[House Report 105-653]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-653
_______________________________________________________________________


 
DISAPPROVING EXTENSION OF WAIVER AUTHORITY UNDER SECTION 402(c) OF THE 
               TRADE ACT OF 1974 WITH RESPECT TO VIETNAM

                                _______
                                

 July 29, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


    Mr. Archer, from the Committee on Ways and Means, submitted the 
                               following

                             ADVERSE REPORT

                      [To accompany H.J. Res. 120]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
joint resolution (H.J. Res. 120) 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 and recommend that the joint 
resolution do not pass.

                            I. INTRODUCTION

                         A. Purpose and Summary

    H.J. Res. 120 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

    Since the early 1990s, the United States has taken gradual 
steps to improve relations with Vietnam. In February 1994, 
President Clinton lifted the trade embargo on Vietnam in 
recognition of the progress made in accounting for prisoners of 
war and missing-in-action (POW/MIA) and the successful 
implementation of the Paris Peace Accords. The United States 
opened a Liaison Office in Hanoi later that year. On July 11, 
1995, President Clinton announced the establishment of 
diplomatic relations, which was followed by the appointment of 
former Member of Congress Douglas ``Pete'' Peterson as U.S. 
Ambassador to Vietnam.
    The Administration has also taken steps toward the 
normalization of U.S. trade relations with Vietnam. At present, 
Vietnam's trade status is subject to the Jackson-Vanik 
amendment to Title IV of the Trade Act of 1974. This provision 
of law governs the extension of most-favored-nation (MFN), or 
normal, tariff treatment, as well as access to U.S. government 
credits, or credit or investment guarantees, to nonmarket 
economy countries ineligible for MFN treatment as of the 
enactment of the Trade Act. A country subject to the provision 
is eligible for coverage by U.S. trade financing programs only 
if it is certified by the President as complying with the 
freedom of emigration provisions under the Act or if the 
President waives this requirement. Specifically, the Act 
authorizes the President to waive the requirements for full 
compliance with respect to a particular country if he 
determines that such 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. This 
determination is subject to a resolution of disapproval by 
Congress. In addition to the freedom of emigration 
requirements, the extension of MFN tariff treatment is subject 
to the conclusion and approval by Congress of a bilateral 
commercial agreement with the United States providing for 
reciprocal nondiscriminatory tariff treatment.
    On March 9, 1998, the President determined that a Jackson-
Vanik waiver for Vietnam would substantially promote the 
freedom of emigration objectives under the Trade Act of 1974. 
On April 7, 1998, the President issued Executive Order 13079 
under which the Jackson-Vanik waiver for Vietnam went into 
force. Because Vietnam is still negotiating a bilateral 
commercial agreement with the United States, it is currently 
ineligible to receive MFN tariff treatment. The President's 
waiver for Vietnam, however, gives that country access to U.S. 
government credits, or credit or investment guarantees, such as 
those administered 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. The President's 
initial waiver determination for Vietnam expired on July 2, 
1998. The renewal procedure under the Trade 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 (i.e., by not later than June 3). On June 3, 1998, 
the President determined that a 12-month continuation of the 
waiver for Vietnam (from July 3, 1998 to July 2, 1999) would 
substantially promote the freedom of emigration criteria in the 
statute.
    After the President ordered an end to the U.S. trade 
embargo, two-way trade between the United States and Vietnam 
increased steadily from $224 million in 1994 to $948 million in 
1996. In part, this rapid growth was due to a large number of 
U.S. plane sales to Vietnam in 1996. The pace of bilateral 
trade slowed in 1997, partially due to the Asian financial 
crisis, but two-way trade was still $666 million. In 1997, U.S. 
exports to Vietnam were valued at $278 million, while U.S. 
imports in return from Vietnam totaled $388 million. Top U.S. 
exports to Vietnam in 1997 included machinery, electrical 
equipment, vehicles, footwear, optic and medical instruments, 
aluminum, and cotton and yarn fabric. The largest U.S. imports 
from Vietnam in 1997 included spices, coffee, tea, footwear, 
fish and seafood, mineral fuel, cereals, woven apparel, and 
edible fruits and nuts. U.S. investment in Vietnam has grown in 
tandem with trade. Since 1993, U.S. investment in Vietnam has 
risen from just $3.3 million to $1.2 billion 1997, making the 
United States the eighth largest foreign investor in Vietnam. 
Another factor affecting U.S.-Vietnamese economic relations is 
the hundreds of millions of dollars that Vietnamese Americans 
send to Vietnam each year for family aid and business 
investment.

                         C. Legislative History

Subcommittee action

    House Joint Resolution 120 was introduced on June 4, 1998, 
by Mr. Rohrabacher to disapprove the extension of the waiver 
authority contained in the Jackson-Vanik amendment to Title IV 
of the Trade Act of 1974 recommended by the President to 
Congress on June 3, 1998 with respect to Vietnam, and was 
referred to the Committee on Ways and Means. On June 23, 1998, 
the Subcommittee on Trade of the Committee on Ways and Means 
ordered House Joint Resolution 120 reported adversely 
withoutamendment to the full Committee on Ways and Means by a voice 
vote with a quorum present. On June 25, 1998, the Committee on Ways and 
Means ordered House Joint Resolution 120 reported adversely without 
amendment to the House of Representatives by a voice vote with a quorum 
present.

Legislative hearing

    On June 18, 1998, the Subcommittee on Trade of the 
Committee on Ways and Means held a hearing on the issue of 
U.S.-Vietnam trade relations. At this hearing, Members of 
Congress, as well as representatives of POW/MIA families, 
veterans organizations, refugees, Vietnamese-Americans, and 
U.S. businesses expressed their views regarding U.S.-Vietnam 
trade relations and the President's extension of the Jackson-
Vanik waiver for Vietnam. Former Member of Congress and current 
U.S. Ambassador to Vietnam Douglas ``Pete'' Peterson presented 
testimony from the Administration in support of the President's 
waiver extension.

                   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 (Public Law 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, as well as the 
conclusion by the President of a bilateral commercial agreement 
providing for reciprocal nondiscriminatory tariff treatment, 
subject to Congressional approval. Because Vietnam has not yet 
concluded a bilateral commercial agreement with the United 
States, it is ineligible to receive MFN tariff treatment. The 
President's waiver of the freedom of emigration requirements 
for Vietnam, however, currently gives that country 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 Title IV expires at 
midnight on July 2 of each year. It 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 Trade Act of 1974. 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. Under Title IV amendments adopted as part 
of the Customs and Trade Act of 1990, disapproval takes the 
form of a joint resolution disapproving the extension of 
Presidential authority to waive the freedom of emigration 
requirements in the Trade Act of 1974. 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, under the 
1990 amendments, 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, thus generally 
guaranteeing a vote in the House if a resolution of disapproval 
is introduced.
    On June 3, 1998, 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 2nd of 
the next year. If a resolution of disapproval is enacted, it 
becomes effective 60 days after enactment.

Explanation of resolution

    House Joint Resolution 120 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 3, 1998, with respect to Vietnam.

Reasons for Committee action

    The Committee on Ways and Means reports House Joint 
Resolution adversely primarily because the Members, in general, 
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 lead 
eventually to democratic principles. Fundamentally, the 
Committee believes that terminating 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 (ASEAN) and has applied 
to become a member of the World Trade Organization (WTO). In 
November 1998, Vietnam will join the Asia-Pacific Economic 
Cooperation (APEC) group.
    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. Finally, the 
Committee recognizes that disapproving the President's 
extension of Vietnam's Jackson-Vanik waiver would derail 
progress toward market-oriented reforms and the process of 
normalizing U.S. trade relations with Vietnam, particularly the 
ongoing bilateral commercial agreement negotiations, while at 
the same time harming U.S. exporters and workers.
    While the United States has many serious concerns about 
human rights abuses and the need for economic and political 
reforms in Vietnam, the Committee believes that they 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 is effective 60 days after enactment.

                       III. VOTE OF THE COMMITTEE

    In compliance with clause 2(l)(2)(B) of rule XI of the 
Rules of the House of Representatives, the following statements 
are made concerning the votes of the Committee in its 
consideration of House Joint Resolution 120.

                    Motion to Report the Resolution

    H.J. Res. 120 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 7(a) 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 
120, as reported: The Committee agrees with the 
estimateprepared by the Congressional Budget Office (CBO), which is 
included below.

    B. Statement Regarding New Budget Authority and Tax Expenditures

    In compliance with subdivision (B) of clause 2(l)(3) of 
rule XI of the Rules of the House of Representatives, the 
Committee states that the provisions of House Joint Resolution 
120 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 subdivision (C) of clause 2(l)(3) of 
rule XI 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 9, 1998.
Hon. Bill Archer,
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. 120, a joint 
resolution expressing Congress's disapproval of the 
recommendation of the President to extend the waiver 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 for federal 
revenues is Hester Grippando, or for federal costs is Craig 
Jagger.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.J. Res. 120--A joint resolution 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. However, the President may waive this 
prohibition on an annual basis if he certifies that doing so 
would promote freedom of emigration in that country. On June 3, 
1998, President Clinton transmitted to Congress his intention 
to waive the prohibition with respect to Vietnam for a year, 
beginning July 3, 1998. H.J. Res. 120 would disapprove the 
President's extension of this waiver.
    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 outlays or 
receipts.
    Basis of estimate: Because the waiver contained in section 
402(c) of the Trade Act of 1974, as recommended by the 
President, would not give Vietnam most-favored-nation status, 
disapproving it would not affect customs duties. Enacting H.J. 
Res. 120 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 Overseas 
Private Investment Corporation, Eximbank programs, or General 
Sales Manager (GSM) export credit guarantee programs of the 
U.S.

 V. OTHER MATTERS REQUIRED TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

          A. Committee Oversight Findings and Recommendations

    With respect to subdivision (A) of clause 2(l)(3) of rule 
XI of the Rules of the House of Representatives (relating to 
oversight findings), the Committee, based on public hearing 
information and information from the Administration, believes 
that terminating Vietnam's Jackson-Vanik waiver by enacting 
House Joint Resolution 120 would be unwise and 
counterproductive.

B. Summary of Findings and Recommendations of the Government Reform and 
                          Oversight Committee

    With respect to subdivision (D) of clause 2(l)(3) of rule 
XI 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 and Oversight 
with respect to the subject matter contained in House Joint 
Resolution 120.

                 C. Constitutional Authority Statement

    Department of Agriculture (USDA). While USDA has testified 
that it is considering whether to offer GSM export credit 
guarantees to Vietnam if the waiver is not disapproved, CBO has 
no good basis for estimating when, how, and to what extent 
these guarantees may be offered. If USDA does offer GSM credit 
guarantees to Vietnam, the associated costs during the next 
year are likely to be small.
    Pay-as-you-go considerations: Because H.J. Res. 120 could 
affect outlays, pay-as-you-go procedures, as designated under 
section 252 of the Balanced Budget and Emergency Deficit 
Control Act of 1985, would apply. However, CBO estimates that 
disapproving the extension of the waiver to Vietnam would have 
no significant impact on receipts or outlays.
    Intergovernmental and private-sector impact: The proposed 
legislation contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act of 
1995, and would impose no direct costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal Revenues: Hester Grippando. 
Federal Cost: Craig Jagger.
    Estimate approved by: Frank Sammartino, Acting Assistant 
Director for Tax Analysis. Paul N. Van de Water, Assistant 
Director for Budget Analysis.
    With respect to clause 2(l)(4) of rule XI 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 * * *'').

                                
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