[Senate Report 107-49]
[From the U.S. Government Publishing Office]
Calendar No. 108
107th Congress Report
SENATE
1st Session 107-49
======================================================================
APPROVING THE EXTENSION OF NONDISCRIMINATORY TREATMENT (NORMAL TRADE
RELATIONS) TO THE PRODUCTS OF THE SOCIALIST REPUBLIC OF VIETNAM
_______
July 27, 2001.--Ordered to be printed
_______
Mr. Baucus, from the Committee on Finance, submitted the following
R E P O R T
[To accompany S.J. Res. 16]
[Including cost estimate of the Congressional Budget Office]
The Committee on Finance, to which was referred the joint
resolution (S.J. Res. 16) approving the extension of
nondiscriminatory treatment to the products of the Socialist
Republic of Vietnam, having considered the same, reports
favorably thereon without amendment and recommends that the
joint resolution do pass.
I. Summary
S.J. Res. 16 would approve the extension of
nondiscriminatory (normal trade relations (``NTR'')) treatment
to products imported into the United States from the Socialist
Republic of Vietnam (``Vietnam''). The reciprocal extension of
NTR treatment is a principal provision of the Agreement Between
the United States of America and the Socialist Republic of
Vietnam on Trade Relations (``the U.S.-Vietnam Trade
Agreement'' or ``the Agreement''), which was signed by U.S.
Trade Representative Charlene Barshefsky and Vietnam's Trade
Minister Vu Khoan, on July 13, 2000. On June 8, 2001, the
President formally transmitted the agreement, including related
annexes and exchanges of letters, to the Congress for its
consideration, along with his proclamation extending
nondiscriminatory treatment to imports from Vietnam.
Under section 405(c) of the Trade Act of 1974, as amended
by the Customs and Trade Act of 1990 (Public Law No. 101-382),
the trade agreement and proclamation may take effect only if a
joint resolution approving the agreement is enacted into law.
II. General Explanation
A. The Statutory Framework
Title IV of the Trade Act of 1974, as amended, authorizes
the President to extend NTR treatment to the products of any
country not receiving such treatment on the date of enactment
of that act (January 3, 1975) if two conditions are met: (1)
compliance with the freedom-of-emigration provisions under
section 402 of the Trade Act of 1974 (commonly referred to as
the Jackson-Vanik amendment); and (2) conclusion of a bilateral
commercial agreement under section 405 of the Trade Act of
1974, providing reciprocal nondiscriminatory treatment. Section
404 of the Trade Act of 1974 stipulates that NTR treatment
shall remain in effect only as long as the bilateral commercial
agreement is in effect. Section 404 also provides that the
President may suspend or withdraw NTR treatment at any time.
(1) Compliance with freedom-of-emigration provisions.--
Section 402 of the Trade Act of 1974 (the Jackson-Vanik
amendment) provides that products from certain non-market
economies are not eligible to receive NTR treatment, and that
such countries may not participate in any U.S. Government
financial credit or guarantee programs, if the President
determines that the country: (a) denies its citizens the right
or opportunity to emigrate; (b) imposes more than anominal tax
on visas or other documents required for emigration; or (c) imposes
more than a nominal tax, levy, fine, fee or other charge on any citizen
as a consequence of the desire of such citizen to emigrate. Further,
the President is prohibited from concluding any commercial agreement
with any country in which the foregoing restrictions apply.
A country may become eligible for NTR treatment and U.S.
financial programs, and may conclude a commercial agreement
with the United States, only if the President submits a report
to Congress indicating that the country is not in violation of
the provisions of section 402 as outlined above.
Alternatively, the President may waive the Jackson-Vanik
requirements if he reports to Congress that a waiver will
substantially promote the objectives of section 402 of the
Trade Act of 1974, and if the President has received assurances
that the emigration practices of the country will henceforth
lead substantially to achievement of the objectives of such
section. Waivers of the Jackson-Vanik requirements may be made
for 12 months at a time. A recommendation to extend a waiver
must be made not later than 30 days before the existing waiver
expires. The recommendation to extend must be made in a report
transmitted by the President to the Congress, setting forth his
reasons for determining that extension of the waiver will
substantially promote the objectives of section 402 of the
Trade Act of 1974.
Renewal of a Jackson-Vanik waiver for a country triggers an
opportunity for any Member of Congress to introduce a
resolution disapproving the waiver. A resolution of disapproval
is subject to special ``fast track'' rules for consideration by
both Houses of Congress. If a resolution of disapproval with
respect to a given country is enacted into law, the waiver for
that country ceases to be effective starting on the 61st day
after enactment of the resolution.
(2) Bilateral commercial agreement.--Section 405(b) of the
Trade Act of 1974 requires that a bilateral commercial
agreement with a Jackson-Vanik country:
(a) be limited to an initial 3-year period;
(b) be subject to suspension or termination for
national security reasons;
(c) include ``safeguard'' provisions, allowing the
United States to put measures in place to prevent
``market disruption'' from ``actual or prospective
imports'';
(d) provide rights to U.S. patent and trademark
holders not less than those provided for in the Paris
Convention for the Protection of Industrial Property;
(e) provide rights to U.S. copyright holders not less
than the rights provided for in the Universal Copyright
Convention;
(f) provide arrangements for the protection of
industrial rights and processes;
(g) provide arrangements for the settlement of
commercial differences and disputes;
(h) provide for promotion of trade (including, for
example, facilitation of trade fairs and activities of
governmental commercial officers);
(i) provide for consultations to review the operation
of the agreement; and
(j) provide for such other arrangements of a
commercial nature as will promote the purpose of the
Trade Act.
An agreement may be renewable for additional periods, each
not to exceed 3 years, if a satisfactory balance of concessions
in trade and services has been maintained during the life of
the agreement, and if the President determines that actual or
foreseeable reductions in U.S. tariffs and non-tariff barriers
to trade resulting from multilateral negotiations are
satisfactorily reciprocated by the other party to the
agreement.
B. Presidential Action and Congressional Consideration
(1) Presidential action.--As a non-market economy country,
Vietnam is subject to the Jackson-Vanik provisions (sections
402(a) and (b) of the Trade Act of 1974). On March 9, 1998,
President Clinton determined for the first time since enactment
of the Jackson-Vanik provisions that they should be waived with
respect to Vietnam (Pres. Det. No. 98-17, reprinted in H. Doc.
No. 105-227). On April 7, 1998, he issued an executive order to
that effect (reprinted in H. Doc. No. 105-238). On June 3,
1998, he renewed the waiver for a full 12-month period,
commencing July 3, 1998 (reprinted in H. Doc. No. 105-263).
In the report submitted with his June 3, 1998 waiver
renewal, the President stated that ``Vietnam's emigration
policy has liberalized considerably over the last 10-15
years.'' He observed that, among other things, 480,000
Vietnamese had entered the United States under the Orderly
Departure Program (ODP), and the Government of Vietnam had
located, contacted, screened, and authorized for interview by
the U.S. Immigration and Naturalization Service 78% of persons
eligible for the Resettlement Opportunity for Vietnamese
Returnees (ROVR) program (a U.S.-Vietnamese program leading to
the resettlement in the United States of refugees from
Vietnam).
The Jackson-Vanik waiver for Vietnam was renewed in 1999
and 2000. Resolutions of disapproval were introduced following
each such renewal but failed to be enacted. The most recent
waiver renewal was transmitted to the Congress by President
Bush on June 1, 2001 (Pres. Det. No. 2001-17). The accompanying
report stated, ``Vietnam has a solid record of cooperation with
the United States to permit Vietnamese emigration.'' The
President observed that the majority of ODP and ROVR cases had
completed processing in fiscal year 1999. He reported that, as
of May 11, 2001, only 73 of nearly 21,000 ROVR applications
were still pending.
The Jackson-Vanik waivers for Vietnam since March 9, 1998
have made Vietnam eligible for participation in certain U.S.
government-sponsored financial credit and guarantee programs.
However, absent a bilateral commercial agreement, the waivers
have not resulted in extension of NTR status to products from
Vietnam.
In 1996, the United States and Vietnam began negotiations
on a bilateral trade agreement. This led to an agreement in
principle in June 1999. Finally, on July 13, 2000, an agreement
was signed by U.S. Trade Representative Charlene Barshefsky and
Vietnam's Trade Minister, Vu Khoan. The agreement, including
related annexes and exchanges of letters, was transmitted on
June 8, 2001, by the President to the Congress for its
consideration, along with his proclamation extending
nondiscriminatory treatment to imports from Vietnam, as
required by statute.
(2) Congressional consideration.--Sections 405(c) and
407(c) of the Trade Act of 1974, as amended by the Customs and
Trade Act of 1990 (Public Law No. 101-382), provide that a
trade agreement and the Presidential proclamation granting NTR
status may take effect only after a joint resolution of
approval is enacted into law. Such a joint resolution is
subject to the ``fast-track'' implementing procedures of the
House and Senate set forth in section 151 of the Trade Act of
1974, as amended.
Section 151(b)(3) of the Trade Act of 1974 prescribes the
text of an approval resolution. Section 151(c)(2) provides for
the introduction of such a resolution in both Houses, upon
transmittal of a bilateral commercial agreement by the
President. It also provides for referral of the Senate
resolution to the Committee on Finance and the House resolution
to the Committee on Ways and Means. No amendments are in order.
The procedures of section 151 provide for final congressional
action on an approval resolution that is a revenue measure
within 90 session days.
S.J. Res. 16 and H.J. Res. 51--identical resolutions
approving the extension of nondiscriminatory treatment with
respect to the products of Vietnam--were introduced in the
Senate (on June 11, 2001) and in the House (on June 12, 2001),
respectively. S.J. Res. 16 was referred to the Senate Committee
on Finance, and H.J. Res. 51 was referred to the House
Committee on Ways and Means.
On June 26, 2001, the Committee on Finance held a hearing
on the U.S.-Vietnam Trade Agreement. Witnesses appearing before
the Committee were Peter Davidson, Esquire (General Counsel,
Office of the United States Trade Representative); the
Honorable Ralph L. (``Skip'') Boyce (Deputy Assistant Secretary
of State for East Asian and Pacific Affairs); Virginia B. Foote
(U.S.-Vietnam Trade Council); Lionel Johnson (Vice President
and Director, International Government Relations, Citigroup,
Inc.); and Mark Levinson (Chief Economist and Director of
Policy, Union of Needletrades, Industrial and Textile
Employees). Other interested parties submitted written
testimony for the record.
C. Summary of The U.S.-Vietnam Trade Agreement
The core of the U.S.-Vietnam Trade Agreement consists of
four chapters covering the following subjects: (1) trade in
goods; (2) intellectual property rights; (3) trade in services;
and (4) investment. In addition, there are chapters covering:
(5) business facilitation (i.e., rules requiring that each
country allow nationals of the other country to engage in
activities such as renting office space, importing business
equipment, advertising, performing market studies, etc.); (6)
transparency (i.e., rules requiring that laws, rules and
procedures be regularly and promptly published, that nationals
of each country be given access to non-proprietary economic
data, that nationals of each country be given a fair
opportunity to comment on the formulation of laws, rules and
procedures, etc.); and (7) cross-cutting matters (e.g.,
national security exception, freedom of currency transfers,
consultation provisions, etc.). Finally, appended to the
agreement is an exchange of letters (incorporated by reference
into the agreement) on the subject of investment licensing.
A chapter-by-chapter summary of the agreement follows:
Chapter I.--Chapter I of the agreement covers trade in
goods. The United States and Vietnam each agree to accord non-
discriminatory (NTR) treatment to products originating in or
exported to the other country (i.e., treatment no less
favorable than that accorded to like products originating in or
exported to a third country). The NTR requirement applies to
customs duties and charges of any kind imposed on or in
connection with importation or exportation; methods of payment
for imports and exports; rules and formalities in connection
with importation and exportation; taxes and other internal
charges; and laws, regulations, and other requirements
affecting the sale, offering for sale, purchase,
transportation, distribution, storage, and use of products.
Additionally, the United States and Vietnam each agree to
accord national treatment to products originating in the other
country (i.e., treatment no less favorable than that accorded
to like domestic products). The national treatment requirement
applies with respect to internal taxes and charges as well as
to other laws and regulations affecting products' internal
sale, offering for sale, purchase, transportation, distribution
storage or use.
Further, the agreement requires Vietnam to phase in
``trading rights'' (i.e., rights of eligible companies to
import and export goods) over a period of 3 to 7 years. Upon
entry into force of the agreement, U.S.-invested companies will
be allowed to import goods to be used in production activities
in Vietnam and in exports from Vietnam. By the end of the 7-
year period, U.S.-owned companies will be allowed to engage in
most trading activities (subject to certain limitations with
respect to particular product categories).
Vietnam is required to phase out quantitative restrictions
on imports of certain products into Vietnam over periods of 3
to 7 years, depending on the product. Vietnam also has agreed
to reduce tariffs on approximately 250 products. The parties
also agree to pursue ``thesatisfactory reciprocation of
reductions in tariffs and nontariff barriers to trade in goods
resulting from multilateral negotiations.''
The agreement sets forth a ``safeguard'' procedure,
authorizing the countries to put emergency measures into place
in the event surges of imports from one country cause or
threaten to cause market disruption in the other country.
The agreement requires each country to grant to nationals
and companies of the other country access to all competent
courts and administrative bodies. It also encourages the use of
arbitration to settle commercial disputes.
The agreement permits Vietnam to continue operating state
enterprises for the import and export of certain products.
However, such enterprises are required to make purchases or
sales involving imports or exports solely in accordance with
commercial considerations.
Chapter II.--Chapter II of the agreement covers
intellectual property rights. The parties are required to give
effect to the substantive economic provisions of major
intellectual property conventions. Further, each country is
required to afford nationals of the other country treatment no
less favorable than treatment it affords to its own nationals
with regard to the acquisition, protection, enjoyment and
enforcement of all intellectual property rights and any
benefits derived therefrom.
The agreement contains several articles setting forth
rights and obligations with respect to specific categories of
intellectual property, including copyright, satellite signals,
trademarks, patents, integrated circuit designs, trade secrets,
and industrial designs. In general, Vietnam's obligations under
these provisions are equal to or greater than the obligations
that it would undertake if it were a party to the World Trade
Organization Agreement on Trade-Related Aspects of Intellectual
Property.
Each country is required to provide procedures in domestic
law to permit prompt and effective action against infringement
of intellectual property rights, including prompt and effective
provisional measures. The agreement spells out certain due
process requirements for such procedures. It further requires
each country to provide ``criminal procedures and penalties to
be applied at least in cases of willful trademark
counterfeiting or infringement of copyrights or neighboring
rights on a commercial scale.'' It also requires each country
to adopt procedures enabling private parties to petition for
suspension by the customs authorities of the release of
imported goods that are found to infringe certain intellectual
property rights.
The United States agrees to provide technical assistance to
Vietnam ``to strengthen its regime for the protection and
enforcement of intellectual property rights.''
With respect to most of its obligations under Chapter II,
Vietnam is entitled to a transition period for compliance, with
most core obligations phasing in by 18 months after entry into
force of the agreement. Vietnam's trademark and patent
obligations phase in 12 months after entry into force of the
agreement. Most of its copyright and trade secrets obligations
phase in 18 months after entry into force of the agreement.
Chapter III.--Chapter III of the agreement concerns trade
in services. Each country is required to accord ``immediately
and unconditionally to services and service suppliers of the
other country treatment no less favorable than it accords to
like services and service suppliers of any other country''
(i.e., NTR treatment).
Under Chapter III, the United States and Vietnam made
specific commitments with respect to particular service
sectors. Vietnam made commitments in the following sectors
(among others): legal services, accounting, computer services,
telecommunications services, audio-visual services,
construction, banking, insurance, and distribution. In sectors
where a country made specific commitments, it generally is
required to accord services and service suppliers of the other
country treatment no less favorable that it accords its own
like services and service suppliers (i.e., the national
treatment standard). Other commitments apply to such sectors as
well. For example, the country is prohibited from applying
excessively burdensome licensing requirements.
The agreement incorporates by reference certain provisions
adopted by some members of the World Trade Organization, as
follows: the Annex on Financial Services to the WTO General
Agreement on Trade in Services (``GATS''); the GATS Annex on
Movement of Natural Persons; the GATS Annex on
Telecommunications, and the GATS Telecommunications Reference
Paper.
Chapter IV.--Chapter IV of the agreement concerns
development of investment relations. Investment is also
addressed in an exchange of letters between U.S. Trade
Representative Charlene Barshefsky and Vietnam's Trade Minister
Vu Khoan, which is incorporated into the agreement.
Each country is required to extend the better of NTR
treatment or national treatment to investments of nationals of
the other country. This obligation applies with respect to all
phases of investment (i.e., establishment, acquisition,
expansion, management, conduct, operation, and sale or other
disposition). Each country also is required to accord ``fair
and equitable treatment and full protection and security'' to
investments of nationals of the other country. This is an
international law standard separate from the NTR/national
treatment obligation.
Each country is required to provide nationals of the other
country effective means to enforce rights with respect to
investments in the territory of the first country. Each country
also consents to submit investment disputes brought by
nationals of the other country to binding arbitration.
Each country is prohibited from requiring technology
transfers as preconditions for investment by nationals of the
other country.
Any direct or indirect expropriations by either country
must be for a public purpose, non-discriminatory, upon payment
of prompt, adequate and effective compensation, and in
accordance with due process of law.
The agreement contains obligations on trade-related
investment measures (such as requirements that products
manufactured in a country contain specified quantities of local
content). The parties agree not to apply any measures
inconsistent with the WTO Agreement on Trade-Related Investment
Measures. However, Vietnam is given a 5-year period in which to
phase out certain such measures.
The agreement allows Vietnam to keep certain restrictions
on investment in place during an initial 3-year period. For
example, during this period, Vietnam may require that the
capital contribution by U.S. nationals to joint ventures in
Vietnam be at least 30%. Further, pursuant to the exchange of
letters on investment licensing, Vietnam will be allowed to
``pre-screen'' certain investments before licensing those
investments. Gradually (over a 9-year period), Vietnam will
adopt a registration regime, akin to the regime for
establishing a business in the United States.
Chapter V.--Chapter V of the Agreement covers business
facilitation. Each country is obligated to permit nationals of
the other country to rent office space, bring employees into
the country, engage in advertising and direct sales, and engage
in certain other conduct ``to facilitate business activity.''
Chapter VI.--Chapter VI of the agreement concerns
transparency-related provisions and the right to appeal. Under
this chapter, the parties are obligated to ``publish on a
regular and prompt basis all laws, regulations, and
administrative procedures of general application pertaining to
any matter covered by [the] Agreement.'' Each country also is
obligated to provide nationals and companies of the other with
data on the national economy and individual sectors. Each
country also must afford nationals of the other country, to the
extent possible, the opportunity to comment on the formulation
of laws, regulations, and administrative procedures of general
application.
The parties are required to publish measures of general
application in a designated official journal.
The parties are required to administer their laws in a
``uniform, impartial, and reasonable manner.'' They also are
required to maintain administrative and judicial tribunals for
the prompt review and correction of administrative action in
areas covered by the agreement.
Chapter VII.--Chapter VII of the agreement, entitled
``general articles,'' covers several miscellaneous issues. It
requires that all cross-border commercial transactions be
conducted in U.S. dollars or other freely usable currency,
unless otherwise agreed to by the parties to such transactions.
It also requires each country to extend non-discriminatory
treatment with respect to transfers into and out of the
country.
Chapter VII allows each country to take measures that it
considers necessary for the protection of its own national
security interests, notwithstanding its obligations under the
agreement. It also provides for certain exceptions to the
ordinary rules of the agreement (as, for example, in the case
of measures taken to protect health and safety).
Chapter VII establishes a Joint Committee on Development of
Economic and Trade Relations between Vietnam and the United
States of America. The Committee's responsibilities will
include monitoring operation of the agreement and addressing
matters arising from interpretation or implementation of the
agreement.
Finally, Chapter VII provides that the agreement will
remain in place for an initial 3-year period and that it will
be automatically renewable for successive 3-year periods,
unless either country notifies the other of its intent to
terminate at least 30 days before the date on which the 3-year
term would end.
D. U.S.-Vietnamese Trade and Impact of Trade Agreement
(1) U.S.-Vietnamese Trade.--Two-way trade (imports plus
exports) between the United States and Vietnam in 2000 was
$1.189 billion. This represents a five-fold increase from
levels in 1994, when the embargo on Vietnam was lifted. In
2000, U.S. imports from Vietnam totaled $821.66 million, and
U.S. exports to Vietnam totaled $367.72 million.
The main products the United States currently imports from
Vietnam are: shrimps and prawns, coffee, rubber-soled footwear,
petroleum oils, and cashew nuts.
The main products the United States currently exports to
Vietnam are: steam turbine parts, machine parts, computers and
computer parts, electronic circuits, and fertilizers.
U.S. foreign direct investment in Vietnam is roughly $1
billion, making the United States the ninth-largest foreign
investor in Vietnam.
(2) Impact of the Trade Agreement.--The extension of
nondiscriminatory treatment to goods imported into the United
States from Vietnam means that tariffs imposed on such goods
will fall from an average of 35% by value to an average of
about 5% by value.
A 1999 World Bank study found that extending NTR treatment
to imports into the United States from Vietnam would lead to a
$430 million increase in the value of such imports over 1996
levels. The study found that using a more recent baseline
(1998), the increase wouldlikely be closer to $750 million per
year. See E. Fukase & W. Martin, The Effect of the United States'
Granting Most Favored Nation Status to Vietnam at 12 & n.10 (World
Bank, 1999). The extension of NTR also will likely affect the
composition of Vietnamese exports to the United States. Goods currently
imported in small volumes or not at all may now be imported in
significant quantities, due to lower tariffs. Based on Vietnam's
exports to the European Union and Japan, likely categories of increased
imports into the United States are garments, leather products,
footwear, household plastic products, and processed foods.
Imports of apparel from Vietnam, in particular, are
expected to increase dramatically. The above-cited World Bank
study projected a 15-fold increase (from a 1996 baseline) in
the value of U.S. imports of apparel products from Vietnam.
Fukase & Martin, supra, at 12. In the event that such actual or
prospective imports of apparel products (or any products) from
Vietnam caused or threatened to cause or significantly
contributed to market disruption in the United States, then the
United States would be authorized to take a ``safeguard''
measure under Chapter I, Article 6 of the U.S.-Vietnam
Agreement (concerning emergency action on imports). Such
measures could include quantitative import limitations or
tariff measures.
Moreover, under section 204 of the Agricultural Act of 1956
(7 U.S.C. Sec. 1854), the President is authorized to negotiate
agreements limiting the exportation from foreign countries and
importation into the United States of textile and textile
products. While the rules of the World Trade Organization limit
the U.S. ability to negotiate such agreements in most cases,
those rules do not apply to trade with Vietnam, since Vietnam
is not a WTO member.
Benefits to U.S. exporters from the U.S.-Vietnam Trade
Agreement are likely to phase in gradually, as Vietnam
undertakes the market-oriented reforms required by the
Agreement. Noticeable near-term impact should be a business
environment in Vietnam more hospitable to U.S. investors,
including shorter delays in obtaining investment licenses and
enhanced legal protections.
In addition to the measurable benefits expected to flow
from approval of the U.S.-Vietnam Trade Agreement, the
Committee believes that the establishment of normal commercial
ties between the United States and Vietnam will help bring
about substantial, albeit less quantifiable benefits. These
anticipated benefits include an increasingly open society
governed by the rule of law and democratic principles. Striving
towards these objectives is very much in the spirit of ``the
continued dedication of the United States to fundamental human
rights,'' identified in the opening sentences of the Jackson-
Vanik provisions of the Trade Act of 1974 (19 U.S.C.
Sec. 2432(a)). In the expectation that a normalization of
commercial relations will advance these goals, the Committee
reports favorably S.J. Res. 16, approving the extension of NTR
treatment to products of Vietnam, with the hope that the Senate
will be able to act promptly on the resolution.
III. Congressional Action
On June 8, 2001, President Bush, in a message to the
Congress, transmitted the Agreement Between the United States
of America and the Socialist Republic of Vietnam on Trade
Relations, signed July 13, 2000, including annexes and an
exchange of letters forming an integral part of the Agreement.
The President also transmitted with the same message a
proclamation implementing the Agreement, and a report relative
to the Agreement. The report urged the Congress to ``act as
soon as possible to approve, by a joint resolution referred to
in section 151(b)(3) of the Trade Act, the extension of
nondiscriminatory treatment to the products of Vietnam as
provided for in the Agreement.''
On June 11, 2001, Senator Daschle (for himself and Senator
Lott) (by request) introduced S.J. Res. 16, a resolution
approving the extension of nondiscriminatory treatment to the
products of the Socialist Republic of Vietnam. The resolution
was read twice and referred to the Committee on Finance.
On June 12, 2001, Congressman Armey (for himself,
Congressman Gephardt, and Congressman Crane) (all by request)
introduced H.J. Res. 51, which is identical in substance to
S.J. Res. 16. H.J. Res. 51 was referred to the Committee on
Ways and Means.
IV. Vote of the Committee in Reporting the Bill
In compliance with section 133 of the Legislative
Reorganization Act of 1946, the Committee states that S.J. Res.
16 was ordered favorably reported by voice vote with a quorum
present on July 17, 2001.
V. Budgetary Impact of the Bill
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 27, 2001.
Hon. Max Baucus,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S.J. Res. 16, a joint
resolution approving the extension of nondiscriminatory
treatment to the products of the Socialist Republic of Vietnam.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Erin
Whitaker.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
S.J. Res. 16--Approving the extension of nondiscriminatory treatment to
the products of the Socialist Republic of Vietnam
Summary: S.J. Res. 16 would approve extension of
nondiscriminatory treatment, or Normal Trade Relations (NTR)
status, to the Socialist Republic of Vietnam, as transmitted by
the President on June 8, 2001. CBO expects that enacting the
bill would reduce revenues by $33 million in 2002, by $181
million over the 2002-2006 period, and by $416 million over the
2002-2011 period. Since enacting S.J. Res. 16 would affect
revenues, pay-as-you-go procedures would apply.
S.J. Res. 16 contains no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act
(UMRA) and would not affect the budgets of state, local, or
tribal governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S.J. Res. 16 is shown in the following
table.
[By fiscal year, in millions of dollars]
----------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006
----------------------------------------------------------------------------------------------------------------
CHANGES IN REVENUES
Estimated revenues................................................. -33 -34 -36 -38 -40
----------------------------------------------------------------------------------------------------------------
Basis of estimate: S.J. Res. 16 would immediately extend
NTR to products from Vietnam. Such products currently bear
general rates of duty which are significantly higher than the
rates applied to products from countries with NTR treatment.
Based on information from the Office of the United States Trade
Representative (USTR) and from Census Bureau data on imports
from Vietnam, CBO estimates that the reduction of tariff rates
would reduce revenues by about $33 million in 2002, net of
income and payroll tax offsets. This estimate includes the
effects of increased imports from Vietnam that would result
from reduced prices of imported products in the United States--
reflecting the lower tariff rates--and has been estimated based
on the expected substitution between U.S. products and imports
from Vietnam. In addition, it is likely that part of the
increase in U.S. imports from Vietnam would displace imports
from other countries. In the absence of specific data on the
extent of this substitution effect, CBO assumes that an amount
equal to one-half the increase in U.S. imports from Vietnam
will displace imports from other countries.
An extension of NTR treatment to products from Vietnam
would be subject to annual review. Under the Trade Act of 1974,
nondiscriminatory trade relations may not be conferred on a
country with a nonmarket economy if that country maintains
restrictive emigration policies. The President may waive this
prohibition on an annual basis, however, if he certifies that
doing so would promote freedom of emigration in that country.
Vietnam has received such a waiver on an annual basis since
1998, and CBO assumes that Vietnam would continue to receive
such a waiver after enactment of S.J. Res. 16. Based on
information from the USTR and the Census Bureau, CBO estimates
enacting the legislation would reduce revenues by $181 million
over the 2002-2006 period, and by $416 million over the 2002-
2011 period.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up procedures for
legislation affecting receipts or direct spending. The net
changes in governmental receipts that are subject to pay-as-
you-go procedures are shown in the following table. For the
purposes of enforcing pay-as-you-go procedures, only the
effects in the current year, the budget year, and the
succeeding four years are counted.
[By fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in receipts............................................. 0 -33 -34 -36 -38 -40 -42 -44 -47 -49 -52
Changes in outlays\1\........................................... ...... ...... ...... ...... ...... ...... ...... ...... ...... ...... ......
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Not applicable.
Intergovernmental and private sector impact: S.J. Res. 16
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of State,
local or tribal governments.
Estimate prepared by: Federal Revenues: Erin Whitaker.
Impact on State, local, and tribal governments: Scott Masters.
Impact on the Private Sector: Paige Piper/Bach.
Estimate approved by: G. Thomas Woodward, Assistant
Director for Tax Analysis.
VI. Regulatory Impact and Other Matters
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee states that the
bill will not significantly regulate any individuals or
businesses, will not affect the personal privacy of
individuals, and will result in no significant additional
paperwork.
The following information is provided in accordance with
section 423 of the Unfunded Mandates Reform Act of 1995 (Pub.
L. No. 104-4). The Committee has reviewed the provisions of
S.J. Res. 16 as approved by the Committee on July 17, 2001. In
accordance with the requirements of Pub. L. No. 104-4, the
Committee has determined that the resolution contains no
intergovernmental mandates, as defined in the UMRA, and would
not affect the budgets of state, local or tribal governments.
VII. Changes in Existing Law
Pursuant to the requirements of paragraph 12 of rule XXVI
of the Standing Rules of the Senate, changes in existing law
made by the resolution, S.J. Res. 16, as reported, are shown as
follows (existing law proposed to be omitted is enclosed in
black brackets, new matter is printed in italic, existing law
in which no change is proposed is shown in roman):
UNITED STATES CODE
TITLE 19--CUSTOMS DUTIES
CHAPTER 18--IMPLEMENTATION OF HARMONIZED TARIFF SCHEDULE
Harmonized Tariff Schedule of the United States (2001) Annotated for
Statistical Reporting Purposes
GENERAL NOTES
* * * * * * *
3(a).* * *
* * * * * * *
(b) Rate of Duty Column 2. . . . Notwithstanding any of the
foregoing provisions of this note, the rates of duty shown in
column 2 shall apply to products, whether imported directly or
indirectly, of the following countries and areas pursuant to
section 401 of the Tariff Classification Act of 1962, to
section 231 or 257(e)(2) of the Trade Expansion Act of 1962, to
section 404(a) of the Trade Act of 1974 or to any other
applicable section of law, or to action taken by the President
thereunder: Afghanistan, Cuba, Laos, North Korea[, Vietnam].
* * * * * * *