WASHINGTON — The Bush administration’s effort to grant Vietnam permanent normal trade relations status appears to have hit a roadblock over protections for the U.S. textile industry.
Sen. Lindsey Graham (R., S.C.) has become the second textile-state senator to place a hold on legislation granting Vietnam PNTR because of concerns about the adverse impact of potential import surges on domestic textile firms, a staffer in Graham’s office confirmed Wednesday.
Graham joins Sen. Elizabeth Dole (R, N.C.) in placing holds on the bill, which could force the hand of the White House and Republican leaders to address the senators’ concerns and make concessions for textile producers. Dole has her own hold, first reported in WWD on Wednesday, and is seeking several remedies as a condition to lifting it. They include an extension of quotas on Vietnamese textile and apparel, expanding the application of antidumping and countervailing duty laws to Vietnam and requiring the U.S. Trade Representative’s office to investigate and combat subsidies in Vietnam’s textile and apparel industry.
A USTR spokesman said the office is aware of both holds and is working “to see if we can find some common ground,” noting the discussions began Wednesday.
With Dole and Graham blocking the legislation, the timing of Senate approval is unclear. The holds could derail the legislation, which gives Vietnam and the U.S. more market access by lowering tariffs. But the bill has broad bipartisan support and some experts contend the holds will only delay final passage.
“This hold could potentially have some bite to it,” said Daniella Markheim, senior trade policy analyst at the Heritage Foundation, a conservative Washington think tank. “I think [Dole] and any others … could have some power with this one and the issues will be addressed.”
Republican leaders most likely will not tackle the issues until Congress returns from a monthlong recess in September, but Congress will adjourn again in October before the midterm elections in November.
The office of Sen. Chuck Grassley (R., Iowa), chairman of the Senate Finance Committee, with jurisdiction over the legislation, did not respond to an inquiry on the bill’s status. The administration is hoping to have Congressional approval before the President travels to Hanoi in November for an Asia-Pacific Economic Cooperation summit.
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Vietnam has already reached a bilateral trade pact with the U.S. as a precursor for its joining the World Trade Organization.
The textile industry’s back is up against the wall and the move by the two senators could be the industry’s last shot at securing stronger protections against apparel and textile imports from Vietnam, which hit $2.9 billion in 2005. Those imports are expected to rise substantially once the country joins the WTO because the existing U.S. quotas will be eliminated if Congress approves PNTR. Domestic textile producers contend the bilateral pact the U.S. reached with Vietnam is inadequate in controlling import surges.
“There is not an adequate safeguard measure in that bilateral today,” said Jim Chesnutt, president and chief executive officer of National Spinning Co. “Frankly, I don’t think it is enforceable or measurable.”
U.S. trade officials have repeatedly stated they secured a “tough commitment” from the Vietnamese with an “unprecedented” enforcement mechanism, which allows the U.S. to reimpose quotas for a year if Vietnam does not abolish all “prohibited” subsidies to those industries. Importers support the deal and oppose a safeguard or quotas for apparel and textiles.
“The textile industry is alone on this,” said Brenda Jacobs, counsel for the U.S. Association of Importers of Textiles and Apparel. “Everyone knows … inevitably, Congress will support PNTR. The only question is when.”