AMTAC 'No' for PNTR to Vietnam sans adequate safeguards
13 Jul '06
5 min read
For example, Vietnam currently bolsters its textile and apparel sector through preferential interest rates, wage controls, rent holidays, export subsidies, preferential tax rates and direct investment from the Vietnamese government.
State-owned Vinatex is the self-proclaimed 10th largest textile and garment company in the world, receiving more than $891 million in government assistance the last 5 years.
Keeping the example of China in mind, it is wishful thinking to believe that Vietnam will immediately transition from the current environment to a free-market approach on its own accord. Having been burned once, it would have been wise for the U.S. to negotiate meaningful assurances that would have created leverage. However, this is not the case.
First of all, Vietnam has pledged to eliminate only certain "prohibited" export subsidies. Unfortunately, WTO rules are so loose that members have frequently been able to repackage export subsidies as permissible production supports.
Secondly, the textile safeguard included in the bilateral to "enforce" these limited commitments is woefully inadequate. The Vietnam safeguard will be almost impossible to trigger and will expire after a brief 12 month period.
Let me make a quick comparison to the China textile safeguard. The decision to invoke the China safeguard is made by the U.S. government. In contrast, the decision to invoke the Vietnam safeguard is made by a WTOarbiter in Switzerland.
Moreover, safeguards on China can be reinstated annually through the end of 2008, whereas, the Vietnam mechanism can only be used once for a lone 12-month period. As you can see, the Vietnam safeguard is much weaker than the one used in China's accession agreement.
marketing@alchempro.com
