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:

11.24.08
The US Department of Commerce announced November 21 that, after reviewing the third set of six month data from the monitoring program of apparel imports from , there is insufficient evidence to warrant self-initiating an antidumping investigation. This is the final review of apparel imports from under the monitoring program. The monitoring program will formally end as scheduled on January 20, 2009.

10.06.08
Over 70 members of Congress sent a letter September 26 pushing the Bush Administration to continue the current textile and apparel monitoring program for Vietnam and expand it to China. The group claims that stronger enforcement is needed given the recent lead issues, trade cases and the seizure of 1,000 containers of Chinese apparel that had apparently been shipped illegally through different countries. AAFA opposes the monitoring program, emphasizing that this special apparel monitoring program unfairly singles out a specific sector, is unnecessary and is a misuse of taxpayer’s funds. It is also harmful to the US economy to single out apparel that is solely made in Vietnam or China.

07.21.08
On July 15, AAFA joined with the National Retail Federation (NRF), Retail Industry Leaders Association (RILA) and the United States Association of Importers of Textiles and Apparel (USA-ITA) in sending a series of letters to Congressional leaders opposing the inclusion of Chinese and Vietnamese apparel import monitoring language in the House Appropriations Committee report accompanying the Commerce, Justice and Science Appropriations bill. The letters emphasize that this special apparel monitoring program unfairly singles out a specific sector and is unnecessary considering the Department of Commerce’s International Trade Administration (ITA) already funds a program to assist potential trade remedy petitioners as well as the results on the current Vietnam monitoring program. AAFA is working hard to ensure this language is not included in the final version of the appropriations legislation.

06.30.08
The House Appropriations Committee announced that it expects the Administration to expand a Vietnam apparel-monitoring program to include apparel and textile imports from China and expand the program for another year in non-binding report language accompanying their June 26 approval of a $56.9 House Appropriations bill. The legislation, which funds the Department of Commerce and the U.S. Trade Representative’s Office for the 2009 fiscal year, is awaiting a House vote. The report accompanying the Senate-passed version of the legislation does not include this language.

With the Administration indicating that the current program will expire in mid-January and that there are no plans to extend or expand it, attention will shift to the next Administration to determine what plans it has. Any extension and expansion of the existing program could further disrupt U.S. apparel and textile businesses especially as companies prepare for Chinese apparel and textile import quotas to be lifted at the end of the year.

AAFA continues to monitor this developing situation.

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.