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 and other market opening measures, as last amended by the Agreement in the form of an Exchange of Letters initialled on 31 March 2000

1. Letter from the European Community

Sir,

1. I have the honour to refer to the negotiations held from 12 to 15 February 2003 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 31 March 2000 (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 shall be replaced by the following:

"Article 3

1. The Community agrees to raise its quantitative limits of products listed in Annex II to the amounts set out therein for each Agreement year. This increase will be carried out each year upon implementation by Vietnam of its commitments under paragraphs 3, 4, 8 and 10. The quantitative limits for 2003 will be raised to the levels indicated in column 4. For the years 2004 and 2005 the quantitative limits as indicated in columns 5 and 6 will apply.

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.

In case the amount granted under the industry reserve does not reach 30 % of the quantitative limits, the unused amount of the industry reserve can be reverted to the yearly overall quota levels from 1 May each year.

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 Vietnam become a Member of the World Trade Organisation (WTO) before 1 January 2005, the Agreement and its Annexes, as well as Annex C, D and E to the Exchange of Letters initialled on 15 February 2003, will be applied in accordance with the Agreements and rules of the WTO and Vietnam's Protocol of Accession to the WTO. Any quotas maintained prior to the date of accession of Vietnam to the WTO will be notified to the Textiles Monitoring Body set up by the Agreement on Textiles and Clothing (ATC) in accordance with Article 2 of that Agreement, together with appropriate administrative arrangements, to be agreed prior to Vietnam's WTO accession, and phased out in accordance with the ATC and Vietnam's protocol of accession. Should Vietnam become member of the WTO after 1 January 2005 but before the expiry date of this Agreement, the Agreements and rules of WTO shall be applied from the date of Vietnam's accession to the WTO.

8. Vietnam shall not apply tariffs on the import of textiles and clothing products of EU origin at rates higher than those indicated in Annex C to the Exchange of Letters referred to in paragraph 7.

9. The Parties agree to refrain from applying any non-tariff measures inconsistent with WTO rules that could hinder trade in textile and clothing as indicated in a non-exhaustive list of these measures in Annex D to the Exchange of Letters referred to in paragraph 7.

10. In addition to its commitments under paragraphs 3, 4, 8 and 9 above, Vietnam undertakes to take the measures indicated in Annex E to the Exchange of Letters referred to in paragraph 7.

11. Under the terms to be agreed between Vietnam and Turkey and on the basis of an increase by Turkey of the quotas it applies vis-à-vis Vietnam, Vietnam agrees to extend the treatment provided to textile and clothing products originating in the Community to textile and clothing products originating from Turkey.

12. The Parties agree that the Community retains, for a maximum period not extending beyond the duration of the ATC, insofar as Vietnam has become Member of the WTO, the right to reapply the quota regime at the levels indicated in Annex II, column 3 in the event that Vietnam fails to fulfil any of the obligations contained in paragraphs 3, 4, 8, 9 and 10. Should any failure to fulfil its obligations take place in years 2004 or 2005, these levels will be increased by a growth rate of 3 % per annum. The Parties agree that Vietnam retains the right to suspend the application of its commitments under paragraphs 3, 4, 8, 9 and 10 should the Community fail to fulfil any of the obligations contained in paragraphs 1 and 9. The Parties agree to consult with each other pursuant to paragraph 13 before exercising this right.

13. The Parties agree that the balance of this Agreement, forming a package of mutual concessions freely extended between the Parties, depends on the full and faithful implementation of all the terms of this Agreement. As a result, the Parties agreed to consult periodically in order to ensure the proper implementation of this Agreement. In addition, the Parties agree to consult following the request of either Party concerning any aspect of this Agreement.

In the event that either Party seeks to exercise the right contained in paragraph 12 it will provide the other Party with details of any alleged failure in writing. Consultations with a view to remedying the failure in question will be held within 30 days of such a written request unless the Parties agree otherwise. In the event the Parties cannot agree on appropriate remedial action within 30 days from the start of the consultations either Party will have the right to proceed under paragraph 12."

2.2. Article 19 shall be amended as follows:

(a) paragraph 1 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 2005.";

(b) paragraph 2 shall be replaced by the following:

"2. Both Parties are ready to engage in further negotiations as of 1 January 2004 with a view to improving access to their respective markets."

2.3. Annex I of the Agreement is replaced by the text in Annex A to this letter.

2.4. Annex II of the Agreement is replaced by the text in Annex B to this letter.

2.5. To the Protocol concerning the industry reserve attached to the Agreement, the following is added:

"The Vietnamese authorities shall provide the Community with the list of the European companies benefiting from the Industry reserve and the quantities and categories for which licenses have been granted."

2.6. In the Protocol of Understanding attached to the Agreement, Articles 4 and 5 and its three Annexes are repealed.

3. 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 meantime, the amendments to the Agreement shall be applied provisionally from 15 April 2003, subject to reciprocity.

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

For the European Community

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 12 to 15 February 2003 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 31 March 2000 (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 shall be replaced by the following:

'Article 3

1. The Community agrees to raise its quantitative limits of products listed in Annex II to the amounts set out therein for each Agreement year. This increase will be carried out each year upon implementation by Vietnam of its commitments under paragraphs 3, 4, 8 and 10. The quantitative limits for 2003 will be raised to the levels indicated in column 4. For the years 2004 and 2005 the quantitative limits as indicated in columns 5 and 6 will apply.

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.

In case the amount granted under the industry reserve does not reach 30 % of the quantitative limits, the unused amount of the industry reserve can be reverted to the yearly overall quota levels from 1 May each year.

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 Vietnam become a Member of the World Trade Organisation (WTO) before 1 January 2005, the Agreement and its Annexes, as well as Annex C, D and E to the Exchange of Letters initialled on 15 February 2003, will be applied in accordance with the Agreements and rules of the WTO and Vietnam's Protocol of Accession to the WTO. Any quotas maintained prior to the date of accession of Vietnam to the WTO will be notified to the Textiles Monitoring Body set up by the Agreement on Textiles and Clothing (ATC) in accordance with Article 2 of that Agreement, together with appropriate administrative arrangements, to be agreed prior to Vietnam's WTO accession, and phased out in accordance with the ATC and Vietnam's protocol of accession. Should Vietnam become member of the WTO after 1 January 2005 but before the expiry date of this Agreement, the Agreements and rules of WTO shall be applied from the date of Vietnam's accession to the WTO.

8. Vietnam shall not apply tariffs on the import of textiles and clothing products of EU origin at rates higher than those indicated in Annex C to the Exchange of Letters referred to in paragraph 7.

9. The Parties agree to refrain from applying any non-tariff measures inconsistent with WTO rules that could hinder trade in textile and clothing as indicated in a non-exhaustive list of these measures in Annex D to the Exchange of Letters referred to in paragraph 7.

10. In addition to its commitments under paragraphs 3, 4, 8 and 9, Vietnam undertakes to take the measures indicated in Annex E to the Exchange of Letters referred to in paragraph 7.

11. Under the terms to be agreed between Vietnam and Turkey and on the basis of an increase by Turkey of the quotas it applies vis-à-vis Vietnam, Vietnam agrees to extend the treatment provided to textile and clothing products originating in the Community to textile and clothing products originating from Turkey.

12. The Parties agree that the Community retains, for a maximum period not extending beyond the duration of the ATC, insofar as Vietnam has become Member of the WTO, the right to reapply the quota regime at the levels indicated in Annex II, column 3 in the event that Vietnam fails to fulfil any of the obligations contained in paragraphs 3, 4, 8, 9 and 10. Should any failure to fulfil its obligations take place in years 2004 or 2005, these levels will be increased by a growth rate of 3 % per annum. The Parties agree that Vietnam retains the right to suspend the application of its commitments under paragraphs 3, 4, 8, 9 and 10 should the Community fail to fulfil any of the obligations contained in paragraphs 1 and 9. The Parties agree to consult with each other pursuant to paragraph 13 before exercising this right.

13. The Parties agree that the balance of this Agreement, forming a package of mutual concessions freely extended between the Parties, depends on the full and faithful implementation of all the terms of this Agreement. As a result, the Parties agreed to consult periodically in order to ensure the proper implementation of this Agreement. In addition, the Parties agree to consult following the request of either Party concerning any aspect of this Agreement.

In the event that either Party seeks to exercise the right contained in paragraph 12 it will provide the other Party with details of any alleged failure in writing. Consultations with a view to remedying the failure in question will be held within 30 days of such a written request unless the Parties agree otherwise. In the event the Parties cannot agree on appropriate remedial action within 30 days from the start of the consultations either Party will have the right to proceed under paragraph 12.'

2.2. Article 19 shall be amended as follows:

(a) paragraph 1 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 2005.';

(b) paragraph 2 shall be replaced by the following:

'2. Both Parties are ready to engage in further negotiations as of 1 January 2004 with a view to improving access to their respective markets.'

2.3. Annex I of the Agreement is replaced by the text in Annex A to this letter.

2.4. Annex II of the Agreement is replaced by the text in Annex B to this letter.

2.5. To the Protocol concerning the industry reserve attached to the Agreement, the following is added:

'The Vietnamese authorities shall provide the Community with the list of the European companies benefiting from the Industry reserve and the quantities and categories for which licenses have been granted.'

2.6. In the Protocol of Understanding attached to the Agreement, Articles 4 and 5 and its three Annexes are repealed.

3. 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 meantime, the amendments to the Agreement shall be applied provisionally from 15 April 2003, 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

ANNEX A

ANNEX I

TEXTILE PRODUCTS REFERRED TO IN ARTICLE 1

1. Without prejudice to the rules for the interpretation of the combined nomenclature, the wording of the description of goods is considered to be of indicative value only, since the products covered by each category are determined, within this Annex, by CN codes. Where there is an "ex" symbol in front of a CN code, the products covered in each category are determined by the scope of the CN code and by that of the corresponding description.

2. 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 animal hair, of cotton or of man-made fibres.

3. 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.

4. 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)

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ANNEX C(1)

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(1) The HS codes in this Annex refer to those of the International Convention on the Harmonised Commodity Description and Coding System as last amended by the Recommendation of 25 June 1999 of the Customs Cooperation Council (Vietnam is a member of the World Customs Organisation).

ANNEX D

Agreed minute

In the context of the Agreement in the form of an Agreement in the form of an Exchange of Letters on trade in textile and clothing products between the European Community and the Socialist Republic of Vietnam initialled in Hanoi on 15 February 2003 and more particularly with reference to Article 3(9) thereof, the Parties recorded their understanding that non-tariff measures inconsistent with WTO rules that could hinder trade in textiles and clothing, wines and spirits and ceramic tiles are not to be applied by either of the Parties, a non-exhaustive list of such measures is provided as follows:

- any additional customs duties on the import or sale of products of EU or Vietnamese origin in excess of those set out in the Agreement, or any fees and charges in connection with importation or exportation in excess of the approximate cost of services rendered,

- any taxes which are higher than any such taxes imposed on the production or sale of equivalent domestic goods,

- technical regulations or standards, or conformity assessment or certification rules, procedures or practices going beyond the purposes for which they are required,

- any minimum import prices or indicative values resulting in effective application of minimum prices or arbitrary and fictitious prices or any customs valuation rules, procedures or practices giving rise to barriers to trade,

- rules, procedures or practices for pre-shipment inspection that are discriminatory, non-transparent, excessively lengthy or burdensome, and the imposition of customs controls for the clearance of goods to shipments that have already been subject of pre-shipment inspection,

- excessively burdensome, costly or arbitrary rules, procedures or practices concerning the certification of the origin of products or requiring direct shipment of goods from the country of origin to the country of destination,

- any non-automatic, discretionary or other licensing requirements, rules, procedures or practices imposing disproportionate burdens or having restrictive effects on imports, in particular application for automatic licenses submitted in an appropriate and complete form should be approved immediately on receipt, to the extent administratively feasible, but within a maximum of 10 working days,

- requirements or practices concerning marking, labelling, the description of composition of the product or the description of the manufacturing of products which, either in their formulation or in their application, are in any form discriminatory as compared with domestic products and not more trade restrictive than necessary to fulfil a legitimate objective,

- unduly long customs clearance delays or excessively burdensome, non-transparent or costly customs procedures, including inspection requirements, which have an unnecessary restrictive effect on imports,

- subsidies causing injury to the textiles and clothing industry of the other Party.

In order to facilitate legitimate trade, notwithstanding the need of effective control, the Parties undertake to:

- cooperate and exchange information on issues of mutual interest concerning customs legislation and procedures, and in particular to deal promptly with problems faced by operators arising from measures covered by this Agreement,

- provide effective, non-discriminatory and prompt procedures enabling the right of appeal against customs and other agency administrative actions, ruling and decisions affecting import or export of goods,

- establish an appropriate consultation mechanism between customs administrations and traders on customs regulations and procedures,

- publish, as far as possible through electronic means, new legislation and general procedures related to customs, as well as any modification, no later than the entry into force of any such legislation and procedures,

- cooperate with a view to reaching a common approach to issues relating to customs valuation, in particular the elaboration of a "code of good practices" in relation to working methods and operational aspects, the use of indicative or reference indices, appropriate documentation to certify the accuracy of the customs value and the use of securities.

The Parties agree that the commitments contained in this Agreed Minute are not intended to go beyond or to place them under higher standards or obligations than those contained in the WTO agreements, taking into account the provisions applying to developing countries with a low level of GNP per capita.

ANNEX E

Other commitments on market access

1. Vietnam shall implement the following measures necessary to guarantee improved market access for Community operators in the following non-textiles sectors:

Maritime transport

Vietnam agrees that by 1 January 2004 Community maritime operators through joint venture companies with Vietnamese partners, the investment capital to be contributed by both Parties to be subject to negotiation between them and without a limit for either Party, are able to undertake the following sea transport cargo agency activities:

- marketing and sales services related to cargoes transported,

- acting on behalf of the cargo owners,

- provision of business information,

- preparation of documentation related with cargoes transported,

- preparation of documentation concerning customs documents or other documents related to the origin and character of the goods transported,

- setting up of representative offices in Vietnam,

- provision of maritime transport services, including the cabotage services necessary for the supply of the integrated services through Vietnamese ships.

As far as multimodal transport is concerned, Vietnam agrees to consider favourably any EU request that Community maritime operators obtain the same rights as companies of ASEAN countries as soon as the ASEAN Framework on Multimodal Transport comes into force.

Insurance brokerage licences

Vietnam shall immediately issue an operating licence to an EU insurance brokerage.

Motorcycles/scooters

Vietnam shall introduce by 1 January 2004 a tariff quota for the importation annually of up to 3000 units of completely built units (CBU) of motorcycles or scooters of EU origin with a view to a significant reduction in the tariff rate.

Wines and spirits

Vietnam shall reduce import tariffs on wines and spirits of EU origin to 80 % from 1 January 2004 and to 70 % from 1 January 2005.

2. Vietnam shall also fulfil its earlier commitments in the following sectors:

Wines and spirits

Elimination of minimum import prices for wines and spirits of EU origin.

Ceramic tiles

Elimination of minimum import prices and additional duties (price difference collection rate of 10 %).

Pharmaceuticals

Progressive elimination (five molecules per year) of list of prohibited molecules by 2006.

3. Non discrimination issues

Vietnam confirms the commitment by its Foreign Minister in letter dated l February 2002, Trade Minister in letter dated 10 October 2000, to Commissioners Patten and Lamy respectively.