[House Report 106-794]
[From the U.S. Government Publishing Office]
106th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 106-794
======================================================================
DISAPPROVING THE EXTENSION OF THE WAIVER AUTHORITY CONTAINED IN SECTION
402(c) OF THE TRADE ACT OF 1974 WITH RESPECT TO VIETNAM
_______
July 26, 2000.--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. 99]
The Committee on Ways and Means, to whom was referred the
joint resolution (H.J. Res. 99) 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.
CONTENTS
Page
I. Introduction......................................................2
A. Purpose and Summary................................... 2
B. Background............................................ 2
C. Legislative History................................... 3
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 99 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
amendment to Title IV of the Trade Act of 1974. This provision
of law governs the extension of normal trade relations (NTR),
including normal 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 Trade Act. A country subject to the
provision may gain NTR treatment and 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,
President Clinton lifted the trade embargo on Vietnam in
recognition of the cooperation received from the Vietnamese in
POW/MIA accounting. On July 11, 1995, President Clinton
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
Office of the United States Trade Representative began
negotiations toward the conclusion of a bilateral commercial
agreement with Vietnam. An agreement in principle between the
United States and Vietnam was reached on July 25, 1999.
In the succeeding months, the bilateral commercial
agreement was finalized between the United States and Vietnam.
On July 13, 2000, the bilateral commercial agreement was
signed. 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, if the President determines that a
Jackson-Vanik waiver would substantially promote the freedom of
emigration objectives under the Trade Act of 1974, U.S.
exporters doing business in Vietnam are given 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. On November 30, 1999,
OPIC signed its first financing agreement since the Vietnam
war, a $2.3 million loan to Caterpillar's authorized dealership
in Vietnam. The Ex-Im Bank announced that it was ready to
finance sales to Vietnam on April 10, 1998, and on December 9,
1999, signed two framework agreements with the State Bank of
Vietnam to facilitate project financing cooperation between the
two agencies. Commercial sales of agricultural commodities to
Vietnam are also eligible for coverage by USDA's Southeast Asia
Regional GSM 102 program.
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 Trade Act of
1974. On April 7, 1998, the President issued Executive Order
13079, under which the waiver entered into force. The renewal
procedure under the Trade Act of 1974 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. On June 3,
1998, the President renewed Vietnam's waiver for the next 12-
month period. On June 3, 1999, the President again issued
another 12-month waiver. Most recently, the President issued a
12-month waiver for Vietnam on June 2, 2000. This waiver
authority will continue in effect unless disapproved by
Congress within 60 calendar days after the expiration of the
existing waiver. Disapproval, should it occur, would take the
form of a joint resolution disapproving of the President's
waiver determination.
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. Two-way trade
reached $827 million in 1998, and $900 million in 1999. Last
year, U.S. exports to Vietnam totaled $291 million, while U.S.
imports in return were valued at $609 million. Between 1994 and
1999, total trade between the U.S. and Vietnam increased 75
percent. Top U.S. exports to Vietnam in 1999, included
machinery and transportation equipment, chemicals and related
products, and manufactured goods. The largest U.S. imports from
Vietnam in 1999, included mineral fuels, coffee, footwear, and
fish. U.S. investment in Vietnam has grown in tandem with
trade. In 1999, the U.S. was the seventh largest investor in
Vietnam with $120.2 million, while France led foreign
investment in Vietnam with $303.4 million.
C. Legislative History
Committee action
House Joint Resolution 99 was introduced on June 6, 2000,
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 2, 2000, with
respect to Vietnam. The resolution was referred to the
Committee on Ways and Means. On June 28, 2000, the Committee on
Ways and Means ordered House Joint Resolution 99 reported
adversely without amendment to the House of Representatives by
a voice vote with a quorum present.
Legislative hearing
On June 15, 2000, 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, representatives
of refugee organizations, Vietnamese-American groups, 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. Mr. Rohrabacher testified in support of the
resolution of disapproval he introduced on Vietnam's Jackson-
Vanik waiver. 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. Congress has not
yet approved of 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 Title IV expires at
midnight on July 2 of each year. The Trade Act of 1974 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 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. 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 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 2, 2000, 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 99 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 2, 2000, with respect to Vietnam.
Reasons for Committee action
The Committee on Ways and Means reports House Joint
Resolution 99 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 (ASEAN) and the Asia-
Pacific Economic Cooperation (APEC) group. Vietnam has also
applied to become a member of the World Trade Organization
(WTO).
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 recently signed bilateral
commercial agreement between the United States and Vietnam,
which Congress would have to approve separately in order to
extend NTR to Vietnam. 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 many 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 is 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 99.
Motion to Report the Resolution
House Joint Resolution 99 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 99, 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 99 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 7, 2000.
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. 99,
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 Hester
Grippando (for revenues), and Greg Hitz (for federal costs).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.J. Res. 99.--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 2,
2000, President Clinton transmitted to the Congress his
intention to waive the prohibition with respect to Vietnam for
a year, beginning July 3, 2000. H.J. Res. 99 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. 99 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. 99 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 of
Agriculture (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. 99 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. 999
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 16, 1999, CBO transmitted for
H.J. Res. 58, 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. That joint resolution would have disapproved the
extension of the President's waiver for the period beginning on
July 3, 1999, and ending on July 2, 2000. H.J. Res. 99 would
disapprove of the extension of the President's waiver for the
period beginning July 3, 2000, and ending July 2, 2001. CBO's
cost estimates for the two joint resolutions are very similar.
Estimate Prepared by: Federal revenues: Hester Grippando.
Federal costs: Greg Hitz.
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 public hearing information and
information from the Administration, that terminating Vietnam's
Jackson-Vanik waiver by enacting House Joint Resolution 99
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 99.
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 * * *'').