Vietnam's Accession to the World Trade Organization
Vietnam’s bid for membership in the World Trade Organization was approved on November 7, 2006. This follows nearly a decade of negotiations between Vietnam and WTO members and economic preparation on the part of the Vietnamese government. “Vietnam has shown how anchoring domestic reforms in the WTO can yield dramatic results,” commented Director General Lamy. Vietnam formally entered the WTO 30 days after the country’s National Assembly passed the agreement in late November 2006. The United States Congress passed measures (H.R. 6111 in the Senate and H.R. 6406 in the House of Representatives) granting Vietnam Permanent Normal Trade Relations Status (PNTR) on December 8-9, 2006. Both California Senators and 19 California Representatives voted for PNTR. This means that the US will now benefit from the trading concessions Vietnam has made as part of their WTO membership. President Bush signed the PNTR bill into law on December 20, 2006.
A bilateral trade agreement between the United States and Vietnam on the terms of Vietnam's accession to the World Trade Organization (WTO) were agreed upon in 2001, resulting in lowered tariffs on goods traded between Vietnam and the United States, and the same favorable tariff rate applied to most favored nations such as Europe, Japan and other WTO members.
Before the trade agreement was in place, Vietnam imposed a surcharge of up to 100 percent on imports of products from countries with which it did not have normal trade relations. Japan and European Union member states already have extended Normal Trade Relations (NTR) status to Vietnam, and their companies are exempt from the surcharge.
In July 2004, Deputy U.S. Trade Representative Josette Sheeran Shiner confirmed that Washington had offered to support Vietnam's bid to join the WTO. Vietnam first applied for WTO membership in 1995, but had to reach bilateral deals with all members before being accepted to the organization. Trade Representative Shiner indicated that the bilateral trade pact of 2001 between the United States and Vietnam was a significant sign that Vietnam was serious about WTO membership, as it required the nation to liberalize its market access and meet international standards on investment, trade and financial transparency. The United States and Vietnam concluded bilateral negotiations on Vietnam’s accession to the WTO on May 14, 2006, and officially signed the agreement on May 31.
U.S.-Vietnam Trade and Investment Framework Agreement
U.S. Trade Representative Susan Schwab announced the beginning of talks with Vietnam for a Trade and Investment Framework Agreement (TIFA) in March, 2007. The Agreement establishes a formal discussion between the two nations regarding ways to further their trade and investment relationship.
"I am enthusiastic about our joint vision for the future of this relationship. " said Ambassador Schwab. "Vietnam is a dynamic and rapidly growing economy, and we see a TIFA as an important vehicle for promoting continuation of the impressive expansion in our trade and investment relationship we have witnessed over the past few years."
Background
Vietnam is a nation of nearly 80 million people, the 13th most populated country in the world. The economy is growing and the volume of foreign trade has been increasing. Vietnam is a member of the World Bank, the International Monetary Fund and the Asian Development Bank. Vietnam is in the process of economic transition and is taking steps to integrate into the regional and world economy by, among other things, joining the Association of Southeast Asian Nations (ASEAN), the ASEAN Free Trade Area (AFTA), and the APEC, and has gained membership in the World Trade Organization (WTO). Vietnam is sponsoring more than $7 billion in infrastructure projects. Vietnam’s top priorities for investments are manufacturing and infrastructure projects, telecommunications, oil and gas development, agricultural production and tourism.
The United States is the home of more than 900,000 people of Vietnamese origin, more than half of whom reside in California. Outside Vietnam, Orange County has the largest Vietnamese community, with approximately 100,000 people of Vietnamese descent. The United States and Vietnam have trade flows of nearly $12.4 billion. U.S. exports to Vietnam totaled $1.9 billion in 2007, led by sales of nuclear machinery and parts, plastics, and electronics. U.S. imports from Vietnam include apparel, mineral fuel, and footwear. California's top exports to Vietnam include: transportation equipment, machinery, computers, electrical equipment, chemicals, and agricultural crops. In 2007, California exports to Vietnam doubled from 2006, reaching $587 million. Transportation equipment exports grew seven times to $212 million, accounting for 36 percent of the total California exports to Vietnam.
Recognizing the environment in Vietnam is different from the United States and creates challenges for multinational corporations, the CalChamber supports the United States in establishing full economic relations by providing economic support and commercial program assistance for U.S. businesses operating in Vietnam and by granting PNTR status to Vietnam.
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