Behind Congress's delay of Vietnam trade vote

Postponement of a decision on Vietnam's trade status reveals concern over the growth of free-trade pacts.

US pork producers foresee a boom if the United States adds Vietnam to its list of countries that enjoy permanent normal trade relations.

Other companies ranging from Harley-Davidson to Citigroup are also eager to gain access to one of the world's most vibrant developing economies.

But they will have to learn an Asian virtue – patience – because Congress this week postponed a vote that would have added Vietnam to the list of nations enjoying this trade status. The delay was an embarrassment to the White House since President Bush is on his way to Vietnam for an Asian summit meeting and would have touted the benefits of a completed pact. Now, most analysts anticipate Congress will vote on it next month.

Behind the delay is an underlying concern, reflected in the election results, over the growth of free-trade pacts. Politicians are once again focusing on the giant US trade deficit, now at about $684 billion this year and growing. One particular area of concern is China: Trade analysts anticipate the administration will be under pressure to get results in its negotiations with Beijing over revaluing its currency.

"In terms of protectionism, we appear to be tilting that way," says Clayton Yeutter, a former US trade representative. "In terms of the US-China relationship, I think the patience has worn thin."

The Vietnam vote may indicate how hard it will be to pass any trade legislation next year. For one thing, trade analysts doubt Mr. Bush can win approval for an extension of fast-track authority (which means Congress can vote only up or down on a trade pact).

Several bilateral trade agreements, for such countries as Peru and South Korea, may also be in trouble. For example, the US wants to add rice to the South Korean negotiations, says Ben Carliner, director of research at the Economic Strategy Institute in Washington. Rice has been a sticking point in past negotiations with Asian nations.

"If we were to get the Korean trade pact through, it would put a lot of pressure on Japan since they now compete with Korea very strongly in electronics and autos," says Mr. Carliner. "It would give a big advantage to Korea."

If the Bush completes the negotiations, he would have to make a major push to get Congress to approve them. "A lot of members of Congress don't want to vote for anything that speaks to trade liberalization," says Mr. Yeutter.

In fact, business interests who are in favor of the Vietnam bill point out that it wouldn't lower tariffs for Vietnam. "This is removing tariffs in Vietnam for us and other [World Trade Organization] countries," says Christopher Wenk, director of international trade at the National Association of Manufacturers in Washington.

US pork producers are particularly eager to gain access to Vietnam. Vietnamese cuisine uses parts of the hog that are not of great interest to Americans. A study has found that the sale of these parts would add about 52 cents a hog to profits over 10 years, according to Nick Giordano of the National Pork Producers Council. "That's a significant increase in profit," he says.

Despite such profit prospects, the Bush administration has had to work hard to get elected officials in the South on board because of concerns about large surges of textile and apparel imports from Vietnam. The US has an estimated $5.7 billion trade deficit with the Asian nation, and most of it is from textiles.

Bush goes East

Wednesday

Moscow – Met with President Vladimir Putin.

Thursday

Singapore – Meets with the prime minister.

Friday

Hanoi, Vietnam – Meets with the prime minister of Australia; meets with top Vietnamese leaders.

Nov. 18

Hanoi, Vietnam – Meets with the president of the Republic of Korea; attends the Asia-Pacific Economic Cooperation meeting (through Nov. 19).

Nov. 19

Hanoi, Vietnam – Meets with the president of China; meets with the president of Russia.

Nov. 20

Ho Chi Minh City, Vietnam – Participates in round table with business leaders; participates in a briefing on HIV/AIDS and avian influenza.

Bogor, Indonesia – Meets with the president of Indonesia.

Nov. 21

Honolulu – Participates in a breakfast with US troops.

– Reuters

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