Vietnam Set to Become WTO's 150th Member (Membership Approved by WTO General Council)

Vietnam Must Now Ratify WTO Membership Agreement, Etc.

According to the press release, Vietnam must now ratify its membership agreement and inform the WTO of this ratification. Thirty days after this notification is given, Vietnam will become the WTO's 150th member. The WTO has previously stated that Vietnam is expected to ratify the membership agreement by December 5, 2006.

U.S. Will Not Remove Quotas, Apply Other Benefits, Until PNTR is Granted

Press reports indicate that as of November 7, 2006 the U.S. Congress has not yet approved legislation to grant permanent normal trade relations (PNTR) to Vietnam. PNTR is necessary for the U.S. to recognize Vietnam as a WTO member.

Among other things, the U.S. must remove its quotas on Vietnamese textiles and apparel once Vietnam is a WTO member - if PNTR is granted. (If Vietnam is a WTO member, and PNTR is not granted, these quotas will remain in place.)

(Quotas to be removed when Vietnam becomes a WTO member. See ITT's Online Archives or 12/07/06 news, 061200710 for update.)

In addition, press reports indicate that until PNTR is granted, U.S. companies cannot enjoy the benefits Vietnam has made available in its WTO agreement unless it decides to unilaterally treat the U.S. like other WTO member countries.

Legislators, Industry Spar Over Possible Government-Initiated AD Textile Investigations, Etc.

Earlier in 2006, Senators Dole and Graham placed holds on the PNTR legislation out of concern that Vietnam's WTO accession could harm the U.S. textile industry. According to a press release from Senator Dole's office, Senators Dole and Graham recently withdrew holds on Vietnam's PNTR legislation in exchange for a commitment from the Bush Administration that the Commerce Department will self-initiate antidumping (AD) cases against Vietnam if trade data suggests that dumping is occurring. (See ITT's Online Archives or 10/04/06 news, 06100499 1, for BP summary of the withdrawal of these holds.)

In response to this commitment, Senators Feinstein and Smith issued a letter to Bush Administration officials expressing concern with the government's commitment to Senators Dole and Graham. The letter requests that the Bush Administration address these concerns prior to the Senate vote on granting Vietnam PNTR

(Aside from this issue, the PNTR legislation is reported to have another Senatorial hold stemming from Vietnam's detention of an American citizen suspected of plotting against the Vietnamese government.)

Highlights of Vietnam's WTO Accession Documents

The WTO explains that the package of Vietnam's accession documents consists of: (1) Vietnam's commitments on goods, (2) Vietnam's commitments on services, and (3) the WTO working party's report. Highlights of Vietnamese commitments include:

Bound duty rates for most goods. For the majority of agricultural and non-agricultural goods, Vietnam is promising ceilings (or "bound" rates) on duties ranging between zero and 35%.

Trading rights. The WTO notes that trading rights (i.e. the right to import and export) were a subject of tough negotiations partly because of different registration procedures for foreign and domestic traders. However, a new law has now harmonized the procedure for both. Among other things, Vietnam has committed that all foreign firms and individuals will be able to engage in importing and exporting as importers/exporters "of record" so long as they register. Importers will also be able to choose their domestic distributors.

Export restrictions. Vietnam maintains export controls on some products such as rice and some wood products and minerals (to prevent illegal exploitation). It is pledging to apply controls on these products in a way that conforms with WTO agreements.

Intellectual property. The WTO states that almost 33 pages of the working party's report describe in detail the administrative and legal set up in Vietnam. Vietnam will comply with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement immediately, without any transition period.

(See ITT's Online Archives or 10/27/06 news, 06102799 1, for previous BP summary indicating that PNTR many not be approved prior to Vietnam's WTO accession. See ITT's Online Archives or 06/19/06 news, 06061910, for BP summary of the introduction of Vietnam PNTR legislation in Congress. See ITT's Online Archives or 06/02/06 news, 06060205, for BP summary of U.S.-Vietnam signing of a WTO bilateral market-access agreement.)

WTO Press Release (Press/455, dated 11/07/06) available at http://www.wto.org/english/news_e/pres06_e/pr455_e.htm

Senator Dole Press Release (dated 09/29/06) available athttp://dole.senate.gov/index.cfm?FuseAction=PressReleases.Detail&PressRelease_id=880&Month=9&Year=2006

Text of letter issued by Senators Feinstein and Gordon (dated 11/03/06) available at http://www.amchamvietnam.com/index.php?id=1137