Vietnam

The Issue:

Vietnam entered the World Trade Organization (WTO) on January 11, 2007, completing a gradual period of economic normalization that had taken nearly 10 years. As part of its WTO accession, the United States and Vietnam concluded a bilateral WTO accession agreement in May 2006. That agreement provides that, upon Vietnam’s accession to the WTO, the United States discontinue imposition of quotas on U.S. textile and apparel imports from Vietnam. The agreement also requires Vietnam to discontinue prohibited export subsidies in the textile and apparel industry. Further, it provides for an enforcement mechanism, through the temporary reimposition of quotas at 2006 levels, if the United States believes, and the WTO affirms, that Vietnam has violated that requirement. Although the U.S. Congress was not able to vote on the agreement itself, it was able to vote on legislation to extend permanent normal trade relations (PNTR) to Vietnam, which is required before the United States can benefit from Vietnam’s accession to the WTO. Vietnam PNTR was approved as part of the trade omnibus package (HR 6406) during the final hours of the 109^th Congress. As required, the U.S. government eliminated all quotas on U.S. apparel and textile imports from Vietnam that were exported from Vietnam after January 10, 2007. However, considerable controversy continues to surround a late September 2006 commitment made by the Administration to Senators Elizabeth Dole (R-NC) and Lindsey Graham (R-SC) to monitor textile and apparel imports and possibly self-initiate anti dumping investigations on apparel products from Vietnam (even though apparel companies have not requested such trade remedies, which is necessary under the tight “standing” rules of trade remedy law). Importers and retailers, as well as several Senators (Senators Dianne Feinstein (D-CA) and Gordon Smith (R-OR)), have pushed the Administration to clarify how this commitment will be implemented. While the monitoring program was implemented on January 11, 2007 (the day Vietnam joined the WTO), the U.S. government has failed to provide much detail on the implementation program or how it will work.

AAFA on the Issue:
AAFA continues to press the U.S. government to ensure that the Vietnam apparel and textile import-monitoring program does not burden trade nor exceed U.S. law or WTO obligations. In addition to numerous meetings and discussions with U.S. government officials regarding the program, AAFA has twice submitted comments (December 27, 2006 comments, January 31, 2007 comments), independently as well as with importers and retailers, in response to U.S. government Federal Register (FR) notices (December 4, 2006 FR Notice, January 23, 2007 FR Notice). AAFA also testified at an April 24, 2007 hearing.

The Latest News:

12.10.07

The Congressional Research Service (CRS) -- the research arm of Congress -- issued a new report November 27 questioning the Bush administration's implementation of the Vietnam import monitoring program. The report also outlines options for Congress if it chooses to make changes to the program. According to the 40-page report, "The completion of the first review by the Department of Commerce (DOC) of its monitoring program provided little resolution or clarity to a number of questions raised about the authority and the necessity of establishing such a monitoring program. The DOC press release appears to have been carefully worded to avoid a flat denial that there was evidence of dumping by Vietnam, while simultaneously providing possible grounds for the continuation of the monitoring of selected Vietnamese clothing imports. In addition, there is sufficient ambiguity in the language of the press release to allow the DOC to amend or alter the categories of Vietnamese clothing imports it monitors, if it chooses to do so."

10.01.07

Thanks to the efforts of AAFA and many other American and European organizations and companies, the European Commission issued a formal proposal on September 10 to withdraw the European Union (EU) directive that would have required metric-only labels and designations on products sold in the European Union beginning in 2010. The new proposal would allow dual-labeling (metric and inches/pounds) to continue indefinitely. While the EU Parliament and Council of Ministers must still approve the proposal, there appears to be no opposition.

Based on a request from the American Chamber of Commerce in Vietnam, Vietnam has announced that it has implemented an apparel export monitoring task force and is considering re-imposing a controversial export licensing scheme, purportedly to ensure that apparel exported to the United States is in no way dumped on the US market. Meanwhile, the US government announced that it has now collected data for the first six months since Vietnam joined the World Trade Organization (WTO) on January 11, 2007 as part of its Vietnam apparel import monitoring program. The US government expects to formally issue the results of its first bi-annual review within the next few weeks