WASHINGTON — The House on Monday night failed to give the necessary two-thirds majority for approval of a bill granting permanent normal trade relations status to Vietnam. The 228 to 161 vote on the historic bill appeared to catch proponents by surprise.
President Bush had pressed hard for full Congressional approval of the legislation before he attends the Asia-Pacific Economic Cooperation forum at the end of the week in Hanoi. Bush is slated to arrive on Friday.
The textile industry has argued it needs protection against an anticipated surge in textile imports that could lead to more U.S. job losses. The industry lobbied for an extension of existing quotas on Vietnamese textile and apparel imports or a China-like textile safeguard mechanism that allows the U.S. to impose quota restrictions if it determines there is market disruption or the threat of market disruption due to imports.
During floor debate in the House on Monday, Democrats called for a safeguard mechanism in all future WTO accession agreements, including one about to be signed with Russia.
“When nonmarket economies operate, they usually do not go through the usual mechanisms of supply and demand or international market dynamics,” said Rep. Sander Levin (D., Mich.), which means that “it is easier for there to be surges in imports into this country and more difficulties dealing with them.”
The next step for the legislation was uncertain.
The measure would have given U.S. companies the full benefits of the Southeast Asian country’s membership in the World Trade Organization. It also included an amendment to establish a procedure for imposing quotas on imports of subsidized apparel and textile products from Vietnam, a mechanism to which Vietnam agreed in the bilateral WTO accession agreement with the U.S.
House lawmakers, in their first day of a lame-duck session after the midterm elections, considered the bill under suspension of the rules, which is a procedural step for supposedly noncontroversial bills, but requires a two-thirds majority for passage.
Senate Majority Leader Bill Frist (R., Tenn.) said before the House action that he expected to bring the bill to a vote this week. That plan was thrown into disarray.
“Vietnam joining the WTO will bring substantial economic benefits, obviously to Vietnam and to the United States, because Vietnam has agreed to open its markets to U.S. goods and services,” said Rep. Bill Thomas (R., Calif.), chairman of the House Ways & Means Committee, who is retiring at the end of the year.
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Thomas said he struck a balance with an amendment establishing the procedure for reimposing quotas on subsidized apparel and textile imports from Vietnam.
“Vietnam will be a major player in the textile industry,” Thomas said. “The concern we have is in balancing the concerns of those who are on the retail side and those who are on the production side, and we believe that the amendment we have offered will go a long way toward resolving those concerns.”
Vietnam is a relatively small foreign supplier, compared with China, but domestic textile producers maintain it will grow exponentially when quotas are lifted and U.S. importers shift more business to the Southeast Asian nation. Imports from Vietnam for the year ended Sept. 30 were valued at $3.37 billion.
Vendors and retailers have argued against any mechanisms restricting imports from Vietnam.
The U.S. maintains quotas on 38 apparel and textile import categories from Vietnam that are set to expire at the end of the year.
Under the new mechanism in the bill, the U.S. would have had the right to seek a reimposition of textile and apparel quotas for as long as one year if Vietnam fails to abolish all of its “prohibited” textile and apparel subsidies — a commitment it made in the accession agreement with the U.S. — by the date it officially becomes a WTO member. Last week, the WTO approved Vietnam as its 150th member. The country will formally join 30 days after its national assembly signs off on entry.
The U.S. would determine whether to initiate an investigation within a set time period and if it finds just cause, refer the case to a WTO arbitrator for a final determination on whether Vietnam had violated the terms of its accession agreement and failed to abolish all of the prohibited subsidies.