Agreement in the form of an exchange of letters

amending the Agreement between the European Community and the Socialist Republic of Vietnam on trade in textile and clothing products initialled on 15 December 1992, as last amended by the Agreement in the form of an Exchange of Letters initialled on 17 November 1997

1. Letter from the Council of the European Union

Sir,

1. I have the honour to refer to the negotiations held from 27 to 31 March 2000 between our respective delegations with a view to amending the Agreement between the European Community and the Socialist Republic of Vietnam on trade in textile and clothing products initialled on 15 December 1992 and applied from 1 January 1993, as last amended by the Agreement in the form of an Exchange of Letters initialled on 17 November 1997 (hereinafter referred to as "the Agreement").

2. As a result of those negotiations, it was agreed to amend the Agreement as follows:

2.1. Article 3 of the Agreement shall be replaced by the following:

"Article 3

1. Vietnam agrees to limit its exports to the Community of products listed in Annex II to the amounts set out therein for each Agreement year.

In the allocation of quantities for export to the Community, Vietnam undertakes to ensure that companies fully or partially owned by Community investors and Vietnamese companies are treated equally.

2. Exports of textile products set out in Annex II shall be subject to a double-checking system as specified in Protocol A.

3. In administering the quantitative limits referred to in paragraph 1, Vietnam shall ensure that the Community textile industry benefits from utilisation of such limits.

In particular, Vietnam undertakes to reserve, as a priority, 30 % of the quantitative limits for firms in that industry for a period of four months beginning on 1 January of each year. For this purpose, contracts made with such firms during the period in question and submitted to the Vietnamese authorities during the same period shall be taken into consideration.

4. To facilitate the implementation of these provisions, the Community shall provide the competent Vietnamese authorities, before 31 October of each year, with a list of interested manufacturers and processors and of the quantity of products requested for each firm. To this end, the firms concerned must make direct contact with the relevant Vietnamese bodies during the period specified in paragraph 3, in order to verify what quantities are available under the reserve referred to in paragraph 3.

5. Subject to the provisions of this Agreement, and without prejudice to the quantitative system applicable to products subject to the operations referred to in Article 4, the Community undertakes to suspend the application of quantitative restrictions currently in force in respect of products covered by this Agreement.

6. Exports of products referred to in Annex IV to the Agreement which are not subject to quantitative limits shall be subject to the double-checking system referred to in paragraph 2.

7. Should the Socialist Republic of Vietnam become a member of the World Trade Organisation (WTO) before the date of expiry of this Agreement, the restrictions in force shall be phased out in the framework of the WTO Agreement on Textiles and Clothing and Vietnam's Protocol of Accession to the WTO."

2.2. Article 19(1) of the Agreement shall be replaced by the following:

"1. This Agreement shall enter into force on the first day of the month following the date on which the Parties notify each other of the completion of the procedures necessary for that purpose. It shall be applicable until 31 December 2002. Thereafter, its application shall be automatically extended for a period of one year, unless either Party notifies the other by 30 June 2002 at the latest that it does no agree with the extension.

In the event of extension of the Agreement up to 31 December 2003, the quantitative limits for the categories of products set out in Annex II for the year 2003 shall be the amounts set out in that Annex for the year 2002 increased by the percentage of growth applied for each category of products between the years 2001 and 2002."

2.3. Annex I to the Agreement shall be replaced by the text in Annex A to this letter.

2.4. Annex II to the Agreement shall be replaced by the text in Annex B to this letter.

2.5. The Annex to Protocol B of the Agreement shall be replaced by the text in Annex C to this letter.

2.6. A Protocol concerning the industry reserve, which appears in Annex D to this letter, is attached to the Agreement.

2.7. Paragraph 4 of the Protocol of Understanding concerning access to the Vietnamese market for products of the textile and clothing sectors originating in the European Community shall be replaced by the text in Annex E to this letter.

2.8. Annex F to this letter shall become Annex III to the Protocol of Understanding concerning access to the Vietnamese market for products of the textile and clothing sectors originating in the European Community.

2.9. An Agreed Minute on the reciprocal opening of each Party's markets, which appears in Annex G to this letter, shall be attached to the Agreement.

3. An Agreed Minute on the operation of the industry reserve in 2000, which appears in Annex H to this letter, is attached to the Agreement.

4. I should be obliged if you would confirm the agreement of the Socialist Republic of Vietnam to the above amendments. Should this be the case, this letter and its accompanying Annexes, together with your written confirmation shall constitute an Agreement in the form of an Exchange of Letters between the European Community and the Socialist Republic of Vietnam. This Agreement shall enter into force on the first day of the month following the date on which the European Community and the Socialist Republic of Vietnam notify each other of the completion of the procedures necessary for that purpose. In the mean time, the amendments to the Agreement shall be applied provisionally from 1 July 2000, subject to reciprocity.

Please accept, Sir, the assurance of my highest consideration.

On behalf of the Council of the European Union

ANNEX A

"ANNEX I

PRODUCTS REFERRED TO IN ARTICLE 1

1. When the constitutive material of the products of categories 1 to 114 is not specifically mentioned, these products are to be taken to be made exclusively of wool or of fine hair, of cotton or of man-made fibres.

2. Garments which are not recognisable as being garments for men or boys or as being garments for women or girls are classified with the latter.

3. Where the expression "babies' garments" is used, this is meant to cover garments up to and including commercial size 86.

GROUP I A

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GROUP I B

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GROUP II A

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GROUP II B

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GROUP III A

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GROUP III B

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GROUP IV

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GROUP V

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ANNEX B

"ANNEX II

QUANTITATIVE LIMITS REFERRED TO IN ARTICLE 3(1)

Descriptions of the goods covered by the categories referred to in this Annex are given in Annex I

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ANNEX C

"Annex to Protocol B

QUANTITATIVE LIMITS APPLICABLE TO ECONOMIC OUTWARD-PROCESSING TRAFFIC

Descriptions of the goods covered by the categories referred to in this Annex are given in Annex I to the Agreement

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ANNEX D

Protocol concerning the industry reserve

In the context of the Agreement in the form of an Exchange of Letters between the European Community and the Socialist Republic of Vietnam initialled on 31 March 2000 amending the Agreement between the European Community and the Socialist Republic of Vietnam on trade in textile and clothing products as last amended by the Agreement initialled on 17 November 1997, the Socialist Republic of Vietnam took note of concerns expressed by the European Community regarding the implementation of Article 3(1), (3) and (4) of the Agreement. With a view to strengthening mutual understanding and cooperation in this field, the following standard procedure for implementation of the industry reserve was approved by both Parties:

- the Vietnamese authorities will take the list of Community enterprises provided by the European Community authorities as a list of those traders entitled to benefit from the industry reserve,

- Community industry will make contact with Vietnamese exporters with a view to entering into contracts with the Vietnamese manufacturers and exporters,

- the Vietnamese manufacturers or exporters will submit applications for use of the industry reserve together with the contracts to the competent Vietnamese bodies,

- within the limits of the reserve, the authorities will grant Vietnamese manufacturers or exporters a quota for the duration of the reserve, in accordance with the relevant regulations,

- thereafter, the competent Vietnamese bodies will issue export licences to allow the Community traders specified in the lists provided by the Community authorities to complete purchasing contracts.

In this regard, the Vietnamese authorities undertake:

- to operate the system promptly and in a non-discriminatory manner,

- to provide the names and addresses of the competent Vietnamese bodies,

- to provide texts of the relevant regulations as soon as they are available,

- to ensure that export licences issued under this system are identified as "industry reserve",

- to supply separate statistical information concerning licences applied for and issued pursuant to these provisions by 1 April of each year,

- to cooperate with the European Community authorities to ensure that licences issued pursuant to these provisions are identified within the exchanges of information via the SIGL network.

The Parties agreed that, in the event of any difficulties in the application of the provisions relating to the industry reserve, consultations may be held with a view to finding a mutually satisfactory solution.

ANNEX E

Paragraph 4 of the Protocol of Understanding concerning access to the Vietnamese market for products of the textile and clothing sector originating in the European Community shall be replaced by the following:

"4. Concernant les taux de droits de douane actuellement applicables aux importations des produits textiles et d'habillement communautaires, la partie vietnamienne s'engage à recommander à l'Assemblée nationale du Viêt Nam d'adopter les mesures suivantes en matière de réduction des droits de douane afin de faciliter l'accès au marché vietnamien des produits textiles et d'habillement communautaires:

a)

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étant entendu que cette réduction porterait en priorité sur les produits indiqués à l'annexe II du présent protocole;

b)

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Des consultations seront tenues à ce sujet au plus tard le 31 octobre 2000.

Dans l'hypothèse où il devrait être constaté par la Communauté européenne à l'issue de ces consultations que ces réductions ne seraient pas réalisées par les autorités vietnamiennes, les modifications apportées à l'accord seront considérées comme caduques et l'accord, dans sa forme existante à la date du paraphe du présent accord, redeviendra applicable entre les deux parties à partir du 1er janvier 2001."

ANNEX F

"ANNEX III

Textile products referred to in paragraph 4(b)

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ANNEX G

Agreed Minute

Both Parties referred to the first paragraph of the Protocol of Understanding concerning access to the Vietnamese market for products of the textile and clothing sectors originating in the European Community and underlined the importance of the reciprocal opening of their markets within the context of the negotiations on the amendments to the textile agreement between the European Community and the Socialist Republic of Vietnam.

For the Government of the Socialist Republic of Vietnam

On behalf of the Council of the European Union

ANNNEX H

Agreed Minute

In order to ensure the smooth operation of the industry reserve in 2000, the Vietnamese delegation undertakes to provide by 1 July 2000 at the latest statistical information on licence applications and licences issued pursuant to the Protocol concerning the industry reserve.

For the Government of the Socialist Republic of Vietnam

On behalf of the Council of the European Union

2. Letter from the Government of the Socialist Republic of Vietnam

Sir,

I have the honour to acknowledge receipt of your letter of ... which reads as follows:

"1. I have the honour to refer to the negotiations held from 27 to 31 March 2000 between our respective delegations with a view to amending the Agreement between the European Community and the Socialist Republic of Vietnam on trade in textile and clothing products initialled on 15 December 1992 and applied from 1 January 1993, as last amended by the Agreement in the form of an Exchange of Letters initialled on 17 November 1997 (hereinafter referred to as 'the Agreement').

2. As a result of those negotiations, it was agreed to amend the Agreement as follows:

2.1. Article 3 of the Agreement shall be replaced by the following:

'Article 3

1. Vietnam agrees to limit its exports to the Community of products listed in Annex II to the amounts set out therein for each Agreement year.

In the allocation of quantities for export to the Community, Vietnam undertakes to ensure that companies fully or partially owned by the Community investors and Vietnamese companies are treated equally.

2. Exports of textile products set out in Annex II shall be subject to a double-checking system as specified in Protocol A.

3. In administering the quantitative limits referred to in paragraph 1, Vietnam shall ensure that the Community textile industry benefits from utilisation of such limits.

In particular, Vietnam undertakes to reserve, as a priority, 30 % of the quantitative limits for firms in that industry for a period of four months beginning on 1 January of each year. For this purpose, contracts made with such firms during the period in question and submitted to the Vietnamese authorities during the same period shall be taken into consideration.

4. To facilitate the implementation of these provisions, the Community shall provide the competent Vietnamese authorities, before 31 October of each year, with a list of interested manufacturers and processors and of the quantity of products requested for each firm. To this end, the firms concerned must make direct contact with the relevant Vietnamese bodies during the period specified in paragraph 3, in order to verify what quantities are available under the reserve referred to in paragraph 3.

5. Subject to the provisions of this Agreement, and without prejudice to the quantitative system applicable to products subject to the operations referred to in Article 4, the Community undertakes to suspend the application of quantitative restrictions currently in force in respect of products covered by this Agreement.

6. Exports of products referred to in Annex IV to the Agreement which are not subject to quantitative limits shall be subject to the double-checking system referred to in paragraph 2.

7. Should the Socialist Republic of Vietnam become a member of the World Trade Organisation (WTO) before the date of expiry of this Agreement, the restrictions in force shall be phased out in the framework of the WTO Agreement on Textiles and Clothing and Vietnam's Protocol of Accession to the WTO.'

2.2. Article 19(1) of the Agreement shall be replaced by the following:

'1. This Agreement shall enter into force on the first day of the month following the date on which the Parties notify each other of the completion of the procedures necessary for that purpose. It shall be applicable until 31 December 2002. Thereafter, its application shall be automatically extended for a period of one year, unless either Party notifies the other by 30 June 2002 at the latest that it does no agree with the extension.

In the event of extension of the Agreement up to 31 December 2003, the quantitative limits for the categories of products set out in Annex II for the year 2003 shall be the amounts set out in that Annex for the year 2002 increased by the percentage of growth applied for each category of products between the years 2001 and 2002.'

2.3. Annex I to the Agreement shall be replaced by the text in Annex A to this letter.

2.4. Annex II to the Agreement shall be replaced by the text in Annex B to this letter.

2.5. The Annex to Protocol B of the Agreement shall be replaced by the text in Annex C to this letter.

2.6. A Protocol concerning the industry reserve, which appears in Annex D to this letter, is attached to the Agreement.

2.7. Paragraph 4 of the Protocol of Understanding concerning access to the Vietnamese market for products of the textile and clothing sector originating in the European Community shall be replaced by the text in Annex E to this letter.

2.8. Annex F to this letter shall become Annex III to the Protocol of Understanding concerning access to the Vietnamese market for products of the textile and clothing sector originating in the European Community.

2.9. An Agreed Minute on the reciprocal opening of each Party's markets, which appears in Annex G to this letter, shall be attached to the Agreement.

3. An Agreed Minute on the operation of the industry reserve in 2000, which appears in Annex H to this letter, is attached to the Agreement.

4. I should be obliged if you would confirm the agreement of the Socialist Republic of Vietnam to the above amendments. Should this be the case, this letter and its accompanying Annexes, together with your written confirmation shall constitute an Agreement in the form of an Exchange of Letters between the European Community and the Socialist Republic of Vietnam. This Agreement shall enter into force on the first day of the month following the date on which the European Community and the Socialist Republic of Vietnam notify each other of the completion of the procedures necessary for that purpose. In the mean time, the amendments to the Agreement shall be applied provisionally from 1 July 2000, subject to reciprocity."

I have the honour to confirm that my Government is in agreement with the contents of your letter.

Please accept, Sir, the assurance of my highest consideration.

For the Government of the Socialist Republic of Vietnam