Update and Background on WTO Accession and Implementation (and Apparel Trade)

Updates: Aug 2, 2006 – Jan 11, 2007

Vietnam’s WTO Accession Agreement
Includes a Summary and Overview, and also links to downloads of complete information on the Working Party Report (260 pages), Commitments on Goods (560 pages), Commitments on Services (60 pages).

USTR Fact Sheets on U.S.-Vietnam WTO Bilateral Market Access Agreement
General Overview, Agricultural Goods, Industrial Goods, Services, Textiles and Apparel

Final Steps to WTO Accession

According to statements on official web sites (USTR, WTO, etc.) and statements by officials involved, the following is the expected calendar of steps leading to Vietnam’s WTO accession. These dates are estimates and subject to change, based on developments.

Oct 13WTO Working Party informal agreement reached
Oct 26WTO Working Party formally approves agreement
Nov 07WTO General Council approves Vietnam’s accession
Nov 23Government submits WTO Agreement to National Assembly
Nov 28National Assembly votes to ratify Vietnam’s WTO accession
Dec 12Vietnam notified the WTO of ratification
Jan 11 .30 days after notifying WTO, Vietnam became a WTO member .

Mon, Apr 23

Hanoi: Import Monitoring Program for Textiles and Apparel from Vietnam, Apr 19
Discussion meetings with VITAS and with AmCham Vietnam.

Public Hearing: Import Monitoring Program for Textiles and Apparel from Vietnam, Apr 24
To help the U.S. Department of Commerce develop the program and, at the same time, be advised of the issues and concerns of all interested stakeholders.

Hanoi: Vietnam’s Draft Decree to Implement WTO Commitments, Apr 25
MPI Vice Minister, Mr Tran Hao Hung, the MPI Legal Deputy Manager and Mr Nguyen Quoc Khanh, the MOT Head of Multilateral Trade Policy will chair the meeting. Download the draft decree in English and Vietnamese.

Mon, Feb 05

Textile and Apparel Products from Vietnam Import Monitoring Program
Review the program and

  • Monitored Import Data by Month
  • Public Comments Received on Dec 27, 2006
  • Public Comments Received on Jan 31, 2007Mon, Jan 15U.S. Quotas on Textile and Apparel Exported from Vietnam Eliminated on and after Jan 11, 2007
    Vietnam entered the WTO on January 11, 2007. As a result, the U.S. eliminated quota, and visa and ELVIS requirements for goods exported from Vietnam on and after January 11, 2007. The quota levels set forth and amended in the aforementioned documents remain the same in the adjusted period (1-10 Jan 2007.)

    Textile and Apparel Products from Vietnam Import Monitoring Program, 11 Jan 2007
    Review the program and the comments of interested parties, received on Dec 27, 2006 in response to the Request for Comments of Dec 4, 2006.

    Mon, Dec 25

    President Bush signed PNTR Bill, Dec 20, 2006
    President George W. Bush signed into a bill law that extends normal trade relations with Vietnam and provides trade benefits to nations of sub-Sahara Africa, Haiti and four Andean countries. He pushed hard for approval of the legislation before Democrats take control of Congress in January 2007. Presidential Proclamation, Dec 29, 2006

    Mon, Dec 18

    Vietnam notified the WTO on Dec 12 that it had ratified the WTO accession agreement|
    Viet Nam to join WTO on 11 January 2007. Viet Nam informed the WTO on 12 December 2006 that it has ratified its membership agreement. It will now become the WTO’s 150th member on 11 January 2007.

    Mon, Dec 11

    Vietnam to notify WTO on or about Dec 13 that it has ratified the WTO accession agreement.
    Vietnam is expected to send an official notification to the WTO “this week” that the National Assembly ratified the WTO accession agreement on November 28. According to WTO procedures, Vietnam will only become a WTO member 30 days after it has officially notified the WTO that it has ratified the accession package domestically.

    U.S. Congress approved PNTR (House: 212-184, Senate: 79-9), bill goes to President.
    The U.S. Congress approved PNTR in votes by the House of Representatives on Friday, Dec 8 (212-184) and the Senate early Saturday morning, Dec 9 (79-9). The legislation now goes to the President for signature before finally becoming law.

    Mon, Dec 04

    Washington – PNTR Legislation. The Senate and House of Representatives will re-convene on Tuesday, December 5 for a final week of legislative activity. Passage of the PNTR legislation is possible, but may be difficult.

    Geneva – WTO Accession. Although Vietnam’s National Assembly ratified the WTO accession agreement on November 28, it is not yet clear whether Vietnam has officially notified the WTO that it has done so. According to the procedures, Viet Nam will only become a WTO member 30 days after it has informed the WTO that it has ratified the accession package domestically.

    U.S. Department of Commerce Request for Public Comment, 04 Dec 2006
    The Department of Commerce requested public comment on the development of a monitoring program covering imports of textile and apparel products from Vietnam to remain in place for the duration of the current Administration (Jan 19, 2009). To help the Department develop the program and, at the same time, be advised of the concerns of all interested stakeholders, the Department invited the public to provide input on the monitoring program and identify issues or considerations that they believe are deserving of the Department’s attention as implementation of this program proceeds.

    Mon, Nov 27

    PNTR Legislation. The U.S. House of Representatives is adjourned until Tue, Dec 5. No votes are scheduled. Click here to see the Marjority Whip Schedule for the U.S. House of Representatives.

    “The message of this election says to me that all of these trade agreements need to be renegotiated,” said Rep. Sherrod Brown (D-Ohio), who gained a Senate seat in large part by promising job protection. The new atmosphere in Washington was underscored in the House on Nov 13 with the unexpected rejection of a measure to establish normal trade relations with Vietnam. This week, 16 Democratic members of Congress, including Charles B. Rangel of New York, who is to chair the House Ways and Means Committee, sent a letter to the U.S. trade representative demanding that enforceable labor protections be written into the Peru and Colombia treaties.

    Mon, Nov 20

    U.S. House of Representatives Nov 13 vote failed to pass PNTR bill, as more than one-half of the Democratic members voted against the bill (90 Yea-94Nay), while two-thirds of the Republicans voted for it (138 Yea-66 Nay) . The vote on PNTR was under a special “suspension of the rules” for non-controversial legislation, so it required a two-thirds majority. However, 228 voted for, 161 against, so it failed. It will be rescheduled under regular procedures in December, with only a simple majority required for approval.

    Mon, Nov 13
    WTO Accession. On Nov 7, the WTO General Council approved Vietnam’s membership agreement. Vietnam now has to ratify the agreement, and it will become a member 30 days after it has informed the WTO that it has ratified. Click here for details and downloads of WTO Working Party Report on Vietnam’s Trade & Investment Framework (260-pages), Vietnam’s Commitments on Goods (560-pages), Vietnam’s Commitments on Services (60-pages)

    PNTR Legislation. The U.S. Congress reconvened after the Nov 7 mid-term elections. The U.S. House of Representatives has scheduled a Nov 13 vote an amended PNTR bill, which states: “To authorize the extension of nondiscriminatory treatment (normal trade relations treatment) to the products of Vietnam, and to establish a procedure for imposing quotas on imports of subsidized textile and apparel products of Vietnam (Sponsored by Rep. Thomas / Ways and Means Committee). . The U.S. Senate has not yet scheduled a vote on the bill, according to the Senate Calendar of Business, Monday, November 13, 2006.

    Mon, Nov 6

    A Letter from Senators Smith and Feinstein to Commerce Secretary Gutierrez and US Trade Representative Schwab, 03 Nov 2006 requests (1) that no precedent be set by the Sep 28 Letter from USTR Schwab and Commerce Secretary Gutierrez to Senators Dole and Graham; (2) the proposed program not establish any additional requirements or altered standards for importers or exporters of Vietnamese textiles and apparel; (3) U.S. officials work closely with U.S. textiles and apparel importers so that they have the opportunity to provide input and to review and comment on key aspects of the process as it is being developed; and (4) a response to the foregoing concerns prior to the Senate vote on Vietnam PNTR. Note that Senator Gordon H. Smith is a co-sponsor of the Senate version of the PNTR bill, S.3495

    If the US doesn’t grant PNTR to Vietnam, our textile-garment exports will be still imposed with quotas” said Vietnam’s Trade Minister Truong Dinh Tuyen, who flew to Geneva with a large delegation to participate in the Nov 7 WTO General Council approval of Vietnam’s accession.

    The Business impact of WTO accession is already appearing in the news
    Texas Pacific Group and Intel Capital invest US$ 36.5 million for a 10% share of FPT in view of the opening of the IT business and anticipated dramatic growth. Anc Microsoft is moving toward agreements as government agencies and SOEs plan to legalize software—Ministry of Finance: 15,000 users, MPT: under negotiation for all government agencies, FPT – 4,500 users, Vietcombank: 4,000 users. With these agreements, Vietnam’s computer software piracy rate, around 90 percent, could drop significantly.

    Mon, Oct 30

    The WTO Working Party completed Vietnam’s membership talks on Oct 26, 2006. Next, the WTO General Council will approve the agreement (expected on Nov 7). A summary of the package will be released after the General Council approves Vietnam’s membership. The package consists of three parts: agreement on Trade in Goods (560 pages), Trade in Services (60 pages), and Working Party Report (260 pages) on Vietnam’s trade and investment institutional framework

    Mon, Oct 23

    Minister of Trade Truong Dinh Tuyen said that the WTO Agreement would be submitted to the National Assembly on Nov 10 so that the National Assembly could ratify the agrement before the session ends on Dec 5.

    A USTR spokesman said Oct. 16 that the U.S. will be obliged to invoke the WTO’s so-called “non-application” provision pending Congressional approval of PNTR. Under Article XIII of the Agreement establishing the WTO, any existing member may make a declaration before the meeting at which a new member joins stating that it will not apply the trade concessions normally granted to the new member. Normally, WTO rules require a member to provide “immediate and unconditional nondiscriminatory treatment” to all WTO members.

    Mon, Oct 16

    On Oct 13, negotiations concluded successfully on Vietnam’s WTO succession. Assuming all goes smoothly, the WTO Working Group on Vietnam’s will circulate a draft Report for approval of the Working Party at its Oct 26 meeting. After that, the WTO General Council will meet on Nov 7 to approve Vietnam’s accession, and Vietnam will become a member 30 days after it has ratified the package and informed the WTO that it has done so. According to a USTR Fact Sheet, “the U.S.-Vietnam Textile Agreement will expire on the date of Vietnam’s accession to the WTO and quotas under the Agreement will be removed as of that date.”

    On Oct 11, a group of leading trade associations, apparel importers and retailers asked that the Bush Administration rescind the commitment in a Sep 28 letter from USTR Schwab and Commerce Secretary Gutierrez to Senators Dole and Graham. Read more … . They are considering whether to ask a senator to place a hold on the PNTR legislation if they do not receive written clarification from the administration. Read more … .

    Mon, Oct 9

    In Geneva, Vietnam’s WTO accession has been held up over implementation of tariff reductions on certain goods and services, and whether it has amended legislation to comply fully with global commerce rules. The Chair of the WTO Working Group on Vietnam’s accession said it would not be finalized in time for this week’s WTO General Council meeting. He said it was still possible to complete an accession deal for Vietnam in time to call an early November (Nov 13) meeting of the WTO’s General Gouncil, ” … subject to all things going well … .” Read more … .

    In the U.S., the Congress is adjourned until November 13, the week after the November 7 mid-term elections.

    AmCham Vietnam sent a letter to USTR Schwab and Commerce Secretry Gutierrez expressing concern that the promised program would create uncertainty and business risk that would discourage U.S. apparel imports from Vietnam. Given the role of the apparel sector in Vietnam’s economy, other sectors will be negatively affected if the apparel sector declines. And the prospective loss of export earnings from Vietnam’s largest export industry would naturally lead to significant losses of export opportunities in the Vietnam market for U.S. exporters of goods and services. We request that the promised actions be conducted fully in accordance with U.S. law and WTO rules.

    Mon, Oct 2

    Both the Senate and the House of Representatives adjourned on Sep 30 and will reconvene on Nov 9. The atmosphere was somehat tense as attention is focused on preparing for difficult midterm elections to be held four weeks later, on Tuesday, Nov 7. The Democrats need to win 15 seats to take control of the House and 6 seats to recapture the Senate.

    On Sep 29, Senators Dole and Graham announced that they had withdrawn their holds on PNTR legislation, allowing a Senate vote, after receiving a Sep 28 Letter from USTR Schwab and Commerce Secretary Gutierrez agreeing that the Administration will closely monitor and review imports of textiles and apparel from Vietnam, and self-initiate anti-dumping investigations with respect to apparel imports from Vietnam, if dumping exists and material injury is caused.

    House leaders have said they plan a vote on Nov 13, but Senator Grassley, Finance Committee Chairman, reportedly blocked a move by Senate Republican leaders to get unanimous consent to set a date for a Senate PNTR the week of Nov 13; Senator Grassley wants the U.S.-Peru Free Trade Agreement to move at the same time as the Vietnam PNTR legislation.

    According to the American Apparel and Footwear Association, “opinion prevailing in Washington DC” is that quotas on US imports of apparel and textiles from Vietnam will be removed on the date of Vietnam’s accession to the World Trade Organization (WTO), expected sometime in November, regardless of whether Congress approves Vietnam PNTR or not. A May 2006 U.S.-Vietnam Bilateral WTO Accession Agreement – Textile and Apparel Issues states, “The Agreement Relating to Trade in … Textiles and Textile Products, extended by Memorandum of Understanding, … will expire on the date of Vietnam’s accession to the WTO and quotas under the Agreement will be removed as of that date.”

    Mon, Sep 25

    Friday, Oct 6 is the target adjournment date for both the House of Representatives and the Senate. The midterm election is on Nov 7. Democrats need to win 15 seats to take control of the House and 6 seats to recapture the Senate.

    Sens. Elizabeth Dole (R-N.C.) and Lindsey Graham (R-S.C.) wrote a letter to USTR Susan Schwab Sep 18 again urging her to defend the U.S. textile industry from unfair trade practices by Vietnam. Dole and Graham have placed holds on PNTR legislation.

    A group of 20 members of the U.S. House of Representatives signed a Sep 21 letter to the Speaker of the House Dennis Hastert asking for “swift consideration and approval” of PNTR; however, House Republican leaders have decided to wait until after the November elections to vote on legislation extending some trade preferences programs after textile-state lawmakers raised concerns, Republican Leader John Boehner (R-Ohio) told reporters on Sep 26. The House will vote on the legislation and a bill to extend Permanent Normal Trade Relations treatment to Vietnam the week of November 13 when it returns for a post-election “lame duck” session, Mr. Boehner said.

    Senate Finance Committee Chairman Charles Grassley (R-IA) said Sep 21 that Bush Administration officials are exploring with congressional leaders how PNTR could be approved before Congress adjourns, but expressed doubts that the Senate could consider the bill given its crowded legislative calendar.

    USTR Susan Schwab is scheduled to meet with members of the House and Senate in a Sept. 27 meeting of the Congressional Oversight Group on Trade.

    A Vietnamese delegation led by Deputy Trade Minister Luong Van Tu departed last week for informal talks in Geneva, and the WTO has scheduled a meeting of the Working Party on the Accession of Vietnam for October 9, the day before the Oct 10-11 meeting of the WTO General Council.

    Mon, Sep 18

    House Republican leaders plan a Nov. 13 vote on PNTR for Vietnam, according to a report in the Congress Daily. The Vietnam bill should enjoy broad bipartisan support in the House. One big reason it has not passed already is skittishness on the part of House leadership about voting on trade legislation right before the election.

    The delays to PNTR approval raise the possibility that the United States will invoke the non-application clause if Vietnam’s accession is approved by an Oct 10-11 WTO General Council meeting.

    A Vietnamese delegation led by Deputy Trade Minister Luong Van Tu is heading for another round of talks in Geneva, after completing informal discussions in Washington. The various drafts concerning unresolved issues and the planned informal meetings in September, followed by a formal working party meeting, seem to be scheduled, finally. If the deadlines for the October 10-11 WTO General Council are missed, there is another meeting on December 20-21, 2006.

    Once the WTO General Council approves, Vietnam’s National Assembly must ratify its “Protocol of Accession.” Thirty days after that ratification, it formally becomes a WTO member.

    Concerning the quotas for Vietnam’s apparel exports to the U.S., paragraph 1 (B) of the U.S.-Vietnam Agreement on Trade … in Textiles states, ” … in the event that this Agreement is not renegotiated prior to December 1 of any year …, the Parties shall automatically extend this Agreement for one year and increase the Specific Limits by the applicable growth rate … , until the Socialist Republic of Vietnam becomes a Member of the World Trade Organization to whom the United States applies the Agreement Establishing the World Trade Organization.”

    Mon, Sep 11

    U.S. House of Representatives Majority Leader John Boehner said on Sep 5 when the House reconvened that the House vote on PNTR was expected before the President’s trip to Vietnam. However, the vote might be the week after the November 7 congressional elections.

    U.S. Senator Max Baucus (D-Mont.), Ranking Member of the Senate Finance Committee, and U.S. Senator Gordon Smith (R-Oregon) sent a letter to President Bush on Sep 8 underscoring the importance of legislation to grant Vietnam Permanent Normal Trade Relations (PNTR) before President Bush travels to Vietnam in November. However, Senators Dole and Graham have both put a hold on the bill.

    Although approval of PNTR is widely expected, U.S. domestic politics, timing and opposition pose obstacles and create delays. The Oman and Peru agreements are “in line ahead” of the PNTR. In the four weeks before the targeted Oct 6 adjournment for tne Nov 7 elections, Republican leaders are reluctant to call for votes on contentious trade issues when they have so many hotly contested seats. In recent years, Democratic leaders have criticized the Bush administration’s trade policies, especially labor and the environment aspects.

    Several U.S. organizations sent a September 6 letter to the Vietnamese government urging them to not delay their WTO accession. There have been growing rumors in Washington DC that Vietnam would delay its WTO accession in protest of Congressional delays in approving Vietnam PNTR.

    Mon, Sep 4

    Congress returns from its August “District Work Period” this week for a one month session before the October 6 target adjournment to prepare for the November 7 U.S. general elections. After a year of political turmoil, Republicans enter the fall campaign with their control of the House in serious jeopardy, and the possibility of major losses in the Senate. Two independent political analysts have forecast a narrow Democratic takeover of the House of Representatives, if current political conditions persist. Read more …

    Mon, Aug 14

    Over the coming weeks, work will continue on WTO Accession at both the multilateral and bilateral level.

    At the WTO in Geneva, drafts about unresolved issues will be circulated, there will be informal meetings in September, followed by a formal working party meeting. No dates have been set by the WTO Conference Office for these meetings. The WTO General Council, which has the authority to act on behalf of the Ministerial Conference, will meet in Geneva on October 10-11, and again on December 20-21, 2006.

    On the bilateral level, both houses of the U.S. Congress are now in recess for the August District Work Period, and will reconvene on Tue, Sep 5 (Senate) and Wed, Sep 6 (House). Target adjournment is Oct 6 (for both House and Senate). Election Day in the U.S. is Tue, Nov 7.

    Thu, Aug 3

    The Senate Finance Committee’s unanimous approval (18-0) Monday night of legislation granting Vietnam PNTR shows strong bipartisan support. Sen. Chuck Grassley (R., Iowa), chairman of the Senate Finance Committee, has said the Senate will most likely vote on the bill in September when Congress returns from a month-long recess.

    However, Sen. Elizabeth Dole (R., N.C.), has placed a hold on the PNTR bill “because she is very concerned about the potential negative impact this agreement could have on North Carolina textile jobs.” Sen. Lindsey Graham (R., S.C.) also placed a hold on the PNTR bill because of concerns about the adverse impact of potential import surges on the U.S. textile industry. (A “hold” is a threat to delay or filibuster legislation, which requires 60 votes to over-come.

    In the House, Ways and Means Committee Chairman Bill Thomas (R-Calif.) would like trade legislation to be passed in the order it was introduced, which means a vote on Vietnam PNTR would come after the Peru trade promotion agreement. The PTPA and PNTR votes may happen in a “lame duck” session after the elections on Tuesday, November 7. The APEC Leaders Meetings are November 18-19 in Hanoi, with the APEC CEO Summit taking place Nov 16-19.

    Wed, Aug 2

    In Washington, the Senate Finance Committee voted 18-0 to extend permanent normal trade relations to Vietnam. “The finance committee took an important step today, and now Congress needs to bring this 15-year process of reconciliation with Vietnam to its long-sought conclusion,’’ Montana Democrat Max Baucus said in a statement after the vote. A full Senate vote is likely in September, Senate Finance Committee Chairman Charles Grassley said last week. Senator Dole of North Carolina is reported to be considering a “hold” on PNTR to address textile and apparel issues. The Senate has scheduled a four-week “district work period” August 7 – September 4 and will not be in session. It will reconvene on Tuesday, September 5. The House of Representatives’ five-week district work period started July 31.

    In Geneva, good progress was made at the WTO Working Party talks starting July 19. Remaining issues not yet agreed in the multilateral report include labor standards, textiles and apparel, trading rights (importing into Vietnam), and the excise duty on spirits and beers. Additional meetings are planned for September in order to prepare for accession by the WTO General Council meeting in October.

    For more details, visit the US-Vietnam WTO Coalition web site (bilateral – PNTR legislation) and WTO web page: Accessions – Vietnam (multilateral).

    Status of PNTR Legislation

    In the House of Representatives H.R. 5602

    In the Senate S.3495

    Background

    Action by the U.S. Congress is necessary to terminate application of “Jackson-Vanik” to Vietnam and authorize the granting of permanent normal trade relations (MFN) tariff treatment to products of Vietnam.

    Jackson-Vanik Amendment “Unconditional most-favored-nation (MFN) status, or in U.S. statutory parlance, normal trade relations (NTR) status, is a fundamental principle of the World Trade Organization. Under this principle, WTO members are required to treat imports of goods and services from any WTO member no less favorably than they treat the imports of like goods and services from any WTO member. Under Title IV of the U.S. Trade Act of 1974, as amended, most communist or non-market economies were denied MFN (NTR) status unless they fulfilled freedom of emigration conditions as contained in section 402, the so-called *Jackson-Vanik” amendment, or were granted a presidential waiver of the conditions, subject to congressional disapproval. The statute still applies to many of these countries, even though most have replaced their communist governments.

    Non-Application Clause The WTO agreements also require that MFN treatment be applied “unconditionally.” However, when a WTO member determines that it cannot, for political or other reasons, accede to this or any other GATT/WTO principle toward a newly acceding member , it can “opt-out” of its obligations toward that member by invoking the non-application provision (Article XIII of the WTO or Article XXXV of the GATT). In so doing, the WTO member is declaring that the WTO obligations are not applicable in its trade with the new member in question.”

    Congressional Research Service Report for the U.S. Congress Click here to download and read the complete Congressional Research Service (CRS) Report for Congress on PNTR and WTO Accession.