WASHINGTON — The U.S. signed a trade deal with Vietnam on Wednesday, clearing a major hurdle in that country’s effort to join the World Trade Organization.

The pact has angered U.S. textile groups, which maintain that the arrangement offers inadequate protection from imports that are supported by Vietnam’s non-market economy.

Apparel and textile imports from Vietnam, valued at $3 billion for the year ended March 31, are restrained by quotas, which would be lifted if Vietnam succeeds in becoming the WTO’s 150th member. To proceed, Vietnam must now negotiate a deal with the global trading body and get a thumbs up from Congress in the form of an affirmative vote for Permanent Normal Trade Relations.

“Through this agreement, Vietnam will become more transparent in its regulatory trade practices, enhance the economic freedoms enjoyed by its people and establish a more level playing field between Vietnamese and foreign companies,” Deputy U.S. Trade Representative Karan Bhatia said in a statement.

Bhatia signed the deal, reached in principle last month, with his Vietnamese counterparts in Ho Chi Minh City.

Under the pact, Vietnam agreed to eliminate key supports to its apparel and textile industry. If the U.S. believes the country still has prohibited subsidies once it joins the WTO, it can request consultations and then go to a WTO arbitrator that could decide on a year’s worth of quotas.

“This agreement is bound to replicate the disastrous trade pattern the U.S. has constructed with China,” Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said in a statement. “Because of China’s state-sponsored advantages, their manufacturers have run roughshod over U.S. companies….We are left with no choice but to urge Congress to oppose this flawed agreement.”

Tracy Mullin, president and chief executive officer of the National Retail Federation, said the agreement would make it easier for U.S. retailers to open stores in Vietnam and to buy goods there.

This story first appeared in the June 1, 2006 issue of WWD. Subscribe Today.

load comments
blog comments powered by Disqus