Vietnam Trade Agreement: Approval and Implementing Procedure
Released: 2001-12-17T00:00:00

RS20717 -- Vietnam Trade Agreement: Approval and Implementing Procedure

Updated December 17, 2001

Background (1)

After protracted negotiations and a one-year delay after its adoption in principle, the United States and Vietnam signed, on July 13, 2000, a comprehensivebilateral trade agreement. The key statutory purpose of the agreement is the restoration of nondiscriminatory tarifftreatment (2) ("normal-trade-relations" (NTR),formerly "most-favored-nation" treatment) to U.S. imports from Vietnam, suspended since 1951. Hence, theagreement contains a provision reciprocallyextending the NTR treatment and certain other provisions required by law for trade agreements with nonmarketeconomy (NME) countries. In addition, it containscomprehensive specific commitments by Vietnam in matters of market access (e.g., reduced tariff rates on importsfrom the United States), intellectual propertyrights, trade in services, and investment, such as the United States already has in force as a matter of general tradepolicy. To enter into force, the agreement mustbe approved by the enactment of a joint resolution of Congress.

Restoration of NTR treatment to Vietnam as an NME country is also contingent on Vietnam's compliance with the freedom-of-emigration requirement of theJackson-Vanik amendment (Section 402) of the Trade Act of 1974. (3) In the case of Vietnam, such compliance is achieved by an annual Presidential waiver of fullcompliance under specified statutory conditions; such waiver may be disapproved by the enactment of a jointresolution of Congress. The President has issuedsuch waivers for Vietnam since mid-1998, but in no instance has a disapproval resolution, if introduced, been passedby Congress, allowing the waiver to continuein force.

Implementing Procedure

The statutory requirements and legislative procedure leading to the enactment and entry into force of a trade agreement with a nonmarket economy (NME)country, including Vietnam, are set out in detail in Sections 151, 404, 405, and 407 of the Trade Act of 1974 ( P.L.93-618 ), as amended. Section 151 has beenenacted as an exercise of the rulemaking power of either house and supersedes its other rules to the extent that theyare inconsistent with it. Its provisions can bechanged by either house with respect to its own procedure at any time, in the same manner and to the same extentas any other rule of that house (Section 151(a);19 U.S.C. 2191(a)).

All alphanumerical statutory references cited in this report are to sections of the Trade Act of 1974. While care has been taken to reflect accurately the meaning ofthe statutes, consulting the actual language of any statute is recommended in case of any ambiguity.

Functionally, the consideration and enactment of the approval resolution and the implementation of the agreement follow a specific expedited ("fast-track")procedure explained below. Additional information, based on past practice of implementing trade agreements withNME countries in general, but applicable alsoto Vietnam, is provided in footnotes

(1) Enactment necessary.

The agreement can take effect only if approved by enactment of a joint resolution (Section 405(c)); 19U.S.C.2435(c)).

(2) Transmittal of the agreement by the President to Congress.

The text of the bilateral trade agreement with Vietnam must be transmitted by the President to both houses ofCongress, together with a proclamation (4) extendingnondiscriminatory treatment to Vietnam and stating his reasons for it (Section 407(a); 19 U.S.C. 2437). While thereis no statutory deadline for the transmittal ofthe proclamation and the agreement to Congress after its signing, the law requires that the transmittal take place"promptly" after the proclamation is issued. (5)

(3) Mandatory introduction of approval resolution.

On the day the trade agreement is transmitted to the Congress (or, if the respective house is not in session onthat day, the first subsequent day on which it is insession), a joint resolution of approval (Sec. 151(b)(3); 19 U.S.C. 2191(b)(3)) must be introduced (by request) ineach house by its majority leader for himself andthe minority leader, or by their designees (Sec. 151(c)(2); 19 U.S.C. 2191(c)(2)). (6)

(4) Language of approval resolution .

The language of the resolution is prescribed by law (Sec. 151(b)(3); 19 U.S.C. 2191(b)(3)) to read, in thisparticular instance, after the resolving clause:

"That the Congress approves the extension of nondiscriminatory treatment with respect to the products ofVietnam transmitted by the President to the Congress onJune 8, 2001". (7)

(5) Committee referral .

The resolution is referred in the House to the Committee on Ways and Means and in the Senate to theCommittee on Finance (Sec. 151(c)(2); 19 U.S.C.2191(c)(2)).

(6) Amendments prohibited .

No amendment to the resolution, and no motion, or unanimous-consent request, to suspend the no-amendmentrule, is in order in either house (Sec. 151(d); 19U.S.C. 2191(d)).

(7) Committee consideration in the House . (8)

If the Ways and Means Committee has not reported the resolution within 45 days (9) after its introduction, the Committee is automatically discharged from furtherconsideration of the resolution, and the resolution is placed on the appropriate calendar (Sec. 151(e)(1); 19 U.S.C.2191(e)(1)).

(8) Floor consideration in the House.

(a) A motion to proceed to the consideration of the approval resolution is highly privileged and nondebatable;an amendment to the motion, or a motion toreconsider the vote whereby the motion is agreed or disagreed to, is not in order (Sec. 151(f)(1); 19 U.S.C.2191(f)(1)).

(b) Debate on the resolution is limited to 20 hours (10) , divided equally between the supporters and opponents of the resolution; a motion further to limitdebate isnot debatable; a motion to recommit the resolution, or to reconsider the vote whereby the resolution is agreed ordisagreed to, is not in order (Sec. 151(f)(2); 19U.S.C. 2191(f)(2)).

(c) Motions to postpone the consideration of the resolution and motions to proceed to the consideration of otherbusiness are decided without debate (Sec.151(f)(3); 19 U.S.C. 2191(f)(3)).

(d) All appeals from the decisions of the Chair relating to the application of the rules of the House ofRepresentatives to the approval resolution are decidedwithout debate (Sec. 151(f)(4); 19 U.S.C. 2191(f)(4)).

(e) In all other respects, consideration of the approval resolution is governed by the rules of the House ofRepresentatives applicable to other measures in similarcircumstances (Sec. 151(f)(5); 19 U.S.C. 2191(f)(5)).

(f) The vote (by simple majority) on the final passage of the approval resolution must be taken on or before the15th day (11) after the Ways and MeansCommitteehas reported the resolution, or has been discharged from its further consideration (Sec. 151(e)(1); 19 U.S.C.2191(e)(1)).

(9) Committee consideration in the Senate (12)

An approval resolution adopted by the House of Representatives and received in the Senate is referred to theFinance Committee (Sec. 151(c)(2) and (e)(2); 19U.S.C. 2191(c)(2) and (e)(2)). (13) If the FinanceCommittee has not reported the resolution within 15 days after its receipt from the House or 45 days (14) after theintroduction of its own corresponding resolution (whichever is later), the Committee is automatically dischargedfrom further consideration of the resolution, andthe resolution is placed on the appropriate calendar (Sec. 151(e)(1); 19 U.S.C. 2191(e)(1)).

(10) Floor consideration in the Senate.

(a) A motion to proceed to the consideration of the approval resolution is privileged and nondebatable; anamendment to the motion, or a motion to reconsider thevote whereby the motion is agreed or disagreed to, is not in order (Sec. 151(g)(1); 19 U.S.C. 2191(g)(1)).

(b) Debate on the approval resolution and on all debatable motions and appeals connected with it is limited to20 hours, equally divided between, and controlledby, the majority leader and the minority leader, or their designees (Sec. 151(g)(2); 19 U.S.C. 2191(g)(2)).

(c) Debate on any debatable motion or appeal is limited to one hour, equally divided between, and controlledby, the mover and the manager of the resolution,except that if the manager of the resolution is in favor of any such motion or appeal, the time in opposition iscontrolled by the minority leader or his designee;such leaders may, from time under their control on the passage of the resolution, allot additional time to any Senatorduring the consideration of any debatablemotion or appeal (Sec. 151(g)(3); 19 U.S.C. 2191(g)(3)).

(d) A motion further to limit debate on the approval resolution is not debatable; a motion to recommit it is notin order (Sec. 151(g)(4); 19 U.S.C. 2191(g)(4)).

(e) The vote (by simple majority) on the final passage of the approval resolution must be taken on or before the15th day (15) after the FinanceCommittee hasreported the resolution, or has been discharged from its further consideration (Sec. 151(e)(2); 19 U.S.C. 2191(e)(2)).

(f) Although, unlike in the case of the House procedure (16) , this is not specifically mentioned in Section 151, the Rules of the Senate govern the considerationofthe approval resolution in the Senate in all aspects not specifically addressed in Section 151.

(g) If prior to the passage of its own approval resolution, the Senate receives the approval resolution alreadypassed by the House, it continues the legislativeprocedure on its own resolution, but the vote on the final passage is on the House resolution.

(11) President's implementing authority.

(a) After the joint resolution approving the trade agreement with Vietnam is passed

by both houses and signed by the President, it becomes public law, in effect, authorizing the President to putinto effect the already issued proclamation (17) implementing the agreement extending nondiscriminatory treatment to Vietnam (Secs. 404(a) and 405(c); 19 U.S.C.2434(a) and 2435(c)).

(b) Application of nondiscriminatory treatment is limited to the term during which the agreement remainsin force (Sec. 404(b); 19 U.S.C. 2434(b)) (see alsofootnote 19 and text which it accompanies).

(c) The President may at any time suspend or withdraw nondiscriminatory treatment of Vietnam (Sec. 404(c);19 U.S.C. 2434(c)) and thereby subject all importsfrom that country to column 2 tariff rates (i.e., full rather than NTR rates).

(12) Approval by Vietnam.

The agreement also must be approved by Vietnam. (18)

(13) Entry into force.

After the joint resolution of approval is enacted and the agreement is approved by Vietnam, the proclamation(see item (2) becomes effective, the agreemententers into force, and nondiscriminatory treatment is extended to Vietnam on the date of exchange of written noticesof acceptance of the agreement by the UnitedStates and Vietnam. A notice of the effective date of the agreement is published by the U.S. Trade Representativein the Federal Register . (19)

(14) Maintenance in force .

According to its own terms (Article 8 of Chapter VII - General Articles), the agreement with Vietnam remainsin force for a period of three years and isautomatically renewable for successive three-year terms unless either party to it, at least 30 days before theexpiration of the then current term, gives notice of itsintent to terminate the agreement. If either party ceases to have domestic legal authority to carry out its obligationsunder the agreement, it may suspend theapplication of the agreement, or, with the agreement of the other party, any part of the agreement. (20)

In addition, Section 405(b)(1) (19 U.S.C. 2435(b)(1)) limits the life of trade agreements restoring nondiscriminatory treatment to NME countries to an initial termof three years. Agreements may be renewable for additional three-year terms if a satisfactory balance of tradeconcessions has been maintained during the life ofthe agreement and the President determines that actual or foreseeable U.S. reductions of trade barriers resulting frommultilateral negotiations are satisfactorilyreciprocated by the other country. (21)