```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
                 PRESIDENT'S WAIVER FOR VIETNAM FROM
                      THE JACKSON-VANIK FREEDOM OF
                 EMIGRATION REQUIREMENTS IN TITLE IV OF
                       THE TRADE ACT OF 1974
=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON TRADE

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 18, 2002

                               __________

                           Serial No. 107-79

                               __________

         Printed for the use of the Committee on Ways and Means

                          U.S. GOVERNMENT PRINTING OFFICE
82-265                             WASHINGTON : 2002
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800  
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
E. CLAY SHAW, Jr., Florida           FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut        ROBERT T. MATSUI, California
AMO HOUGHTON, New York               WILLIAM J. COYNE, Pennsylvania
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM McCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota               GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, Iowa                     JOHN LEWIS, Georgia
SAM JOHNSON, Texas                   RICHARD E. NEAL, Massachusetts
JENNIFER DUNN, Washington            MICHAEL R. McNULTY, New York
MAC COLLINS, Georgia                 WILLIAM J. JEFFERSON, Louisiana
ROB PORTMAN, Ohio                    JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania           XAVIER BECERRA, California
WES WATKINS, Oklahoma                KAREN L. THURMAN, Florida
J.D. HAYWORTH, Arizona               LLOYD DOGGETT, Texas
JERRY WELLER, Illinois               EARL POMEROY, North Dakota
KENNY C. HULSHOF, Missouri
SCOTT McINNIS, Colorado
RON LEWIS, Kentucky
MARK FOLEY, Florida
KEVIN BRADY, Texas
PAUL RYAN, Wisconsin

                     Allison Giles, Chief of Staff
                  Janice Mays, Minority Chief Counsel

                                 ______

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman

E. CLAY SHAW, Jr., Florida           SANDER M. LEVIN, Michigan
AMO HOUGHTON, New York               CHARLES B. RANGEL, New York
DAVE CAMP, Michigan                  RICHARD E. NEAL, Massachusetts
JIM RAMSTAD, Minnesota               WILLIAM J. JEFFERSON, Louisiana
JENNIFER DUNN, Washington            XAVIER BECERRA, California
WALLY HERGER, California             JOHN S. TANNER, Tennessee
PHIL ENGLISH, Pennsylvania
JIM NUSSLE, Iowa

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________
                                                                   Page
Advisories announcing the hearing................................  2, 4

                               WITNESSES

Office of the U.S. Trade Representative, Ralph F. Ives, III, 
  Assistant U.S. Trade Representative, Southeast Asia, the 
  Pacific and APEC...............................................     8
U.S. Department of State, Christopher LaFleur, Acting Assistant 
  Secretary, East Asian and Pacific Affairs......................    11

                                 ______

General Electric Company in Vietnam, Andre Sauvageot.............    44
New York Life International, and New York Life Insurance Company, 
  Gary Benanav...................................................    28
Oklahoma Department of Commerce, Vietnam Trade Office, and 
  Pacific Ventures, Incorporated, Barry L. Clark.................    41
U.S.-Vietnam Trade Council, Virginia B. Foote....................    31

                       SUBMISSIONS FOR THE RECORD

American Chamber of Commerce in Vietnam, Hanoi, Vietnam, Chris S. 
  Tragakis, letter...............................................    55
Boeing Company, Arlington, VA, statement.........................    55

   PRESIDENT'S WAIVER FOR VIETNAM FROM THE JACKSON-VANIK FREEDOM OF 
      EMIGRATION REQUIREMENTS IN TITLE IV OF THE TRADE ACT OF 1974

                              ----------                              

                        THURSDAY, JULY 18, 2002

                  House of Representatives,
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 10:04 a.m., in 
room 1100 Longworth House Office Building, Hon. Philip M. Crane 
(Chairman of the Subcommittee) presiding.
    [The advisory and the revised and revised #2 advisories 
announcing the hearing follow:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
July 8, 2002
No. TR-10

               Crane Announces Hearing on the President's
               Waiver for Vietnam from the Jackson-Vanik
                  Freedom of Emigration Requirements

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing on the President's waiver for Vietnam 
from the Jackson-Vanik freedom of emigration requirements in Title IV 
of the Trade Act of 1974. The hearing will take place on Thursday, July 
18, 2002, in the main Committee hearing room, 1100 Longworth House 
Office Building, beginning at 10:00 a.m.

    Oral testimony at this hearing will be from both invited and public 
witnesses. Invited witnesses will include officials from the U.S. 
Department of State and the Office of the United States Trade 
Representative. Also, any individual or organization not scheduled for 
an oral appearance may submit a written statement for consideration by 
the Committee or for inclusion in the printed record of the hearing.

BACKGROUND:

    Vietnam's trade status is subject to the ``Jackson-Vanik'' 
provisions in Title IV of the Trade Act of 1974. Title IV sets forth 
requirements relating to freedom of emigration which must be met or 
waived by the President in order for a nonmarket economy country to 
gain access to U.S. Government credits, or credit or investment 
guarantees, and be granted Normal Trade Relations (NTR) status. On June 
4, 2002, the President issued an extension of the waiver from the 
Jackson-Vanik freedom of emigration requirements for Vietnam (H. Doc. 
107-221).

    The President's waiver of the freedom of emigration requirements 
for Vietnam grants NTR status to products imported from Vietnam and 
gives U.S. exporters doing business in Vietnam access to U.S. 
Government credits, or credit or investment guarantees, such as those 
administered by the Overseas Private Investment Corporation, the 
Export-Import Bank, and the U.S. Department of Agriculture, provided 
that Vietnam meets the relevant program criteria. The President's 
waiver authority expires at midnight on July 2 of each year and may be 
extended on an annual basis upon a Presidential determination and 
report to Congress that such extension will substantially promote the 
freedom of emigration objectives in the Act. The waiver authority 
continues in effect unless disapproved by the Congress, either 
generally or with respect to a specific country, within 60 calendar 
days after the expiration of the existing authority.

    H.J. Res. 101 was introduced by Representative Rohrabacher (R-CA) 
on June 25, 2002, and states that Congress does not approve the 
extension of the authority contained in section 402(c) of the Trade Act 
of 1974 as recommended by the President to Congress on June 4, 2002, 
with respect to Vietnam. The effect of this Resolution would be to 
withdraw the President's Jackson-Vanik waiver for Vietnam.

    In announcing the hearing, Chairman Crane stated: ``U.S.-Vietnam 
bilateral relations have significantly improved over the last 10 years. 
Normal Trade Relations is an important component of our bilateral 
relationship, and I am pleased that the Congress approved the U.S.-
Vietnam Bilateral Trade Agreement last December. We should not 
undermine the important progress that has been made by withdrawing 
Normal Trade Relations status for Vietnam.''

FOCUS OF THE HEARING:

    The focus of the hearing will be the President's waiver for Vietnam 
from the Jackson-Vanik freedom of emigration requirements in Title IV 
of the Trade Act of 1974 and H.J. Res. 101, a resolution to disapprove 
the waiver.

DETAILS FOR SUBMISSIONS OF REQUESTS TO BE HEARD:

    Requests to be heard at the hearing must be made by telephone to 
Traci Altman or Bill Covey at (202) 225-1721 no later than the close of 
business, Thursday, July 11, 2002. The telephone request should be 
followed by a formal written request faxed to Allison Giles, Chief of 
Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 
Longworth House Office Building, Washington, D.C. 20515, at (202) 225-
2610. The staff of the Subcommittee on Trade will notify by telephone 
those scheduled to appear as soon as possible after the filing 
deadline. Any questions concerning a scheduled appearance should be 
directed to the Subcommittee on Trade staff at (202) 225-6649.

    In view of the limited time available to hear witnesses, the 
Subcommittee may not be able to accommodate all requests to be heard. 
Those persons and organizations not scheduled for an oral appearance 
are encouraged to submit written statements for the record of the 
hearing. All persons requesting to be heard, whether they are scheduled 
for oral testimony or not, will be notified as soon as possible after 
the filing deadline.

    Witnesses scheduled to present oral testimony are required to 
summarize briefly their written statements in no more than five 
minutes. THE FIVE-MINUTE RULE WILL BE STRICTLY ENFORCED. The full 
written statement of each witness will be included in the printed 
record, in accordance with House Rules.

    In order to assure the most productive use of the limited amount of 
time available to question witnesses, all witnesses scheduled to appear 
before the Committee are required to submit 200 copies, along with an 
IBM compatible 3.5-inch diskette in WordPerfect or MS Word format, of 
their prepared statement for review by Members prior to the hearing. 
Testimony should arrive at the Subcommittee on Trade office, room 1104 
Longworth House Office Building, no later than the close of business on 
Monday, July 15, 2002, in an open and searchable package. The U.S. 
Capitol Police will refuse sealed-packaged deliveries to all House 
Office Buildings. Failure to do so may result in the witness being 
denied the opportunity to testify in person.

WRITTEN STATEMENTS IN LIEU OF PERSONAL APPEARANCE:

    Please Note: Due to the change in House mail policy, any person or 
organization wishing to submit a written statement for the printed 
record of the hearing should send it electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, by the close of business on Monday, July 22, 2002. 
Those filing written statements who wish to have their statements 
distributed to the press and interested public at the hearing should 
deliver their 200 copies to the Subcommittee on Trade in room 1104 
Longworth House Office Building, in an open and searchable package 48 
hours before the hearing. The U.S. Capitol Police will refuse sealed-
packaged deliveries to all House Office Buildings.

FORMATTING REQUIREMENTS:

    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.

    1. Due to the change in House mail policy, all statements and any 
accompanying exhibits for printing must be submitted electronically to 
[email protected], along with a fax copy to 
(202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a 
total of 10 pages including attachments. Witnesses are advised that the 
Committee will rely on electronic submissions for printing the official 
hearing record.

    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.

    3. Any statements must include a list of all clients, persons, or 
organizations on whose behalf the witness appears. A supplemental sheet 
must accompany each statement listing the name, company, address, 
telephone and fax numbers of each witness.

    Note: All Committee advisories and news releases are available on 
the World Wide Web at http://waysandmeans.house.gov.

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call (202) 225-1721 or (202) 226-3411 TTD/TTY in advance of the event 
(four business days notice is requested). Questions with regard to 
special accommodation needs in general (including availability of 
Committee materials in alternative formats) may be directed to the 
Committee as noted above.

                               

                   * * * NOTICE--CHANGE IN TIME * * *

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
July 15, 2002
No. TR-10-Revised

             Change in Time for Hearing on the President's

               Waiver for Vietnam from the Jackson-Vanik

                   Freedom of Emigration Requirements

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, today announced that the 
Subcommittee hearing on the President's waiver for Vietnam from the 
Jackson-Vanik freedom of emigration requirements in Title IV of the 
Trade Act of 1974 scheduled for Thursday, July 18, 2002, at 10:00 a.m., 
in the main Committee hearing room, 1100 Longworth Office Building, 
will now be held at 9:30 a.m.

    All other details for the hearing remain the same. (See 
Subcommittee Advisory No. TR-10, dated July 8, 2002.)

                               

                   * * * NOTICE--CHANGE IN TIME * * *

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-1721
FOR IMMEDIATE RELEASE
July 17, 2002
No. TR-10-Revised #2

             Change in Time for Hearing on the President's

               Waiver for Vietnam from the Jackson-Vanik

                   Freedom of Emigration Requirements

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, today announced that the 
Subcommittee hearing on the President's waiver for Vietnam from the 
Jackson-Vanik freedom of emigration requirements in Title IV of the 
Trade Act of 1974 scheduled for Thursday, July 18, 2002, at 9:30 a.m., 
in the main Committee hearing room, 1100 Longworth Office Building, 
will now be held at 10:00 a.m.

    All other details for the hearing remain the same. (See 
Subcommittee Advisory No. TR-10, dated July 8, 2002, and No. TR-10-
Revised, dated July 15, 2002.)

                               

    Chairman CRANE. The United States and Vietnam celebrated an 
important milestone last December when the long-negotiated and 
long-awaited bilateral trade agreement finally entered into 
force. That was a significant achievement, and I am personally 
satisfied to finally see normal trade relations between our two 
countries. The Bilateral Trade Agreement (BTA) was the fruit of 
a process of gradual engagement that began back in February 
1994 when President Clinton ended the 19-year-old U.S. trade 
embargo with Vietnam.
    Over the past 8 years, the United States has gradually 
expanded its economic engagement with Vietnam. Since 1998 when 
the President first granted a Jackson-Vanik waiver to Vietnam 
to allow the Overseas Private Investment Corporation and the 
Export-Import Bank to support U.S. business activities in 
Vietnam, two-way trade with Vietnam has nearly doubled.
    Our engagement with the Vietnamese Government has already 
borne tangible results in promoting important U.S. policy 
objectives, such as encouraging political and economic reform, 
promoting Asian regional stability, the fullest possible 
accounting for prisoners of war (POWs) and U.S. servicemen 
still missing in action (MIA), and resolving the remaining 
immigration cases of concern to the United States.
    On the issue of immigration, which is the only issue that 
is directly related to the renewal of Vietnam's Jackson-Vanik 
waiver, Vietnam has a solid record of cooperation with the 
United States to permit Vietnamese emigration. Over 500,000 
Vietnamese have emigrated as refugees or immigrants to the 
United States under the orderly departure program. Only a small 
number of refugee applicants remain to be processed under both 
the orderly departure and the resettlement for Vietnamese 
returnee programs.
    It is clear that the United States should and will continue 
to address serious concerns with Vietnam. However, the most 
effective way for the United States to seek progress on 
political and economic reform, human rights, labor rights, and 
environmental standards is through continued engagement. To 
that end, the Jackson-Vanik waiver provides an opportunity for 
dialog to address issues of concern with the Vietnamese and to 
pressure them for change.
    I support the renewal of Vietnam's Jackson-Vanik waiver and 
urge my colleagues to oppose H.J. Res. 101. With that, I would 
like to yield to our distinguished colleague from 
Massachusetts, Mr. Neal.
    [The opening statement of Chairman Crane follows:]
  Opening Statement of the Hon. Philip M. Crane, a Representative in 
  Congress from the State of Illinois, and Chairman, Subcommittee on 
                                 Trade
    The United States and Vietnam celebrated an important milestone 
last December when the long-negotiated and long-awaited Bilateral Trade 
Agreement finally entered into force. That was a significant 
achievement, and I am personally satisfied to finally see normal trade 
relations between our two countries. The BTA was the fruit of a process 
of gradual engagement that began back in February 1994 when President 
Clinton ended the 19-year old U.S. trade embargo with Vietnam.
    Over the past 8 years, the United States has gradually expanded its 
economic engagement with Vietnam. Since 1998, when the President first 
granted a Jackson-Vanik waiver to Vietnam to allow the Overseas Private 
Investment Corporation and the Export-Import Bank to support U.S. 
business activities in Vietnam, two-way trade with Vietnam has nearly 
doubled. Our engagement with the Vietnamese Government has already 
borne tangible results in promoting important U.S. policy objectives 
such as encouraging political and economic reform, promoting Asian 
regional stability, the fullest possible accounting for prisoners of 
war and U.S. servicemen still missing in action, and resolving the 
remaining emigration cases of concern to the United States.
    On the issue of emigration, which is the only issue that is 
directly related to the renewal of Vietnam's Jackson-Vanik waiver, 
Vietnam has a solid record of cooperation with the United States to 
permit Vietnamese emigration. Over 500,000 Vietnamese have emigrated as 
refugees or immigrants to the United States under the Orderly Departure 
Program. Only a small number of refugee applicants remain to be 
processed under both the Orderly Departure and the Resettlement for 
Vietnamese Returnees programs.
    It is clear that the United States should--and will--continue to 
address serious concerns with Vietnam. However, the most effective way 
for the United States to seek progress on political and economic 
reform, human rights, labor rights, and environmental standards is 
through continued engagement. To that end, the Jackson-Vanik waiver 
provides an opportunity for dialogue to address issues of concern with 
the Vietnamese and to pressure them for change. I support the renewal 
of Vietnam's Jackson-Vanik waiver and urge my colleagues to oppose H.J. 
Res. 101.

                               

    Mr. NEAL. Thank you, Mr. Chairman. I would like to ask your 
permission to enter Mr. Levin's opening statement into the 
record.
    Chairman CRANE. Without objection, so ordered.
    [The opening statement of Mr. Levin follows:]
  Opening Statement of the Hon. Sander M. Levin, a Representative in 
                  Congress from the State of Michigan
    Thank you, Mr. Chairman. I am glad we are here today to evaluate 
the President's decision to waive applicability of the so-called 
Jackson-Vanik amendment to Vietnam.
    Yesterday I met with the Vietnamese Ambassador to the United 
States, who emphasized the importance of the Jackson-Vanik waiver to 
his country.
    The waiver that is the subject of the resolution at issue today is 
a continuation in the process of engaging with Vietnam. Expanding upon 
prior year's Jackson-Vanik waivers, the waiver this year will not only 
continue the availability of export-related financing from OPIC, Ex-Im 
Bank, and the Department of Agriculture for Vietnam, but will also 
continue NTR status for Vietnam.
    Although the Jackson-Vanik criteria are focused on emigration 
issues, the annual review process is an opportunity to examine various 
aspects of our relationship with Vietnam, including emigration, human 
rights, MIA recovery efforts, and trade issues, including labor market 
standards.
    I am glad that Mr. LaFleur from the State Department will be 
addressing emigration and human rights issues in his comments, but I am 
a bit surprised that at this hearing today we do not have any witnesses 
from the human rights community.
    Our relationship with Vietnam is a complicated one, still very much 
impacted by the war that left a deep and lasting impact on both 
nations. Despite years of bitter relationships and conflict, U.S. 
relations with Vietnam have improved over the last decade.
    In 1994, we lifted the comprehensive trade embargo that had been in 
place for nearly 20 years.
    In 1995, we opened a U.S. embassy in Hanoi.
    In 1998, President Clinton first waived the Jackson-Vanik 
prohibitions, and every year since, this body has supported his 
decision with decisive margins.
    Just last year, Congress approved the U.S.-Vietnam bilateral trade 
agreement, granting Vietnam normal trade relations.
    Each of these steps was a long time in evolving. Each responded to 
positive developments in Vietnam. Notably, the Government of Vietnam 
has continued to cooperate in helping to locate U.S. servicemen and 
women missing in Vietnam. Just last year, nine Vietnamese died helping 
in the search for U.S. MIAs.
    Further, there has been improvement by the Government of Vietnam in 
emigration and increased cooperation with U.S. refugee programs.
    Indicating the seriousness with which it has taken its obligations, 
Vietnam has made progress in implementing the bilateral trade agreement 
that entered into force last year. I look forward to hearing testimony 
from the witnesses detailing some of Vietnam's implementation efforts.
    Unfortunately, the Government of Vietnam has not made a similar 
commitment to improving its human rights record. The most recent State 
Department human rights report indicates that Vietnam's already poor 
human rights record has deteriorated. This is very troubling and I hope 
that some of our witnesses will discuss that issue and discuss how they 
think it should play into our analysis of this and future Jackson-Vanik 
waivers.
    Additionally, Vietnam still needs to make major progress in 
respecting and enforcing core, internationally-recognized labor rights. 
The Clinton Administration signed a Memorandum of Understanding 
regarding labor rights with Vietnam, and programs have been operating 
under this MOU for the past few years.
    Nevertheless, Vietnam continues to deny its workers the fundamental 
right to associate freely. The recent State Department Human Rights 
Report contains some good news on labor rights, but also indicates that 
child labor and prison labor continue to be widespread in Vietnam and 
that Vietnam has not adequately enforced its own laws regarding minimum 
wages and workplace safety.
    I stated last year when we approved the bilateral trade agreement 
with Vietnam that I would watch closely the eventual negotiations of 
the textiles and apparel agreement, and that any such agreement must 
include labor provisions similar to the positive incentives included in 
the Cambodia textiles and apparel agreement.
    I understand that negotiations on a textiles and apparel agreement 
have begun, but there still has not been a firm commitment by the 
Administration to include positive incentive labor provisions. Although 
the issue is not yet ripe for this year's vote, I want to convey to the 
Administration and the Government of Vietnam that if the labor issue is 
ignored in the textile and apparel agreement, it will have 
repercussions for future Jackson-Vanik NTR waivers.
    In the mean time, there is still much to be done to fully normalize 
our relationship with Vietnam. The resolution at issue would be a step 
back today. It would hurt our relations with Vietnam and it would hurt 
important reform efforts there. We must preserve the forward momentum 
that has developed over the past several years and continue working 
together to build a meaningful and enduring relationship.
    I look forward to hearing the testimony of the witnesses today.

                               

    Mr. NEAL. Thank you, Mr. Chairman.
    I think that we are in agreement that continuing normal 
trade relations with Vietnam is a very important issue. I also 
think that today's hearing highlights the need, however, to 
focus on some additional issues as they relate not only to this 
trade relationship, but well beyond.
    Included in that area of concern obviously is the whole 
issue of human rights and labor issues. I think that I can say 
collectively for the Members of the U.S. House of 
Representatives, where we can ascertain what has happened, 
still, to those POWs who have never been accounted for, I think 
that always has to be part of a steady dialog here in the 
Congress, to demonstrate that we have not lost interest in that 
issue.
    Just as importantly, we hope to bring that matter to 
closure, perhaps a long time down the road, but hopefully 
sooner. So, I look forward to the testimony today.
    I think that you are to be commended, Mr. Chairman. I 
think, by and large, the Trade Subcommittee has demonstrated a 
pretty good approach toward normal trade relationships with 
nations across the globe.
    Chairman CRANE. Thank you.
    With that, I would like to introduce our two witnesses in 
the first panel. We have Ralph Ives, the Assistant U.S. Trade 
Representative for Asia and the Pacific, and Chris LaFleur, 
Acting Assistant Secretary for East Asian and Pacific Affairs 
with the U.S. Department of State. I would suggest, gentlemen, 
if you can keep your statements to--in the neighborhood of 5 
minutes, all of your statements will be part of the official 
record.
    With that, proceed in order.

     STATEMENT OF RALPH F. IVES, III, ASSISTANT U.S. TRADE 
REPRESENTATIVE, SOUTHEAST ASIA, THE PACIFIC AND APEC, OFFICE OF 
                 THE U.S. TRADE REPRESENTATIVE

    Mr. IVES. I would like to keep my remarks brief and submit 
my full statement for the record.
    Thank you, Chairman Crane, Mr. Levin, and the other Members 
of the Subcommittee, for this opportunity to testify in support 
of continuation of the President's waiver for Vietnam of the 
so-called Jackson-Vanik amendment to Title IV of the Trade Act 
of 1974.
    Congress, particularly this Committee, has a strong record 
of endorsing normalized trade relations with Vietnam. 
Continuing the Jackson-Vanik waiver, which former President 
Clinton first invoked in 1998, is required to maintain normal 
trade relations (NTR) status for Vietnam. Retaining NTR status 
is necessary to fully implement the U.S.-Vietnam Bilateral 
Trade Agreement, the BTA.
    Today, I will focus on our trade relationship about 
Vietnam. Mr. LaFleur plans to discuss U.S. efforts to work with 
Vietnam on human rights, including religious freedom and labor 
rights.
    The BTA, which entered into force on December 10, 2001, 
represents the culmination of a decade-long bipartisan effort 
to heal the wounds of the Vietnam era and to restore our 
relations with this country of 80 million people. The path to 
normalization of our bilateral relations was formulated by 
former President Bush in a ``road map'' in 1991, and passed 
important milestones under the Clinton Administration, 
particularly lifting of the trade embargo in 1994 and 
conclusion of BTA negotiations.
    Under the BTA, Vietnam has made extensive commitments to 
reform its economy, including revision of its legal system as 
it relates to trade, finance, and other related areas. The BTA 
is probably the most significant economic reform measure 
Vietnam has adopted since the eighties when it began embracing 
a market-based economy.
    The BTA is the most comprehensive agreement the United 
States has ever negotiated with a country subject to Jackson-
Vanik amendment. This agreement requires Vietnam to provide 
access to its market for a wide range of U.S. goods, services, 
and investment and to apply the rule of law to its trade 
regime, thereby laying the foundation for more extensive 
reforms in its World Trade Organization (WTO) accession.
    Of course, conclusion of an agreement must be followed by 
implementation. The USTR, working with other key agencies like 
the State Department and the U.S. Agency for International 
Development (USAID), is monitoring Vietnam's progress. So far, 
Vietnam's political commitment to fully implement the BTA is 
resulting in substantial progress and increasingly being 
translated into new laws, rules, and regulations.
    We are working intensively with the Vietnam Government to 
assist in this. With the strong support of Congress, USAID has 
undertaken a unique and substantial program to assist Vietnam, 
committing nearly $8 million over 3 years. This is the first 
USAID program aimed exclusively toward implementation of a 
trade agreement.
    Efforts to ensure BTA implementation are also occurring at 
high levels. In May, Deputy USTR Huntsman and Vietnam's Vice 
Minister Tu convened in Hanoi the first meeting of the Joint 
Committee established under the BTA. The status of 
implementation was a principal element of this meeting and will 
continue to be a major focus of our work.
    In conclusion, maintaining NTR status is not only good for 
our bilateral relationship, but helps encourage regional 
stability and prosperity. As Vietnam gains economically, it 
integrates itself further into the regional and global market. 
Prosperous countries with close economic ties to each other 
make better neighbors. Continuing NTR status advances the 
fundamental U.S. interest we have in expanding opportunity and 
freedoms in Vietnam and the Asian region.
    We urge Congress' continued support for the Jackson-Vanik 
waiver for Vietnam.
    I would be pleased to respond to any questions you may 
have. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Ives follows:]
 Statement of Ralph F. Ives, III, Assistant U.S. Trade Representative, 
    Southeast Asia, the Pacific and APEC, Office of the U.S. Trade 
                             Representative
    Thank you, Chairman Crane, Mr. Levin and Members of the 
Subcommittee, for this opportunity to testify today in support of 
continuation of the President's waiver for Vietnam of the freedom of 
emigration provisions of Title IV of the Trade Act of 1974, the so-
called Jackson-Vanik amendment. Congress and this Committee in 
particular has a strong record of endorsing a normalized trade 
relationship with Vietnam.
    Continuing the Jackson-Vanik waiver, which former President Clinton 
first invoked in 1998, is required to maintain Normal Trade Relations 
(NTR) status for Vietnam. Retaining NTR status is necessary to continue 
full implementation of the U.S.-Vietnam bilateral trade agreement 
(BTA). Congress passed legislation approving extension of NTR to 
Vietnam on October 3, 2001, which the President signed into law on 
October 16, 2001.
    I will focus my comments today on the trade aspects of our 
relationship with Vietnam. Mr. LaFleur plans to discuss the U.S. 
efforts to work with Vietnam on human rights, including issues such as 
religious freedom and labor rights.
    On December 10, 2001, with firm bipartisan support from the 
Congress, and this Committee in particular, NTR was extended to Vietnam 
and the U.S.--Vietnam BTA entered into force. Entry into force of this 
Agreement was a critical step in the process of normalizing our trade 
relations with Vietnam, furthering U.S. economic and strategic 
objectives and opening a growing market to U.S. exports and investment.
    The BTA represents the culmination of a decade-long, bipartisan 
effort to heal the wounds of the Vietnam era and to restore our 
relations with this country of 80 million people--the fourth most 
populous country in East Asia, and one with tremendous potential; half 
of its population is under the age of 25. The path to normalization of 
our bilateral relations was formulated by former President Bush in a 
``road map'' in 1991. With substantial work by the Clinton 
Administration--and bipartisan leadership by key Members of Congress in 
both houses--we have passed important milestones, including securing 
Vietnam's cooperation in accounting for MIAs and POWs, lifting of the 
trade embargo in 1994, establishing diplomatic relations in 1995, and 
the entry into force of the BTA last year.
    Under the BTA, Vietnam has made extensive commitments to reform its 
economy, including revision of its legal system as it relates to trade, 
finance and other related areas. The BTA provides Vietnam the incentive 
it needs to open its economy, introduce competition--both internally 
and internationally--and make its entire economic regime more 
transparent. Indeed, the BTA is probably the most significant economic 
reform measure Vietnam has adopted since the mid-1980s, when it 
abandoned central planning and moved toward adoption of market 
mechanisms.
    The BTA is the most comprehensive agreement we have ever negotiated 
with a country subject to Jackson-Vanik amendment. This Agreement 
requires Vietnam to provide access to its market for a wide range of 
U.S. goods, services and investment--some sectors immediately, others 
over several years--and to apply the rule of law to its trade and 
investment policy. The BTA represents a significant step in Vietnam's 
movement toward WTO and other international norms, as well as its 
integration into the regional and global economy. Vietnam's adoption of 
the BTA's provisions laid the groundwork for even more extensive reform 
efforts as it proceeds with its accession to the WTO.
    Vietnam's commitments under the BTA provide a number of commercial 
benefits to the United States. A wide range of U.S. products can enter 
Vietnam at substantially reduced tariff rates--including avoiding a 50% 
surcharge Vietnam levies on countries with which it does not have 
normal trade relations. Such U.S. goods will be valued according to WTO 
rules, and be free of quotas. Also, many U.S. suppliers in key sectors 
can sell their services either from the United States or by investing 
in Vietnam. Intellectual property rights are to be subjected to WTO-
levels of protection. Vietnam must use WTO disciplines for its trade-
related technical standards and sanitary and phytosanitary measures. 
And the BTA's transparency requirements reduce the cost of doing 
business and provide fairness and openness in administration of 
Vietnam's trade laws and regulations.
    Implementation of all of these BTA provisions can, over time, 
greatly increase U.S. exports to Vietnam. In the first four months of 
this year, we have seen U.S. exports grow by 27.5% compared to the same 
period last year--at a time when our overall exports to Asia are off by 
nearly 15%.
    Of course, conclusion of an agreement must be followed by 
implementation. USTR, working with other key agencies like State, 
Commerce, and USAID, is monitoring Vietnam's progress. So far, we have 
seen that the political commitment of the leadership of Vietnam to make 
the changes necessary to fully implement the BTA is solid and is 
increasingly being translated into new laws, rules and regulations.
    We are working intensively with the Vietnamese Government to assist 
it in this effort. During the negotiation of the BTA, we understood 
that Vietnam would require substantial capacity building assistance to 
fulfill its commitments. With the strong support of Congress, USAID has 
undertaken a unique and substantial program to assist Vietnam, 
committing nearly $8 million over three years. This is the first USAID 
program aimed exclusively toward implementation of a trade agreement.
    The USAID STAR (Support for Trade Acceleration) program, located in 
Hanoi, has been assisting Vietnam in its efforts to understand and 
implement changes to its legal and regulatory framework since late last 
year. In addition, for the last few years USAID has given financial 
support to the U.S.-Vietnam Trade Council, which provided technical 
assistance during the negotiation of the BTA and now through the 
implementation phase.
    Efforts to ensure BTA implementation is also occurring at high 
levels. In May, Deputy USTR Jon Huntsman and Vietnam's Vice Minister of 
Trade Luong Van Tu convened in Hanoi the first meeting of the Joint 
Committee established by the BTA. A principal element of this meeting 
was a review of the status of implementation.
    At this meeting, it was evident that Vietnam has made substantial 
progress in fulfilling its obligations under the BTA and great strides 
in developing a cadre of officials that understand the rules and 
regulations of the international trading system. It was equally evident 
to us that our technical assistance programs are having a very positive 
effect on Vietnam's efforts. Of course, we will need to continue to 
work closely with Vietnam to ensure that it fulfills all of its BTA 
commitments. For example, we continue to be concerned about the level 
of enforcement of intellectual property rights in Vietnam, particularly 
in light of other similar problems in the region.
    Concluding the BTA with Vietnam and obtaining congressional 
approval of that Agreement was a necessary step in granting Vietnam NTR 
tariff treatment to the products of Vietnam. Maintaining NTR status for 
Vietnam is not only good for our bilateral relationship but helps 
encourage regional stability and prosperity. As Vietnam gains 
economically from its trade with us and reforms its economy, it 
integrates itself further into the regional and global market. 
Prosperous countries with close economic ties to each other tend to 
make better, more dependable neighbors. Providing NTR status and 
maintaining the BTA thus advances the fundamental interest that we have 
in expanding opportunity and freedoms in Vietnam, the Asian region and 
the world.
    Through its implementation of the BTA, Vietnam is demonstrating 
that it is willing to play by the same rules as our other trading 
partners, and be a member in good standing of the international 
economic community. The Administration remains confident that the 
continuation of NTR treatment furthers our economic objectives in 
Vietnam, and our overall national interest. We urge the continued 
support of the Congress for the Vietnam's Jackson-Vanik waiver.
    I would be pleased to respond to any questions Members may have.

                               

    Chairman CRANE. Thank you Mr. Ives, and now, Mr. LaFleur.

 STATEMENT OF CHRISTOPHER LAFLEUR, ACTING ASSISTANT SECRETARY, 
    EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE

    Mr. LaFLEUR. Thank you, Mr. Chairman.
    Chairman Crane, other distinguished Representatives on the 
Subcommittee, it is an honor to be here before you today. This 
morning I look forward to consulting with you about the 
President's decision to waive the provisions of the Jackson-
Vanik amendment again this year.
    Since the waiver was first granted in March 1998, it has 
been an essential component of our policy of engagement with 
Vietnam. I am confident that this extension of the waiver will 
continue to advance U.S. national interests in Vietnam.
    The common theme that you will hear in my testimony today 
is that engagement works. This month marks the seventh year 
since we normalized our diplomatic relations with Vietnam, and 
we have seen substantial progress in a number of areas 
important to the United States. From increased trade and 
investments, to greater cooperation on POW/MIA recovery 
efforts, our relationship has advanced dramatically. I must say 
that much of the credit is due to the Members of this 
Subcommittee and the Members of the House and their continuing 
contributions to the development of U.S.-Vietnamese relations. 
Much of the progress on our most important bilateral issues 
would not have been possible without the direct assistance of 
Members of Congress and their excellent staffs.
    Vietnam's cooperation on immigration policy, the test issue 
for the Jackson-Vanik waiver, is continuing. We have completed 
nearly all immigration processing under our refugee programs. 
Less than 100 applicants remain to be interviewed. We hope to 
finish processing of eligible applicants under the former 
Orderly Departure Program and the Resettlement Opportunity for 
Vietnamese Returnees program by the end of this calendar year. 
I want to emphasize that we will not consider our refugee 
programs to be completed, however, until the last eligible 
applicant has had an opportunity to be interviewed, or we have 
an acceptable accounting in each case.
    Our relations with Vietnam were tested last year when over 
1,000 Montagnards fled to Cambodia following large-scale 
Montagnard protests in February 2001. The Vietnamese Government 
initially objected to third-country resettlement of the 
Montagnards in Cambodia and indeed tried to repatriate them 
directly back to Vietnam. After discussions between the United 
States, Vietnam, Cambodia, and the United Nations High 
Commissioner for Refugees, Vietnam tacitly acquiesced and 
dropped its opposition to arrangements to resettle those 
Montagnards from Cambodia to the United States. Hundreds of 
those Montagnards have already arrived here and nearly all 
should be in the United States by the end of the summer.
    We would like to work with Vietnam to help develop the 
Central Highlands and encourage greater respect for human 
rights so that this kind of exodus is no longer necessary.
    We have established an impressive spirit of cooperation 
with the Vietnamese in the search for our servicemen and women 
still missing in action from the Vietnam War. There is 
certainly still work ahead, much of it dangerous.
    In April last year, seven Americans and nine Vietnamese 
lost their lives in a helicopter crash on a mission to recover 
the remains of missing Americans. Nevertheless, our operations 
continue unabated, and young volunteer American servicemen and 
women and their Vietnamese counterparts continue to brave these 
severe and, in some cases, dangerous conditions to locate the 
remain of our MIAs.
    We are also continuing to resolve cases. Of the 196 
Americans who were on the last ``known alive'' list, we have 
determined the fate for all but 39 men.
    Vietnam's cooperation in our efforts to account for missing 
Americans from the Vietnam War remain full and in good faith. 
Without such cooperation, closure for many of the families of 
our missing warriors would not occur. Let me assure you, the 
quest for fullest possible accounting of our POW/MIAs remains 
one of our top priorities with Vietnam.
    Since we reestablished relations with Vietnam, we have seen 
human rights improvements in that country. It is far from a 
satisfactory situation, and we see a long road ahead in 
encouraging Vietnam to make further improvements in this 
critical area.
    We share with the Congress and the people of the United 
States a deep concern for the human rights situation in 
Vietnam. We take a particular interest in religious freedom in 
that country. We have established what we hope is a serious 
dialog with the Vietnamese on human rights issues, and this 
fall we will hold the next of our annual high-level human 
rights discussions with Vietnam.
    Secretary Powell has raised human rights issues with the 
Vietnamese senior leadership in his meetings, and our staff at 
our embassy in Hanoi constantly work to keep this a key issue 
in our bilateral relationship.
    Our cooperation with Vietnam on labor issues is improving 
and conditions for workers in Vietnam are improving along with 
it. Under a memorandum of understanding (MOU) on labor, signed 
in November 2000, the U.S. Department of Labor has developed 
five technical assistance projects with Vietnam and has a sixth 
on the drawing board. We also held the first-labor dialog 
between the United States and Vietnam in March of this year. We 
were pleased, after long years of negotiation, to see the U.S.-
Vietnam Bilateral Trade Agreement finally enter into force last 
December.
    The BTA is comprehensive, binding Vietnam to an 
unprecedented array of reform commitments, including tariff 
reductions, protection for intellectual property rights (IPR), 
market access for American service industries, and protections 
for American investors.
    The results of the BTA are already there to see. In the 
first 4 months of this year, U.S. exports to Vietnam increased 
by over 25 percent, compared with the same period last year. 
This increase came even as our exports to most other countries 
in Asia were not doing nearly as well. Extension of the 
Jackson-Vanik waiver is required in our view to keep the BTA in 
effect and vital to keeping our momentum on trade.
    We have been working closely with the Vietnamese on 
implementation of the BTA, funding technical assistance to 
review Vietnam's legal and regulatory framework, and help draft 
new laws to meet its commitments. As we work to put in place 
these changes, the business climate in Vietnam for U.S. 
business and Vietnamese business should continue to improve.
    The Jackson-Vanik waiver remains a prime example of 
executive-legislative cooperation on foreign policy and an 
essential element of our engagement with Vietnam. We have seen 
greater Vietnamese cooperation on the total range of bilateral 
issues, and its successes are visible and plentiful. 
Congressional approval of the waiver sends a vital message to 
Vietnam's leadership and people that the United States wants a 
cooperative, constructive relationship with Vietnam. I am 
confident that this extension of Jackson-Vanik will further 
advance the national interest of the United States in Vietnam.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. LaFleur follows:]
  Statement of Christopher LaFleur, Acting Assistant Secretary, East 
          Asian and Pacific Affairs, U.S. Department of State
    Chairman Crane, Mr. Levin, I would like to thank you for inviting 
me to consult with you about the President's decision to waive Jackson-
Vanik again this year. Since the waiver was first granted in March 
1998, it has been an essential component of our policy of engagement 
with Vietnam. I am confident this extension of the waiver will continue 
to advance U.S. national interests in Vietnam.
    The last seven years have seen substantial progress in our 
relationship with Vietnam, and much of the credit must be given to the 
vigorous and productive executive/legislative cooperation that has been 
developed relative to Vietnam policy. I would like to take this 
opportunity to thank the Members of this Subcommittee and the Members 
of the House for their continuing contributions to the development of 
U.S.-Vietnam relations. Your visits to Vietnam, meetings with 
Vietnamese leaders visiting Washington, and other congressional 
interventions on a wide range of issues have reinforced our policy of 
engagement. The House and its Members have made clear, both privately 
and publicly, to Vietnam's leaders and its people that the United 
States remains committed to enhanced U.S.-Vietnam relations. Progress 
on some bilateral issues would not have occurred without direct 
assistance rendered by Members of Congress. In that regard, I would 
like specifically to thank Chairman Crane and the Members of this 
Committee for your direct support and counsel.
    One common theme runs through the development of every facet of our 
relationship with Vietnam--engagement works. We have made progress on 
every issue in which we have been able to demonstrate mutual interests 
and in which both sides have been convinced of each other's commitment 
to build a relationship. Each side has made gestures over the years to 
advance this process--the United States lifted its trade embargo and 
Vietnam agreed to assume long-term debt and settle property claims. 
Vietnam, by joining the ASEAN Regional Forum and the Asia Pacific 
Economic Cooperation Forum, signaled its desire to play a constructive 
role on regional security, trade issues, and economic development. In 
the past two years we have signed agreements with Vietnam to expand 
cooperation in labor and in the science and technology fields. Both 
sides worked together for many years to bring into force finally last 
year a bilateral trade agreement.
    Bilaterally, engagement at all levels is building a spirit of 
cooperation between our two peoples and producing results in those 
areas that are most important to us--POW/MIAs, emigration, human 
rights, and economic reform. Vietnam's cooperation on emigration 
policy, the test issue for the Jackson-Vanik waiver, is continuing. We 
have completed nearly all immigration processing under the former 
Orderly Departure Program, the Resettlement Opportunity for Vietnamese 
Returnees (ROVR) sub-program, the Former Re-education Camp Detainees 
(``HO'') program, and the Montagnard programs. Less than 100 applicants 
remain to be interviewed under all of our various refugee programs.
    We still hope to finish processing of eligible applicants under the 
former ODP and ROVR programs by the end of this calendar year. We 
recently completed interviewing applicants under the U-11 program for 
former USG employees. I want to emphasize that we will not consider our 
refugee programs to be completed until the last eligible applicant has 
had the opportunity to be interviewed, or we have an acceptable 
accounting of each case. Vietnamese officials have continued 
cooperation over this past year and we will continue to build on this 
strong foundation to interview all those who wish to be interviewed for 
resettlement in the United States under all refugee and related 
programs. We hope this cooperation will extend to accepting the 
deportations of Vietnamese imprisoned in the U.S.
    Our relations with Vietnam were tested last year when over one 
thousand Montagnards fled to Cambodia following large-scale Montagnard 
protests in the Central Highlands in February 2001. The Vietnamese 
Government initially objected to third-country resettlement of the 
Montagnards in Cambodia, and unsuccessfully attempted to repatriate the 
Montagnards directly from the refugee camps. After intensive 
discussions between the U.S., Vietnam, Cambodia and UNHCR, Vietnam 
tacitly acquiesced and accepted arrangements to resettle these 
Montagnards from Cambodia to the United States. Hundreds have already 
arrived and nearly all should be in the U.S. by the end of this summer. 
We would like to work with Vietnam to help develop the Central 
Highlands and encourage greater respect for human rights so that this 
kind of exodus is not necessary.
    We have established an impressive spirit of cooperation with the 
Vietnamese in the search for our servicemen and women still missing in 
action from the Vietnam War. Slowly, we are making progress in building 
the people-to-people relationships that are replacing suspicion with 
trust and understanding. This is vitally important at this juncture 
because we have finished the easy work; the tasks ahead are becoming 
progressively more arduous. We are now searching in some of the most 
difficult and dangerous terrain possible and our recovery teams face 
greater dangers. In April last year, seven Americans and nine 
Vietnamese lost their lives in a helicopter crash on a mission to 
recover the remains of missing Americans. Nonetheless, our operations 
continue unabated and young volunteer American servicemen and women and 
their Vietnamese counterparts continue to brave these severe and highly 
dangerous conditions to locate the remains of our MIAs.
    Since 1988 when joint recovery operations began with the 
Vietnamese, we have conducted sixty-eight joint field activities in 
Vietnam, five of those since the previous Jackson-Vanik waiver was 
extended last year. Since 1973 the remains of 481 individuals have been 
identified and repatriated. This would not have been possible without 
bilateral cooperation between the U.S. and Vietnam. Of the 196 
Americans that were on the Last Known Alive list, the fate of all but 
39 men has been determined. Many of the American losses occurred in 
Laos and Cambodia. To date, Vietnam has provided 44 witnesses for 
investigation of possible loss sites along the border and within Laos 
and Cambodia. The Vietnamese continue to provide documents and films to 
investigation teams. Approximately 28,000 items have been reviewed for 
possible information that would lead to an accounting for our fallen 
comrades. We are still encouraging Vietnam to provide additional 
documentation and to conduct more unilateral activities. As presented 
here, Vietnam is fully cooperating in our efforts to account for 
missing Americans from the Vietnam War; without such cooperation, 
closure for the many families of our missing warriors would not occur. 
Let me assure you, the quest for fullest possible accounting of POW/
MIAs remains one of our top foreign policy priorities with Vietnam.
    Since we reestablished relations with Vietnam, we have seen some 
human rights improvements there. It is far from a perfect situation and 
we see a long road ahead in encouraging Vietnam to make further 
improvements in this critical area. We share with the Congress and the 
people of the United States a deep concern for the human rights 
situation in Vietnam. We have established what we hope is a serious 
dialogue with the Vietnamese on human rights issues, and, this fall we 
will hold the ninth annual high-level human rights discussions. 
Secretary Powell raised human rights issues with Vietnamese senior 
leadership during his visit last summer. In addition, our staff in the 
Embassy in Hanoi constantly work with Vietnamese officials to keep this 
issue a key issue of the bilateral relationship.
    Progress in past years notwithstanding, there were some troubling 
setbacks on human rights and religious freedom this year, and not much 
good news. Two recent amnesties did not include any political or 
religious prisoners that we knew of. Father Nguyen Van Ly, a high-
profile case for us, was sentenced to fifteen years imprisonment for 
activities that the authorities deemed anti-government. Two Buddhist 
monks, Thich Quang Do and Thich Huyen Quang remain under house arrest 
for their work with the United Buddhist Church of Vietnam. Two other 
dissidents, Pham Hong Son and Lam Chi Quang were arrested for 
circulating documents on the Internet promoting democracy in one case 
and criticizing a border agreement with China in another.
    However, the picture on religious freedom brightened a bit for 
officially recognized religious organizations. Those not recognized 
continue to face difficulties, as the imprisonment of religious leaders 
highlights. The Vatican and Vietnam have regular dialogue. We are also 
encouraging Vietnam to recognize more than one group of Hoa Hao 
adherents. Ambassador at Large for International Religious Freedom John 
Hanford plans to visit Vietnam next month to continue discussions with 
the Vietnamese. Much remains to be done, but there has been progress 
and we want to encourage further progress.
    Conditions for workers have also improved. The U.S. Department of 
Labor has developed technical assistance projects with Vietnam in the 
areas of employment services, social insurance and safety nets, 
employment of people with disabilities, industrial relations, and 
prevention of child labor. A sixth project on HIV/AIDS education and 
prevention is in the works. And the first Labor Dialogue between the 
U.S. and Vietnam took place in March this year.
    You should also know that there were 72 private and public strikes 
during the year, many against foreign-owned or joint venture companies, 
but others that involved state-owned and private firms. The government 
tolerated these strikes, even though most were spontaneous and 
supported by organized labor after the fact. In some cases, the 
government disciplined employers for illegal practices that led to 
strikes.
    The brightest spot in our engagement with Vietnam has been on the 
economic side. Last December saw the capstone on long years of 
negotiation when the U.S.-Vietnam Bilateral Trade Agreement (BTA) 
finally entered into force. The BTA is comprehensive, binding Vietnam 
to an unprecedented array of reform commitments, including tariff 
reductions for key U.S. exports, elimination of non-tariff barriers on 
most products, adoption of WTO-consistent protection for intellectual 
property rights (IPR), market access for American service industries, 
and protections for American investors. Many of these reforms were due 
on entry into force; others will be phased in over the next one to nine 
years.
    The results of the BTA are already there to see. In the first four 
months of this year, U.S. exports to Vietnam increased by over 25 
percent compared with the same period last year. This increase came 
even as our exports to most other countries in Asia were falling. As 
Vietnam phases in further reforms over the coming years the trade and 
investment picture for U.S. business should steadily improve. Extension 
of the Jackson-Vanik waiver is required to keep the BTA in effect and 
vital to keeping our momentum on trade.
    In the seven months since the BTA entered into force, Vietnam has 
made substantial progress in assessing and planning for legal reforms 
that are necessary to meet its BTA commitments. Their government is 
progressively drafting and enacting new laws and reforming its 
regulatory structure. A new ordinance that opened up opportunities for 
foreign business in advertising came into force this year, and legal 
amendments that will expand operations for foreign law firms are 
expected soon. The National Assembly is to discuss additional laws on 
business bankruptcy and commercial law this month; new laws on MFN and 
national treatment are under draft. This has been no simple task. The 
work to change this large number of laws, regulations and rules would 
swamp the law-drafting capacity of most countries.
    That said, Vietnam's current trade and investment regime still 
falls significantly short of its commitments in the BTA, including many 
that were due on entry into force. We recognized early on that Vietnam 
would need technical assistance to meet its BTA commitments, and USAID 
has funded assistance in this area.
    One of our most vexing long-term problems is the protection of 
intellectual property rights. Vietnam is again on the Special 301 Watch 
List for IPR, as IPR enforcement generally remains weak and violations 
are rampant. Piracy rates are extraordinarily high on some types of 
products such as computer software, music and video CDs, VCDs and DVDs. 
On the positive side, the BTA contains important commitments in the IPR 
arena, and Vietnam is making progress in strengthening its legal 
regime. Vietnam has recently extended legal protection to new areas not 
previously covered such as trade secrets and new plant varieties. This 
year Vietnam issued guidelines on resolving copyright disputes and is 
drafting a new Civil Procedure law. Vietnamese officials are well aware 
of the enforcement difficulties and are prepared in principle to 
address them, but IPR enforcement responsibilities are divided among a 
number of agencies, often with coordination and resources lacking.
    As certain as these ongoing reforms will help the U.S. to expand 
exports to and investment in Vietnam, they will surely also bring 
change for the better in Vietnam. The Vietnamese economy appears today 
to be in recovery, thanks to relatively low inflation, a favorable 
trade balance and the prospect of increased exports and investment from 
the BTA. Many of the same commitments that are opening up markets and 
improving the business climate for U.S. business in Vietnam should be 
opening the way for Vietnamese business at home as well. Vietnam's 
commitments to make its process for drafting and enacting laws more 
transparent will give Vietnamese and international business a chance to 
comment on laws before they are passed, improving the process for all. 
Tariff reductions are opening up new markets on both sides of the 
Pacific; indeed, Vietnamese exports to the U.S. have grown this year as 
well.
    Vietnam's outlook toward private enterprise has taken a radical 
departure. The economy today bears little resemblance to the days of 
communal farms and ration cards in the 70's and 80's. With 
approximately 1.3 million annual entrants into the job market, Vietnam 
needs a vibrant private sector to keep growth at high rates and provide 
the necessary jobs. The Enterprise Law in effect for the last two years 
made it substantially easier to begin a new business and is given 
credit for the registration of 35,000 new businesses since that time. 
The Communist Party even changed its rules this year to allow members 
to own private businesses.
    The Jackson-Vanik waiver remains a prime example of executive/
legislative cooperation on foreign policy and an essential element of 
our engagement with Vietnam. It has promoted greater Vietnamese 
cooperation on the total range of bilateral issues and its successes 
are visible and plentiful. Congressional approval of the waiver sends a 
vital message to Vietnam's leadership and people that the United States 
wants a cooperative, constructive relationship with Vietnam. The policy 
tools the Jackson-Vanik waiver makes available build the people-to-
people relationships that will strengthen trust between our societies. 
I am confident that this extension of Jackson-Vanik will further 
advance the national interests of the United States in Vietnam. I urge 
Members of the Committee to support the President's waiver.

                               

    Chairman CRANE. Thank you, Mr. LaFleur.
    I would like to put a question to both of you, and that is, 
I understand that the Communist Party in Vietnam has changed 
its rules this year to allow its members to own private 
businesses.
    Has the Vietnamese military made any progress toward free 
enterprise as well?
    Mr. LaFLEUR. I believe that the Vietnamese military has 
been engaged in some private business, or what we would define 
as private business activity. I am not sure whether this 
represents a reform initiative as much as it represents an 
effort on their part to further strengthen their own financial 
situation and meet their operational requirements. I believe 
that is the general situation at this time.
    I don't think we have seen a dramatic change in that 
situation yet.
    Chairman CRANE. I see.
    Why do you think that our exports to Vietnam have increased 
while our exports to many other countries in the region have 
declined?
    Mr. IVES. Thank you, Chairman. I think partly due to the 
BTA, since Vietnam committed to and implemented a wide range of 
tariff reductions. Also, Vietnam is a relatively new market for 
the United States and many other countries have had long-term, 
established relationships with that country, Japan, and the 
European Union in particular. So, we are just beginning to 
develop our market in Vietnam.
    Chairman CRANE. Have you both seen a decrease in the extent 
of corruption of the Vietnamese Government?
    Mr. LaFLEUR. Mr. Chairman, I think the situation on 
corruption in Vietnam continues to be a major concern for 
American businesses operating there and for the U.S. Government 
in general. I believe there are private nongovernmental 
organization studies of corruption in Vietnam that indicate 
that Vietnam ranks somewhere around 75 on the list of 99 
countries, zero being best, and 100, I guess, being worst, 
which puts it certainly in the lower tier and in an area of 
concern, although there are other countries on there with whom 
we have fairly vigorous and extensive trading relations as 
well. It is a problem and the problem needs to be worked on.
    I think there is recognition in Vietnam on the part of the 
leadership there that they do have a serious problem, and it is 
impeding their economic development. They have established a 
campaign to combat it among their own officials with, in some 
cases, quite draconian penalties for violators at the worst end 
of the spectrum.
    It certainly remains an issue of concern that we encourage 
them to address. In our view, one of the most effective ways 
for addressing it will be the establishment of a more 
transparent legal and regulatory environment. This is exactly 
one of the areas that we are working with them on pursuant to 
implementation of the BTA and providing them with technical 
assistance.
    Chairman CRANE. Can you please describe in more detail the 
progress made in the labor dialogue taking place between the 
United States and Vietnam?
    Mr. LaFLEUR. Mr. Chairman, on the books, Vietnam has a 
quite impressive set of regulations governing labor law 
relations. In reality, of course, there are severe limitations 
on the rights and abilities of Vietnamese workers to organize 
and effectively carry out labor activities.
    There has been some identifiable progress in recent years. 
We have seen, for example, in 2000, approximately 72--I believe 
it was--labor actions of various kinds conducted by workers 
against various factories, companies, and institutions in 
Vietnam. These were not--these were not perhaps organized in 
the classic way along our lines, but certainly the fact that 
they were allowed to be undertaken and received the support of 
the labor organization in Vietnam is an indication of 
recognition on the part of the authorities that labor has a 
role to play in industry relations in Vietnam, and certainly we 
hope to see further evolution along those lines.
    In addition, Vietnam--we and the Vietnamese have signed, as 
I indicated, a MOU pursuant to which our U.S. Department of 
Labor is providing technical assistance to Vietnam in a number 
of areas, including social services, dealing with workers with 
disabilities, efforts to prevent exploitation of child labor, 
industrial relations. As I indicated, we are also working on a 
possible project to deal with HIV in the workplace. So, we do 
have cooperative efforts under way with Vietnam.
    Last, I think I would point to the role of American 
business investing in Vietnam as providing an important example 
and demonstration to other companies in Vietnam about how to 
effectively manage labor relations. We know that major U.S. 
companies there are making a real effort to provide independent 
monitoring of labor conditions, working conditions in their 
factories. So, we think that as U.S. business presence expands 
in Vietnam, this can have a beneficial effect on the labor area 
as well.
    Chairman CRANE. Thank you. Did you want to add anything to 
that Mr. Ives?
    Mr. IVES. No, Mr. Chairman, I think he did a very good job 
of responding to the question. Thank you.
    Chairman CRANE. Very good. Mr. Neal.
    Mr. NEAL. Thank you very much, Mr. Chairman.
    Mr. LaFleur, thank you for your testimony. Which of the 
following two statements would be accurate? If neither is 
accurate, please fill in the blanks: that modern Vietnam is 
half-Communist and half-capitalist when suited, or half-
socialist and half-capitalist when suited?
    Mr. LaFLEUR. Well, I think we are really--we have a system 
here that certainly is at least half-Communist and as we have 
seen in the case of China, for example, Communist Parties have 
recognized that in order to have a chance of maintaining their 
hold on power, it is essential in this day and age that the 
countries be moving forward and that they be able to respond to 
the demands of their populations for better living standards, 
better conditions, as well as improving the strength of the 
nation as a whole.
    So we have seen an effort, certainly, pioneered in Asia, if 
you will, by the Chinese, but very carefully watched now and in 
many cases imitated by the Vietnamese as they attempt to 
maintain a one-party state, while at the same time introducing 
the market mechanisms and some of the operational practices 
that are essential to a free-market economy.
    How these two systems are going to meld together for the 
long term, of course, is something we are all very much 
watching. I think a lot of us expect that over time it will be 
natural for the requirements of a market economy to have a 
substantial impact on the way politics works in all of these 
countries and certainly in Vietnam. I think we see some 
indications, as I indicated earlier, with respect to the labor 
relations area in which, already, we are seeing some impact 
from this market economy on the--what is a classical Communist 
system.
    Mr. NEAL. Thank you, Mr. LaFleur. One other question.
    Did you mention you thought there had been satisfactory 
progress on MIA issues, or POW issues? Could you speak on that 
specifically for us.
    Mr. LaFLEUR. Certainly.
    We have been conducting, as you know, a series of joint 
operations that require very extensive Vietnamese participation 
and support in Vietnam, since the late 1980s. Since that time, 
we have conducted numerous, what we call, ``joint field 
investigations'' in that our teams go off with Vietnamese 
counterparts to excavate areas where we believe losses have 
taken place in order to try to find remains and any other 
indications of the fate of our missing. Those operations can 
only be effective if the right amount of staff and support work 
precedes them and if the teams get the kind of support in the 
field they need.
    As I indicated, a number of locations where these 
operations take place, particularly these days, are in remote 
areas, hard to support and hard to live in. So, we really do 
have to have pretty full cooperation to make these possible, 
and we have seen that from the Vietnamese.
    We have also had a series of turnovers by the Vietnamese of 
documents, hundreds of pages of documents, that help give us 
some pointers to what happened during the war and shed some 
light on the fate of the missing, again. The Vietnamese have 
provided, as well, a number of living witnesses of events that 
occurred, in some cases, in quite remote areas so that we can 
try to get as firsthand as possible accounts of incidents in 
which we believe some of our missing were lost. That effort 
continues; we have interviewed quite a number, and we have more 
being made available by the Vietnamese.
    So, it is a package that--there are a number of important 
elements that go into making that total package and making the 
judgment about Vietnamese cooperation, but the work continues, 
the accounting continues; and so we feel that it is justified 
to make that judgment.
    Mr. NEAL. Thank you, Mr. LaFleur.
    Thank you, Mr. Chairman.
    Chairman CRANE. Thank you. Ms. Dunn.
    Ms. DUNN. Thank you very much, Mr. Chairman.
    It is good to have you here today, gentlemen. Thank you for 
coming.
    As part of the BTA, Vietnam has pledged to phase in over 18 
months the trips agreement under the WTO. I am wondering if you 
could please--maybe, Mr. Ives, this is an appropriate question 
for you. Could you bring us up to date on how they were moving 
along with the implementation, particularly with the 
enforcement of the laws that would provide the trips 
qualification, please?
    Mr. IVES. Certainly. Thank you very much for that question.
    Vietnam, as you indicated, has 18 months to comply with the 
TRIPS obligation as part of the bilateral trade agreement. 
Overall, Vietnam is making substantial progress in implementing 
its commitments under the BTA, which, as I indicated, are among 
the most comprehensive we have ever negotiated with any 
country. In terms of the IPR provisions, in particular, we have 
had a team in Vietnam working with Vietnam overall in 
implementation. The IPR provisions are part of that effort to 
work with Vietnam in implementing its commitments.
    The enforcement remains a serious concern with the 
Vietnamese on intellectual property protection. It is a serious 
concern throughout the region. Piracy is widespread. We have 
been working with all the countries in the region to bring 
piracy under control, but we have a long way to go in terms of 
Vietnam and indeed most of the other countries in the region to 
reduce the rate of piracy. So, we still have a great deal of 
work to do on that.
    Ms. DUNN. I can imagine. I think that is very typical in 
some of the nations that we are doing BTAs with.
    What about the progress toward their membership in the WTO? 
I know that they have applied, but I am not sure what the 
outstanding issues are and where that stands. Would you care to 
comment on that.
    Mr. IVES. Certainly.
    Vietnam applied for membership in 1995. There have been, I 
believe, five meetings of what we call the ``working party,'' 
which is the committee--basically, Committee of the Whole--of 
all WTO members working with Vietnam in its accession process. 
The most recent meeting of this working party was earlier this 
year.
    The USTR and other countries are actually using the 
bilateral trade agreement as the foundation for Vietnam's 
accession to the WTO, again highlighting the importance of the 
BTA not only in the bilateral relationship with Vietnam, but 
also in terms of its accession process.
    That said, Vietnam still has a way to go, primarily in its 
market access commitments, not only to us but to other WTO 
members. So, it is making good progress. We have indicated to 
Vietnam that--Ambassador Zoellick has indicated to Trade 
Minister Vu Khuan and at lower levels that we are pleased to 
work with Vietnam in the accession process. We want Vietnam to 
accede to the WTO, but it has to be on terms that other members 
have acceded to the WTO.
    Ms. DUNN. Thank you, Mr. Ives.
    Thank you, Mr. Chairman.
    Chairman CRANE. Mr. Levin.
    Mr. LEVIN. Thank you, Mr. Chairman.
    Welcome. Let me just ask a couple questions about our 
commercial relationships.
    There is a reference in the testimony to the increase in 
exports, but say a word also about the import side of it, just 
so we can get a balanced picture here. There has been an 
increase, right, of imports? Just say a word about that so the 
record is complete.
    Mr. IVES. Thank you, Mr. Levin. In terms of U.S. imports in 
2001, which the most recent year, we have complete data, 
Vietnam's--U.S. imports from Vietnam increased approximately 21 
percent to $1 billion. During the first 4 months of this year, 
we don't have a complete record for 2002. During the first 4 
months of this year, Vietnam's imports were valued at a little 
over $400 million, and that represents approximately a 67-
percent increase over the same period in the previous year.
    Mr. LEVIN. As I understand, a substantial portion of that, 
a growing portion, is in textiles, apparel.
    Mr. IVES. Textiles and apparel during the full year 2001 
represent a little under $50 million of U.S. imports. For the 
first 4 months of this year, textiles and apparel imports 
represent about $65 million.
    Mr. LEVIN. I mention it in part because I think 
negotiations have begun on a textile agreement, right? There 
have been some early discussions about a textile agreement with 
Vietnam?
    Mr. IVES. We have had some consultations with Vietnam on 
textiles. We have had teams in Vietnam discussing this with 
them.
    Mr. LEVIN. I think it has been productive for the Chairman 
and others to raise and for to you discuss the labor picture in 
Vietnam. When we talk about movement toward a free market, a 
free-labor market is an important piece of free market, and 
that is reflected in the MOU.
    I think that in terms of Mr. Neal's question about the 
balance between Communist control and non-Communist control, 
socialism and the free-capital market, capitalist market, 
movement toward a free-labor market is a critical element--so 
critical that it is likely to be resistant.
    As mentioned by one of you, there were some worker actions 
allowed, and that is a step forward. Still there is control, 
there can only be, in essence, one labor union controlled by 
the party that controls the government. I think it is important 
that as we discuss the textile agreement with Vietnam that this 
issue be raised, as it was with Cambodia.
    I think the textile agreement with Cambodia was a very 
significant step forward, and Cambodia is moving, with the help 
of technical assistance from the United States, including the 
labor movement of the United States, toward a more free-labor 
market. When our staff was in Cambodia, one of the concerns was 
that their neighbors did not have the same, and we were moving 
in the same direction and, therefore, in terms of competition 
could have an economic advantage.
    So, I hope very much that--and we have made this clear, a 
number of us for a number of years, going back to the previous 
Administration--as we talk over with the Vietnamese a textile 
agreement that that be very much--not the only, by any means, 
but an important ingredient. I mentioned that to the Ambassador 
when we had a discussion, the distinguished Vietnamese 
Ambassador, yesterday.
    So, I don't know if you want to react to that, but I wanted 
that to be very clear on the record. We have made it clear to 
Mr. Zoellick and, I think, to Mr. Evans. I am not sure if we 
made it clear to Mr. Paul.
    Any comment?
    Mr. IVES. It is very clear, sir. I mean, we understand.
    Mr. LEVIN. Thank you.
    Chairman CRANE. Mr. Houghton.
    Mr. HOUGHTON. Thank you, Mr. Chairman. Thank you, 
gentlemen, for being here this morning. It always is 
fascinating to me, having lived a lot longer than an awful lot 
of other people around here, to think of our enemies being our 
friends. I mean, I think of it in terms--I happened to be in 
World War II--of Germany, Japan, Italy, Korea, and now Vietnam, 
and how powerful the urgings of peace and the cementing of that 
peace through economic activity are. I just hope we can 
continue that.
    I have got just a couple of questions. One, we do have, as 
a counterbalance to Mr. Levin, a question on imports: We have 
been rather successful in terms of our exports, haven't we, to 
Vietnam? Maybe you want to elaborate on that a little bit.
    Then the other thing is, as you move forward and get a 
solid and a much more meaningful relationship, you have to have 
sort of a rule of law at play. One of the things that bothers 
me is this whole concept of intellectual property rights, which 
are so important here, particularly since the United States, if 
it is to export all it has to export, on--with an advantage, it 
can't be low labor rates, it has got to be some sort of 
technical input.
    So you might be able to comment on both those issues.
    Mr. IVES. Certainly, sir. In terms of exports, I believe, 
as Mr. LaFleur indicated, our exports to Vietnam----
    Mr. HOUGHTON. Could you move that microphone a little 
closer to you.
    Mr. IVES. In terms of our exports to Vietnam, they are up 
approximately 27 percent the first 4 months of this year, 
compared to the first 4 months of 2001. They are covering a 
wide range of products--wood and paper, cotton, chemicals, 
machinery--they are all among the important exports that we are 
expanding to Vietnam.
    You have also made a very important point in terms of the 
rule of law. This is one of the most significant changes that 
the BTA will help Vietnam with, that is, introducing 
transparency in its rules and regulations, requiring Vietnam to 
observe public trade related rules and regulations, requiring 
Vietnam to receive public comment much along the lines that the 
United States does when it implements rules and regulations. So 
that is all very important.
    In terms of intellectual property rights, that is a very, 
very serious issue with Vietnam. We recently put Vietnam on our 
special 301 list indicating that it does have serious problems 
and that we need to work very closely with Vietnam on those 
problems, and we will do so.
    Mr. HOUGHTON. Mr. LaFleur, have you got any comments you 
would like to make?
    Mr. LaFLEUR. Sir, referring to your earlier comments on the 
transition that has taken place in our relationship with 
Vietnam, I guess I would observe on a somewhat personal note, 
if you will permit me that, some 10 years ago I had an 
opportunity to visit Hanoi when I was assisting General Vessey 
in his efforts to improve cooperation from the Vietnamese on 
our POW/MIA accounting.
    I had a chance to go back to Hanoi for the first time in a 
decade only a few months ago, and I can attest that Hanoi has 
changed remarkably during that period. The visible level of 
economic activity, the tremendous expansion of commerce, the 
availability of consumer goods, in some cases quite costly 
consumer goods, was extraordinary to see having seen what Hanoi 
looked like a decade ago.
    There was a visible change when you see it in that sort of 
snapshot. Although it is true that progress on some issues with 
Vietnam isn't always as rapid as we would like to see, there 
clearly has been progress and it is visible.
    I might note, too, that the reason I was in Vietnam a few 
months ago was because Vietnam was hosting a meeting of the 
Association of Southeast Asian Nations (ASEAN) Regional Forum 
Members, and one of the transformations that has taken place in 
Vietnam's role in the region is that is as joint ASEAN. It is 
now being incorporated into the community of Southeast Asians, 
which includes, of course, many excellent friends and good 
allies of the United States. So the role Vietnam is playing in 
the region is different. Our cooperation, I think, is expanding 
with them.
    So the trend, sir, as you so correctly noted, is very 
different from what it was in the past, and I think, very 
positive for U.S. interests.
    Mr. HOUGHTON. Thanks very much.
    Thank you, Mr. Chairman.
    Chairman CRANE. Mr. Shaw.
    Mr. SHAW. Thank you, Mr. Chairman.
    I was in Vietnam many years ago, in fact, I think Sam 
Gibbons of Florida was Chairman of the Trade Subcommittee when 
I was there. I would hope there have been some remarkable 
changes over the years, so that is very good to hear. I hear 
from the Ambassador, and also from Members who have traveled to 
Vietnam, that there has been a great change.
    Where are we as far as corruption in the government? How 
have they proceeded? How are they subsidizing trade coming into 
the United States--these types of things, if you would comment 
on that, either one of you.
    Mr. LaFLEUR. Perhaps, if you will permit me, I will make a 
couple of quick comments on the corruption issue, and perhaps 
my colleague will respond on the subsidy of trade.
    As I indicated in response to an earlier question, there 
clearly is a significant level of corruption in Vietnam, 
including corruption that affects performance of official 
duties. There are studies by nongovernment organizations that 
note the seriousness of this and rank it--in fact, in Vietnam 
versus other countries. Vietnam certainly has a serious problem 
based on those sorts of standards.
    We are doing what we can, I think, to encourage Vietnam to 
improve on corruption, to try to develop a more transparent 
system of rules and regulations, which in the long run is 
probably the best way to try to stamp out this practice in a 
broad and general way.
    Vietnam itself, clearly the government there has made the 
prosecution of this crime, this series of crimes, when they had 
identified it as a serious national concern. No question, the 
general person in the street, if you will, in Vietnam finds 
corruption unacceptable, even as they have to live with it.
    So I think that there are efforts under way to deal with 
it, but you are absolutely correct in pointing to it as a very 
serious concern for the Vietnamese and for us.
    Mr. IVES. Thank you, sir. In terms of your question 
regarding subsidies, we are not aware of any direct subsidies 
that the Government of Vietnam is providing in terms of their 
exports to the United States. On a positive note, I would like 
to point out that the Government of Vietnam, as part of its 
transition to a market-based economy, is moving a number of its 
State-owned enterprises to the private sector. So that to the 
extent that the government is involved in its production, 
manufacturing and sales of products, as it moves from State-
owned enterprises to the private sector, any degree of 
involvement by the government should diminish.
    Mr. SHAW. What if--any other restrictions on foreign 
investment in Vietnam?
    Mr. IVES. The BTA would require Vietnam, over a transition 
period, to allow U.S. investors to gradually own greater shares 
of various----
    Mr. SHAW. Where are we now? What are those percentages now?
    Mr. IVES. In this case, U.S. companies cannot invest in the 
particular sectors that we negotiated in the bilateral trade 
agreement, for example, in telecommunications distribution 
services, which is one reason why in the BTA we wanted to make 
sure that Vietnam would allow those investments to occur.
    Mr. SHAW. It would seem to be to their advantage. I mean, 
it is a capital-poor country. It would seem they would want to 
be reaching out everywhere they can for foreign investment, not 
necessarily from here, but all over the world. As I recall, the 
desire of American business to be able to invest in Vietnam and 
open up trade with Vietnam, back when I was there years ago and 
it wasn't open, this was really what thrust us into opening up 
trade and getting us where we are today.
    Mr. IVES. Clearly, U.S. business wants to be engaged in 
Vietnam, which is, of course, one reason why we asked for and 
received the market openings that we did under the bilateral 
trade agreement.
    Mr. SHAW. I recall, when we were there, Jake Pickle, who 
was a very highly regarded Member of this Committee, had his 
wife along. She stumbled and broke her hip, and we really had 
to fly her out of Vietnam to get her proper medical treatment.
    Are their medical facilities better than they were at that 
time? As I recall, we flew her over to Japan to have her 
treated.
    If you don't know the answer, it is not really in the scope 
of things, but I think does tell us a lot about the quality of 
life today in Vietnam.
    That question will go unanswered. Let's hope we don't have 
anyone else.
    Mr. LaFLEUR. We will be happy to try and get an assessment 
of that and provide it to you.
    I think it is fair to say the conditions medically are 
improving, but there is no question that having American 
medical supplies, equipment, devices, and pharmaceuticals more 
widely available in Vietnam can only improve the situation.
    [The information follows:]

    Currently available medical care in Vietnam is basic by U.S. 
standards, reflecting the limited resources available. For example, 
anything involving broken bones or other surgical procedures among the 
western expatriate community usually results in a medical evacuation to 
Bangkok, Singapore, or points beyond. Nevertheless, Vietnam has a 
growing number of medical professionals able to provide increasingly 
good care to those who can afford it, despite the lack of resources one 
would find in Western clinics. Medical care for the majority of 
Vietnamese remains inadequate.

                               

    Mr. SHAW. I will close with this. In just following up on 
this, the physician that was traveling with us at that time 
said they took her down to the hospital to x-ray her, and he 
came back and said, this is fifties technology. If there was 
ever a better argument for opening up Vietnam, that was it.
    Thank you, Mr. Chairman.
    Chairman CRANE. Mr. Herger.
    Mr. HERGER. Thank you, Mr. Chairman.
    Mr. Ives, which U.S. exports are we seeing the most growth 
in since the BTA went into effect?
    Mr. IVES. The major categories of U.S. export growth are in 
wood and paper products, cotton, chemicals, and machinery.
    Mr. HERGER. Can you tell me, why do you think our exports 
to Vietnam have increased while our exports to many other 
countries in the region have declined?
    Mr. IVES. We would like to attribute it, at least in part, 
to the bilateral trade agreement. I think that is a fair 
attribution in that it significantly reduces tariffs on a wide 
range of products to the United States and therefore lowers the 
cost of exporting to Vietnam.
    In addition, Vietnam is a relatively new market to the 
United States since Vietnam's major trading partners are 
primarily the European Union and Japan. So, we are starting 
from a relatively low base and developing a market.
    Mr. HERGER. Thank you.
    Then a final question: How do you believe the Vietnamese 
would respond if the President's Jackson-Vanik waiver were 
disapproved, and would it adversely affect our ability to 
encourage the Vietnamese to expedite the processing of 
immigration cases?
    Mr. LaFLEUR. Sir, the Jackson-Vanik waiver has clearly been 
a key element in encouraging many of the positive trends we see 
in Vietnam today. I think it is true that our arrangements on 
the effort to account for our POWs and MIAs and, as well, as 
our efforts to bring populations of people of special concern 
to the United States out of Vietnam, are arrangements that were 
put into place before that, commitments that the Vietnamese 
made over the years and have honored.
    So, our hope certainly would be that they would continue. 
An expectation, I think, is that they would continue to provide 
the sort of effort that we look for in those areas.
    Of course, in any relationship, the steps the two sides 
take are going to have an impact as new issues come up and new 
problems arise. So, I think I would continue to point to the 
waiver as a very important element that helps provide the 
positive atmosphere in which we can more easily address our 
additional concerns and problems with Vietnam, as well as 
maintain the current positive trends.
    Mr. HERGER. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman CRANE. Mr. English.
    Mr. ENGLISH. Thank you. Thank you, Mr. Chairman.
    You know, I am continuing to be concerned somewhat with the 
cooperation of the Vietnamese Government to provide the fullest 
possible accounting of POW and MIA cases. I guess what I would 
like to pose to the Administration witnesses is, how can the 
United States continue to most effectively influence the pace 
and direction of economic and political reforms in Vietnam 
while, at the same time, gain the fullest possible accounting 
of these POW/MIA cases and progress on remaining immigration 
cases?
    Mr. LaFLEUR. Sir, I think we have in place a number of 
tools that have been advancing us toward our goals with 
Vietnam, particularly with respect to immigration and toward 
the fullest possible accounting for our POWs and MIAs.
    As I indicated earlier, the work takes years and has taken 
years and particularly in the case of POW/MIA accounting, we 
can see that this effort is going to have to continue for some 
time, but the results do come in and they do come in over time, 
but they are coming. Therefore, we feel it is important to 
maintain the positive momentum that we have developed with 
Vietnam.
    The BTA, the trading relationship is part of sustaining 
that positive environment in any government. Certainly 
including a government run by one party as in Vietnam, you are 
always going to have differences of view among those involved 
about the commitment to reform that the country should take, 
the particular decisions that are going to affect the relative 
economic performance, and benefits that different regions of 
the country receive from any change in policy.
    We want to do our best, I think, to empower those who want 
to move the country forward, to have a more open trading 
environment, to be more welcoming to American business, to be 
more cooperative in general with the outside world. That kind 
of environment, of course, benefits our economic interests, 
naturally.
    Mr. ENGLISH. I understand. Mr. LaFleur, reclaiming my time, 
we have seen the Vietnamese Government take some baby steps to 
liberalize their economy. Do you feel corruption in recent 
years has increased or decreased, and to what extent within the 
economy?
    Mr. LaFLEUR. I am not sure I can give you a statistical 
response to that. I think the sense is if you look at it over a 
time span of a decade or two, you would probably see an 
increase as the opportunities for that sort of behavior have 
expanded in what is a more open economy and of course, too, as 
officials feel the need to supplement their income from the 
private economic activity that is expanding around them.
    However, as I indicated earlier, I think the government 
does see how serious a problem this is for them, both in 
economic and political terms, and is trying to deal with it 
more effectively.
    Mr. ENGLISH. What concrete measures have they undertaken, 
in your view, to address the problem of corruption?
    Mr. LaFLEUR. They have instituted a campaign to encourage 
people to report on corruption that they encounter and they 
have established some--a wide series of penalties for varying 
degrees of construction which go up to the most severe penalty 
that can be levied. So, they are trying to deliver a signal to 
the officialdom there. Whether it is going to be effective 
remains to be seen.
    Mr. ENGLISH. Thank you, Mr. Chairman. I have no further 
questions.
    Chairman CRANE. Gentlemen, I want to express our 
appreciation for your testimony and cooperation in 
communicating with us in getting the message out, and we look 
forward to working with you on a continuing basis. Last time I 
was in Vietnam was a couple of years ago, but they told me at 
that time that 65 percent of the Vietnamese population was not 
even born at the time of the U.S.-Vietnam War. Is that up to 70 
percent by now?
    Mr. LaFLEUR. Sir, once again, I don't have a statistic for 
you, but I think we are pretty confident it is up in that range 
now; yes, sir.
    Mr. WATKINS. Mr. Chairman.
    Chairman CRANE. Wes.
    Mr. WATKINS. I indicated I did not have a question, and I 
mention, though, from the testimony I have a question if I may 
ask, sir. Are we getting the cooperation--I shouldn't say--is 
Vietnam getting the cooperation from the developing banks like 
World Bank, the Asian Development Authority? Are you familiar 
with the increases? Are they increasing in the development 
phases in Vietnam? I know they have massive problems in 
pollution and solid waste and a lot of other things. The 
Chairman was correct in that I think most of the population is 
less than 25 years of age. Do you have any information on that 
by chance?
    Mr. LaFLEUR. We can certainly get you some. I am confident, 
although I don't have the figures with me, that the Asian 
Development Bank (ADB) has a number of projects in Vietnam, but 
we can get you further information.
    Mr. WATKINS. I would like to see what kind of increases or 
what the situation is, because I know what several of them 
involve. They have indicated they had more than just a passing 
interest in trying to solve a lot of the problems, and some of 
my people I worked with have indicated a desire to try to help, 
and I want to see if they are truly making that effort.
    Thank you, Mr. Chairman. I apologize.
    [The information follows:]

    Vietnam is working very closely and very successfully with 
international development organizations and international financial 
institutions like the World Bank, including the International Financial 
Corporation, and The Asian Development Bank, as well as the IMF and the 
UNDP. These organizations are actively working with Vietnam on the full 
range of development issues, including health, as well as economic, 
legal and institutional reform. Many other donors are also working with 
Vietnam in these areas. Sustainable development, in particular 
preservation of the environment and natural resources, is a primary 
focus of many international organizations and donors, including the 
United States.

                               

    Chairman CRANE. With that, this panel may be excused.
    We now would like to call to our next panel, Mr. Gary 
Benanav, Chairman and Chief Executive Officer of New York Life 
International; Ms. Virginia Foote, President of U.S.-Vietnam 
Trade Council. The next gentleman I am going to skip over for a 
moment, because I want our distinguished colleague from 
Oklahoma to introduce him, and Mr. Andre Sauvageot, Chief 
Representative of General Electric in Vietnam.
    Now I yield to Mr. Watkins to introduce our fourth 
panelist.
    Mr. WATKINS. Thank you for letting me have the honor, and 
members of the panel, I just would like to say that the other 
fourth member is Barry Clark, who is the Director of Oklahoma-
Vietnam Trade Office in the Oklahoma Department of Commerce. It 
is our true belief that there is a lot to be developed and 
gained from both sides if we are working and engaging one 
another and finding out what our problems are and what we can 
do to make a contribution in that area. We are very fortunate 
to have a person like Barry Clark heading our efforts from 
Oklahoma, and we think we are building not only trade relations 
but tremendous relationships in the future not only between 
Oklahoma and Vietnam, but for our country. Thank you, Barry.
    Chairman CRANE. Now, gentlemen, if you will proceed in the 
order that you were organized at the dais there, and try and 
limit your presentations to 5 minutes of oral testimony, and 
any written remarks will be made a part of the permanent 
record.
    Chairman CRANE. With that, Mr. Benanav.

    STATEMENT OF GARY BENANAV, CHAIRMAN AND CHIEF EXECUTIVE 
 OFFICER, NEW YORK LIFE INTERNATIONAL, AND VICE CHAIRMAN, NEW 
                     YORK INSURANCE COMPANY

    Mr. BENANAV. Thank you, Mr. Chairman and Members of the 
Subcommittee. My name is Gary Benanav. I am Chairman and Chief 
Executive Officer of New York Life International and Vice 
Chairman of New York Life Insurance Company. In addition to my 
corporate responsibilities, I am Chair of the U.S. National 
Committees of the Pacific Basin Economic Council, known as 
PBEC, and the Pacific Economic Cooperation Council, known as 
PECC. My company is also a leader in the U.S.-Vietnam Business 
Council and the U.S.-ASEAN Business Council.
    I appreciate the opportunity to testify on an issue which 
is important not only to the United States and Vietnam, but to 
the entire Asian Pacific region. Once again this year, Mr. 
Chairman, the eyes of the world are looking to the United 
States to see if we are going to continue to engage fully with 
Vietnam. Once again this year, the House Committee on Ways and 
Means must consider a resolution disapproving of the waiver of 
the Jackson-Vanik provision of the Trade Act of 1974.
    The steadily increasing bipartisan majority of the House 
since the first disapproval resolution reflect the 
understanding and insights which we have gained as more 
officials, legislators, educators, business managers, and 
tourists have seen Vietnam firsthand. This year, the stakes 
remain high.
    The continuation of Vietnam's normal trade relations status 
is vital for four reasons:
    First, it is a precondition for the further integration of 
this important emerging nation into the Asian Pacific 
community.
    Second, it is an essential element to the continued 
progress of Vietnam toward WTO membership and the rules-based 
trading system.
    Third, it is necessary in order to improve the 
international investment environment in Vietnam, and fourth, 
and perhaps most important, it is vital if we want to continue 
improving the U.S.-Vietnam relationship and enhancing the 
economic development, security, and stability of the region.
    I believe that we must remain fully engaged with Vietnam, 
both economically and politically, in order to anchor Vietnam 
in the world community of nations. The multilateral rules based 
on cooperation and transparency form a set of building blocks 
for a global system that can secure and sustain economic 
stability. Without economic stability, no nation can hope to 
achieve political stability and security. Vietnam needs to be 
part of this global system if it is to realize its full growth 
potential.
    How can the United States best anchor Vietnam in the global 
rules-based system? By expanding our bilateral economic 
relationship. We must continue Vietnam's NTR status and not 
link it to other, albeit important, issues which should be 
pursued vigorously but separately as part of the improving of 
the U.S.-Vietnam relationship.
    Vietnam needs to take further action to promote that 
process also. First and foremost, it must fully implement the 
terms of the Bilateral Trade Agreement. In addition, Vietnam 
should move as rapidly as possible to join WTO and continue its 
transition to a market-based economy grounded in the rule of 
law.
    The WTO is a crucial next step. The continuation of 
Vietnam's NTR status is a precondition to the full 
implementation of BTA and for Vietnam's eventual entry into the 
WTO. Even with the determination demonstrated by the citizens 
and leadership of Vietnam, the process of joining WTO will not 
be simple. Doing so will require Vietnam to develop 
institutional capacity to operate as an effective competitor in 
the world's marketplace and to construct a domestic market in 
which companies from the United States and other WTO member 
countries can operate effectively.
    Mr. Chairman, I am convinced that it is in our national 
interest to assist Vietnam in developing that institutional 
capacity. We should support capacity-building efforts that can 
be made available through multilateral, regional, and bilateral 
mechanisms. The private sector can contribute to this 
assistance process. My company, for example, has made several 
corporate commitments to build capacity in Vietnam's financial 
sector. However, the willingness and ability of the private 
sector to continue programs like this are fully dependent upon 
overall economic context, the positive context created by 
granting NTR status to Vietnam.
    In conclusion, Mr. Chairman, continuation of progress in 
the relationship between the United States and Vietnam is 
dependent on this waiver. Broad engagement will benefit not 
only the United States and Vietnam, but also the entire 
community of responsible nations. Thank you, sir.
    [The prepared statement of Mr. Benanav follows:]
 Statement of Gary Benanav, Chairman and Chief Executive Officer, New 
  York Life International, and Vice Chairman, New York Life Insurance 
                                Company
    Mr. Chairman, Members of the Committee, my name is Gary Benanav. I 
am Chairman and CEO of New York Life International, and Vice Chairman 
of New York Life Insurance Company. In addition to my corporate 
responsibilities, I chair the U.S. national committees of the Pacific 
Basin Economic Council (PBEC-US) and the Pacific Economic Cooperation 
Council (US-PECC). New York Life International also is a leader in the 
US-Vietnam Business Council and the US-ASEAN Business Council.
    I appreciate this opportunity to testify on an issue which is 
important not only to the United States and Vietnam, but to the entire 
Asia Pacific region.
    Once again this year, Mr. Chairman, the eyes of the world are 
looking to the United States to see if we are going to continue to 
engage fully with Vietnam. Once again this year, the House Ways and 
Means Committee must consider a resolution disapproving the waiver of 
the Jackson-Vanik provision of the 1974 Trade Act.
    Since the first disapproval resolution, the bipartisan majority of 
the House has grown from 260 in 1998 to 324 in 2001. This steadily 
increasing majority reflects the improved understanding and insights 
which we all have gained as more officials, legislators, educators, 
business managers and tourists have seen Vietnam first hand. This year 
the stakes remain high. The continuation of Vietnam's Normal Trade 
Relations (NTR) status is vital because:
         LIt is a precondition to the further integration of 
        this important emerging nation into the Asia Pacific community;
         LIt is an essential element to the continued progress 
        of Vietnam towards WTO membership and the rules-based trading 
        system;
         It is necessary in order to improve the international 
        investment environment in Vietnam;
         And, most important, it is vital if we want to 
        continue improving the U.S.-Vietnam relationship and enhancing 
        the economic development, security and stability of the region.
Tying Vietnam to the Global System
    I believe that we must remain fully engaged with Vietnam, both 
economically and politically, in order to anchor Vietnam in the world 
community of nations. The multilateral rules based on cooperation and 
transparency form a set of building blocks for a global system that can 
secure and sustain economic stability. Without economic stability no 
nation can hope to achieve political stability and security. Vietnam 
needs to be part of this global system if it is to realize its full 
growth potential.
    The more Vietnam is rooted in the international rules-based trading 
system, the greater the stake Vietnam will have in supporting the 
system. This in turn will encourage Vietnam to continue to take steps 
that are beneficial to its domestic economic development and towards a 
more market based economy.
    How can the U.S. best anchor Vietnam in the global rules-based 
system? By expanding our bilateral economic relationship. How can we 
best expand our bilateral economic relationship? By continuing 
Vietnam's NTR status and by not linking it to other, albeit important, 
issues which should be pursued vigorously, but separately, as part of 
the improving US-Vietnam relationship.
    Vietnam needs to take further action to promote that process also. 
First and foremost, it must fully implement the terms of our Bilateral 
Trade Agreement (BTA). In addition, Vietnam should move as rapidly as 
possible to join the World Trade Organization and continue its 
transition to a market-based economy grounded in the rule of law.
    WTO membership is the crucial next step. We should have no 
illusions about the challenges that Vietnam will face in ensuring an 
orderly evolution of the nation's economic and political underpinnings. 
There is no better economic option for Vietnam than joining the WTO. 
Neither should there be any illusions about NTR. The continuation of 
Vietnam's NTR status is a precondition for the full implementation of 
the BTA and for Vietnam's eventual entry into the WTO.
Building Institutional Capacity
    Even with the determination demonstrated by the citizens and 
leadership of Vietnam, the process of joining the WTO will not be 
simple. Doing so will require that Vietnam develop the institutional 
capacity to operate as an effective competitor in the world's 
marketplace, and to construct a domestic market in which companies from 
the U.S. and other WTO member countries can operate effectively.
    Mr. Chairman, I am convinced that it is in our national interest to 
assist Vietnam in developing that institutional ability. We should 
support capacity-building efforts that can be made available through 
multilateral and regional institutions. In addition, we should be 
prepared to offer bilateral technical assistance.
    Many American companies committed to the development of Vietnam 
have already started the assistance process. For example, my company, 
New York Life, has made a corporate commitment to build capacity in 
Vietnam's financial sector. We are sponsoring training programs which 
regularly bring Vietnamese insurance regulators to the U.S. to work 
with their counterparts here on issues ranging from risk analysis to 
financial management. In addition, we are sending U.S. technical 
experts to Vietnam to help develop the skills of officials in Vietnam's 
Finance Ministry. The willingness and ability to continue private 
sector programs like this are fully dependent upon the overall economic 
context created by the granting of NTR status to Vietnam.
The Annual Waiver Process
    Mr. Chairman, I would like to make one other point this morning. 
Although I believe that the House will reject the resolution of 
disapproval by a resounding, bipartisan majority, the annual Jackson-
Vanik waiver process has outlived its usefulness. It creates 
uncertainty. It creates the impression that we are prepared to reverse 
course in our foreign economic policy from one year to the next as we 
manage through various issues in our relationship with Vietnam. This is 
not good for business, for our bilateral relationship or for the 
continued momentum needed to motivate and implement reforms in Vietnam. 
The Jackson-Vanik provisions no longer serve us well, and I strongly 
urge that we get beyond them as soon as possible.
Conclusion
    In conclusion, Mr. Chairman, the continuation of broad engagement 
will benefit not only the United States and Vietnam, but also the 
community of responsible nations. Therefore, I strongly support the 
waiver of the Jackson-Vanik amendment. Continuation of progress in the 
relationship between the United States and Vietnam is dependent on this 
waiver.
    Thank you.

                               

    Chairman CRANE. Thank you, Mr. Benanav. Ms. Foote.

           STATEMENT OF VIRGINIA B. FOOTE, PRESIDENT,
                   U.S.-VIETNAM TRADE COUNCIL

    Ms. FOOTE. Mr. Chairman and Members of the Subcommittee, I 
am very pleased to be here today testifying on behalf of the 
U.S.-Vietnam Trade Council before your Subcommittee. At this 
important time again this year, as you assess the renewal of 
the Jackson-Vanik waiver for Vietnam, we strongly urge you to 
vote against H.R. Resolution 101.
    The Trade Council is a trade association, with strong 
membership from the American business community, working to 
develop relations between the United States and Vietnam. We 
also chair a coalition of over 270 associations and companies 
who support trade relations with Vietnam and the renewal of 
Jackson-Vanik.
    The U.S.-Vietnam Trade Agreement and NTR status, which only 
began in December last year, is the beginning of a new and 
extremely important, indeed hopeful, chapter in U.S.-Vietnam 
relations. December 10, 2001 may well be the most significant 
day in U.S.-Vietnam relations since the war ended.
    While further steps in normalization lie ahead, the first 6 
months of NTR have shown again that the 12-year path of the 
step-by-step normalization process has benefited bilateral 
relations, Vietnamese citizens, Americans' interests--and all 
impressively. What other conflict, so bitterly and costly 
fought, has come to new resolution and a new beginning so 
successfully?
    The U.S.-Vietnam Trade Agreement is the most comprehensive 
trade agreement Vietnam has ever signed and the most 
comprehensive NTR agreement the United States has ever 
negotiated in exchange for sweeping commitments from Vietnam, 
which include providing greater market access for trading goods 
and services, protecting intellectual property rights, 
improvements in the investment regime, and far greater 
transparency than U.S.-granted normal trade tariffs.
    The results that were identified from the last panel have 
been immediate. Over the first reporting period, the first 4 
months of this year, two-way trade between the United States 
and Vietnam is up over 60 percent. In implementing the BTA, 
Vietnam has already passed laws and ordinances, one on Most-
Favored-Nation status and national treatment status, 
safeguards, Customs valuation. It is drafting a commercial 
arbitration law, transparency laws, auditing laws, and 
regulations. These are just a few.
    Private companies, multilateral donors and governments, and 
U.S. organizations such as the Trade Council are providing 
technical assistance and comments on each of these laws and 
multiple drafts of these laws. American companies are beginning 
to turn a profit. The reforms in Vietnam don't just apply to 
foreign companies but also to domestic companies. An enterprise 
law was passed last year, and since that time, there are 53,000 
new private enterprises creating over a million jobs in 
Vietnam.
    Also important was the opening of a stock market in July 
2000. It is still a tiny stock market. There are only 15 
companies listed, but the government has plans to expand this 
year and to include joint stock companies.
    American involvement in this process of economic reform is 
welcome in Vietnam and is extremely important to overall 
bilateral relationships in the long run. Our business 
community, particularly with extensive involvement of the 
Vietnamese American business community, continues to play a key 
role in the economics and the normalization of commercial 
relations and in the implementation of the BTA.
    The initial waiver of Jackson-Vanik in 1998 allowed trade 
support programs such as the Overseas Private Investment 
Corporation, Export-Import (Exim) Bank to get started, but now 
the waiver includes NTR status, and therefore it is even more 
critical that it be renewed.
    In addition to great progress the United States and Vietnam 
have made on MIA and immigration work, our relationship has 
strengthened in many personal and more human ways. Many 
Americans are traveling to Vietnam. Vietnam veterans are 
returning on organized trips and individually. Vietnam veterans 
have led the way in the normalization process. Vietnamese 
Americans are traveling to Vietnam; 230,000 Vietnamese 
Americans returned to Vietnam last year for visits. Two to 
three billion dollars are remitted annually.
    Additionally, the United States and Vietnam have signed a 
memorandum of understanding on labor issues that include a $3 
million support program for technical assistance. Many American 
companies are involved in these programs. Since our two 
countries set out on a path to normalize relations, Vietnam has 
had many successes while suffering a few setbacks. In the year 
2000 and 2001, Vietnam became the second-largest coffee 
exporter after Brazil, yet coffee prices have plummeted and 
serious land rights disputes have emerged. Seafood exports have 
risen dramatically from Vietnam, while catfish farmers in the 
Mekong Delta, who now face an antidumping petition by the U.S. 
industry, and labeling rules were changed.
    The point is the trade relationship is developing. A strong 
bipartisan policy of a step-by-step process of normalizing 
relations with Vietnam has produced positive results for 
Americans, Vietnamese, regional interests, and we encourage the 
continuation of this policy. On behalf of the U.S.-Vietnam 
Trade Council, we urge the renewal of Jackson-Vanik again this 
year for the benefit of both American and Vietnamese interests. 
Thank you.
    [The prepared statement of Ms. Foote follows:]
 Statement of Virginia B. Foote, President, U.S.-Vietnam Trade Council
    Mr. Chairman and Committee Members, I am pleased to be here today 
representing the U.S.-Vietnam Trade Council to testify before your 
Committee at this important time in U.S.-Vietnam relations as you 
assess extending the Jackson-Vanik waiver for Vietnam another year. We 
strongly urge you to vote against H.R. 101.
    The U.S.-Vietnam Trade Council, founded in 1989, is a trade 
association with strong membership from the American business community 
and offices in Washington D.C., and Vietnam. We have worked through the 
Council and our Education Forum, to help improve relations between the 
United States and Vietnam with educational exchange programs, annual 
conferences, Congressional delegations and programs designed to provide 
technical assistance on international trade norms and standards. We 
chair a coalition of over 270 associations and companies who support 
trade relations with Vietnam and the renewal of Jackson-Vanik. I hope 
my full testimony can be submitted into the hearing record today.
    Today I would like to discuss the importance renewing the Jackson-
Vanik waiver and maintaining NTR status. The U.S.-Vietnam Trade 
Agreement and NTR status, which entered into force on December 10, 2001 
and the process of normalizing relations overall have had positive 
impact on cooperation between the United States and Vietnam in a number 
of crucially important areas. This agreement and the granting of NTR 
status, marked the beginning of a new and extremely important--indeed 
hopeful--chapter in U.S.-Vietnam relations. December 10, 2001 may well 
be the most important day in U.S.-Vietnam relations since the war 
ended.
    The reciprocal granting of NTR status is key to the economic 
development of Vietnam and for the successful involvement of American 
companies. Repeal of NTR status, only 6 months old, would be the 
economic equivalent of an act of war and is wholly unwarranted. The old 
war is over, a new one should not begin. While further steps of 
normalization lie ahead, these first 6 months of NTR have again showed 
that the 12 year path of step-by-step normalization has benefited 
bilateral relations, Vietnamese citizens, and American interests--
impressively.
    What other conflict, so bitter and so costly, has come to 
resolution and a new beginning so successfully.
    In the late 1980's, the Vietnamese Government committed to ending 
its isolation and began working to normalize relations worldwide--
including the United States. With great effort Vietnam has had 
tremendous diplomatic and commercial success in establishing relations 
in Europe, within Asia, and with the United States. Vietnam normalized 
with China in 1991, joined ASEAN in 1995, APEC in 1998, and now belongs 
to over a dozen international organizations and signed onto numerous 
international agreements. Vietnam has observer status in the WTO and 
has a stated commitment to join in 2005. And now, Vietnam and the U.S. 
enjoy the normal trade relations on tariffs.
    The Reagan, Bush, Clinton and Bush Administrations have all 
followed a policy of normalizing relations with Vietnam through a step-
by-step process pegged to cooperation on the U.S.'s principal goal of 
seeking the fullest possible accounting for our missing in action from 
the Vietnam War, and emigration issues. As the attached timeline shows, 
this process has proceeded successfully, albeit slowly through four 
administrations. Overall it has led to the lifting of the trade embargo 
in 1994, the establishment of diplomatic relations in 1995, the 
exchange of ambassadors in 1997. Economic normalization includes the 
initial waiver of the Jackson-Vanik amendment in 1998, signing of the 
Bi-lateral Trade Agreement (BTA) in July 2000, and the granting of NTR 
status in December 2001. Other bilateral steps such as an aviation 
agreement, a textile agreement, PNTR, and WTO accession lie ahead. BTA 
implementation and WTO accession will go hand in hand over the next 
several years with important U.S. involvement.
    Throughout the process of normalization, Vietnam has greatly 
enhanced its efforts on issues of high priority to the U.S. including 
MIA efforts, emigration goals, and economic integration. Vietnam and 
the U.S. have also developed important bilateral dialogue on regional 
issues, human rights and labor standards. Vietnam is the second most 
populous nation in Southeast Asia, the 13th largest in the world, and 
with a population of 78 million it has enormous growth potential.
    The entry into force of the U.S.-Vietnam Trade Agreement last year 
was a key step to further progress in normalizing relations. The U.S.-
Vietnam Trade Agreement is the most comprehensive trade agreement 
Vietnam has ever signed, and the most comprehensive NTR trade agreement 
the U.S. has ever negotiated. In exchange for sweeping commitments from 
Vietnam including providing greater market access for trade in goods 
and services, protecting intellectual property rights, improvements in 
the investment regime, and far greater transparency, the U.S. granted 
Vietnam normal trade tariffs--moving Vietnam from column two in the 
U.S. tariff code to column one.
    The results were immediate. Over the first reporting period of 
2002, January-April, two-way trade between the U.S. and Vietnam was up 
over 60% from the same period last year. Two-way trade has grown 
steadily from $666 million in 1997, $827 million in 1998, $899 million 
in 1999, $1,189 million in 2000, to $1,513 million in 2001.
    Equally important, the Vietnamese Government has committed to 
important reform in the areas of trading rights, transparency, customs, 
investment, services, and intellectual property rights. Moreover, 
approval of the trade agreement ensured that exports from U.S. 
companies receive treatment in Vietnam no less favorable than products 
of foreign competitors. Vietnam has signed bilateral trade agreements 
and granted reciprocal NTR to 72 countries, including the European 
Union and its Asian neighbors.
    The entry into force of the U.S.-Vietnam trade agreement was a 
watershed event. While the negotiations between the U.S. and Vietnam 
were long and difficult, it was the discussions between and among the 
Vietnamese that were the most important. The result is that the BTA is 
an important blueprint or roadmap for Vietnam to follow while tackling 
some of the more difficult issues of economic reform which lie ahead. 
It is a roadmap of economic reform commitments that the Vietnamese 
Government reached consensus on before signing.
    Towards this end, commercial law reform is already underway. To 
help track these efforts since the BTA was signed in 2000, the Trade 
Council's Education Forum has been publishing a Catalog of Legal 
Updates, which compiles summaries of new laws, decrees and regulation 
that address commercial law reform and with possible impact on BTA 
implementation. Our July 2002 Catalog is 33 pages long. In the last two 
months Vietnam has passed laws and ordinances on MFN and NT, 
Safeguards, Customs Valuation, and is drafting Commercial Arbitration, 
Transparency and Auditing laws and regulations to mention just a few. 
Private companies, multilateral donors and governments, and U.S. 
organizations such as the Trade Council are providing technical 
assistance and comments on each of these new laws. The Catalog can be 
found on our website.
    Some examples: Vietnam passed a new Insurance Law in December 2000 
and is finalizing the implementing regulations. The General Department 
of Customs drafted a new Customs law, which passed overwhelmingly in 
the National Assembly on last year. The new law is based on WTO 
valuation procedures and has been favorably reviewed by international 
customs experts. Vietnam is also addressing competition policy, the 
elimination of burdensome registration and licensing procedures, 
intellectual property protection, administrative procedures, and 
increased transparency. A new database of Vietnamese law is now 
available on the internet and the Ministry of Planning and Investment 
in Ho Chi Minh City will offer online licensing for foreign investment 
projects that do not require appraisal.
    With respect to IPR issues, Vietnam has recently made significant 
legal reforms in its implementation of the trade agreement. A system 
has been put in place for patent and trademark registration. In the 
year 2000 several important decrees protecting trade names, trade and 
business secrets, patent registration, and protection of industrial 
designs were issued.
    The Enterprise Law, which came into effect in January 2000, marked 
a turning point in Vietnam's efforts to reform the domestic private 
sector. According to the World Bank, more than 30,000 private small and 
medium sized enterprises (SMEs) were registered under the new 
Enterprise Law in the first year compared to only 3,000 registrations a 
year for the previous three years. These figures are very significant 
given the small size of Vietnam's fledging private sector. The number 
of enterprises founded in the six months after the law went into effect 
in January 2000 equals the total number of enterprises founded in the 
previous nine years. By the end of 2001 there were an estimated 53,000 
new enterprises creating over a million jobs.
    The number of private enterprises engaged in trade has multiplied 
five times between 1997 and 2000. As a result the share of private 
domestic firms has increased from 4 percent to 16 percent of total 
imports and from 10 percent to 17 percent of total exports. For non-oil 
exports the percentage is higher at 22 percent. Total non-oil exports 
grew by 42 percent from 1997 to 2000. Private domestic exports grew by 
161 percent during this time period and accounted for 46 percent of the 
overall increase.
    And Foreign Direct Investment continues to grow as well. New 
reforms in licensing procedures were partially responsible for an 
upsurge in foreign investment last year. Total FDI to date by May 2002 
is $38.3 billion, with over one billion coming from the U.S. $3.4 
billion in new investment was committed in 2001. $19.8 billion has been 
disbursed. Overseas Development Assistance has been generous as well. 
From 1993 when Vietnam first became eligible to the end of 2001, total 
ODA equaled over $9.0 billion.
    Also important was the opening of a stock market in July 2000. The 
tiny stock market started with treasury bonds and shares of only five 
listed companies, which has now increased to fifteen and the government 
plans to open a second transaction center in Hanoi and develop the OTC 
market (Over-the-Counter) for companies prior to listing. Additional 
companies are expected to be listed on the market this year.
    The United States should continue to be involved in this process. 
It is in our interest to see an economically healthy and 
internationally engaged Vietnam. The Economist Intelligence Unit 
foresees annual GDP growth of 6-7% over the coming years. With fully 
normalized economic relations, the United States could well join the 
top ranks of investors in Vietnam, up from our rank in 13th position.
    The agreement includes important benefits for American business, 
consumers and farmers. Trade rights will be liberalized for U.S. firms, 
current tariff rates on key agricultural and industrial goods have been 
reduced and will be reduced further; and quantitative restrictions will 
be removed on steel and cement after six years and petroleum products 
after seven years. Other immediate improvements were made in trading, 
IPR, transparency, investment and services. In the services sector, 
Vietnam is providing American companies with greater access in many 
sectors, and entry into and equity in banking services will be 
increased. WTO consistent intellectual property rights will be 
introduced in 12-18 months after the date of entry into force of the 
BTA, and all WTO inconsistent trade related investment measures will be 
eliminated within five years. The chapter on transparency requires that 
all laws and governing decrees be published, and that the right of 
appeal and tribunals for review be established. The Trade Council's 
Summary of the U.S.-Vietnam Trade Agreement will be available on our 
website later this month.
    The BTA is not only strengthening market access for American 
companies in Vietnam, it is also greatly benefiting the people of 
Vietnam. With a per capita GDP of $395 in 2001, Vietnam is still one of 
the poorer nations in the world. In a comprehensive report, the World 
Bank concluded the significant achievements on reducing poverty that 
were made in the period between 1993 and 1998, continue today. Indeed 
per capita rose from 370 to 395 in one year. The proportion of people 
with per capita expenditures under the total poverty line dropped 
impressively from 58 percent in 1992/93 to 37 percent in 2000. The 
number of people below the much lower ``food poverty line,'' has also 
declined from 25 percent to 15 percent, indicating that the very 
poorest segments of the population have experienced improvements in 
their living standards between 1993 and 1998. The poverty rate has 
fallen by half in the past ten years, one of the sharpest declines for 
any country.
    The BTA could contribute to lifting Vietnam out of endemic poverty 
by increasing trade, investment, and development in Vietnam, as well as 
promoting market reforms, including greatly expanded trading rights. 
Furthermore, by expanding trade and extending the rule of law in 
Vietnam, the BTA will encourage access to information and greater 
transparency for domestic enterprises as well. Vietnam has great 
potential for development as a significant trading partner worldwide. 
Over half the population is under the age of 25 and the literacy rate 
is over 90%. The work ethic, entrepreneurial talent, and emphasis on 
education is strong.
    American involvement in the process of economic reform is welcome 
in Vietnam and could be extremely important to overall development in 
the long run. American companies set a high standard for trade, 
investment, labor and business practices. American technology is 
greatly admired in Vietnam. American companies are actively involved in 
training and technical assistance programs in Vietnam, through the 
Trade Council and individually. American products are popular. Our 
business community, particularly with the extensive involvement of the 
Vietnamese-American businesses, continues to play a key role in the 
normalization of economic relations and BTA implementation.
    In the absence of NTR status, a trade agreement, and initially 
without trade support programs, American companies and individuals 
nonetheless began traveling, investing and trading with Vietnam when 
the embargo was lifted in 1994. Given that the U.S. normalized 
relations far more slowly than other nations did, American business 
involvement in Vietnam has lagged behind other nations and still 
operates with handicaps. The U.S. fell from the fifth largest investor 
in 1995, to the 12th largest investor in 2001 with slightly under one 
billion committed to foreign investment projects, and one billon in 
two-way trade.
    But following the initial ``road map'' for normalization laid out 
under the Bush Administration in April 1991, the bilateral relationship 
has made a great deal of progress. In 1998 President Clinton issued the 
first waiver of the Jackson-Vanik Amendment, which Congress upheld by a 
vote of 260 in favor and 163 opposed. Congress renewed the waiver in 
1999 by a vote of 297 in favor and 130 opposed. In 2000 the margin 
increased positively again to 332 in favor and only 91 opposed. The 
2001 vote was 324-91 in favor of renewing the waiver. We hope this 
year's vote will be equally strong.
    The initial Jackson-Vanik waiver in 1998 allowed trade support 
programs, such as loans from the Overseas Private Investment Corp 
(OPIC), the Export-Import Bank (Exim) and other credits for American 
business to establish operations in Vietnam. In December 1999 Exim and 
the State Bank of Vietnam completed the framework agreements, which 
allowed Exim to begin operations in Vietnam. Now the waiver is 
necessary for the continuation of normal tariffs as well.
    Initially, U.S. policy pegged the Jackson-Vanik waiver to progress 
on the Resettlement Opportunity for Vietnamese Returnees (ROVR) program 
specifically and immigration in general. Although it was extremely 
difficult to reach agreement initially, the implementation of the ROVR 
program has been fairly smooth and rapid. The State Department reports 
that the Government of Vietnam has cleared all but a handful of the 
nearly 20,000 ROVR cases. The Orderly Departure Program overall has 
also been successful. Approximately half a million Vietnamese have come 
to the United States under ODP and only a small number of ODP cases 
remain to be processed. Since the initial waiver of Jackson-Vanik, the 
Vietnamese have allowed all remaining ODP cases--including the 
Montagnard cases which are of particular concern to the U.S.--to be 
processed under the new more responsive system developed by the 
Vietnamese initially just for ROVR cases.
    The U.S. and Vietnam are jointly pursuing the 913 missing in 
Vietnam, of the 1,363 missing in Southeast Asia. Since 1973, 578 
Americans have been accounted for, including 412 in Vietnam. Since 
January 1993, the remains of 258 individuals have been repatriate, 
identified and returned to their families. Additionally, the Department 
of Defense has confirmed the fate of all but 39 of 196 individuals who 
fall in the ``last known alive'' discrepancy cases. The U.S. has 
maintained a permanent staff to visit crash sites and interview 
witnesses throughout the country since 1993, with teams of experts 
coming to Vietnam monthly. The U.S. and Vietnam have provided 
reciprocal access to information on MIAs from the war and have 
conducted 68 Joint Field Activities on POW/MIA cases since 1988. 
Vietnam has unilaterally undertaken case specific investigations in 216 
cases since 1996. President Bush most recently certified Vietnam 
issuing a determination that Vietnam ``is fully cooperating in good 
faith with the United States.'' It is a model program.
    Our relationship has strengthened in other areas as well. Americans 
are traveling to Vietnam in great numbers. In 1997 Vietnam issued 
98,000 visas for Americans to travel to Vietnam, over 66,000 for 
Vietnamese Americans. In 2000 the total was 152,928 visas, 
approximately 137,000 of which were for Vietnamese Americans. In 2001 
this number grew to 230,470. Remittances from overseas Vietnamese are 
estimated at $2-3 billion annually. Vietnam veterans are traveling, 
working and involved in charitable activities in Vietnam. Veterans 
groups organize visits for their members and their families.
    In November 2000, President Clinton became the first U.S. President 
to visit Vietnam since the end of the war. During the President's trip 
ten new business partnerships were announced and our two countries 
concluded numerous bilateral agreements. One of these was an Agreement 
on Scientific and Technological Cooperation to facilitate cooperation 
between American and Vietnamese scientists in areas such as health, 
technological innovation and entrepreneurship, disaster mitigation and 
marine and water resource management. Increased cooperation in the 
prevention and treatment of infectious diseases, including typhoid 
fever and HIV/AIDS, will strengthen Vietnam's ability to meet critical 
health challenges. Environmental projects operate through the U.S.-Asia 
Environmental Partnership and cooperation on Agent Orange research. The 
Vietnam Education Foundation was established.
    Equally important, the U.S. and Vietnam also signed a Memorandum of 
Understanding on Labor in November 2000. The MOU was the result of a 
dialogue over labor that the U.S. and Vietnam have developed. The MOU 
includes $3 million in technical assistance working with the ILO to 
strengthening labor protection, skills training, employment services, 
social insurance and safety nets, employment of the disabled, 
industrial relations and child labor. The child labor provisions focus 
on street children and child trafficking. Workplace education and 
prevention programs on HIV/AIDS are also including in the MOU. These 
projects are ongoing.
    The 2002 Labor Code, incorporating standards of internationally 
recognized worker rights. A complete English translation of the Labor 
Code can be found at http://www.ivietnam.com/Eng/ in the iVietnam Law 
database. The labor code stipulates the requirements for the formation 
of unions. In addition to trade unions, the Labor Code stipulates a 
number of workers' basic rights including: freedom to choose employer 
(Article 30), standard work week (Article 68), overtime limits and pay 
(Article 61), leave, holidays, and rest (Article 71, 73, 74 & 78), 
minimum wage, bonuses (Article 64), maternity leave (Article 114 & 
144), severance entitlements (Article 17 & 42), workplace safety 
(Article 97 & 100), etc. In recent years, the Government of Vietnam has 
sent labor experts to the U.S., the U.K., Singapore, New Zealand, South 
Korea, and Hong Kong in its efforts to update the 1994 Labor Code.
    In April 2002, Vietnam's National Assembly passed the Law on 
Amendment of and Addition to a Number of Articles of the Labor Code. 
The Assembly made changes and revisions to 56 articles of the Labor 
Code, updating and amending existing law and clarifying points, which 
had been unclear in the previous regulations. In a major shift, foreign 
enterprises will be allowed to directly recruit and hire staff without 
going through employment agencies and middlemen. The new Code also 
clarifies regulations on wage and salary scales, which had been the 
subject of some dispute under existing Circular 11. Private and 
foreign-invested enterprises are not required to follow State 
Enterprise wage scale systems under the new Code. However they are 
required to establish and make public a salary scale system, which must 
be registered with the Labor Department. Some 56 amendments were made 
including articles 17, 27, 41, 69, 85, 140 and 166. The new Labor Code 
will require additional implementing regulations to take effect and 
will come into force January 1, 2003.
    Since 1992, Vietnam has ratified 15 ILO conventions, including 
three of the ILO's eight core human rights conventions: No. 100, equal 
pay for men and women for work of equal value (ratified by Vietnam in 
1997); No. 111, prohibiting discrimination in employment (1997); and 
No. 182, prohibiting the worst forms of child labor (2000). Currently, 
the Vietnamese are working on a plan to gradually ratify the remaining 
core ILO conventions and hope to ratify both forced labor conventions 
and the minimum age convention. With offices in Hanoi, the ILO has 24 
ongoing projects, 6 of which the ILO defines as promoting fundamental 
principles and rights.
    On commercial law reform, the U.S also pledged six million in 
technical assistance to Vietnam over a three-year period to assist with 
implementation of the bilateral trade agreement. Through a grant from 
the U.S. Agency for International Development (USAID) and the support 
of our members, and in coordination with USAID's STAR project, the 
Council's Education Forum has provided technical assistance on 
commercial and legal reform to Vietnamese Ministries and government 
branches with economic portfolios on the issues raised by the BTA and 
WTO standards. For example, just last week the Department of Commerce, 
three prominent U.S. insurance companies, and the Trade Council held 
two days of seminars in Hanoi with the Ministry of Finance. Other 
training has been ongoing with the Ministries of Trade, Justice, Labor, 
Finance, Planning and Investment, with effective public/private 
partnerships.
    Unique to this agreement, the U.S.-Vietnam BTA establishes a Joint 
Committee to monitor implementation, to guarantee enforcement, and to 
make recommendations. This Committee will meet at a minimum of once a 
year and should be a very effective mechanism for both sides on 
implementation and in shaping technical assistance and monitoring 
compliance. The Committee met for the first time in May this year in 
Hanoi, with Ambassador Jon Huntsman, Deputy USTR as chair on the US 
side.
    Since our two countries set out on the path to normalized 
relations, Vietnam has enjoyed many successes, while suffering a few 
setbacks. The bold economic reform program that Vietnam embarked on in 
the late eighties showed impressive results almost immediately. Vietnam 
went from near famine to become the third largest rice exporter behind 
Thailand and the United States in a matter of a few years. In the year 
2000, Vietnam was the second largest coffee exporter after Brazil, 
while coffee prices have plummeted and serious land right disputes 
emerge. Seafood exports have risen dramatically from Vietnam while 
catfish farmers in the Mekong Delta face an anti-dumping petition by 
the U.S. industry and labeling rules change.
    But the strongly bipartisan policy of a step-by-step process of 
normalizing relations with Vietnam has produced positive results for 
American, Vietnamese, and regional interests, and we encourage a 
continuation of this policy into the future.
    Vietnam and the U.S. share a tragic history, which both countries 
remain mindful of as we build a new future. Normalization of relations, 
matched with a growing economy and commitment to a market based economy 
will continue to contribute to Vietnam's increased openness, increased 
transparency in government, a rise in living standards, and greater 
international economic and political integration. But more important to 
the U.S., this policy of normalization has also ensured that American 
business, diplomatic, and regional interests are met. The past ten 
years are proof.
    On behalf of the members of the U.S.-Vietnam Trade Council, we urge 
the renewal of the Jackson-Vanik waiver for the benefit of Vietnamese 
and American interests, again this year.

                                      Chronology of U.S.-Vietnam Relations
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
April 30, 1975                 North Vietnamese forces take over the southern part of Vietnam, ending the war.
                                Washington extends an embargo to all of Vietnam and breaks diplomatic relations.
----------------------------------------------------------------------------------------------------------------
1978                           Talks between Hanoi and Washington on normalizing relations break down.
----------------------------------------------------------------------------------------------------------------
1988                           Under the Reagan Administration, Vietnam begins cooperation with the United
                                States to resolve the fate of American servicemen missing in action (MIA).
----------------------------------------------------------------------------------------------------------------
September 1989                 Vietnam completes its withdrawal from Cambodia.
----------------------------------------------------------------------------------------------------------------
April 1991                     Under the Bush Administration, Washington presents Hanoi with a ``roadmap'' plan
                                for phased normalization of ties. The two sides agree to open a U.S. Government
                                office in Hanoi to help settle MIA issues.
----------------------------------------------------------------------------------------------------------------
April 1991                     U.S. begins humanitarian aid projects for war victims to be administered by the
                                U.S. Agency for International Development (USAID).
----------------------------------------------------------------------------------------------------------------
October 1991                   The Senate Select Committee on POW/MIA Affairs established with Senator John
                                Kerry as Chair and Senator Bob Smith Vice Chair.
----------------------------------------------------------------------------------------------------------------
October 1991                   Vietnam supports U.N. peace plan for Cambodia. Secretary of State James Baker
                                announces Washington is ready to take steps toward normalizing relations with
                                Hanoi.
----------------------------------------------------------------------------------------------------------------
December 1991                  Washington lifts the ban on organized U.S. travel to Vietnam.
----------------------------------------------------------------------------------------------------------------
1991                           U.S. Congress authorizes the United States Information Agency (USIA) to begin
                                exchange programs with Vietnam.
----------------------------------------------------------------------------------------------------------------
February 1992                  Joint Task Force--Full Accounting founded to conduct field activity on MIA
                                accounting with General Thomas Needham in command.
----------------------------------------------------------------------------------------------------------------
February 1993                  The work of the Senate Select Committee concludes.
----------------------------------------------------------------------------------------------------------------
July 2, 1993                   President Clinton clears way for resumption of international lending including
                                IMF and World Bank to Vietnam.
----------------------------------------------------------------------------------------------------------------
January 26, 1994               Senate amendment (S.AMDT.1266) re: the lifting of sanctions being contingent upon
                                a resolution of all cases or reports of unaccounted for U.S. personnel lost or
                                captured during the war in Vietnam fails by a vote of 42-58.
----------------------------------------------------------------------------------------------------------------
February 3, 1994               President Clinton lifts trade embargo.
----------------------------------------------------------------------------------------------------------------
January 28, 1995               United States and Vietnam sign agreements settling property claims and
                                establishing liaison offices in each other's capitals.
----------------------------------------------------------------------------------------------------------------
May 15, 1995                   Vietnam gives U.S. presidential delegation batch of documents on missing
                                Americans, later hailed by Pentagon as most detailed and informative of their
                                kind.
----------------------------------------------------------------------------------------------------------------

                                 Chronology of U.S.-Vietnam Relations--Continued
------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
June 1995                      Veterans of Foreign Wars announces support of U.S. normalization of diplomatic
                                relations with Vietnam.
----------------------------------------------------------------------------------------------------------------
July 11, 1995                  President Clinton announces ``normalization of relations'' with Vietnam.
----------------------------------------------------------------------------------------------------------------
August 6, 1995                 Secretary of State Warren Christopher visits Hanoi and officially opens U.S.
                                embassy. Vietnam opens embassy in Washington.
----------------------------------------------------------------------------------------------------------------
September 20, 1995             Senate amendment (S.AMDT.2723) re: prohibiting financial assistance to Vietnam
                                unless certain conditions relating to Americans unaccounted for from the Vietnam
                                War are met fails by a vote of 39-58 (3 NV).
----------------------------------------------------------------------------------------------------------------
May 1996                       U.S. presents Vietnam with trade agreement blueprint.
----------------------------------------------------------------------------------------------------------------
July 25, 1996                  Senate amendment (S.AMDT.5027) re: striking funds made available for the
                                Socialist Republic of Vietnam for technical assistance fails by a vote of 43-56
                                (1 NV).
----------------------------------------------------------------------------------------------------------------
April 7, 1997                  U.S. Treasury Secretary Robert Rubin and Finance Minister Nguyen Sinh Hung sign
                                accord in Hanoi for Vietnam to repay debts of $145 million, from the former
                                Government of South Vietnam.
----------------------------------------------------------------------------------------------------------------
April 10, 1997                 Senate confirms Douglas ``Pete'' Peterson, Vietnam War veteran and former
                                prisoner of war (POW), as Ambassador.
----------------------------------------------------------------------------------------------------------------
April 16, 1997                 United States and Vietnam reach agreement on providing legal protection for
                                copyright owners.
----------------------------------------------------------------------------------------------------------------
May 9, 1997                    Peterson takes up post as U.S. Ambassador in Hanoi, Le Van Bang becomes
                                Ambassador in Washington, DC.
----------------------------------------------------------------------------------------------------------------
August 1997                    U.S. Government, under the U.S. Agency for International Development (USAID),
                                begins a commercial law program.
----------------------------------------------------------------------------------------------------------------
October 1997                   Vietnam institutes new processing procedure in ROVR program significantly
                                improving progress.
----------------------------------------------------------------------------------------------------------------
March 11, 1998                 President Clinton issues waiver of Jackson-Vanik Amendment for Vietnam, paving
                                the way for OPIC, Ex-Im, TDA, USDA and MARAD.
----------------------------------------------------------------------------------------------------------------
March 26, 1998                 Minister of Planning & Investment Tran Xuan Gia and Ambassador Pete Peterson
                                finalize signing of the OPIC bilateral for Vietnam.
----------------------------------------------------------------------------------------------------------------
July 23, 1998                  The U.S. Senate votes 66-34 to continue funding for the U.S. Embassy in Vietnam
                                based on ongoing cooperation on the POW/MIA issue.
----------------------------------------------------------------------------------------------------------------
July 30, 1998                  The U.S. House of Representatives renews the Jackson-Vanik waiver for Vietnam by
                                a 260-163 vote.
----------------------------------------------------------------------------------------------------------------
October 1998                   U.S. and Vietnam agree to negotiate Science & Technology Agreement.
----------------------------------------------------------------------------------------------------------------
June 30, 1999                  President Clinton re-extends the Jackson-Vanik waiver for Vietnam.
----------------------------------------------------------------------------------------------------------------
July 25, 1999                  USTR Ambassador Richard Fisher and Vietnam Trade Minister Tuyen agree to a
                                bilateral trade agreement in principle in Hanoi, Vietnam.
----------------------------------------------------------------------------------------------------------------
August 3, 1999                 The Jackson-Vanik waiver passes the House by a vote of 297-130.
----------------------------------------------------------------------------------------------------------------
December 9, 1999               Ex-Im and the State Bank of Vietnam complete the framework agreements which allow
                                Ex-Im to begin operations in Vietnam.
----------------------------------------------------------------------------------------------------------------
March 13, 2000                 Secretary of Defense William Cohen becomes the first U.S. Defense Secretary to
                                visit Vietnam since the end of the War.
----------------------------------------------------------------------------------------------------------------

                                 Chronology of U.S.-Vietnam Relations--Continued
------------------------------------------------------------------------------ 
----------------------------------------------------------------------------------------------------------------
July 13, 2000                  Vietnam Trade Minister Vu Khoan and USTR Ambassador Barshefsky sign an agreement
                                on trade relations at USTR. President Clinton announces the conclusion of a
                                bilateral trade agreement with a White House Rose Garden ceremony.
----------------------------------------------------------------------------------------------------------------
July 26, 2000                  The U.S. House of Representatives renews the Jackson-Vanik waiver for Vietnam by
                                a 332-91 vote.
----------------------------------------------------------------------------------------------------------------
November 16-20, 2000           President Clinton visits Vietnam, with Commerce Secretary Norman Mineta, USTR
                                Ambassador Charlene Barshefsky, Senator John Kerry (D-MA), Congressmen Earl
                                Blumenauer (D-OR), Vic Snyder (D-Ark), Mike Thompson (D-CA) and Congresswoman
                                Loretta Sanchez (D-CA). Business delegations and the leadership of the Veterans
                                of Foreign Wars attend.
----------------------------------------------------------------------------------------------------------------
November 17, 2000              The U.S. Department of Labor and Vietnam's Ministry of Labor, Invalids, and
                                Social Affairs sign a Memorandum of Understanding on Labor cooperation.
----------------------------------------------------------------------------------------------------------------
January 15-18, 2001            House Minority leader Dick Gephardt (D-MO) and Congressman Ray LaHood (R-IL) lead
                                a Congressional delegation to Vietnam.
----------------------------------------------------------------------------------------------------------------
June 1, 2001                   President Bush renews the Jackson-Vanik waiver for Vietnam.
----------------------------------------------------------------------------------------------------------------
June 8, 2001                   President Bush transmits the request for NTR for Vietnam and implementation of
                                the trade agreement to Congress.
----------------------------------------------------------------------------------------------------------------
July 17, 2001                  Senate Finance Committee consideration and mark-up session held. BTA ordered to
                                be reported by voice vote.
----------------------------------------------------------------------------------------------------------------
July 26, 2001                  House Committee on Ways and Means consideration and mark-up session held. BTA
                                ordered to be reported by voice vote.
----------------------------------------------------------------------------------------------------------------
July 26, 2001                  The U.S. House of Representatives renews the Jackson-Vanik waiver for Vietnam by
                                a 324-91 vote.
----------------------------------------------------------------------------------------------------------------
September 6, 2001              BTA passes by voice vote in the U.S. House of Representatives.
----------------------------------------------------------------------------------------------------------------
October 3, 2001                BTA passes without amendment by 88-12 vote in the U.S. Senate.
----------------------------------------------------------------------------------------------------------------
October 10, 2001               Ambassador Nguyen Tam Chien presents Letter of Credence to President George W.
                                Bush at the White House.
----------------------------------------------------------------------------------------------------------------
October 16, 2001               President George W. Bush signs BTA into Public Law No: 107-52.
----------------------------------------------------------------------------------------------------------------
November 28, 2001              BTA Ratified by Vietnam National Assembly, 278-85.
----------------------------------------------------------------------------------------------------------------
December 3, 2001               Ambassador Raymond Burghardt sworn in as U.S. Ambassador to Vietnam.
----------------------------------------------------------------------------------------------------------------
December 7, 2001               BTA signed into law by Vietnamese President Tran Duc Luong.
----------------------------------------------------------------------------------------------------------------
December 9-14, 2001            Permanent Deputy Prime Minister Nguyen Tan Dung heads a high level delegation to
                                Washington, DC, New York and San Francisco, accompanied by Vu Khoan--Minister of
                                Trade, Tran Xuan Gia--Minister of Planning and Investment, Nguyen Manh Kiem--
                                Minister of Construction, and other government officials and over 60 members
                                from the Vietnamese private sector.
----------------------------------------------------------------------------------------------------------------
December 10, 2001              U.S.-Vietnam Bilateral Trade Agreement signed into force at a Blair House
                                ceremony with Deputy Prime Minister Dung, Trade Minister Vu Khoan and USTR
                                Ambassador Robert Zoellick. Conference and banquet hosted by US-VTC.
----------------------------------------------------------------------------------------------------------------

                                 Chronology of U.S.-Vietnam Relations--Continued
----------------------------------------------------------------------------------------------------------------
 ----------------------------------------------------------------------------------------------------------------
May 6-7, 2002                  Deputy USTR Ambassador Jonathan Huntsman in Hanoi to open BTA Joint Committee.
----------------------------------------------------------------------------------------------------------------
May 10, 2002                   Vice President Nguyen Thi Binh visit to Washington, DC.
----------------------------------------------------------------------------------------------------------------
May 13, 2002                   Farm bill including catfish provision requiring Vietnam to rename its catfish
                                product signed by the President Bush.
----------------------------------------------------------------------------------------------------------------
May 18, 2002                   Vice Minister Luong Van Tu of Ministry of Trade Delegation to the U.S.
----------------------------------------------------------------------------------------------------------------
June 1-8, 2002                 Minister of Justice Nguyen Dinh Loc visit to the U.S. on BTA implementation.
----------------------------------------------------------------------------------------------------------------
June 3, 2002                   Jackson-Vanik waiver signed by the President Bush.
----------------------------------------------------------------------------------------------------------------
June 12-22, 2002               Deputy Prime Minister Nguyen Manh Cam visits to Texas, New York, Massachusetts
                                and Washington DC.
----------------------------------------------------------------------------------------------------------------
June 28, 2002                  The Catfish Farmers of America filed an anti-dumping petition against Vietnam.
----------------------------------------------------------------------------------------------------------------
July 18, 2002                  Ways and Means Committee hearings on Jackson-Vanik renewal.
----------------------------------------------------------------------------------------------------------------

                               

    Chairman CRANE. Mr. Clark.

   STATEMENT OF BARRY L. CLARK, PRESIDENT, PACIFIC VENTURES, 
  INCORPORATED, TULSA, OKLAHOMA, AND DIRECTOR, VIETNAM TRADE 
            OFFICE, OKLAHOMA DEPARTMENT OF COMMERCE

    Mr. CLARK. Thank you, Mr. Chairman and Members of the 
Subcommittee, and Congressman Watkins, thank you for that very 
kind introduction, sir.
    Thank you for the opportunity to testify before you today. 
My name is Barry Clark, and I am the President of Pacific 
Ventures, which is an Oklahoma-based consulting and private 
equity company. Headquarters are in Tulsa, Oklahoma with field 
offices in Ho Chi Minh City and Hanoi, Vietnam.
    The focus of our consulting business has been to assist 
American companies entering the Vietnamese market. We have been 
in Vietnam since 1995, 1 year after President Clinton lifted 
the trade embargo.
    From my first visit to Vietnam in 1993 to moving there in 
1995 for 3 years, I have witnessed firsthand the dramatic 
changes as Vietnam took the first uncertain steps toward a 
market economy. These changes are providing new economic and 
civic hopes for many Vietnamese people and new business 
opportunities for American companies.
    Similar to most people doing business in Vietnam, our 
challenges have been frequent and time-consuming, but 
nevertheless we are seeing real and significant successes as a 
result of the improved trade relations between the United 
States and Vietnam.
    In addition to our private endeavors, Pacific Ventures also 
represents the State of Oklahoma Department of Commerce. In 
September 1996, the State of Oklahoma became the first State of 
any nation to open a trade office in Vietnam. Through our 
company infrastructure, Oklahoma now has offices in Hanoi and 
Ho Chi Minh City with a staff of 10 Vietnamese and 2 Americans.
    Oklahoma is still the only American State to have a trade 
office there, and the reason the State of Oklahoma opened the 
trade office was because many of the major industries matched 
those of Vietnam. Some of those industries are agriculture, oil 
and gas, education, and the need for building infrastructure.
    Through businesses we represent directly and through our 
ties with the State of Oklahoma, we manage the daily challenges 
of arranging meetings, securing licenses, conducting market 
research, and identifying potential partners, distributors, and 
agents. It is significant that Oklahoma ranked 38 in overall 
international exports, ranks 13 in exports to Vietnam with over 
$10 million in export sales. Through our contract with the 
State of Oklahoma, Pacific Ventures has led 14 delegations of 
Oklahoma businesses and institutions to Vietnam to sell 
Oklahoma goods and services, as well as 8 delegations from 
Vietnam that have come to Oklahoma to purchase equipment and 
look for potential business partners.
    The goods and services sold to Vietnam have included oil 
field service equipment, biotech products for shrimp farming, 
assistance in building environmentally friendly landfills, beef 
and dairy cattle genetics, and infrastructure building 
equipment.
    One major export for which the State of Oklahoma has great 
pride is education. Oklahoma has more than 9,000 foreign 
students studying in its colleges and universities. Oklahoma is 
second in the Nation in the number of Vietnamese students that 
are studying in higher education in our State. This next month 
our Governor, Frank Keating, will travel to Vietnam to sign a 
major education agreement between 12 Oklahoma universities and 
Vietnam National University.
    Currently, Petro Vietnam, the Vietnamese national oil 
company, has 65 students, young people, that they feel will be 
its future leaders, as full-tuition-paying graduate and 
undergraduate students at the world famous Sarkeys Energy 
Center at the University of Oklahoma. These students will go 
back to Vietnam not only with a world-class education, but also 
a better understanding of the American way of life.
    The Jackson-Vanik waiver has brought about dramatic changes 
that are indeed part of the rising tide that is floating more 
hopes and dreams for Vietnamese companies and entrepreneurs. As 
the Vietnamese economy continues to emerge, the middle class is 
growing, the population is becoming more educated and exposed 
to more free market realities, and Vietnam continues to evolve 
in a more open and transparent society.
    A good example of Vietnam's new efforts toward the 
development of an open market is reflected in its new 
enterprise law. This law allows Vietnamese citizens to freely 
establish enterprises in most industries without restriction. 
Because of this new law, within the first 2 years there were 
over 35,000 new registered enterprises. This number exceeded 
the total number of registered enterprises established during 
the past 9 years. The number of new jobs created directly 
through the enterprise law encompassed over one-third of 
Vietnam's annual increase in the labor force.
    However, changes come in increments. There now exists a 
critical moment of opportunity between the United States and 
Vietnam, and by extending the Jackson-Vanik waiver, continued 
implementation of the Bilateral Trade Agreement, the United 
States can best support Vietnam's ongoing transition to a 
sustaining market economy.
    In conclusion, I want to express my appreciation to 
Oklahoma's business and government leaders for continuing their 
pioneering spirit of opening up and building valuable trade 
relationships in global markets that will benefit future 
generations of Oklahomans. I would like to thank the U.S. 
Embassy in Vietnam and the U.S.-Vietnam Trade Council for their 
continued efforts and support and leadership on behalf of all 
the American businesses with interests in Vietnam. They have 
made our work much more productive than we could have been 
otherwise. Thank you again for the privilege to be here today.
    [The prepared statement of Mr. Clark follows:]
Statement of Barry L. Clark, President, Pacific Ventures, Incorporated, 
     Tulsa, Oklahoma, and Director, Vietnam Trade Office, Oklahoma 
                         Department of Commerce
    Thank you, Mr. Chairman, Members of the Subcommittee, for the 
opportunity to testify before you today. My name is Barry Clark and I 
am President of Pacific Ventures, which is an Oklahoma-based consulting 
and private equity company. Our headquarters is in Tulsa, Oklahoma with 
field offices in Hanoi and Ho Chi Minh City, Vietnam. The focus of our 
consulting business has been to assist American companies entering the 
Vietnamese market. We have been in Vietnam since 1995, one year after 
President Clinton lifted the trade embargo. From my first visit to 
Vietnam in 1993, to moving there in 1995 for three years, I have 
witnessed firsthand the dramatic changes as Vietnam took the first 
uncertain steps towards a market economy. These changes are providing 
new economic and civic hopes for many Vietnamese people--and new 
business opportunities for American companies. Similar to most people 
doing business in Vietnam, our challenges have been frequent, and time-
consuming, but never the less, we are seeing real and significant 
success as a result of the improved trade relations between the United 
States and Vietnam.
    In addition to our private endeavors, Pacific Ventures also 
represents the State of Oklahoma, Department of Commerce. In September 
1996 the State of Oklahoma became the first State of any nation to open 
a trade office in Vietnam. Through our company infrastructure Oklahoma 
now has offices in Hanoi and Ho Chi Minh City with a staff of ten 
Vietnamese and two Americans. Oklahoma is still the only American State 
to have a full-time presence in Vietnam. The reason the State of 
Oklahoma opened this trade office was due to several of Oklahoma's 
major industries matching those of Vietnam's. The industries are of 
vital importance to both economies. Some of those industries include, 
but are not limited to, oil and gas, agriculture, education, and 
infrastructure development. For the businesses we represent directly 
and through our ties to the State of Oklahoma, we manage the daily 
challenges of arranging meetings, securing licenses, conducting market 
research, and identifying potential partners, distributors, and agents. 
It is significant that Oklahoma, ranked 38th in overall international 
exports, ranks 13th in exports to Vietnam with over ten million dollars 
in export sales.
    Through our contract with the State of Oklahoma, Pacific Ventures 
has led fourteen delegations of Oklahoma businesses and institutions to 
Vietnam to sell Oklahoma-made goods and services as well as eight 
delegations from Vietnam, that have come to Oklahoma to purchase 
equipment and look for business partners.
    The goods and services sold to Vietnam from Oklahoma have included 
oil-field service equipment, which you might expect, but also biotech 
products for shrimp farming, assistance in building environmentally 
sound landfills, beef and dairy cattle genetics, and infrastructure 
building equipment.
    One major export for which the State of Oklahoma has great pride is 
education. Oklahoma has more than 9,000 foreign students studying in 
its colleges and universities. Oklahoma is second in the nation in the 
number of Vietnamese students in higher education. This next month our 
Governor, Frank Keating, will travel to Vietnam to sign a major 
education agreement between twelve Oklahoma higher education 
institutions and Vietnam National University. Currently, Petro Vietnam, 
the Vietnamese national oil company, has 65 students (young people 
which the company sees as its future leaders) as full-tuition paying 
undergraduate and graduate students at the world-famous Sarkeys Energy 
Center of the University of Oklahoma. These students will go back to 
Vietnam not only with a world-class education in petroleum science and 
engineering, but also with a better understanding of the American way 
of life. We are also hopeful that they will take back a knowledge of 
and an appreciation for the products and services of Oklahoma 
companies.
    The Jackson-Vanik wavier has brought about dramatic changes that 
are indeed part of the rising tide that is floating more hopes and 
dreams for Vietnamese entrepreneurs and small business owners. As the 
Vietnamese economy continues to emerge, the middle class is growing, 
the population is becoming more educated and exposed to more free 
market realities, and Vietnam continues to evolve into a more open and 
transparent society. A good example of Vietnam's new efforts towards 
the development of an open market economy is reflected in its new 
enterprise law. This law allows Vietnamese citizens to freely establish 
enterprises in most industries without restriction. Because of this new 
law, within the first two years, 2000-2002, there were over 35,000 new 
registered enterprises. This number exceeded the total number of 
registered enterprises established during the previous nine years. The 
number of new jobs created directly through the enterprise law 
encompassed over one-third of Vietnam's annual increase in the labor 
force. However, changes come in increments. There now exists a critical 
moment of opportunity between the United States and Vietnam and by 
extending the Jackson-Vanik waiver and continuing the implementation of 
the Bilateral Trade Agreement (BTA), the U.S. can best support 
Vietnam's ongoing transition toward a sustaining market economy.
    In conclusion, I want to express my appreciation to Oklahoma's 
Government and business leaders for continuing their pioneering spirit 
of opening and building valuable trade relationships in global markets 
that will benefit future generations of Oklahomans. I would also like 
to thank the U.S. Embassy in Vietnam and the U.S.-Vietnam Trade Council 
for their continued efforts, support, and leadership on behalf of all 
American businesses with interest in Vietnam. They have made our work 
much more productive than we could have been otherwise.
    Again, thank you for the privilege to be here today.

                               

    Chairman CRANE. Mr. Sauvageot.

  STATEMENT OF ANDRE SAUVAGEOT, CHIEF REPRESENTATIVE, GENERAL 
                ELECTRIC COMPANY, HANOI, VIETNAM

    Mr. SAUVAGEOT. I am Andre Sauvageot, residing in Hanoi as 
the Chief Representative for General Electric (G.E.) in 
Vietnam. In fact I met you, Mr. Chairman, in Hanoi a couple of 
years ago. I have held this position for over 9 years, and we 
greatly appreciate the opportunity to present testimony before 
your Subcommittee this morning.
    As one of the first 10 American companies to establish a 
representative office in Vietnam and as an active player in the 
Vietnam market for over 9 years, General Electric strongly 
supports the President's Jackson-Vanik waiver.
    First, our 9 years' experience certainly is indicative that 
Vietnam is committed to and inexorably moving toward a market 
economy, as has been testified this morning in greater detail.
    I would like to say this morning, sir, that the waiver of 
the Jackson-Vanik amendment is more important to us this year 
than it has ever been before, and it has been important every 
year. And the reason for that is that the waiver, or the lack 
thereof, will have an immediate, direct effect on project 
opportunities that--whether we win or not--will greatly affect 
the number of exports, American exports, into the Vietnam 
market in the very near future.
    And I would just like to point out a couple of dramatic 
ones. One of the most--the most successful G.E. business in 
Vietnam is G.E. Power Systems based in Atlanta, Georgia. The 
Vietnamese are soon going to invite four companies to bid on a 
720-megawatt combined cycle power plant. The only competitors 
we have are going to be foreign, because they will restrict the 
bidding to those companies in the world who can provide high-
level technology--we call F level technology for big gas 
turbines. There are only four in the world that can: Alstom 
from France, Siemens from Germany, Mitsubishi Heavy Industries 
from Japan, and General Electric.
    Now, since this project is going to be fully run by the 
Vietnamese--in other words, this is not like some of the other 
projects where the prime contractor was Sumitomo from Japan. 
This is strictly a Vietnam operation, so they either fund it 
themselves or they demand supplier credit. In this case, I am 
quite sure they are going to need supplier credit. Our foreign 
competitors can all arrange it. We can arrange it with the 
waiver of the Jackson-Vanik amendment. We cannot without.
    We have significant technical advantages because we have 
the best turbines, the most firing hours, by any measure, we 
are the best. They can't acquire our technology without 
recourse to American financing option. Now, should we win this, 
sir, that is not only an opportunity for General Electric but 
for--as many, depending upon our specific sourcing 
arrangements, for as many as 190 American companies based in 38 
States. You know, that includes Oklahoma, by the way, Texas, 
and California, but I have listed those States in my testimony.
    Also, we have a current proposal to the Vietnam railway to 
provide upgrades for 25 old G.E. locomotives, and these kits 
would be made in Erie, Pennsylvania, and also offer 
opportunities for other suppliers. Right now, the feedback I am 
getting from the railway, they like our technical proposal a 
lot, but they are not so enamored with our partner's financing 
proposal. I would like to be able to assure them that we could 
arrange U.S. Ex-Im Bank financing, and I think that would put 
us over for this opportunity.
    We are also provided leasing arrangements. We have three 
Boeing 767s on lease to the airlines now for over 6 years into 
the lease, with our engines manufactured in Cincinnati, Ohio. 
Again, our relationship with the airline has a strong 
commitment with a Vietnamese major company to the 
implementation of their contractual obligations to General 
Electric. We are very impressed.
    Medical systems, x-ray machines, ultrasound, we have very 
good opportunities there. We continue to expand our market 
share. Very soon we are going to take advantage of the 
Vietnamese liberalization of their laws to form 100-percent-
owned General Electric Company, to provide after-market service 
for our MRI machines, our high-technology stuff that we make in 
Milwaukee, Wisconsin, and other locations.
    So we really need this waiver, Mr. Chairman, and we 
appreciate your Committee's support in the past years, but this 
year it is more important than ever. We will continue to work 
closely, of course, with the U.S. Government every step of the 
way.
    We greatly appreciate the active support received from 
Ambassador Burghardt and his fine staff in Hanoi, and we are 
going to continue our active involvement with the U.S.-Vietnam 
Trade Council and the American Chamber of Commerce. Clearly, as 
the U.S.-Vietnam relationship continues to improve on the basis 
of mutual respect and mutual benefit, progress will continue on 
all fronts. Thank you so much.
    [The prepared statement of Mr. Sauvageot follows:]
 Statement of Andre Sauvageot, Chief Representative, General Electric 
                        Company, Hanoi, Vietnam
    I am Andre Sauvageot, residing in Hanoi as the Chief Representative 
for General Electric in Vietnam. I have held this position for over 9 
years. As I have for several years, I am again submitting the following 
updated information to assist the Committee in its decision regarding 
the renewal of the Jackson-Vanik waiver for Vietnam.
    My 38 years of involvement in Vietnam began in 1964 with a U.S. 
Army assignment in South Vietnam and continues as General Electric's 
Chief Representative resident in Vietnam.
      Reasons for Supporting the President's Jackson-Vanik Waiver
I. Vietnam continues its development of a market economy

    Vietnam continues its steady development of a market economy, 
notwithstanding the difficulties in moving from feudalism through 
Soviet-style state socialism after years of fighting for independence 
and national unity. Some of the milestones on this road include:

        A. LSixth Party Congress--(December 1986) Committed Vietnam to 
        begin economic reform--every Party Congress since has augmented 
        and strengthened this process.

        B. LAgricultural reform--(1989) Made Vietnam a rice exporter 
        (after importing since the 1930's). Vietnam is currently the 
        second largest rice exporter in the world after Thailand.

        C. LConstitution of Socialist Republic of Vietnam--(1992)

                a. LCommits Vietnam (Article 15) to develop a 
                diversified market economy.
                b. LProvides constitutional guarantee (Article 25) 
                against nationalization of foreign invested 
                enterprises.

        D. LInvestment Law passed by National Assembly--(1997) Improved 
        incentives/protections for investors.

        E. LEnterprise Law--(2000)

                a. LHelps level playing field between state and 
                privately held companies--more private companies now 
                being licensed.
                b. LAchievements acknowledged by World Bank, UNDP 
                during donor meeting in Ho Chi Minh City in June 2002.

        F. LU.S.-Vietnam Bilateral Trade Agreement--(2001) Ratification 
        committed Vietnam to extensive, measurable reform.
II. Vietnam provides stable, friendly, predictable environment
    The Vietnamese have forged a society in which 80 million people of 
some 54 different ethnic groups with a wide variety of religions all 
live peacefully together, free of the ethnic and religious strife with 
which so many other countries are afflicted.
    After the September 11, 2001 attacks on the World Trade Center and 
the Pentagon, the Political and Economic Research Company (PERC) based 
in Hong Kong upgraded its assessment of the security among 14 Asian 
Pacific countries to reflect the changing post-9/11 perceptions of 
entrepreneurs. The new assessment ranks Vietnam as the most secure of 
those 14 countries.
III. American business needs Jackson-Vanik waiver to compete

        A. LGE was one of the first American companies to enter 
        Vietnam. GE was among the first ten American companies to 
        establish a representative office, obtaining a license on June 
        18, 1993. Several of GE's 11 major businesses, each with its 
        own separate headquarters in the United States, have already 
        successfully entered the Vietnamese market.

        B. LGE businesses in Vietnam and effect of the waiver:
GE Power Systems (GEPS)
    GE Power Systems (headquartered in Atlanta, Georgia) manufactures 
steam turbines and generators in New York; gas turbines in Greenville, 
South Carolina; and turbine and generator control equipment in Salem, 
Virginia. During tough international bidding, GEPS won the following 
contracts in Vietnam:

         First ever gas compressors for the White Tiger field 
        transporting gas from off-shore (1995);
         Two hydro turbines for Song Hinh 72MW hydro plant--
        plant already commissioned (March 2000);
         Two generators, governors, exciter units for Ham 
        Thuan 300MW hydro plant--generators commissioned and handed 
        over (May 2002);
         Two steam turbines and two hydrogen-cooled generators 
        for Pha Lai 2 600MW thermal, coal fired power plant--nearing 
        completion;
         Two gas turbines for the Phu My 2.2 combined cycle 
        power plant.

    Many more bidding opportunities lie just ahead.
    GEPS field engineers from many countries (including the United 
States, Canada, Norway and Sweden) with great experience installing 
turbines, generators and other GE equipment in power plants praise the 
positive attitude, intelligence and work ethic of Vietnamese workers, 
as well as the eagerness of Vietnamese managers to improve 
productivity. Many have volunteered to return to Vietnam whenever we 
have a project.
Immediate Project Opportunity and Need for Jackson-Vanik Waiver

    Ca Mau is a 720MW combined cycle power plant on which GE is 
preparing to bid by the end of this year (2002). The Vietnamese are 
expected to restrict the bidding to manufactures of high (``F'' level) 
gas turbine technology (i.e., Alstom--France; Siemens--Germany and 
Mitsubishi Heavy Industries--Japan). Although GE enjoys many technical 
advantages and hopes to provide its giant Frame 9A gas turbines from 
Greenville, South Carolina, the supplier may have to provide a 
financing package. If the Congress were not to support the President's 
Waiver for Vietnam from the Jackson-Vanik Amendment, GE and many of its 
American suppliers would lose this opportunity to foreign competition.

    Depending on specific sourcing arrangements, if GE were to win the 
contract to provide two Frame 9A gas turbines, three generators, and a 
steam turbine for the Ca Mau power plant, as many as 190 American 
companies could benefit as suppliers to GE. These companies are located 
in the following 38 States: Alabama, Alaska, Arizona, California, 
Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, 
Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, 
Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New 
York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode 
Island, South Carolina, Tennessee, Texas, Vermont, Virginia, 
Washington, and Wisconsin.
GE Aircraft Engines (GEAE)
    GE Aircraft Engines (headquartered in Cincinnati, Ohio) regards 
Vietnam Airlines (VNA) as a strategic customer with significant growth 
potential. GE engines power three Boeing B767 aircraft and a GE joint 
venture's engines power ten Airbus A320 aircraft in Vietnam Airlines 
current small fleet. These engines represent an aggregate value of some 
$162 million.
    Earlier this year, the Vietnam Airlines selected the GE90-94B 
engine to power two Boeing B777-200ER aircraft, which it will lease 
from another American company, the International Lease Finance 
Corporation (ILFC). The U.S. Trade Development Agency (TDA) offered 
Vietnam Airlines funds for training on the GE90 engine if it were to be 
selected. We believe this played an important supporting role in the 
selection of the GE90 for these two aircraft.
GE Capital Aviation Services (GECAS)
    GE Capital Aviation Services (headquartered in Stamford, 
Connecticut) has dry-leased three new Boeing 767-300ER aircraft to 
Vietnam Airlines (VNA) for a period of nine years. Now, over six years 
into the lease, GECAS is very favorably impressed with the management 
of VNA, a customer that has always paid its lease obligations on time, 
even after the currency crisis hit the Pacific nations in the late 
1990s. We attach a high value to the commitment our Vietnamese 
customers bring to the implementation of their contractual obligations 
to GE.
GE Transportation Systems (GETS)
    Headquartered in Erie, Pennsylvania, GETS manufactures locomotives, 
as well as parts and components. In Vietnam, GETS has won two 
international bids (1996, 1997) to provide parts/components to the 
Vietnam Railways (VR).
Immediate opportunity and possible need for Jackson-Vanik waiver
    GETS recently submitted a technical proposal to VR to upgrade 25 
old GE locomotives in VR's current inventory. If GE's current technical 
proposal is accepted but the financing proposal is not, the U.S. 
Eximbank could become the principal source for another financing 
proposal.
GE Medical Systems (GEMS)
    Medical Systems, a global business (headquartered in Milwaukee, 
Wisconsin) was the first of GE's 11 major businesses to enter the 
Vietnamese market because medical equipment was included among certain 
humanitarian items exempted from the Trade Embargo by President George 
H.W. Bush in April 1992. Since 1993, GEMS has sold ultrasound and x-ray 
equipment in Vietnam against stiff foreign competition from long 
established companies.
    Vietnam's leadership devotes considerable resources to upgrading 
the health of the people, with special attention to children, ethnic 
minorities and people living in remote areas. Vietnam is the leading 
Southeast Asian country in the number of eye specialists per capita, 
with one eye specialist for every 87,000 people. This far exceeds the 
United Nations standard of one doctor per 250,000 persons. Skilled 
Vietnamese eye surgeons traveled regularly to remote areas in a 
continuous campaign to prevent blindness and to restore sight to the 
blind.
    GE has for a number of years contributed funding towards 
``Operation Smile'' (headquartered in Norfolk, Virginia) to bring 
American doctors to countries like Vietnam to operate on children with 
facial deformities such as harelips and cleft palates.
    We believe that GEMS can contribute significantly to the upgrade of 
healthcare in Vietnam.
GE Lighting (GEL)
    GE Lighting (headquartered in Cleveland, Ohio) has gained a modest 
presence in Vietnam with annual sales running over $1 million.
GE Appliances (GEA)
    GE Appliances (headquartered in Louisville, Kentucky) has 
contracted with a private company to sell American (GE) manufactured 
appliances (refrigerators, air conditioners, washing machines, etc.) to 
the Vietnamese market.
IV. Conclusion
    The Vietnamese leadership's commitment to economic reform and to 
the diversification of Vietnam's international relationships, coupled 
with a strong national work ethic far outweighs the country's well 
known difficulties like the weak banking system, underdeveloped body of 
law, and lack of infrastructure.
    Vietnam is using its strengths to effectively address its 
shortcomings and successfully integrate into the global economy. The 
ultimate question is which companies from which countries will grow 
their businesses in Vietnam, and in turn, will grow with Vietnam by 
their engagement.
    We deeply appreciate the support of your Subcommittee and 
ultimately of the entire Congress for renewing waiver of the Jackson-
Vanik Amendment for the past several years. Because of this, General 
Electric is better positioned than ever to meet foreign competition and 
thereby create opportunities for our American workers to produce 
equipment for sale into Vietnam's growing market.
    We will continue to work closely with the U.S. Government and we 
greatly appreciate the active support received from Ambassador 
Burghardt and his fine staff in Hanoi for American business and 
workers. We will also continue our active involvement with such 
organizations as the U.S.-Vietnam Trade Council and AMCHAM.
    Clearly, as the U.S.-Vietnam relationship continues to improve on 
the basis of mutual respect and mutual benefit, progress will continue 
on all fronts.

                               

    Chairman CRANE. I have a couple of questions I would like 
to put to anyone on the panel who feels inclined to respond. 
The first one is, how does the level of activity of U.S. 
companies in Vietnam compare with other countries' investment 
in the region? Second, do foreign companies receive greater 
government-sponsored trade promotion and investment support 
than U.S. companies? Anyone?
    Ms. FOOTE. I may be able to take a crack at that, sir. The 
United States is still--I think it is maybe 12th or 13th on the 
list of foreign investors in Vietnam. As I mentioned in my 
testimony, it has only been 6 months that the United States has 
extended NTR status. We are still behind the curve on the 
economic normalization process. We are catching up, but we have 
had a much slower start than other countries in the region and 
I think our numbers show that.
    The U.S.--the companies who have been there now for some 
time have turned the corner in terms of profits and are looking 
at their second and third generations of investment. So, I 
think the United States is beginning to move up in the process.
    Chairman CRANE. Thank you. Anyone else want to add anything 
to that?
    If not, second question: Where has Vietnam been most 
successful in implementing the Bilateral Trade Agreement, and 
where is more work required? What are your priorities?
    Ms. FOOTE. I could start that one.
    Chairman CRANE. Ladies first.
    Ms. FOOTE. One of maybe the model programs has been in the 
area of insurance technical assistance. We just last week had 
an insurance program in Hanoi that New York Life, ACE, and the 
American International Group (AIG) with the Department of 
Commerce and the Trade Council worked on. There are four 
chapters of the trade agreements, and different ministries are 
involved in different chapters. Things get phased in over time. 
I think probably the most technically difficult would be the 
intellectual rights chapter. The investment chapter is pretty 
straightforward and the rules and regulations are being 
implemented right now.
    Chairman CRANE. You raised a question there. Let me follow 
up on that. Vietnam has one of the worst records on protecting 
intellectual property rights. What specific steps have they 
taken to improve IPR enforcement?
    Ms. FOOTE. They have been very involved in some of the U.S. 
Government programs. We have been able to facilitate bringing 
Vietnamese officials to the United States and other programs. 
The drafting of the law and the writing of the regulation I 
think is going fairly well.
    The problem is on the other side, which is enforcement. 
That is where I think a lot of work needs to be done, and there 
is an increasing amount of products coming in from their 
neighboring countries. This is not a problem of companies 
producing products in Vietnam. It is a smuggling and import 
problem.
    Chairman CRANE. Anyone else want to comment? Mr. Levin?
    Mr. LEVIN. Thank you. Welcome. I think most on the 
Subcommittee and the Committee share your basically positive 
approach. I admire your enthusiasm, Mr. Sauvageot. You have 
been in Vietnam a number of years, but you haven't forgotten 
how to look at the impact of programs on each State. Well done.
    Let me, though, comment, because I do think we have come 
far enough with Vietnam, even though it has been briefed that 
we can have kind of an honest dialog with them on outstanding 
issues. I regret there is nobody here today to talk about human 
rights issues. The State Department report, as you know, the 
most recent report, essentially says that the human rights 
situation in Vietnam worsened in 2001. Then they go on to spell 
out why that is true. Then they say with respect to labor 
conditions, the annual human rights report reports that Vietnam 
restricts the ability of workers to form or join unions of 
their own choosing.
    I think it is important to keep that in mind, Ms. Foote, in 
regard to your statement you cover labor issues.
    Then, at the end, say the main criticism of Vietnam's labor 
code remains the requirement that all unions affiliate with a 
quasi-governmental entity. That is a major deviation, to put it 
mildly, from the labor standards and, as I discussed with the 
Ambassador yesterday, I think a critical issue that we need to 
discuss with them.
    Each country is different. Cambodia is not the same as 
Vietnam, I acknowledge.
    I wanted to say something, if I might, to our friend from 
General Electric about the annual process versus elimination of 
it. The waiver will continue, and I hope with a decisive vote. 
I think that is the way we should proceed. The issue of 
eliminating the Jackson-Vanik provisions as to Vietnam I think 
is more complicated than just saying that you do. It creates 
uncertainty. It also--there really isn't that much uncertainty 
in the sense that we are going to annually--presuming that 
there is a continued positive evolution, we are going to vote 
yes.
    It also creates, I think, some useful pressure. That was 
true of our deliberations as to China. Remember, Jackson-Vanik 
did not start as an immigration provision. It started as a 
trade bill, and the immigration portion was added on to it. It 
was a vital addition.
    We are facing this issue, for example, as to Russia, and I 
think we need to ask ourselves carefully how the annual process 
fits into the discussions of the terms of accession to WTO, as 
well as keeping the pressure--intellectual property, for 
example, has been mentioned.
    I mean, the business community has a major stake in 
Vietnam, not only passing good laws but implementing them. You 
have a major stake in the workers back here who work for the 
companies--have a major stake in Vietnam developing a true rule 
of law, because if you get contracts and you can't enforce them 
through any transparent process, I mean you are not further 
ahead, and you may be further behind if any government entity 
is dealing underneath the table with some entity other than a 
U.S. company where there are restrictions on that.
    So, I think your positive approach resonates, provided that 
we look at it in its full perspective. I mean, it is going to 
take time. There are going to be problems in our relationship. 
The catfish issue is just one example. I would not have voted, 
if I had a separate vote, the way the Senate did, and that is 
another issue.
    Anybody want to spend--the red light is on--do you want to 
spend 15 seconds before the Chairman----
    Mr. BENANAV. I agree with you that there are many issues 
inside Vietnam that we need to keep the pressure on--labor 
issues, human rights issues--and we are going to see progress 
be sort of two steps forward, one step back, and those are 
certainly issues that the Government and the people of the 
United States have an interest in.
    I also agree with you that Jackson-Vanik in the early days 
was an extremely effective tool for getting some progress for 
it. I do believe that we have reached the point in our 
relationship where the value of this, what I call kabuki dance, 
has really become minimal. There are many, many other 
mechanisms in place today to deal with those issues, the 
catfish issue, the enforcement of contract issues. There are 
lots of mechanisms that are in place.
    The relationship has reached such a level of maturity and 
positiveness that I think the whole waiver process has become a 
tremendously inefficient utilization of your time and a lot of 
other people's time. We would, I think, serve ourselves much 
better by treating the relationship with Vietnam as a mature 
relationship, as we have with other countries where we have big 
issues, and not go through this annual kabuki dance, with the 
results almost being certain anyway.
    Mr. LEVIN. My time is up. You know, we don't spend enough 
time talking about these relationships, really. I mean, you all 
come and visit us, but our institutions should spend more time 
rather than less, I think, understanding what is going on in 
Vietnam. We can argue whether this is the best way to do it. 
Thank you.
    Chairman CRANE. Mr. Houghton.
    Mr. HOUGHTON. Thanks, Mr. Chairman. I agree with Mr. Levin 
that it is too bad that we have to have this annual review of 
the Jackson-Vanik waiver, but it does afford us an opportunity 
to talk about some of our international relations. I tend to 
think that we as a country tend to sort of fall back in sort of 
an insular position and think that a lot of things we can do 
ourselves, or do, you know, within the continental limits. So, 
I think there is an opportunity for us to be able to have a 
conversation and dialog with people like yourself.
    Mr. Benanav, I would like to ask you a question. You are 
obviously concerned about the Bilateral Trade Agreement and 
also I think you are interested in the World Trade Organization 
involvement, but you say something about your company going 
into Vietnam to try to increase the financial services sector 
there. You know, everybody's got his or her own participation 
here, and ultimately the financial services section, in 
addition to the whole concept of the rule of law, is going to 
be very, very important. So, what do you plan to do? Are there 
others doing this thing with you? What is going to be the 
impact?
    Mr. BENANAV. Yes, sir. I think the financial service sector 
is a very important industry if we are going to see Vietnam's 
economic development continue. We actually, in one way, shape 
or form, provide a lot of the fuel, if you will, for a growing 
economy. Today in the life insurance sector, Vietnam has one 
state-owned company and three foreign companies operating. One 
is an American company, AIG; one is a British company, 
Prudential U.K.; and one is a Canadian company, Manual Life. 
Others, including my company, would like to enter that market, 
and we think we can bring significant value both to the 
consumers in Vietnam as well as the Vietnamese economy.
    The Bilateral Trade Agreement requires Vietnam to open its 
market over a 5-year period to American insurance companies. We 
are encouraging the Vietnamese to move much more quickly than 
that. We think the market is a large enough market with great 
potential. We have tried to educate the Ministry of Finance on 
how life insurance in particular is a valuable, valuable tool. 
We collect the very small savings of the 80 million people in 
Vietnam, we can pool them together and reinvest them into the 
Vietnamese economy in long-term projects, not short-term 
projects, but long-term infrastructure projects that are 
absolutely essential if that country is going to develop.
    The life insurance industry financed the infrastructure of 
the United States, railroads, many of the roads and housing. We 
can do the same for Vietnam, but we can't do so until they open 
the door to us. As I said, we think that a strong, positive 
relationship with the United States, the waiver of the Jackson-
Vanik will encourage them to open doors to American companies.
    Mr. HOUGHTON. Do you have the same restrictions in Vietnam 
in doing business that you would here in terms of the same 
financial walls against various financial institutions, 
commercial banking, insurance?
    Mr. BENANAV. The first wall we have in Vietnam is that you 
are not allowed to do business in Vietnam until they give you a 
license, and they are not required to give you a license at 
this point. Once you are there, the companies operating there 
are operating in a regulatory structure that I would say is 
somewhat primitive, if you will. The regulations are not highly 
developed. They don't have the expertise. They do keep the 
industries separate--banking, insurance and whatever they have 
of securities at this point.
    One of the things that my company is doing, and other 
companies, is really trying to provide expertise to the 
Government of Vietnam and its various regulatory bodies so they 
can develop their regulations and move them ahead. Whether they 
keep the financial pillars separate for many years I think will 
have to be a decision they have to make. They are a long way 
from making that decision. They are really significantly behind 
much of the world in developing solvency regulation and 
consumer protection regulation.
    Mr. HOUGHTON. I guess what I was trying to get at, do you 
have more flexibility in terms of financial services in Vietnam 
than you would in the United States?
    Mr. BENANAV. No, we don't. We have less.
    Chairman CRANE. Mr. Watkins.
    Mr. WATKINS. Thank you, Mr. Chairman, and members of the 
panel. I am listening with great interest to the various 
testimonies. I know, as Mr. Clark is there and I think----
    Ms. Foote, you made the comment about our companies, more 
involvement with the companies. There is a great deal more 
dumping of solid waste, more problems, and that is one of the 
things that has been brought to my attention by several people; 
the problems that Vietnam has in pollution is one of the major 
problems.
    That is why I was asking the other question of the other 
panel about the involvement of World Bank and the Asian 
Development Bank and the group there, are they participating? I 
was looking at some other testimony here earlier or reading 
some other document, and we have the foreign--the United States 
Foreign Commercial Service, Foreign Agricultural Service. We 
have offices in Hanoi as well as in Ho Chi Minh City.
    I am reading these groups, a number of priorities--they 
have got several, including about the sixth or seventh listed 
down there, the need for environmental and pollution control 
efforts, but some inquiries have been made from time to time; 
they haven't seemed as interested in trying to get involved, to 
getting it solved. Do you have any--I know I have one other 
major question about this. Do any of you have an answer of how 
we open that door to get more activity in there? Evidently they 
are getting the same problem. The water, the sanitation, 
pollution problems, are affecting drinking water and everything 
else in a big way.
    Ms. FOOTE. I can tell you that the multilateral donor 
community is extremely active in Vietnam. I believe World Bank, 
ADB, United Nations Development Programme, some of the other 
organizations, have pledged about 9 billion in poverty 
reduction, development assistance funds in the last 5 to 7 
years. The United States has----
    Mr. WATKINS. United Nations made a commitment in the area?
    Ms. FOOTE. The USAEP, the United States Asia Environmental 
Partnership, which is an USAID-funded program in Vietnam, it is 
small, I don't know what its annual budget is, but there is an 
environmental group there funded by the United States. There 
are also many bilateral donor-assisted programs such as 
building a new dike system in Hanoi, the water system in Hanoi 
which desperately needs it, as you point out. There is 
certainly a door very much open in Vietnam for environmental 
help, pollution control, waste management. There are donors who 
are working on that. Poverty reduction is the overall theme of 
the World Bank program, and pollution control is only one part 
of that.
    Mr. WATKINS. A lot of that is probably in the agriculture. 
I know, Barry, you have done some things in that area. I assume 
there is a tremendous need of increase in their production in 
order for them to have some gainful income. Are they trying to 
increase the production of their land?
    Mr. CLARK. Dramatically, sir, and they are doing it both in 
the production of--in the rice area, but also in shrimp 
farming. They have become the second-largest exporter of shrimp 
behind Thailand. A lot of it is because of the technology from 
a company there in Tulsa that provides biotech products to 
clean up the ponds and has been a dramatic improvement in their 
shrimp production, taking them to second place in the world.
    Mr. WATKINS. Another thing in discussing with a number of 
people, their development depends a good deal on a great more 
involvement of training and the lack of training in job 
descriptions, job areas. Do you find this to be an area that 
needs some attention? Any of you got firsthand experience with 
that?
    Mr. BENANAV. Definitely.
    Mr. WATKINS. That is education, you know.
    Mr. BENANAV. Absolutely. Training is vital if they are 
going to move ahead, if they are going to open the economy. I 
think the Vietnamese recognize it, and they are willing to 
accept it.
    For example, my own company is about to implement a program 
where two officials from the Vietnamese Ministry of Finance 
will come to New York for several months for training on 
insurance regulation. They are quite open about their need for 
it. They are not ashamed to admit that they need to move 
forward, and the best way to get it is through training. Other 
companies are providing the same kind of training in various 
industries, and the universities are really doing a wonderful 
job of training the younger people in general skills.
    I do believe that the more Vietnamese that we can bring to 
this country either for short-term training or long-term 
training, the better off the relationship will be, as well as 
our ability to convince them that open markets and democratic 
societies are really the way to go.
    Mr. WATKINS. How about technology and mechanical areas?
    Mr. SAUVAGEOT. Sir, we have the same positive experience 
with our Vietnamese customers and their enthusiasm for getting 
technical training.
    A couple of examples. Very recently we had a very tough 
competition against a British company, Rolls Royce, for 
selection of aircraft engines the Vietnamese are leasing to--
they have already signed a lease agreement with International 
Leasing Finance Corporation, ILFC, to lease two brand new 
Boeing triple 7200 ER--for extended range--which will do heavy-
duty service, nonstop between Vietnam and Paris with heavy 
payloads. The ILFC could offer either the Rolls Royce engine or 
could offer the General Electric engines. Tough competition.
    One of the things that helped us get selected was the Trade 
and Development Agency offered approximately $300,000, the 
exact amount we will know in a little bit, but about $300,000 
to the Vietnam airlines to provide training in the United 
States. We are now seeking other help from trade development 
agencies to bring some Vietnamese from Vietnam Oil and Gas 
Company, PetroVietnam, and maybe Lei Llama, the big 
construction company who is the prime contractor on this 720-
megawatt combined cycle plant that I mentioned in my 5-minute 
remarks. We are seeking those funds to bring them to an 
orientation visit, and later maybe for some additional 
training. We are finding a lot of interest on technical 
training in the United States.
    Mr. WATKINS. I have had some interest expressed to me and 
that is why I wanted to follow up on it. Mr. Chairman, I thank 
you. I know my time has run out. I appreciate the panel and I 
appreciate you hosting this particular hearing.
    Chairman CRANE. Well, we all appreciate your testimony and 
your involvement in this effort that is one that I think our 
Committee on a bipartisan basis is supportive of.
    We will be meeting in here at 2:30 this afternoon with the 
full Committee, and the objective is to renew Vietnam's 
Jackson-Vanik waiver. With strong bipartisan support, I am 
confident that we will report it out favorably; might take 15 
minutes or so, but report it out favorably. It is in no small 
measure because of the constant ongoing input from people like 
you and your involvement and communicating that to us and we 
are grateful.
    With that, the Subcommittee stands adjourned.
    [Whereupon, at 12:00 noon, the hearing was adjourned.]
    [Submissions for the record follow:]

                            American Chamber of Commerce in Vietnam
                                                     Hanoi, Vietnam
                                                      July 17, 2002

    Dear Member of Congress:

    As members of the American business and development community, we 
strongly support action to continue normal trade relations with 
Vietnam. Renewal of the Jackson-Vanik waiver is a key step in this 
process. The American Chamber of Commerce in Hanoi opposes H.J. 
Resolution 101, which would overturn the waiver, and our membership 
urges you to vote against the resolution when it comes to the floor on 
July 18, 2002.
    The United States has granted Vietnam a waiver of the Jackson-Vanik 
provisions of the Trade Act of 1974 since March 1998. Renewal of the 
Jackson-Vanik waiver will ensure that U.S. companies and farmers 
exporting to Vietnam will maintain access to critical U.S. export 
promotion programs, such as those of the U.S. Export-Import Bank, the 
Overseas Private Investment Corporation, and agricultural and maritime 
credit programs. Ultimately, the Jackson-Vanik waiver, plus the 
bilateral trade agreement, will continue to lead the way for normal 
trade relations, enabling American companies and products to compete 
effectively with European and Asian companies and products in the 
Vietnamese market.
    The Administration's policy since the establishment of diplomatic 
relations in 1995 has been to work with Vietnam to normalize 
incrementally our bilateral political, economic and consular 
relationship. This policy builds on Vietnam's own policy of political 
and economic reintegration in the world. U.S. engagement will promote 
the development of a prosperous Vietnam integrated into world markets 
and regional organizations that, in turn, will contribute to regional 
stability. Our involvement has secured Vietnamese cooperation and 
engagement on a range of important U.S. policy goals. It is in the U.S. 
national interest for this progress to continue.
    Important progress in the bilateral relationship has been made in 
the past year. After five years of negotiations, the U.S.-Vietnam 
Bilateral Trade Agreement (BTA) was activated on December 10 of last 
year. The BTA, which addresses issues relating to trade in goods and 
farm products, trade in services, intellectual property rights and 
foreign investment, creates more open market access, greater 
transparency and lower tariffs for U.S. exporters and investors in 
Vietnam.
    U.S. business views Vietnam, the thirteenth most populous country 
in the world with nearly 80 million people, as an important potential 
market for U.S. exports and investment. Increased U.S. exports to and 
investment in Vietnam that result from progress towards an open, 
market-oriented economy, in turn, translate into increased jobs for 
American workers.
    The American business and development community believes that a 
continued policy of economic normalization with Vietnam is in our 
national interest. Last year, the House defeated the resolution of 
disapproval on Jackson-Vanik by a vote of 324 to 91. We urge you to 
support the renewal of the Jackson-Vanik waiver this summer as an 
important step in positive relations between the two countries.
    Without a Jackson-Vanik waiver, American businesses would lose 
access to U.S. Government trade promotion and investment support 
programs. This would restrict our ability to compete on a level playing 
field with our European and Asian competitors who have access to 
similar programs.
    Accordingly, on behalf of the growing US business community in 
Vietnam, we appeal for your understanding and action in continuing the 
good work that you have already done to move the bilateral relationship 
forward.
    Thank you in advance for your consideration.

            Sincerely,

                                                  Chris S. Tragakis
                                                           Chairman

                               

          Statement of the Boeing Company, Arlington, Virginia
    The Boeing Company appreciates this opportunity to comment on the 
U.S. trade relationship with Vietnam and commends the Chairman for his 
leadership on this important issue. Boeing strongly supports U.S.-
Vietnam trade relations and applauds the Congress and the 
Administration for their efforts to implement the policies necessary to 
further expand trade with Vietnam.
    The U.S.-Vietnam trade relationship is beneficial to both nations. 
Open trade with Vietnam provides a market for U.S. exports, creating 
high-paying jobs here at home, and gives the Vietnamese people an 
opportunity to experience the benefits of free enterprise. Commercial 
aviation is a key element of that relationship, increasing trade, 
tourism, and other types of commerce, promoting communication, and 
generating the foreign currency necessary for continued economic growth 
and development.
    The Boeing Company supports renewal of Vietnam's waiver under the 
Jackson-Vanik amendment to the Trade Act of 1974 and recommends that 
Vietnam and the U.S. complete an air transportation bilateral agreement 
to accelerate Vietnam's progress toward a vital free market economy.
    The waiver of Jackson-Vanik gives American companies selling to 
Vietnam access to crucial U.S. export promotion programs offered by the 
Export-Import Bank and the Overseas Private Investment Corporation. 
These programs are vital to meeting the challenges of doing business in 
Vietnam's emerging market.
    Since the President lifted the trade embargo on Vietnam in 1994, 
the country has made significant free market reforms and has 
experienced substantial economic growth. Foreign companies have joined 
forces with the Vietnamese to undertake a major rebuilding of the 
economy in almost every sector. The aviation sector is no exception.
    Vietnam Airlines has been working hard to make those changes 
necessary to compete in the increasingly competitive commercial 
aviation industry. Less than 10 years ago, the airline operated a small 
fleet of older, Russian-made aircraft generally considered unreliable 
and uncomfortable by today's standards. Vietnam Airlines now has 
replaced much of this fleet with modern equipment, allowing the airline 
to greatly improve its level of service and better meet the demands of 
today's sophisticated traveler. The results have been dramatic.
    Most recently, after passage of the U.S.-Vietnam Bilateral Trade 
Agreement last year, Vietnam Airlines purchased four Boeing 777s in a 
deal worth $680 million. The sale was historically significant, as it 
was the first time Vietnam Airlines purchased aircraft instead of 
leasing them. The deal marked a major step forward in the U.S.-Vietnam 
trade relationship.
    Since then, Vietnam Airlines has leased two more 777s in order to 
expand and upgrade its fleet. Boeing will have to continue to compete 
aggressively for this business, but cannot do so in the absence of a 
strong trade relationship with Vietnam.
    The Boeing Company believes that with the extension of annual NTR 
to Vietnam and the eventual accession of Vietnam to the World Trade 
Organization, that U.S.-Vietnam trade will be of significant benefit to 
both nations.
    The potential for major economic growth in Vietnam is undeniable.
    From 1992 to 1997, prior to the Asian financial crisis, Vietnam 
Airlines experienced annual traffic growth averaging 30 percent per 
year. This compares to an average for the industry worldwide of five 
percent per year, and for Asia as a whole, of seven percent. The 
financial turmoil that engulfed Asia in late 1997 and in 1998 did not 
have the same negative impact on Vietnam Airlines that it did on the 
airlines in neighboring countries. Some of these airlines suffered from 
double-digit percentage reductions in traffic, and significant erosion 
in profits. While Vietnam Airlines did lose profits, the carrier was 
able to hold on to a generally constant level of traffic during the 
depths of the crisis.
    As these statistics indicate, the potential market for aircraft 
sales in Vietnam over the next 10 to 15 years is significant. Boeing 
projects Vietnam Airlines could require three to five billion dollars 
worth of modern aircraft during this period. Such growth means that 
Vietnam Airlines could develop an operation comparable to the size of 
Thai International Airways, Cathay Pacific, or Singapore Airlines, each 
with 60 to 80 aircraft.
    Approval of annual NTR for Vietnam is essential to Boeing's ability 
to continue to compete for commercial aircraft sales to Vietnam.
    The Boeing Company strongly supports the extension of NTR for 
Vietnam. Increased trade between our two nations will create jobs and 
economic opportunity both in the United States and Vietnam.

                        
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