[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].

           *       *       *       *       *       *       *


                                
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