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Washington Outlook Archive
James A. Morrissey, Washington Correspondent

US And Vietnam Finalize Trade Pact

By James A. Morrissey, Washington Correspondent

The United States and Vietnam have reached a final agreement on a bilateral trade agreement calling for the removal of textile and apparel import quotas and a reciprocal pledge from Vietnam to make “substantial changes to its trade laws and practices.” The agreement is an essential step toward Vietnam’s accession to the World Trade Organization (WTO).

The agreement received an immediate strong endorsement from textile and apparel importers, and was met with cries of anguish from US textile manufacturers.
In announcing the final agreement, Deputy US Trade Representative Karan Bhatia called it a historic action that has placed Vietnam firmly on the path of full membership in the rules-based international trade system. She added that in signing the agreement, the US government is “ confident in the belief that it will open new markets to American exporters and will afford Americans back home greater access to a larger variety of goods from Vietnam.”

Retailers and other importers of textiles and apparel agreed with Bhatia’s assessment of the agreement, saying it will make it easier for them to source goods from Vietnam. In a letter to US Trade Representative Designate Susan Schwab, Tracy Mullin, president and CEO of the Washington-based National Retail Federation (NRF), said: “Vietnam is still a comparatively small but growing supplier to the US market of such consumer goods as footwear, furniture, apparel and coffee. Now that we have had an opportunity to review the bilateral market access agreement and the provisions that would directly impact the US retail industry, it is our opinion that this agreement represents a significant step forward in normalizing political and economic relations between the United States and Vietnam.” She praised as “benefits to retailers” the fact that the agreement calls for elimination of textile and apparel import quotas and does not provide for use of a special textile safeguard mechanism to prevent market disruption by imports.

US manufacturers of textiles, apparel and furniture see the agreement in an entirely different light, describing it as “a disaster for US manufacturing and the US textile industry in particular.” Auggie Tantillo, executive director of the Washington-based American Manufacturing Trade Action Coalition (AMTAC), said: “The agreement is bound to replicate the disastrous trade pattern the [United States] has constructed with China. Because of China’s state-sponsored advantages, their manufacturers have run roughshod over US companies in our own market and others. Inconceivably, we have just approved an agreement that will allow Vietnam to do the same thing.”

One key element in Vietnam’s accession to the WTO is approval by the US Congress of permanent normal trade relations for Vietnam, and that is where the battleground will be. Tantillo said the US textile industry “explicitly told” the US Trade Representative it could not support any agreement with Vietnam that did not include “adequate safeguards.” Since he does not believe there are such safeguards in the agreement, he said: “We are left with no choice but to urge Congress to oppose this flawed agreement.

NRF’s Mullin, on the other hand, said her organization will give its “full support” to the process of Vietnam’s accession to the WTO. The showdown likely will occur before the congressional August recess.

June 5, 2006