Debate Builds on Vietnam WTO Bid

A trade battle over Vietnam's 11-year effort to join the World Trade Organization is flying just below the radar in Washington.

Jacobs also said safeguard quotas would undermine the value of joining the WTO for Vietnam.

"The U.S. has never tabled it and Vietnam could never accept it," she said. "For Vietnam, apparel exports are a more significant proportion of their trade [than in China] and they need to bring in currency."

Vietnam needs to pass a few more hurdles before it can join the WTO, including finishing up bilateral talks with the U.S. on the subject and completing multilateral negotiations within the WTO. Congress also has to extend the vital designation of Permanent Normal Trade Relations to the country. Vietnam and Canada completed bilateral talks last week.

Bob Zane, senior vice president at Liz Claiborne Inc., said if Vietnam is going to concede to some restrictions on exports to the U.S. market, it should skip over antisurge protections such as safeguards and go right to an import agreement.

This would essentially bypass what happened last year, where Chinese imports to the U.S. surged, prompting the Bush administration to impose safeguard quotas, which caused uncertainty in the import community. The U.S. and China ultimately worked out a deal to regulate trade through 2008.

"What frightens me and my colleagues is that, if Vietnam subjects its industry to an antisurge mechanism similar to what the Chinese did, then we will probably see a repeat of the chaos that we saw in China," said Zane, who is also chairman of the USA-ITA. "Personally, I've had it with unpredictably. I don't like it. It's a lousy way of doing business."

There is no telling how much Vietnam's imports would increase if the country joined the WTO, though it lacks the resources to become another China.

However, Cass Johnson, president of the National Council of Textile Organizations, said Vietnam has shown it has the ability to flood the U.S. market. Apparel and textile imports from the country jumped to 827.4 million SME in 2003 from 32.7 million SME in 2001, even after being constrained by quotas during May of that year.

"It's very important for us to get an effective safeguard against Vietnam," Johnson said.

The importers' argument against safeguard quotas on Vietnam follows the same lines as did their case against restrictions on China: They won't bring business back to U.S. producers, but give it to other countries. U.S. textile groups, on the other hand, contend the restraints will help apparel production in Central America, a key market for American textile exports.

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