On July 13, 2000, after nearly five years of bargaining, the U.S. and Vietnam announced theyhad signed a bilateral trade agreement (BTA). (1) OnJune 8, 2001, President Bush submitted theagreement, which requires congressional approval, to Congress. Following President Bush'stransmission, joint resolutions ( H.J.Res. 51 and S.J.Res. 16 ) wereintroduced in both chambers, and referred to the House Ways and Means Committee and the SenateFinance Committee. On September 6, 2001, the House approved the agreement by voice vote. TheSenate passed the agreement, by a vote of 88-12, on October 3, 2001 (Roll Call 291). On October16, 2001, President Bush signed the agreement into law ( P.L. 107-52 ). Vietnam's NationalAssembly ratified the BTA on November 28, 2001, by a vote of 278-85, and Vietnamese PresidentTran Duc Luong signed the agreement into law on December 7. It entered into force on December10, 2001 when the two countries formally exchanged notices of acceptance. The BTA is a major step toward fully normalizing U.S.-Vietnam commercial relations, as it restores reciprocal most-favored-nation (MFN, also known as normal trade relations [NTR])treatment between the two countries, and commits Vietnam to undertake a wide range ofmarket-oriented economic reforms. (2) Extending MFNtreatment to Vietnam will significantly reduceU.S. tariffs on most imports from Vietnam. Following the victory of communist North Vietnam over U.S.-backed South Vietnam in 1975,the United States ended virtually all economic interchange with unified Vietnam. The commercialrestrictions included not only those that previously had been imposed only on North Vietnam (seethe following section), but also a halt to bilateral humanitarian aid, opposition to financial aid frominternational financial institutions (such as the World Bank), a ban on U.S. travel to Vietnam, andan embargo on bilateral trade. Washington and Hanoi gradually began to normalize relations in the early 1990s, followingimprovements on the issues of Vietnam's activities in Cambodia and American prisoners of war(POWs) and missing-in-action (MIA) personnel in Vietnam. (4) In 1994, President Clinton orderedthe lifting of the trade embargo against Vietnam. The following year, the two countries establishedambassadorial-level diplomatic relations. In 1998, President Clinton granted Vietnam its first waiverfrom the requirements of the so-called Jackson-Vanik amendment (contained in the Trade Actof1974, Title IV, section 402), which prohibit the President from normalizing commercial relationswith selected socialist and formerly socialist countries if they do not meet certain requirementsregarding freedom of emigration. Presidential waivers were also granted to Vietnam in 1999, 2000,2001, and 2002. Congress may reject the annual waiver by passing a joint disapproval resolution. Each time waivers have been granted to Vietnam, the House has defeated disapproval resolutions. (See Figure 1 ), most recently on July 23, 2002, by a vote of 338-91 (roll call #329). As explainedbelow, after the BTA went into effect in December 2001, the Jackson-Vanik waiver grantedVietnam MFN status and allowed the U.S. Overseas Private Investment Corporation (OPIC) and theU.S. Export-Import Bank to support U.S. businesses exporting to and/or operating in Vietnam. Restoration of Temporary MFN Status to Vietnam. The U.S. denied MFN treatment to communist-controlled areas ofVietnam in August of 1951. At that time, under Section 5 of the Trade Agreements Extension Actof 1951, MFN tariff rates were suspended for all countries of the Sino-Soviet bloc. (5) Whencommunist North Vietnamese forces unified the country in 1975, MFN status was suspended for theentire country. In 1974, the U.S. issued strict conditions for restoring MFN status to those non-market economies (NMEs) subject to Section 5 suspension (in practice, the new conditions applied to allcountries of the former Sino-Soviet bloc). Under Title IV of the Trade Act of 1974, MFN treatmentmay be restored to NME countries after two requirements have been met: a) The President issues a determination that the country is not in violation of the freedom-of-emigration requirements of the Jackson-Vanik amendment. (6) To date, Vietnamhas not been found to be in full compliance with Jackson-Vanik requirements.Alternatively, subject to certain conditions, the President may waive full compliance withthese requirements, as Presidents Clinton and Bush have done since 1998. Jackson-Vanikwaivers must be renewed annually, and Congress may reject them by passing a jointdisapproval resolution. b) The completion of a bilateral trade agreement that contains certain required provisions, including a reciprocal MFN clause. (7) Such anagreement requires approval by the Congress(and by the Vietnamese National Assembly). The approval of the BTA allows thePresident to extend temporary MFN tariff treatment to Vietnam. The MFN treatment istemporary because it is contingent upon Vietnam meeting the requirements described inthe previous paragraphs - i.e. either obtaining a Presidential determination or aPresidential waiver, both of which are subject to annual congressional review anddisapproval. (8) Congressional Procedures for Considering a U.S.-Vietnam BTA. (9) To go into effect, Title IV bilateraltrade agreements must be approved bya joint resolution of Congress. Once the President transmits the agreement to Congress, a jointresolution must be introduced in both Houses. The resolutions are subject to special expeditedprocedures, under which amendments are not permitted in either chamber. Additionally, there are deadlines of 45 session-days for committee consideration (by the House Ways and Means and the Senate Finance Committees), and 15 session-days for floor debate in bothchambers. Because the approval resolutions are revenue measures, the Senate must vote on aHouse-passed resolution, and Congress would have a maximum of 90 session-days to act on theresolution: 45 days for consideration by the House Ways and Means Committee; followed by 15 daysfor floor debate in the House; followed by 15 days for consideration of the House-passed resolutionin the Senate Finance Committee; followed by 15 days for floor debate in the Senate. As with most trade agreements with non-market economies, the U.S.-Vietnam BTA will remain in effect for a 3-year period and will be extended automatically unless renounced by either party. Additionally, each extension will require a presidential determination that Vietnam is satisfactorilyextending reciprocal MFN treatment to U.S. exports. After the BTA: Extending Permanent MFN Treatment to Vietnam. Following the BTA, the next step toward normalizing U.S.-Vietnamcommercial ties is restoring permanent MFN status (also known as permanent NTR or PNTR status)to Vietnam. This process that will require Congress to terminate the application of the relevant TitleIV provisions to Vietnam, as has been done for several countries, including China, Albania, andGeorgia. Vietnam and the World Trade Organization (WTO). Vietnam applied to join the WTO in 1995. Many observers believe thatVietnam is a number of years away from meeting the requirements for WTO membership. In March2001, Vietnam's Trade Minister expressed his government's goal of acceding to the WTO by 2004. Countries seeking to enter the WTO must negotiate bilateral agreements with current WTOmembers. Provisions of such agreements are then consolidated into the acceding country's protocolof accession and, because of the WTO's mandatory MFN requirement, apply to all WTO members. In other words, any concessions obtained by one country in a bilateral accession agreement wouldbe enjoyed by all WTO members. Typically, the bilateral accession negotiations focus on tariffconcessions and other market access issues that will govern bilateral trade relations after theapplicant becomes a member. Thus, at some point in the future, Vietnam and the U.S. are likely toengage in another set of negotiations about the changes Vietnam must make to its trade regimebefore the U.S. will support Vietnam's application for WTO membership. Upon completion of thisagreement, it is likely that the U.S. president will ask Congress to extend permanent MFN treatmentto Vietnam, much as President Clinton did after completing WTO accession negotiations with Chinain November 1999. (10) Table 1. Vietnam's Path to Commercial Normalization with the United States U.S. Interests in a Bilateral BTA. U.S.-Vietnamtrade and investment flows are extremely low. Although Vietnam is the world's 13th most populouscountry, with nearly 80 million people, for the past several years annual U.S. exports have hoveredin the $200-$400 million range (see Table 2 below), a figure roughly equivalent to three days' worthof exports to Japan, and roughly one-fifth the amount the U.S. exported to South Vietnam in 1970. (12) Major U.S. exports to Vietnam include aircraft, fertilizer, telecommunications equipment, andgeneral machinery. Cumulative foreign direct investment (FDI) by U.S. companies in Vietnam isalso low, valued at about $1 billion, making the United States the ninth-largest source of investmentin Vietnam. To boost U.S. exports and investment, U.S. negotiators demanded that Vietnam provide more comprehensive and detailed concessions in the areas of services, investment, and market access thanhad been obtained in previous bilateral trade pacts with other Jackson-Vanik countries. As discussedin the following section, it appears the U.S. successfully obtained most of these negotiatingobjectives.