In order for the United States to realize the benefit of this agreement and Vietnam's membership in the WTO, we whole-heartedly endorse congressional passage of legislation to grant Vietnam Permanent Normal Trade Relations status as soon as possible.
Steve Pfister, SVP National Retail Federation, in a letter to committee Chairman Charles Grassley, R-Iowa

The National Retail Federation urged the Senate Finance Committee today to approve legislation that would grant Permanent Normal Trade Relations status to Vietnam (CIA World Factbook).

"NRF and American retailers strongly support the bilateral trade agreement that was concluded on May 31, 2006, between the United States and Vietnam as part of the process to complete Vietnam's accession to the World Trade Organization," NRF Senior Vice President Steve Pfister said in a letter to committee Chairman Charles Grassley, R-Iowa. "In order for the United States to realize the benefit of this agreement and Vietnam's membership in the WTO, we whole-heartedly endorse congressional passage of legislation to grant Vietnam Permanent Normal Trade Relations status as soon as possible."

The Finance Committee is scheduled to hold a hearing today on S. 3495, sponsored by committee Ranking Member Max Baucus, D-Mont., and co-sponsored by fellow committee member Senator Gordon Smith, R-Ore. The bill would grant PNTR to Vietnam, a move that is necessary in order for the United States to take advantage of reductions in trade barriers provided under the May 31 agreement.

"Vietnam is still a comparatively small but growing supplier to the U.S. market of such basic consumer goods as furniture, footwear, apparel, coffee and seafood," Pfister wrote. "Extending PNTR for Vietnam will provide the business predictability necessary for retailers to expand commerce ties and investment in Vietnam."

Pfister urged senators to reject U.S. textile makers' demand for continued quotas on imports from Vietnam, saying the demand is unfounded because Vietnam accounts for only 3.2 percent of U.S. textile and apparel imports by dollar value and 1.9 percent by volume. In addition, more than 90 percent of all clothing imported from Vietnam is produced by privately owned companies rather than state-owned enterprises, "a positive trend that would be further reinforced by eliminating quotas on those products."

The bilateral agreement calls for the United States to eliminate all existing textile and apparel quotas on Vietnam as soon as Vietnam's WTO membership becomes official, and in return requires that Vietnam eliminate all WTO-prohibited subsidies to its textile and apparel industries. As an enforcement mechanism, the United States would be allowed to impose temporary quotas on imports from Vietnam for up to a year if violations of the subsidy prohibition were proven.

Pfister called the enforcement mechanism "appropriate and effective." Under the mechanism, Vietnam has "a strong incentive" to comply with the bilateral agreement because "Vietnamese apparel exporters know their orders for shipments to the United States would cease immediately" if the agreement were violated, he said.