade policies can stimulate industrial development, especially within the garment industry. This evolution stems from a strategic emphasis on Free Trade Agreements (FTAs), export-driven manufacturing, and integration into global supply chains. Sri Lanka can glean meaningful lessons from Vietnam’s approach, tailoring them to fit its distinctive circumstances.
The contrast between Vietnam’s advancements and Sri Lanka’s current trade dynamics is striking. Vietnam has strategically utilized trade policy to fuel its growth, establishing 19 bilateral and multilateral FTAs that encompass approximately 60 countries. This initiative has led to a significant increase in its trade openness, rising from 19% of GDP in 1988 to 184% in 2022. Trade openness, which reflects the value of international trade relative to GDP, indicates a stronger connection to global markets; in comparison, Sri Lanka’s trade openness hovers around 50% to 55%, suggesting a lesser reliance on international trade and a more inward-focused growth trajectory.
Vietnam’s network of FTAs includes pivotal agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU-Vietnam Free Trade Agreement (EVFTA), and the Regional Comprehensive Economic Partnership (RCEP), along with bilateral deals with nations like the UK, Israel, and the UAE. These agreements have granted Vietnam access to essential markets including the EU, UK, Japan, Canada, Australia, China, South Korea, and ASEAN nations, collectively representing a substantial portion of global GDP. Such extensive market access has bolstered Vietnam’s status as a dependable global sourcing destination, with its apparel exports anticipated to reach USD 46 billion by 2025, underpinned by a trade surplus of USD 21 billion. This growth trajectory has also been augmented by the “China+1” strategy, as global brands seek to diversify their sourcing beyond China.
In the last 15 years, Vietnam’s apparel exports surged from $13 billion to $45 billion, marking a remarkable 250% increase. In contrast, Sri Lanka’s apparel exports have only seen a 58% rise, growing from $3.4 billion to $5.4 billion.
To effectively negotiate and implement its numerous trade agreements, Vietnam has established a highly centralized, technically adept, and politically empowered negotiation framework. The chief negotiator operates at the deputy-ministerial level, granting the necessary authority across various ministries. For significant bilateral negotiations, such as with the United States, Vietnam assembles specialized, multi-ministry teams led by a full minister. This organizational structure has been instrumental in negotiating 19 FTAs with over 60 economies and achieving deep integration into global value chains.
Similar to Sri Lanka, Vietnam exports roughly 40% of its apparel to the USA. Although both countries previously lacked an FTA with the USA, Vietnam has successfully negotiated a tariff agreement following the introduction of reciprocal tariffs in April 2025, ensuring advantageous market access once finalized. Vietnam also maintains three distinct trade agreements with Japan, a key market for its apparel, facilitating a robust trade flow bolstered by significant Japanese investments in Vietnam. Likewise, long-standing trade agreements with the EU, UK, and South Korea support Vietnam’s apparel exports to these major markets.
While Sri Lanka’s apparel sector cannot simply copy Vietnam’s achievements, it can learn essential lessons from its experience. Access via FTAs is only beneficial when complemented by stable policies, readiness for investment, and the ability to meet market demands. To effectively utilize FTAs, Sri Lankan firms must refine their sourcing and compliance practices. Currently, the nation generates $5 billion in apparel exports and employs around 350,000 individuals, but to achieve greater targets, it must enhance its FTA strategy and improve the accessibility of trade policies.
Strategic recommendations for Sri Lanka include establishing a dedicated team to identify and negotiate FTAs and targeting markets that can drive strategic investments and serve as viable outlets for its export products. Vietnam’s experience underscores that aligning trade access, investment, infrastructure, skills, and sustainability can strengthen positions within global supply chains. Sri Lanka has the opportunity to evolve into a high-value, ethical apparel partner; however, it must strategically leverage FTAs and bolster its competitiveness. As the Joint Apparel Association Forum (JAAF) and the apparel sector look to the future, it is vital to adopt a national strategy that acknowledges the industry’s growth potential. The challenge is to create an environment conducive to the sector’s advancement in its next phase.
