49–010 

Calendar No. 560 

109TH CONGRESS REPORT " ! SENATE 2d Session 109–321 

A BILL TO AUTHORIZE THE EXTENSION OF NONDISCRIMINATORY TREATMENT (NORMAL TRADE RELATIONS 

TREATMENT) TO THE PRODUCTS OF VIETNAM 

AUGUST 30, 2006.—Ordered to be printed 

Filed, under authority of the order of the Senate of August 4, 

(legislative day August 3) 2006. 

Mr. GRASSLEY, from the Committee on Finance, 

submitted the following 

R E P O R T 

[To accompany S. 3495] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Finance, to which was referred the bill (S. 

3495) to authorize the extension of nondiscriminatory treatment 

(normal trade relations treatment) to the products of Vietnam, having considered the same, reports favorably thereon without amendment and recommends that the bill do pass. 

CONTENTS 

Page 

I. Report and Other Materials of the Committee .............................................. 2 

A. Report of the Committee on Finance .................................................. 2 

B. Trade Relations with Vietnam ............................................................ 2 

1. U.S.-Vietnam Economic Relations ................................................ 2 

2. U.S.-Vietnam Trade Data .............................................................. 3 

C. Summary of Committee Consideration ............................................... 6 

1. The Jackson-Vanik Amendment ................................................... 6 

2. Description of the Bill .................................................................... 6 

3. Committee Consideration .............................................................. 6 

II. Budgetary Impact of the Bill ........................................................................... 8 

III. Regulatory Impact of the Bill and Other Matters ......................................... 10 

IV. Changes in Existing Law Made by the Bill, as Reported ............................. 10 


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I. REPORT AND OTHER MATERIALS OF THE COMMITTEE 

A. REPORT OF THE COMMITTEE ON FINANCE

The Committee on Finance, to which was referred the bill (S. 

3495) to authorize the extension of nondiscriminatory treatment 

(normal trade relations treatment) to the products of Vietnam, having considered the same, reports favorably thereon without amendment and recommends that the bill do pass. 

B. TRADE RELATIONS WITH VIETNAM

1. U.S.-VIETNAM ECONOMIC RELATIONS

Vietnam is a densely-populated developing country. It ranks as 

the world’s 13th most populous country with nearly 85 million people in an area slightly larger than the size of New Mexico. In 1986, 

Vietnam responded to disastrous economic conditions with the doi 

moi (renovation) economic reforms. Since then, Vietnam has had 

one of the fastest growing economies in the world, with an annual 

gross domestic product (GDP) growth rate of nearly eight percent. 

Despite its economic development, nearly 20 percent of the Vietnamese population is estimated to live in poverty as of 2004. 

Since the early 1990s, the United States has taken gradual steps 

to improve relations with Vietnam. On February 3, 1994, President 

Clinton lifted the trade embargo on Vietnam in recognition of the 

cooperation received from the Government of Vietnam in Prisoner 

of War/Missing in Action (POW/MIA) accounting. On July 11, 1995, 

the President announced the establishment of diplomatic relations 

with Vietnam. On March 9, 1998, the President first determined 

that a Jackson-Vanik waiver for Vietnam would substantially promote the freedom of emigration objectives under the Act. On April 

7, 1998, the President issued Executive Order 13079, under which 

the waiver entered into force. Vietnam has received a presidential 

Jackson-Vanik waiver every year since 1998. 

In 1997, the United States began negotiations with Vietnam toward the conclusion of a U.S.-Vietnam bilateral trade agreement 

(BTA). The negotiations culminated in a BTA, which Congress approved in 2001. Under the BTA, Vietnam agreed to implement significant economic reforms, expand the rule of law, and broaden economic freedoms. In the years that followed, Vietnam made important progress in implementing its commitments under the BTA, 

though concerns remain, particularly with respect to the protection 

of intellectual property rights. Since 2002, the Administration has 

placed Vietnam on the Special 301 watch list for poor protection of 

intellectual property rights, particularly in the areas of music recordings and trademark protection. In November 2005, Vietnam’s 

National Assembly passed a new, comprehensive, law on intellectual property rights. 

Vietnam applied to join the World Trade Organization (WTO) on 

January 1, 1995. The WTO Working Party on the accession of Vietnam was established on January 31, 1995. The eleventh meeting 

of the Working Party was held in March 2006. On May 31, 2006, 

U.S. and Vietnamese negotiators signed a bilateral agreement on 

the conditions for Vietnam’s accession into the WTO. This was the 

last of Vietnam’s bilateral accession negotiations to be concluded. 

Vietnam still needs to conclude the negotiations with the multilatVerDate Aug 31 2005 06:04 Aug 31, 2006 Jkt 049010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR321.XXX SR321

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eral Working Party, which consists of 63 WTO members, including 

the United States. Once the Working Party report is concluded and 

Vietnam accedes to the WTO, the United States will have to extend 

unconditional or permanent normal trade relations (PNTR) to Vietnam in order for U.S. exporters to avail themselves of the market 

access commitments Vietnam has made to join the WTO. 

Since the U.S. trade embargo on Vietnam was lifted in 1994, 

two-way trade between the United States and Vietnam has increased steadily. During the period 1994–1996, two-way trade in- creased from $223 million to $935 million. In 1997 the Asian financial crisis had a dampening effect on two-way trade, which fell to 

$666 million. Since then, two-way trade has been on a continuous 

upward trend. During the period 1998–2005, two-way trade in- creased from $789 million to $7.7 billion. In 2005, U.S. exports to 

Vietnam totaled $1.2 billion, while U.S. imports from Vietnam were 

valued at $6.5 billion. Top U.S. exports to Vietnam include aircraft, 

cotton, polymers, milk, footwear parts, and wood. Major U.S. imports from Vietnam include furniture, clothing, footwear, shrimp, 

petroleum products, nuts, and coffee. 

2. U.S.-VIETNAM TRADE DATA

Vietnam ranks 58th as a U.S. export market, and 38th as a 

source of U.S. imports. The following tables summarize the top 15 

exports to Vietnam and top 15 imports from Vietnam during the 

period 2000–2005: 


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U.S. EXPORTS TO VIETNAM, 2000–2005 

[In U.S. dollars] 

HTS Chapter Top 15 product descriptions, by HTS chapter 2000 2001 2002 2003 2004 

88 .................... Aircraft .................................................................................................................................. 2,918,996 7,483,150 78,642,144 715,577,109 376,203,722 384 .................... Boilers and Mechanical Appliances ..................................................................................... 78,302,366 78,895,614 121,586,326 121,298,360 114,638,618 139 .................... Plastics ................................................................................................................................. 17,649,915 22,117,086 26,564,371 36,882,341 57,926,186 85 .................... Electrical Machinery ............................................................................................................. 30,260,573 34,965,557 39,659,544 46,807,925 54,254,473 90 .................... Optical, Photographic ........................................................................................................... 12,521,281 18,859,652 22,272,905 41,250,426 37,366,352 52 .................... Cotton Yarns and Fabric ...................................................................................................... 14,508,449 29,178,243 27,585,335 33,715,744 66,571,078 44 .................... Wood and Articles of Wood .................................................................................................. 1,639,483 6,342,629 18,970,559 20,302,054 38,962,897 87 .................... Vehicles, Other Than Railway .............................................................................................. 5,079,475 7,387,870 12,237,734 24,920,637 36,979,461 4 ...................... Dairy Produce ....................................................................................................................... 5,037,445 8,127,845 3,172,907 2,653,414 23,617,244 64 .................... Footwear ............................................................................................................................... 27,471,668 19,309,669 17,850,053 22,769,739 24,465,764 23 .................... Waste From The Food Industries .......................................................................................... 8,739,012 8,443,425 13,003,601 12,476,647 9,412,731 72 .................... Iron and Steel ....................................................................................................................... 3,681,125 2,898,975 4,380,944 5,295,662 75,736,593 48 .................... Paper and Paperboard ......................................................................................................... 7,183,041 12,014,730 10,655,970 16,732,905 23,294,203 47 .................... Pulp of Wood ........................................................................................................................ 5,768,163 9,276,841 8,960,610 9,190,415 6,707,243 41 .................... Raw Hides and Skins ........................................................................................................... 2,590,212 2,589,162 5,474,147 5,517,000 11,447,727 

Note: HTS denotes the Harmonized Tariff Schedule of the United States. Source: U.S. International Trade Commission Dataweb. 

U.S. IMPORTS FROM VIETNAM, 2000–2005 

[In U.S. dollars] 

HTS Chapter Top 15 product descriptions, by HTS chapter 2000 2001 2002 2003 2004 

62 ............... Woven Apparel ........................................................................................................................... 29,920,973 26,036,156 437,133,188 1,240,919,563 1,421,626,440 1,561 ............... Knit Apparel ............................................................................................................................... 16,753,925 21,319,457 435,760,339 1,096,375,035 1,080,584,384 1,164 ............... Footwear ..................................................................................................................................... 124,535,232 132,004,312 224,191,079 324,805,608 473,389,837 794 ............... Furniture and Bedding .............................................................................................................. 9,686,998 14,263,761 81,766,415 189,586,600 388,643,084 627 ............... Mineral Fuels and Oils .............................................................................................................. 90,713,774 156,693,042 179,340,422 209,176,775 249,515,516 503 ............... Fish and Crustaceans ............................................................................................................... 242,854,840 383,745,193 478,926,382 568,527,472 403,916,698 409 ............... Coffee, Tea, Mate and Spices ................................................................................................... 132,892,458 88,666,512 73,001,887 97,875,797 143,795,358 116 ............... Meat, Fish, and Aquatic Invertebrates ...................................................................................... 57,717,966 93,048,467 138,101,069 161,969,116 161,662,318 108 ............... Fruit and Nuts ........................................................................................................................... 51,146,615 48,087,034 70,535,333 99,206,684 171,918,868 142 ............... Articles of Leather ..................................................................................................................... 3,567,997 3,422,989 61,955,011 100,694,756 123,881,364 184 ............... Boilers and Mechanical Appliances .......................................................................................... 1,207,502 1,432,266 19,911,509 66,843,656 62,027,576 1


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85 ............... Electrical Machinery .................................................................................................................. 1,632,484 662,348 7,132,904 30,249,976 49,582,490 65 ............... Headgear .................................................................................................................................... 125,055 245,801 23,942,979 38,590,509 63,019,046 39 ............... Plastics ...................................................................................................................................... 225,301 257,212 5,563,440 11,296,261 28,399,795 63 ............... Made-Up Textiles ....................................................................................................................... 845,768 741,893 6,779,157 22,236,891 47,779,022 

Note: HTS denotes the Harmonized Tariff Schedule of the United States. Source: U.S. International Trade Commission Dataweb. 


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C. SUMMARY OF COMMITTEE CONSIDERATION

1. THE JACKSON-VANIK AMENDMENT

Section 401 of Title IV of the Trade Act of 1974 requires the 

President to continue to deny nondiscriminatory treatment (normal 

trade relations treatment) to any country not receiving such treatment at the time of the law’s enactment on January 3, 1975. Section 402 of Title IV, also referred to as the Jackson-Vanik amendment, provides that the President may extend normal trade relations treatment on a recurring basis to a country that is in full 

compliance with certain specified freedom-of-emigration conditions. 

Section 402 also authorizes the President to waive full compliance 

with the freedom-of-emigration requirements if the President determines that such a waiver would encourage freedom of emigration. 

Before the President may extend conditional normal trade relations 

to a country subject to Title IV, that country must first conclude 

a bilateral commercial agreement with the United States pursuant 

to section 405 of Title IV. Since Congress approved the BTA with 

Vietnam in 2001, Vietnam has received conditional normal trade 

relations pursuant to the President’s waiver authority under section 402. 

2. DESCRIPTION OF THE BILL

S. 3495 authorizes the President to determine that title IV of the 

Trade Act of 1974 (19 U.S.C. 2431 et seq.) no longer applies to Vietnam and to proclaim the extension of unconditional or permanent 

normal trade relations treatment (PNTR) to the products of Vietnam. 

3. COMMITTEE CONSIDERATION

S. 3495 was introduced on June 13, 2006, by Senator Baucus, on 

behalf of himself and Senators Smith, McCain, Kerry, Hagel, 

Lugar, Murkowski, and Carper. Since then, Senators Crapo, Bennett, and Stevens have also joined as cosponsors. Also on June 13, 

2006, Congressman Ramstad introduced companion legislation 

(H.R. 5602) in the House of Representatives. 

Chairman Grassley convened a hearing of the Finance Committee on July 12, 2006, to consider S. 3495. Testifying at the hearing were: Ambassador Karan K. Bhatia, Deputy U.S. Trade Representative, Office of the U.S. Trade Representative; Mr. Eric John, 

Deputy Assistant Secretary, Bureau of East Asian and Pacific Affairs, U.S. Department of State; Mr. Jon Caspers, Former President, National Pork Producers Council (Swaledale, IA); Mr. Christian Schlect, President, Northwest Horticultural Council, (Yakima, 

Washington); Mr. Jeffrey R. Shafer, Vice Chairman, Citigroup 

Global Markets (New York, NY); Mr. Augustine D. Tantillo, Executive Director, American Manufacturing Trade Action Coalition 

(Washington, DC); Mr. Chris Seiple, President, Institute for Global 

Engagement (Washington, DC); Mr. T. Kumar, Advocacy Director 

for Asia, Amnesty International (Washington, DC); and Ms. Virginia B. Foote, President, U.S.-Vietnam Trade Council (Washington, DC). Invitations to appear and testify were also extended 

to the AFL–CIO, the International Brotherhood of Teamsters, and 

the Union of Needletrades, Industrial and Textile Employees. Due 


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to scheduling conflicts, those organizations were unable to provide 

a witness to testify at the hearing. 

The Finance Committee also received numerous statements for 

the record. Many of the statements were in support of extending 

permanent normal trade relations to Vietnam. Examples of support 

include a letter from the Vietnam Veterans of America Foundation 

to congressional leaders. Another letter of support was submitted 

by the U.S.-Vietnam WTO Coalition and signed by a number of respected individuals, including former Secretaries of State Madeleine Albright, James Baker III, Warren Christopher, Henry Kissinger, and Colin Powell, among others. Separately, the Chairman 

of the Committee on International Policy of the United States Conference of Catholic Bishops wrote a letter to Ambassador Susan 

Schwab, the United States Trade Representative, expressing support for the extension of permanent normal trade relations to Vietnam. 

Other statements submitted to the Committee expressed reservations, particularly with respect to inadequate protection of human 

rights and religious freedoms in Vietnam. One such letter from a 

group of democracy advocates in Vietnam and other organizations 

in the United States and abroad was submitted to the Committee 

by California Assemblyman Van Tran. Separately, testifying on behalf of the American Manufacturing Trade Action Coalition, Mr. 

Augustine Tantillo expressed strong opposition to extending permanent normal trade relations to Vietnam. 

During the hearing, Chairman Grassley and the Members of the 

Committee expressed very strong concerns regarding the protection 

of human rights and religious freedoms in Vietnam. The Committee notes that the Department of State’s 2005 Country Reports 

on Human Rights Practices states that, with respect to Vietnam, 

‘‘[t]he government’s human rights record remained unsatisfactory’’ and that ‘‘[g]overnment officials, particularly at the local level, continued to commit serious abuses, despite improvement during the 

year.’’ Specific concerns identified include arbitrary detention or restriction of movement, or imprisonment, of persons for political and 

religious activities; restrictions on freedoms of speech, press, assembly, and association; and, police abuse of suspects during arrest, detention, and interrogation. Separately, the Department of 

State’s 2006 report on human trafficking listed Vietnam as a ‘‘Tier 

2’’ country that ‘‘does not fully comply with the minimum standards 

for the elimination of trafficking.’’

The protection of religious freedoms is another matter of serious 

concern to the Committee. In September 2004, the Secretary of 

State designated Vietnam as a ‘‘Country of Particular Concern’’

under the International Religious Freedom Act for particularly severe violations of religious freedom. The Department of State’s 

International Religious Freedom Report 2005 states that, with respect to Vietnam, a number of U.S. government officials have 

‘‘raised concerns about the registration and recognition difficulties 

faced by religious organizations, the detention and arrest of religious figures, the repression of Protestants in the Central and 

Northwest Highlands, and other restrictions on religious freedom 

with the Prime Minister, Deputy Prime Minister, government cabinet ministers, Communist Party of Vietnam (CPV) leaders, provincial officials, and others.’’ In May 2005, the United States and VietVerDate Aug 31 2005 06:04 Aug 31, 2006 Jkt 049010 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\SR321.XXX SR321

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nam concluded an agreement in which the Government of Vietnam 

made a number of commitments to advance and protect religious 

freedoms. While conditions are improving, restrictions on religious 

freedoms continue to occur. 

The Committee finds that engagement between the United 

States and Vietnam has facilitated some improvement in the protection of human rights and religious freedoms in Vietnam. The 

Committee believes that concerns over inadequate protection of 

human rights and religious freedoms are best addressed through 

expanding such engagement, particularly via greater involvement 

of U.S. citizens in Vietnamese society as a result of expanding our 

bilateral trade relations. Still, the Committee calls upon the Administration to continue to actively engage the Government of Vietnam on these issues, particularly with respect to adequate enforcement at the local level, in order to facilitate continued improvement 

in the protection of human rights and religious freedoms in Vietnam. 

On July 27, 2006, Chairman Grassley convened the Committee 

in open executive session to consider favorably reporting S. 3495. 

Senator Conrad filed one non-germane amendment to the bill. The 

Conrad amendment was discussed by the Committee, but the 

amendment was not offered. In the absence of a quorum, Chairman 

Grassley recessed the executive session subject to the call of the 

Chair. On July 31, 2006, Chairman Grassley reconvened the Committee in open executive session, at which time the Committee ordered S. 3495 favorably reported, without amendment, by rollcall 

vote: 18 ayes, 0 nays, 2 present. Ayes: Grassley, Hatch, Lott, 

Snowe, Kyl, Thomas, Frist, Smith, Crapo, Baucus, Rockefeller, 

Conrad, Jeffords, Bingaman (proxy), Kerry (proxy), Lincoln, Wyden, 

and Schumer. Present: Santorum, Bunning (proxy). 

II. BUDGETARY IMPACT OF THE BILL 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, August 18, 2006. 

Hon. CHARLES E. GRASSLEY, 

Chairman, Committee on Finance, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 3495, an act to authorize 

the extension of nondiscriminatory treatment (normal trade relations treatment) to the products of Vietnam. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Emily Schlect. 

Sincerely, 

DONALD B. MARRON, Acting Director. 

Enclosure. 

S. 3495—An act to authorize the extension of nondiscriminatory 

treatment (normal trade relations treatment) to the products of 

Vietnam 

Summary: S. 3495 would allow the President to grant permanent 

normal trade relations (PNTR) status to Vietnam. The CongresVerDate Aug 31 2005 06:04 Aug 31, 2006 Jkt 049010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\SR321.XXX SR321

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sional Budget Office estimates that the bill would increase revenues by $18 million in 2007, by $108 million over the 2007–2011 

period, and by $253 million over the 2007–2016 period. Granting 

PNTR standing to Vietnam would have no impact on tariff rates 

relative to CBO’s revenue baseline assumptions. However, if Vietnam were to become a member of the World Trade Organization 

(WTO), which CBO assumes for baseline purposes is very likely in 

the near future, quotas on Vietnamese products would be liberalized, thereby increasing imports and yielding more tariff revenue. 

CBO has determined that S. 3495 contains no intergovernmental 

or private-sector mandates as defined in the Unfunded Mandates 

Reform Act (UMRA) and would not affect the budgets of state, 

local, or tribal governments. 

Estimated cost to the Federal Government: The estimated budgetary impact of S. 3495 over the 2007–2016 period is shown in the 

following table. 

By fiscal year, in millions of dollars—

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 

CHANGES IN REVENUES 

Estimated Revenues ...................... 18 22 22 23 23 25 27 29 31 33 

Source: Congressional Budget Office. 

Basis of estimate: The legislation would remove Vietnam from 

the list of countries under title IV of the Trade Act of 1974 (the 

Jackson-Vanik amendment). Removing Vietnam from scrutiny 

under the Jackson-Vanik amendment would permit the President 

to accord it PNTR standing. Vietnam has received normal trade relations (NTR) status, renewed annually pursuant to a Presidential 

waiver of the Jackson-Vanik amendment, since 2001. CBO’s revenue baseline assumes that Vietnam will continue to receive NTR 

status, so CBO estimates that making permanent Vietnam’s NTR 

standing would not affect tariff rates. 

Granting Vietnam PNTR status would affect receipts, CBO estimates, if that country were admitted to the WTO. With Vietnam 

in the WTO, the United States would have to allow it PNTR status 

in order for the two countries to trade with each other under the 

WTO, because the rules of that body do not allow member countries to discriminate against each other (with certain exceptions). 

Further, any quotas in place on imports from Vietnam would be 

liberalized. Because it appears that significant types of imports 

from Vietnam are restricted by binding quotas, CBO would expect 

that liberalizing those quotas would result in an increase in imports (particularly of textiles and apparel) from Vietnam and the 

associated tariff collections. Those increases would be partly offset 

by decreased imports from other countries. 

Vietnam is currently negotiating to enter the WTO, and it could 

become a member as early as October 2006. Indeed, CBO assumes 

that it is highly probable that Vietnam will join the WTO this fall. 

Taking that high probability into account, CBO estimates that S. 

3495 would increase revenues by $18 million in 2007, by $108 million over the 2007–2011 period, and by $253 million over the 2007–

2016 period. If Vietnam does not join the WTO, however, these receipts would not materialize. 


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Intergovernmental and private-sector impact: The bill contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would not affect the budgets of state, local, or tribal 

governments. 

Estimate prepared by: Federal revenues: Emily Schlect. Impact 

on state, local, and tribal governments: Melissa Merrell. Impact on 

the private sector: Tyler Kruzich. 

Estimate approved by: G. Thomas Woodward, Assistant Director 

for Tax Analysis. 

III. REGULATORY IMPACT OF THE BILL AND OTHER 

MATTERS 

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee states that S. 

3495 will not significantly regulate any individuals or businesses, 

will not affect the personal privacy of individuals, and will result 

in no significant additional paperwork. 

The following information is provided in accordance with section 

423 of the Unfunded Mandates Reform Act of 1995 (‘‘UMRA’’) (Pub. 

L. No. 104–04). The Committee has reviewed the provisions of S. 

3495 as approved by the Committee on July 31, 2006. In accordance with the requirement of Pub. L. No. 104–04, the Committee 

has determined that the bill contains no intergovernmental mandates, as defined in the UMRA, and would not affect the budgets 

of State, local, or tribal governments. 

IV. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

Pursuant to paragraph 12 of rule XXVI of the Standing Rules of 

the Senate, the Committee finds no changes in existing law made 

by S. 3495, as ordered reported. 

Æ 


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