The establishment of a law normalising trade relations with the US would bring Vietnam one step closer to WTO membership and consecutive end of US quotas. Such a proposal was this week introduced in the US Congress but has been bitterly opposed by a group of elected politicians. They claim the bilateral deal negotiated with Vietnam carries risks for the US industry and threaten withdrawing support for the Bush Administration's trade agenda as a result.
Legislation that would bring Vietnam one step closer to normalised trade relations with the US was earlier this week introduced into Congress, although the issue is proving to be controversial.
The PNTR - Permanent Normal Trading Relations - if voted, would replace a previous law that established trade restrictions during an era of hostility between the two countries.
But now, the US is keen to cement its relationship with Vietnam, something which has been warming over the past decade.
WTO membership bid needs PNTR
Vietnam's bid to join the World Trade Organisation (WTO) before the end of the year would effectively be sealed should Congress vote in favour of PNTR.
But the issue has proved a decisive one, ever since the US Trade Representative's team of negotiators ended negotiating the controversial bilateral deal last month.
The agreement essentially will leave the US domestic textile and apparel industry without the protection of the current system of quotas placed on several categories of sensitive imports from Vietnam.
And, unlike with China, Washington has not negotiated a specific textile safety clause that would allow US companies to apply for quotas should imports start to threaten domestic production.
Congress group express concerns
This is a situation that many lawmakers have reacted angrily to and have written to the new US Trade Representative, Susan Schwab, expressing their concerns.
The group of 44 Republican and Democrat Congress members, has warned of the consequences that would affect the US industry resulting from the agreement with Vietnam.
They state that Vietnam is heavily subsidising its textile sector which they say is giving it an unfair price advantage against other competitors.
Their letter calls on the US to insist that either the current quota system stays in place until all subsidies are removed or to allow a China-style textile safeguard mechanism.
Questioning the TPA
While it seems too late for the US to make such a request, the group has brought into question the Bush administration's Trade Promotion Authority (TPA).
The TPA was voted for by Congress at the request of President Bush in order to boost negotiations for trade deals with other countries.
This requires that when a trade deal is finalised and presented to Congress, lawmakers have to either accept it in its entirety, or to reject it as they are not able to make any amendments.
With the TPA coming to a close in 2007, the group of 44 have said in the letter that the failure to address their concerns will substantially impact their view of the Administrations's legislative trade agenda.
Protective possibilities exist
But the deal is not entirely without any reference to protectionist measures.
It suggests that US domestic producers have the right to go apply for a one-off annual quota should a complaint be accepted that Vietnam is guilty of unfairly subsidising its industry in a given category or categories of imports.
Should this be the case, it would seem likely that a mutually-appointed arbitrator at the WTO would investigate before giving his or her decision.
But this has not gone down well with groups defending the interest of the US industry, such as the National Council of Textile Organizations (NCTO) and the American Manufacturing Trade Action Coalition (AMTAC).
Both the NCTO and AMTAC say that two things would prevent this from being effective.
Firstly, the US textile industry are prevented from putting forward measures such as anti-dumping duty requests due to practical and legal reasons.
Secondly, Vietnam is in the sixth year of a ten-year subsidy program which, the groups claim, will be allowed to remain in place.
This has added to the pressure now put on the USTR and the Bush Administration and could indicate that the US textile industry still manages to carry some political strength.
