WASHINGTON — The decision of Sens. Lindsey Graham and Elizabeth Dole to give the go-ahead to a bill granting permanent normal trade relation status to Vietnam came after the White House pledged to protect the U.S. textile industry against unfairly priced Vietnamese apparel and textile imports.
Graham and Dole lifted their hold on the measure Friday when the Bush administration committed to launch a comprehensive monitoring program of Vietnamese imports and initiate antidumping cases — focused on imports sold for less than fair value in the U.S. — if a six-month review turns up “sufficient evidence.” U.S. Trade Representative Susan Schwab and Commerce Secretary Carlos Gutierrez made the assurances in a letter to Graham (R., S.C.) and Dole (R., N.C.). The bill is expected to come up for a vote after the midterm elections.
The Cabinet officials acknowledged concerns that “Vietnam may continue to offer prohibited subsidies to the state-run textile and apparel industry, which could result in unfair competition in this sector, possibly including dumping.”
Although the World Trade Organization permits U.S. producers injured by any such dumping to seek remedies, the system is considered unwieldy by domestic manufacturers. That’s why the administration’s commitment to generate an inquiry is important.
Industry executives were disappointed with the quota mechanism the U.S. secured in the bilateral trade accord it signed with Vietnam in May, a prerequisite to WTO entry. Quotas would be lifted after Vietnam joins the trade group. The industry unsuccessfully pressed the administration to extend those existing quotas or create a China-like safeguard mechanism triggered by market disruption. The administration defended the bilateral agreement and refused to renegotiate, which prompted the holds by Graham and Dole.
Vietnamese apparel and textile imports totaled $2.9 billion in 2005.
“The North Carolina textile industry has good reason to be concerned about PNTR for Vietnam — a communist country that heavily subsidizes its textile and apparel sector,” Dole said in a statement. “I am very pleased we were able to work with the textile industry and the administration to come up with a solution that will allow our industry to defend itself.”
Graham said, “The changes will help textile industries in the Carolinas compete and protect them.”
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“We recognize there are some positive aspects of this, and we’ll be looking forward to working with the administration to make this a substantive benefit for the U.S. industry,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition.
Tantillo said there are some concerns about the new monitoring system and review process, mainly that antidumping cases are based on illegal pricing activities that are often more difficult to prove than market disruption. He said the positive aspects are that the government will have the ability to override the standing obstacle they’ve faced through self initiation and save the industry millions of dollars.
Importers raised red flags, arguing that dumping cases are not necessary because Vietnam already agreed to abolish all of its “prohibited” export subsidies as part of its accession agreement.
“The fact that there is a streamlined, simplified opportunity for the government to self-initiate dumping cases against Vietnam certainly sends a message to U.S. apparel companies to be very cautious about the size of the commitment they make in sourcing in Vietnam,” said Julia Hughes, senior vice president of international trade at the U.S. Association of Importers of Textiles & Apparel.