ACTION

FROM THE COMMITTEE ON WAYS AND MEANS

FOR IMMEDIATE RELEASE, Contact: (202) 225-3625
July 27, 2001
No. FC 11-A

Thomas Announces Committee Action
on H.J. Res. 51, Resolution Approving the
U.S.-Vietnam Bilateral Trade Agreement, and H.R. 2603, the
"United States-Jordan Free Trade Area Implementation Act of 2001"

Congressman Bill Thomas (R-CA), Chairman of the Committee on Ways and Means, today announced that on Thursday, July 26, 2001, the Committee ordered favorably reported, H.J. Res. 51, Resolution Approving the U.S.-Vietnam Bilateral Trade Agreement, without amendment, and H.R. 2603, the "United States-Jordan Free Trade Area Implementation Act of 2001," a amended, by voice vote.

BACKGROUND OF H.J. RES. 51:

Vietnam's trade status is subject to the "Jackson-Vanik" provisions in the Trade Act of 1974 (the Act). This provision of law governs the extension of normal trade relations (NTR), including NTR tariff treatment, and access to U.S. Government credits, credit guarantees, or investment guarantees, to nonmarket economy countries ineligible for NTR treatment as of the enactment of the Act.

In order to receive NTR tariff treatment, a country subject to Jackson-Vanik must meet two requirements. First, a country must either comply with the freedom of emigration requirements under the Act, or receive an annual waiver of such requirements by the President. On June 1, 2001, the President issued a 12-month renewal of the waiver for Vietnam for the period July 3, 2001, through July 2, 2002. Second, the extension of NTR tariff treatment also requires the conclusion and approval by Congress of a bilateral trade agreement (BTA) with the United States providing for reciprocal nondiscriminatory treatment.

In 1996, the United States and Vietnam began negotiating a BTA. The BTA was signed on July 13, 2000, and President Bush transmitted the agreement to Congress for its approval on June 8, 2001 (H. Doc. 107-85). Should Congress approve the agreement, the President would then be able to extend NTR on an annual basis subject to the Jackson-Vanik freedom of emigration requirements (similar to the process for China prior to its accession to the World Trade Organization). Overall, the BTA commits Vietnam to open its goods and services markets, implement significant economic reforms, expand rule of law, and broaden economic freedom.

On June 12, 2001, H.J. Res. 51 was introduced by request (as required by the Act), the effect of which would be to extend NTR status to Vietnam and approve the U.S.-Vietnam BTA.

DESCRIPTION OF H.J. RES. 51 AS APPROVED:

H.J. Res. 51 states that Congress approves the extension of nondiscriminatory treatment with respect to the products of the Socialist Republic of Vietnam. The effect of this resolution would be Congressional approval of the U.S.-Vietnam BTA, which would grant temporary NTR treatment to Vietnam, subject to an annual review by the President (similar to the process for China prior to its accession to the World Trade Organization).

BACKGROUND OF H.R. 2603:

The United States-Jordan Free-Trade Agreement is America's first free trade agreement (FTA) with an Arab nation and represents the culmination of many years of increasing U.S.-Jordanian economic integration. The agreement also reflects Jordan's commitment to the Middle East peace process, as evidenced by its participation in the 1994 Washington Declaration, which terminated the state of belligerency between Jordan and Israel. H.R. 2603, the "United States-Jordan Free Trade Area Implementation Act of 2001," was introduced by Representative Thomas (R-CA) on July 25, 2001.

DESCRIPTION OF H.R. 2603 AS APPROVED:

As approved, H.R. 2603 would make operational the agreement which was negotiated last year between the countries, and which former President Clinton transmitted to the Congress on January 6, 2001 (H. Doc. 107-15).

On July 23, 2001, United States Trade Representative Robert Zoellick and Jordanian Ambassador Marwan Muasher, exchanged official and formal letters which discussed the implementation of the agreement's dispute settlement procedures. In the letters, both countries stated their intention not to apply the agreement's dispute settlement enforcement procedures in a manner that results in blocking trade. The letters also state that bilateral consultations and other procedures (i.e., alternative mechanisms) would be appropriate measures that will help secure compliance without recourse to traditional trade sanctions.

The agreement is comprehensive, including:

• A 10-year transitional period to phase out almost all duties, leading to near duty-free trade between the United States and Jordan.
• A first-ever bilateral commitment regarding e-commerce. Both countries have agreed to refrain from imposing customs duties on electronic transmissions, or instituting unnecessary barriers to market access for digitized products or for services delivered electronically. The
• e-commerce commitment is linked to the FTA's services commitments, which together should stimulate investment in new technologies and networks.
• Intellectual property rights protections for trademarks, copyrights and patents. The FTA specifically mentions the protection of software and pharmaceuticals, which are especially prone to violations. To enforce these protections, the FTA requires each country to set its statutory minimum fines high enough to deter a potential infringer.
• Specific commitments to opening markets in the services sector, including business, communications, construction and engineering, distribution, education, environment, finance, health, tourism, recreation, and transportation.
• A commitment by both countries to enforce their current environmental and labor laws, and affirms the commitment by both countries to the International Labor Organization's core labor standards.
• The agreement does not include an investment chapter, since those issues were addressed in the 1997 Bilateral Investment Treaty.

H.R. 2603 would also establish the relationship between the FTA and U.S. law as well as State law. With respect to Federal law, it makes clear that no provision of the agreement would be given effect if it is inconsistent with Federal law. It also states that no State law would be declared invalid on the grounds that it conflicts with the agreement, except in an action brought by the United States for such purpose.

Concerning implementation and enforcement, H.R. 2603 would authorize funding for U.S. participation in the United States-Jordan disputes settlement process, and would grant the President the necessary authority to implement the agreement.