TRALAC - Trade Law Centre

Congress Approves Measure Extending AGOA Trade Preferences

Monday, 11 December 2006

Source: U.S. Department of State

As one of its final acts, the 109th U.S. Congress approved legislation that would normalize trade relations with Vietnam and would extend trade preferences for Andean and sub-Saharan countries as well as more than 100 other developing nations.

The Senate passed the bill December 9 by a 79-9 vote as part of a larger legislative package that also would expand oil and gas drilling rights in the Gulf of Mexico and would extend certain business tax cuts. Earlier, the House of Representatives passed separate pieces of legislation with identical provisions.

The bill must be signed by the president to become law.

President Bush commended lawmakers for granting Vietnam permanent normal trade relations (PNTR), otherwise known as most-favored nation status, which would provide the country the same customs and tariff treatment the United States gives to other PNTR countries. The legislation would repeal a Cold-War era law that links PNTR to a communist country’s treatment of immigration issues, thus making the U.S. position consistent with World Trade Organization rules.

“Vietnam is demonstrating its strong commitment to continuing economic reforms, which will support political reform and respect for human rights,” the president said in a prepared statement.

U.S. Trade Representative Susan Schwab said in a prepared statement that the passage of PNTR “begins a new era in our relationship with Vietnam” and “demonstrates to our trading partners in East Asia, the United States’ commitment to strengthen and deepen our relationships in that region.”

The legislation also would extend for two years the Generalized System of Preferences, a program that allows 133 developing countries and territories to export duty-free specified goods to the U.S. market. In 2005, the value of those goods was $27 billion. In addition, it would extend for six months trade preferences for four Andean nations -- Colombia, Peru, Bolivia and Ecuador -- and for up to 12 months if those nations conclude free-trade agreements with the United States. These preferences first were granted 15 years ago to encourage the four countries’ anti-drug efforts. Both programs were set to expire at the end of 2006.

In addition, the bill would extend to 2012 a key provision in the African Growth and Opportunity Act (AGOA) that allows sub-Saharan African countries to use third-country fabrics in their duty-free apparel exports to the U.S. market. The provision was scheduled to expire in 2007.

Despite objection from some Republican lawmakers from textile-producing states, the legislation also would allow Haiti to use third-country fabrics in its duty-free apparel exports to the U.S. market.

Schwab said that the passage of the trade measure can “lay the groundwork for bipartisan action on trade issues in the next Congress,” including passage of bills to implement free trade agreements with Peru and Colombia.

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