The Vietnam-U.S. Bilateral Trade Agreement (CRS Report for Congress)
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| Release Date |
Revised Sept. 9, 2002 |
| Report Number |
RL30416 |
| Report Type |
Report |
| Authors |
Mark E. Manyin, Foreign Affairs, Defense, and Trade Division |
| Source Agency |
Congressional Research Service |
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Summary:
On July 13, 2000, U.S. and Vietnamese negotiators signed a sweeping bilateral trade agreement
(BTA). Following affirmative votes in Congress and the Vietnamese National Assembly, the BTA
entered in into force on December 10, 2001, when the two countries formally exchanged letters
implementing the agreement. Under the deal, the U.S. will extend temporary
most-favored nation
(MFN, also known as normal trade relations [NTR] status) status to Vietnam, a step that will
significantly reduce U.S. tariffs on most imports from Vietnam. The World Bank has estimated that
Vietnam's exports to the U.S. will rise to $1.3 billion -- 60% higher than 2000 levels -- in the first
year of MFN status, as U.S. tariff rates on Vietnamese exports will fall from their non-MFN average
of 40% to less than 3%. In particular, Vietnamese garment exports are expected to record a tenfold
increase in the first year after receiving MFN treatment.
In return, Hanoi agreed to undertake a wide range of market-liberalization measures, including
extending MFN treatment to U.S. exports, reducing tariffs on goods, easing barriers to U.S. services
(such as banking and telecommunications), committing to protect certain intellectual property rights,
and providing additional inducements and protections for inward foreign direct investment. Vietnam
is the world's 13th most populous country, with 78 million inhabitants, roughly equal to the
population of Germany. The U.S. and Vietnam reached an agreement in principle in July 1999, but
for nearly a year Vietnam delayed finalizing the deal because of intense divisions among the
Vietnamese Communist Party (VCP) leadership.
Under the requirements of Title IV of the Trade Act of 1974 -- Section 402 of which is
commonly referred to as the "Jackson-Vanik amendment" -- signing a bilateral trade agreement is
a necessary step for the U.S. to restore MFN treatment to certain socialist countries, including
Vietnam. Congressional approval of the BTA will allow the President to extend MFN treatment to
Vietnam. Such MFN status will be conditional because -- as with all Title IV BTAs -- it will require
annual Presidential extensions, which Congress could disapprove.
This report outlines the terms of the BTA, identifies U.S. and Vietnamese motivations for
entering into the deal, analyzes the reasons for Vietnam's delay in signing the agreement, and
explains Congress' role in the process of restoring normal trade relations treatment to Vietnam. This
report will be updated periodically. Further information on U.S.-Vietnam relations is available in
CRS Issue Brief IB98033, Vietnam-U.S. Relations . Further information on the
legislative and legal
procedures for handling the BTA is available in CRS Report RS20717 , Vietnam Trade
Agreement:
Approval and Implementing Procedure .
