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November 13, 2006, approx. 8:30 pm Washington, DC Time

House defeats Vietnam trade bill
By MARTIN CRUTSINGER, AP Economics Writer

2 hours, 7 minutes ago

Legislation to normalize trade relations with Vietnam was defeated in the House Monday, four days before President Bush makes his first visit to the only country ever to defeat the United States in a major war.

The measure failed to win the necessary two-thirds majority it needed to pass under a procedure House Republicans adopted in an effort to rush it through with limited debate. It received 228 votes in support — 32 short of what was needed. There were 161 votes against it.

Ways and Means Committee aides, however, said Republicans planned to bring the measure up again Wednesday under normal procedures which will require only a majority for passage. The proposal gained 228 votes, 10 more than the 218 majority that would be needed under the normal process.

The administration is hoping to gain approval of the measure before Bush meets later this week with Vietnamese leaders in Hanoi.

However, the proposal also faces obstacles in the Senate, where the administration has had to offer textile-state senators assurances that it will impose penalty tariffs on Vietnamese textile products if the country is found to be selling those products at unfairly low prices.

U.S. retailers were pushing for assurances that these anti-dumping duties would not be used in an arbitrary fashion to keep Vietnamese products off U.S. store shelves.

The House debate occurred on the first day Congress reconvened following last Tuesday's elections, in which Democrats picked up enough seats to gain control of both the House and the Senate.

Rep. Clay Shaw, R-Fla., one of the Republicans beaten in the Democratic wave, noted wryly that he hoped trade liberalization would continue in the next Congress although "I regret I will not be a part" of the debate.

Under the terms of its membership in the Geneva-based WTO, Vietnam will be required to reduce its tariffs on American and other foreign goods to 15 percent or less, a move that would cover 94 percent of U.S. manufactured goods and 75 percent of U.S. farm goods.

Vietnam, which was cleared last week to become the WTO's 150th member, also agreed to open up telecommunications, financial services and energy to competition by American and other foreign companies.

The Vietnam trade bill was heavily supported by U.S. business executives who are anxious to get into one of the fastest growing markets in Southeast Asia. It was just the latest milestone in a two-decade effort to normalize relations that had been severed by the Vietnam War.

Through September, U.S. exports to Vietnam have totaled $724 million while Vietnamese shipments to the United States totaled $6.4 billion, giving the United States a $5.7 billion trade deficit with Vietnam.

Opponents cited this gap and America's soaring trade deficit, which is on track to set a new record close to $781 billion this year, as reasons to oppose granting normal trade status to Vietnam.

They warned that the new measure, by lowering barriers to Vietnamese goods further, will put more American workers in jeopardy to low-wage foreign competition. Nearly 3 million U.S. manufacturing jobs have been lost since Bush took office in 2001.

"Haven't we lost enough jobs in this country?" asked Rep. Dennis Kucinich, D-Ohio. "We have close to an $800 billion trade deficit and this bill just keeps going in the same direction."

One of the major benefits to Vietnam would be the end of U.S. quotas that limit the amount of textiles and clothing that the country can ship to the United States. It is one of the few countries on which such limits remain since the WTO abolished a worldwide quota system last year.

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