Vietnam PNTR Status and WTO Accession: Issues and Implications for the United States

Publication Date: January 2007

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Trade

Type:

Coverage: Vietnam

Abstract:

On December 8, 2006, the House passed legislation (212-184) to grant Vietnam permanent normal trade relations (PNTR) status as part of a more comprehensive trade bill (H.R. 6406). Pursuant to H.Res. 1100, the bill was then coupled with a taxextension bill (H.R. 6111) and sent to the Senate. The Senate passed the combined bills on December 8 (79-9). On December 20, 2006, President Bush signed the bill into law (P.L.109-432) and, per the law, proclaimed PNTR for Vietnam on December 29, 2006.

Congress considered PNTR in the context of Vietnam's accession to the World Trade Organization (WTO), which Vietnam joined in January 2007. Although Congress had no direct role in Vietnam's accession to the WTO, congressional approval was necessary for the President to extend PNTR to Vietnam. The WTO requires its members to extend unconditional most-favored-nation status (MFN), called PNTR in the United States, in order to receive the full benefits of WTO membership in their bilateral trade relations. Until PNTR was granted, the United States had extended conditional NTR treatment to Vietnam under Title IV of the Trade Act of 1974, as amended, which includes the so-called Jackson-Vanik amendment (section 402). Title IV prohibits the President from granting certain countries permanent NTR unless the country has met certain conditions.

Vietnam's entry into the WTO does not establish any new obligations on the part of the United States, only on the part of Vietnam. However, Vietnam's WTO accession requires the United States and Vietnam to adhere to WTO rules in their bilateral trade relations, including not imposing unilateral measures, such as quotas on textile imports, that have not been sanctioned by the WTO. Accession to the WTO affords Vietnam the protection of the multilateral system of rules in its trade relations with other WTO members, including the United States. It could help the United States in that Vietnam would be obligated to apply WTO rules in its trade. PNTR status from the United States provides Vietnam more predictability its growing trade relations with the United States and sheds a legacy of the cold war. For the United States, PNTR is another in a series of steps the United States has taken in trade and foreign policy to normalize relations with Vietnam and place distance between current relations and the Vietnam War.

During the congressional debate on PNTR, Members raised issues regarding the conditions for Vietnam's entry into the WTO, other issues pertaining to the U.S.Vietnam economic relationship, and other aspects of the overall U.S.-Vietnam relationship.