[House Report 107-154]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 107-154
======================================================================
DISAPPROVAL OF NORMAL TRADE RELATIONS TREATMENT TO THE PRODUCTS OF
VIETNAM
_______
July 23, 2001.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Thomas, from the Committee on Ways and Means, submitted the
following
ADVERSE REPORT
[To accompany H.J. Res. 55]
[Including cost estimate of the Congressional Budget Office]
The Committee on Ways and Means, to whom was referred the
joint resolution (H.J. Res. 55) disapproving the extension of
the waiver authority contained in section 402(c) of the Trade
Act of 1974 with respect to Vietnam, having considered the
same, report unfavorably thereon without amendment and
recommend that the joint resolution do not pass.
CONTENTS
Page
I. Introduction......................................................2
A. Purpose and Summary................................... 2
B. Background............................................ 2
C. Legislative History................................... 4
II. Explanation of Resolution.........................................4
III.Votes of the Committee............................................6
IV. Budget Effect.....................................................6
A. Committee Estimate of Budgetary Effects............... 6
B. Statement Regarding New Budget Authority and Tax
Expenditures........................................... 6
C. Cost Estimate Prepared by the Congressional Budget
Office................................................. 6
V. Other Matters To Be Discussed Under the Rules of the House........8
A. Committee Oversight Findings and Recommendations...... 8
B. Summary of Findings and Recommendations of the
Committee on Government Reform and Oversight........... 8
C. Constitutional Authority Statement.................... 8
I. INTRODUCTION
A. PURPOSE AND SUMMARY
House Joint Resolution 55 would disapprove the extension of
the waiver authority contained in section 402(c) of the Trade
Act of 1974 with respect to Vietnam.
B. BACKGROUND
Vietnam's trade status is subject to the ``Jackson-Vanik''
provisions in Title IV of the Trade Act of 1974 (the Act). This
provision of law governs the extension of normal trade
relations (NTR), including NTR tariff treatment, and access to
U.S. Government credits, or credit or investment guarantees, to
nonmarket economy countries ineligible for NTR treatment as of
the enactment of the Act. A country subject to the provision
may gain coverage by U.S. trade financing programs by complying
with the freedom of emigration provisions under the Act. The
extension of NTR tariff treatment also requires the conclusion
and approval by Congress of a bilateral commercial agreement
with the United States providing for reciprocal
nondiscriminatory treatment.
The Act authorizes the President to waive the freedom of
emigration requirement with respect to a particular country if
he determines that a waiver will substantially promote the
freedom of emigration provisions, and if he has received
assurances that the emigration practices of the country will
lead substantially to the achievement of those objectives.
Waiver of the emigration requirement allows the country to be
eligible for U.S. trade financing programs and, if the country
has concluded a bilateral commercial agreement approved by
Congress, to receive NTR tariff treatment.
Since the early 1990s, the United States has taken gradual
steps to improve relations with Vietnam. On February 3, 1994,
the President lifted the trade embargo on Vietnam in
recognition of the cooperation received from the Government of
Vietnam in Prisoner of War/Missing in Action (POW/MIA)
accounting. On July 11, 1995, the President announced the
establishment of diplomatic relations, which was followed by
the appointment of former Congressman Douglas ``Pete'' Peterson
as U.S. Ambassador to Vietnam. In 1997, the United States began
negotiations with Vietnam toward the conclusion of a bilateral
commercial agreement.
On March 9, 1998, the President first determined that a
Jackson-Vanik waiver for Vietnam would substantially promote
the freedom of emigration objectives under the Act. On April 7,
1998, the President issued Executive Order 13079, under which
the waiver entered into force. The renewal procedure under the
Act requires the President to submit to Congress a
recommendation for a 12-month extension no later than 30 days
prior to the waiver's expiration. The President has renewed
Vietnam's waiver every year since 1998, most recently on June
1, 2001 (H. Doc. 107-82). This waiver authority will continue
in effect unless disapproved by Congress within 60 calendar
days after the expiration of the existing waiver (i.e.,
September 1). Disapproval, should it occur, would take the form
of a joint resolution disapproving of the President's waiver
determination.
On July 13, 2000, the bilateral commercial agreement was
signed by the United States and Vietnam. On June 8, 2001,
President Bush transmitted the agreement to Congress for its
approval. The agreement contains five major sections,
including: (1) market access for agricultural and industrial
goods; (2) intellectual property rights protection; (3) market
access for services; (4) provisions to protect U.S.
investments; and (5) measures to ensure transparency in
Vietnamese laws, rules and regulations.
Because Congress has not yet approved the bilateral
commercial agreement, Vietnam is ineligible to receive NTR
tariff treatment. However, the President's annual
determinations to grant a waiver of Jackson-Vanik emigration
requirements to Vietnam allow U.S. exporters doing business in
Vietnam to have access to U.S. government credits, or credit or
investment guarantees, such as those provided by the Overseas
Private Investment Corporation (OPIC), the Export-Import Bank
(Ex-Im Bank), and the U.S. Department of Agriculture (USDA),
provided that Vietnam meets the relevant program criteria. A
formal agreement between OPIC and Vietnam was signed on March
19, 1998, and the Ex-Im Bank signed a framework guarantee
agreement with the State Bank of Vietnam on December 9, 1999.
Commercial sales of agricultural commodities to Vietnam are
also eligible for coverage by USDA's Southeast Asia Regional
GSM-102 program for short-term export credit guarantees.
Vietnam is the world's 13th most populous country, with
nearly 80 million people. While the country has emerged as one
of Southeast Asia's more promising economies and has the
potential to be a strong trading partner for the United States,
its full potential has yet to be realized. Cumulative foreign
direct investment by U.S. companies in Vietnam is low, valued
about $1 billion, making the United States the ninth-largest
source of investment in Vietnam. As of March 31, 2001, OPIC has
received political risk insurance registrations for 26
projects, representing potential U.S. investment of $900
million. However, actual current OPIC exposure is 2 projects,
representing $10.3 million. Since the end of 1999, the Ex-Im
Bank has issued over fifty letters of interest, although no
final commitment applications have been received yet.
After the President ordered an end to the U.S. trade
embargo in 1994, two-way trade between the United States and
Vietnam increased steadily from $223 million in 1994 to $935
million in 1996. In part, this rapid growth was due to a large
number of U.S. aircraft sales to Vietnam in 1996. Despite a
dampening effect on trade as a result of the Asian financial
crisis which began in 1997, two-way trade was still $666
million that year. Beginning in 1998, two-way trade began to
increase again and reached $828 million in 1998, $880 million
in 1999, and $1.16 billion in 2000. Last year, U.S. exports to
Vietnam totaled $331 million, while U.S. imports in return were
valued at $827 million. Between 1994 and 2000, total trade
between the United States and Vietnam increased by 420 percent.
Top U.S. exports to Vietnam include aircraft, industrial
and office machinery, footwear parts, telecommunications
equipment, and fertilizer. Major U.S. imports from Vietnam
include shrimp, footwear, coffee, petroleum products, and
cashews.
C. LEGISLATIVE HISTORY
Committee action
House Joint Resolution 55 was introduced on June 21, 2001,
by Mr. Rohrabacher to disapprove the extension of the waiver
authority contained in section 402(c) of the Trade Act of 1974,
recommended by the President to Congress on June 1, 2001, with
respect to Vietnam. The resolution was referred to the
Committee on Ways and Means. On July 12, 2001, the Committee on
Ways and Means ordered House Joint Resolution 55 reported
adversely without amendment to the House of Representatives by
a voice vote with a quorum present.
Legislative hearing
No legislative hearing was held.
II. EXPLANATION OF THE RESOLUTION
Present law
Title IV of the Trade Act of 1974, as amended by the
Customs and Trade Act of 1990 (P.L. 101-382), sets forth three
requirements relating to freedom of emigration which must be
met or waived by the President in order for a nonmarket economy
country to gain access to U.S. government credits, or credit or
investment guarantees. Congress has not yet approved the
bilateral commercial agreement with Vietnam signed on July 13,
2000; therefore, Vietnam is not yet eligible to receive NTR
tariff treatment. The President's waiver of the freedom of
emigration requirements for Vietnam, however,currently gives
U.S. exporters doing business in Vietnam access to U.S. government
credits, or credit or investment guarantees, such as those administered
by OPIC, the Ex-Im Bank, and USDA, provided that Vietnam meets the
relevant program criteria.
The President's waiver authority under the Act expires at
midnight on July 2 of each year. The Act also establishes
procedures by which the President can renew his waiver on an
annual basis and procedures for Congressional disapproval of
the President's waiver. A waiver may be extended on an annual
basis upon a Presidential determination and report to Congress
that such extension will substantially promote the freedom of
emigration objectives in the Act. The waiver authority
continues in effect unless disapproved by the Congress, either
generally or with respect to a specific country, within 60
calendar days after the expiration of the existing authority.
Disapproval takes the form of a joint resolution disapproving
the extension of Presidential authority to waive the freedom of
emigration requirements in the Act. The resolution is referred
to the Committee on Ways and Means, which has 30 days to
consider it. The resolution is not amendable except to add or
remove country names affected. If the resolution passes both
Houses and is vetoed by the President, Congress must consider
the veto message before the later of the end of the 60-day
period or within 15 legislative days. The disapproval
resolution is highly privileged.
On June 1, 2001, the President issued an extension of the
waiver from the Jackson-Vanik freedom of emigration
requirements for Vietnam. If both chambers of Congress do not
pass a resolution of disapproval within the 60 calendar days
following the expiration of the existing waiver authority, the
President's waiver is automatically renewed through July 2,
2002. If a resolution of disapproval is enacted, it becomes
effective 60 days after enactment.
Explanation of resolution
House Joint Resolution 55 states that Congress does not
approve the extension of the authority contained in section
402(c) of the Trade Act of 1974, recommended by the President
to Congress on June 1, 2001, with respect to Vietnam.
Reasons for Committee action
The Committee on Ways and Means reports House Joint
Resolution 55 adversely primarily because the Members support
the Administration's policy of engagement and gradual
normalization of relations with Vietnam. In particular, the
Committee is convinced that this policy is the cornerstone on
which the United States will be able to continue cooperation
with the Vietnamese government to achieve the fullest possible
accounting of POWs and MIAs in Vietnam. In addition, engagement
enables the United States to influence the pace and direction
of economic and political reform in Vietnam in a manner that
will improve respect for fundamental human rights and promote
democratic reforms. Furthermore, termination of the President's
Jackson-Vanik waiver for Vietnam would undermine the ability of
the United States to influence Vietnam's re-emergence into the
community of nations. In recent years, Vietnam has joined the
Association of Southeast Asian Nations and the Asia-Pacific
Economic Cooperation group. Vietnam has also applied to become
a member of the World Trade Organization.
The Committee recognizes that disapproving the President's
extension of Vietnam's Jackson-Vanik waiver would derail the
process of normalizing U.S. trade relations with Vietnam. In
particular, overturning the Jackson-Vanik waiver would harm
U.S. exporters and workers by delaying the possibility for the
extension of NTR to Vietnam under the bilateral commercial
agreement between the United States and Vietnam, which was
recently submitted to Congress for its approval. As a direct
consequence of terminating the Jackson-Vanik waiver, U.S.
exporters doing business in Vietnam would lose access to U.S.
trade financing programs, such as those administered by OPIC,
the Ex-Im Bank, and USDA, thereby enabling foreign competitors
to gain an unfair advantage in exports to Vietnam.
While emigration issues remain to be resolved, Vietnam has
continued to make progress, and the Members of the Committee
support the President's determination that waiving the Jackson-
Vanik freedom of emigration criteria will substantially lead to
the achievement of those emigration objectives. The Committee
also believes the serious concerns that the United States has
about human rights abuses and the need for economic and
political reform in Vietnam are best addressed through
expanding government and business contacts and the involvement
of U.S. citizens in Vietnamese society, making full use of U.S.
trade statutes where necessary.
Effective date
The resolution would be effective 60 days after enactment.
III. VOTE OF THE COMMITTEE
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the following statement is made
concerning the votes of the Committee in its consideration of
House Joint Resolution 55.
Motion to report the resolution
House Joint Resolution 55 was ordered reported adversely
without amendment by a voice vote with a quorum present.
IV. BUDGET EFFECTS OF THE BILL
A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS
In compliance with clause 3(d)(2) of rule XIII of the Rules
of the House of Representatives, the following statement is
made concerning the effects on the budget of House Joint
Resolution 55, as reported: The Committee agrees with the
estimate prepared by the Congressional Budget Office (CBO),
which is included below.
B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX EXPENDITURES
In compliance with subdivision 3(c)(2) of rule XIII of the
Rules of the House of Representatives, the Committee states
that the provisions of House Joint Resolution 55 do not involve
any new budget authority, or any increase or decrease in
revenues or tax expenditures.
C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET OFFICE
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, requiring a cost estimate
prepared by the Congressional Budget Office, the following
report prepared by CBO is provided.
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 16, 2001.
Hon. William ``Bill'' M. Thomas,
Chairman, Committee on Ways and Means, House of Representatives,
Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.J. Res. 55,
disapproving the extension of the waiver authority contained in
section 402(c) of the Trade Act of 1974 with respect to
Vietnam.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Erin Whitaker
(for revenues) and Greg Hitz (for federal costs).
Sincerely,
Barry B. Anderson,
(For Dan L. Crippen, Director).
Enclosure.
H.J. Res. 55--Disapproving the extension of the waiver authority
contained in section 402(c) of the Trade Act of 1974 with
respect to Vietnam
Summary: 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. On June 1,
2001, President Bush transmitted to the Congress his intention
to waive the prohibition with respect to Vietnam for a year,
beginning July 3, 2001. H.J. Res. 55 would disapprove the
President's extension of this waiver. This legislation could
affect direct spending if credit-guaranteed sales of farm
products to Vietnam are prohibited. However, CBO estimates that
such sales are likely to be insignificant. Because the bill
could affect direct spending, pay-as-you-go procedures would
apply.
H.J. Res. 55 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: CBO estimates
that disapproving the extension of the waiver with respect to
Vietnam would have no significant impact on direct spending or
receipts. Because the waiver contained in section 402(c) of the
Trade Act of 1974, as recommended by the President, would not
give Vietnam normal trade relations treatment, disapproving it
would not affect customs duties.
Enacting H.J. Res. 55 would prohibit various U.S.
government agencies from extending credit and insurance to
Vietnam. CBO estimates that the resolution would have no
significant effect on the Overseas Private Investment
Corporation, Eximbank programs, or General Sales Manager (GSM)
export credit guarantee programs of the U.S. Department
ofAgriculture (USDA). While Vietnam is currently eligible to purchase
farm and food commodities backed by GSM export credit guarantees if the
waiver is not disapproved, CBO estimates the likelihood that these
guarantees will be offered is small. If USDA does offer GSM credit
guarantees to Vietnam, the value of the sales and the associated costs
during the next year are likely to be insignificant.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. Because
H.J. Res. 55 could affect direct spending, pay-as-you-go
procedures would apply. However, CBO estimates that
disapproving the extension of the waiver to Vietnam would have
no significant impact on direct spending.
Intergovernmental and private-sector impact: H.J. Res 55
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Previous estimate: On July 7, 2000, CBO transmitted an
estimate for H.J. Res. 99, disapproving the extension of the
waiver authority contained in section 402(c) with respect to
Vietnam, as ordered reported adversely by the House Committee
on Ways and Means. Last year's joint resolution would have
disapproved the extension of the President's waiver for the
period beginning on July 3, 2000, and ending on July 2, 2001.
H.J. Res. 55 would disapprove of the extension of the
President's waiver for the period beginning July 3, 2001, and
ending July 2, 2002. The two CBO cost estimates for the
disapprovals of such waivers are very similar.
Estimate prepared by: Federal revenues: Erin Whitaker;
Federal costs: Greg Hitz; Impact on State, local, and tribal
governments: Elyse Goldman; Impact on the private sector:
Lauren Marks.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis; G. Thomas Woodward, Assistant
Director for Tax Analysis.
V. OTHER MATTERS REQUIRED TO BE DISCUSSED UNDER THE RULES OF THE HOUSE
A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS
With respect to clause 3(c)(1) of Rule XIII of the Rules of
the House of Representatives (relating to oversight findings),
the Committee believes, based on information from the
Administration, that terminating Vietnam's Jackson-Vanik waiver
by enacting House Joint Resolution 55 would be unwise and
counterproductive.
B. SUMMARY OF FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE ON
GOVERNMENT REFORM
With respect to clause 3(c)(4) of rule XIII of the Rules of
the House of Representatives, the Committee advises that no
oversight findings or recommendations have been submitted by
the Committee on Government Reform with respect to the subject
matter contained in House Joint Resolution 55.
C. CONSTITUTIONAL AUTHORITY STATEMENT
With respect to clause 3(d)(1) of rule XIII of the Rules of
the House of Representatives, relating to Constitutional
Authority, the Committee states that the Committee's action in
reporting the bill is derived from Article I of the
Constitution, Section 8 (``The Congress shall have power to lay
and collect taxes, duties, imposts and excises, to pay the
debts and to provide for * * * the general Welfare of the
United States * * *'').