Copyright 2000 Federal News Service, Inc.
Federal News Service
September 19, 2000, Tuesday
SECTION: CAPITOL HILL HEARING
LENGTH: 6974 words
HEADLINE:
PANEL ONE OF A JOINT HEARING OF THE ASIA AND PACIFIC
SUBCOMMITTEE AND INTERNATIONAL ECONOMIC POLICY & TRADE SUBCOMMITTEE OF THE
HOUSE INTERNATIONAL RELATIONS COMMITTEE
SUBJECT:
U.S.-VIETNAM TRADE RELATIONS
CO-CHAIRS: REPRESENTATIVE DOUG
BEREUTER (R-NE) AND REPRESENTATIVE ILEANA ROS-LEHTINEN (R-FL)
PANEL I LOCATION: 2172 RAYBURN HOUSE OFFICE BUILDING
WITNESSES: AMBASSADOR CHARLENE BARSHEFSKY, UNITED
STATES TRADE REPRESENTATIVE
BODY:
REP. BEREUTER: (Sounds gavel.) The joint subcommittee hearing will come to
order.
The subcommittee on Asia and the Pacific and the subcommittee on
international economic policy and trade meet jointly today to examine the
current and future state of U.S.-Vietnam relations in the context of a new
bilateral trade agreement, VTA, signed between Washington and Hanoi on July 13
of this year.
After taking nearly five years of frustrating and
difficult negotiations -- and the difficulties were on the other side, I think
-- the new bilateral trade agreement represents what I believe to be an
important milestone in the process of normalizing incrementally our bilateral
political, economic, humanitarian and consular relationships with Vietnam.
Focusing for a moment on the economic relationship, this evolving process began
in 1994 with the lifting of the Vietnam War era trade embargo and the
establishment of ambassadorial level diplomatic relations the following year.
Further incremental steps, such as allowing for the Overseas Private Investment
Corporation, OPIC, and the U.S. Export Import Bank to support American
businesses exporting to or operating in Vietnam, were taken with the president's
granting of Vietnam a waiver from the requirements of the Jackson-Vanik
amendment. Congress in general has supported this waiver by increasingly larger
margins each of the last three years. The new VTA represents another step which
will be followed by President Clinton's trip to Vietnam following APEC, the
summit in November.
I believe that this incremental policy and the new
VTA is in America's own short-term and long-term national interests. It is a
flexible policy allowing us to take advantage of new opportunities such as those
in the trade arena now available with the VTA; while at the same time preserving
our leverage to help influence change in the most problematic facets of our
relationship, such as human rights. Indeed, I believe our incremental approach
also builds on Vietnam's own policy of political and economic reintegration into
the world.
The subcommittee on Asia and Pacific has held a number of
hearings on Vietnam in recent years, conducting both broad reviews of the
general direction of U.S.-Vietnam bilateral relations and more defined
examinations of specific issues such as the fullest possible accounting of
American POW/MIAs, the plight of the Vietnamese boat people, and the failure of
Vietnam to meet its human rights obligations.
Today's hearing is the
first that focuses primarily on bilateral economic relations. However, it
certainly does not do so at the exclusion of these other important issues.
Clearly U.S.-Vietnamese trade relations cannot be viewed as if in a vacuum.
At this time the VTA has yet to be transmitted to Congress. I certainly
welcome any insight our United States Trade Representative, Ambassador
Barshefsky, may have on when we should expect to see that transmittal. With
adjournment hopefully just a few weeks away, there is not time this year for
Congress to consider and approve the VTA, a prerequisite for the agreement's
actual implementation. Thus, I envision today's hearing as an early opportunity
to begin the process of congressional consideration of such a VTA.
Before Congress will approve this significant step forward in relations,
there will be many questions for the administration to answer satisfactorily.
For example, Is the VTA a prelude to new directions in U.S.-Vietnam relations?
What actual benefits can the United States generally, and the American business
interests specifically, expect from the VTA? Does approval of the VTA enhance or
serve to postpone needed progress in other non-economic concerns such as POW/MIA
accounting, human rights, immigration and political reforms.
To help our
two subcommittees answer these and many other important questions, including
those pertaining to the president's Vietnam trip, we are very fortunate to have
with us today a truly outstanding panel of high level and distinguished
administration witnesses. The first panel will consist of Ambassador Charlene
Barshefsky, the United States Trade Representative. While the VTA is a result of
hard work from many different agencies, of course, it is the USTR that has
provided the yeoman's service in negotiations with the Vietnamese, as was the
case with the bilateral access agreement for China's accession to the WTO.
Ambassador Barshefsky, it was certainly a great pleasure to work with you on the
China PNTR issue, and I understand that in an hour or so -- I
think you need to leave at 2:15 -- the Senate will be voting on the final
passage of H.R. 4444 as passed by the House, and in my judgement thankfully
unamended by the Senate. In that regard, I appreciate that you have
responsibilities associated with your vote, and a limited time you can spend
with us, and that's why you constitute the first panel.
And I will
introduce the other two distinguished witnesses shortly after your testimony and
questions from the panel. But in order to conserve this time before you must
leave, I want to come back to that later. And I would like now to turn to the
chairwoman of the subcommittee on international economic policy and trade, the
very distinguished gentle lady from Florida, representative Ileana Ros- Lehtinen
for any introductory comments that she may have. Then I will turn to the
distinguished ranking members of the two subcommittees. I turn to the gentle
lady for such time as she may consume.
REP. ROS-LEHTINEN: Thank you.
Well, I thank my colleague from Nebraska, my good friend Bereuter, for the
opportunity to co-chair this hearing with him. I welcome the opportunity to
listen to some of our witnesses.
And while the witnesses appearing
before us today may be of like mind in their approach to U.S.-Vietnam relations,
there are vast differences among the chairs of the two subcommittees regarding
the liability and the wisdom of trading with a communist regime such as Vietnam.
In fact, some of us view Vietnam as a classic example of what happens when
economic engagement begins without first requiring fundamental concrete changes
in government and civil society. The result: a sprinkling of limited economic
reforms to mask the strengthening of communist totalitarian regimes.
In
Vietnam, such entrenchment was clearly demonstrated in '99 with the passage of a
resolution which stated, "Party committees should strictly criticize and punish
those party members who after being assisted by the party organization keep
disseminating their own opinion or distributing documents contrary to the
platform, statutes or resolutions of the party."
In August of this year,
a report from the Vietnamese Communist Party's Congress was drafted, making
reference to the so-called process of reform started 15 years ago. However, that
same document reiterated that during the process of reform it is essential to
persist with the goal of socialism based on Marxist Leninism and Ho Chi Minh
ideology. This coincides with the April '92 Vietnamese resolution in the
constitution reaffirming the role of the Communist Party as the leading force of
the state and society.
Article 4 of the Vietnamese constitution enables
the security apparatus to enforce an extra-legal administrative decree against
any dissident under the pretext of endangering national security. The Vietnamese
government continues to systematically violate the human rights, civil liberties
and religious freedom of its people. It utilizes a maze of laws, decrees and
regulations to prohibition religious worship and to justify the arbitrary
arrest, detention, harassment, physical abuse and censorship of those seeking to
exert their religious liberty and the right to free association.
The
Vietnamese regime is among the totalitarian or authoritarian regimes
specifically rebuked by the State Department for its religious restrictions. The
intense governmental suppression and control came under scrutiny and harsh
criticism when the annual report on international religious freedom was released
earlier this month. However, these denunciations fell on deaf ears as the
Vietnamese government had already been rewarded in August with the signing of
the bilateral trade agreement.
Despite the trade agreement, the supreme
patriarch of the Unified Church of Vietnam is still being detained without trial
under Pagoda arrest. Members of the Hoa Hoa Sect of Buddhism have been subjected
to police surveillance and remain in jail. Members of the Giao-Tai (ph) religion
have had their church properties confiscated. Protestants are still being
suppressed through police raids, surveillance and negative propaganda.
Even foreign investors in June of this year questioned the fanfare and
hype of communist Vietnam's reform process, and issued complaints about
overregulation, inconsistent application of laws, discriminatory pricing and
government bureaucracy. Timothy Reinhold (ph), head of the legal working group
for the Private Sector Forum, at which these concerns were raised, said, "It
prompts one to ask the question whether those currently directing policy really
want foreign participation in the development of the country."
Further,
newspaper reports cited Vietnam's minister of planning and investment as
generally unsympathetic to investor complaints. Vietnam is still one of the most
repressive countries in the world, which in turn keeps it as one of the poorest,
with an average annual per capita income of $330.
The
more recent index of economic freedom published by the Heritage Foundation lists
Vietnam 148 out of 164 nations in lack of economic freedom. This marks a
decrease from the 1995 rating. That is, Vietnam's economy is considered to be
less open today than it was five years ago.
Despite these realities, the
single most powerful reason for demanding much more from Vietnam before
affording it the enviable position of U.S. trading partner and preferential
trade status is the yet unresolved issue of American POWs and MIAs. Through my
investigation into the torture of American POWs in Vietnam by Cuban agents at a
camp known as "The Zoo," I asked Ambassador Pete Peterson and other U.S.
government officials to secure specific information and materials from the
Vietnamese authorities. The response from the Vietnamese clearly depicts the
unreliable duplicitous nature of Vietnam's Communist regime. The statement read:
"The evading war of the Americans in Vietnam had caused great damage in human
lives and property to the people of Vietnam. However, with a policy of clemency
and humanity, Vietnam treated the American POWs in due form. There were
absolutely no cases in which American POWs in Vietnam were tortured," end quote.
Is this the type of regime the U.S. should reward? Is this a reliable trading
partner and an ally? I hope that the witnesses who will testify today will
address these issues along with other concerns raised by my colleagues on these
subcommittees. And I thank Mr. Bereuter for the opportunity.
REP.
BEREUTER: Thank you, Chairwoman Ros-Lehtinen.
And now I would like to
turn to the distinguished gentleman from California, the ranking member of the
Asia Pacific subcommittee, for such time as he may consume in his opening
statement.
REP. TOM LANTOS (D-CA): Thank you very much, Mr. Chairman. I
am anxious to hear Ambassador Barshefsky, so I will be extremely brief.
Vietnam represents an obviously unique case in our foreign relations and
in our trade relations. This is really an issue where many of us have a great
deal of ambivalence. On the one hand, I fully share the views of my good friend
from Florida, who outlined in great detail the human rights violations which are
persisting in Vietnam, and for which there is no excuse.
Yet I think it
would be a mistake not to recognize that the United States has a major
responsibility in normalizing relations with Vietnam. I fully share the views of
my two distinguished colleagues in the other body, John Kerry and John McCain,
who have supported the normalization of relations, and who I believe are in
support of this legislation, as is our good friend and former colleague with
considerable Vietnam experience, Ambassador Pete Peterson.
I commend
President Clinton for his forthcoming plan to visit Vietnam, and I look forward
to Ambassador Barshefsky's testimony.
REP. BEREUTER: In order to save
time, we are going to move directly to the statement by Ambassador Barshefsky.
Your entire written statement will be made a part of the record. You may proceed
as you wish. We look forward to at least a small opportunity to have questions
before you have to leave. So --
REP. : Mr. Chairman --
REP.
BEREUTER: -- we would like to have your full statement at this point --
REP. : Mr. Chairman, I would ask unanimous consent to insert my opening
statement for the record, as well as the inserts of several publication articles
I had for the opening statement.
REP. BEREUTER: Certainly. Without
objection. In fact, we'll extend that to all members at this point.bassador
Barshefsky?B. BARSHEFSKY: Mr. Chairman, Madam Chairman, members of the
subcommittees, thank you very much for inviting me here today to testify on our
bilateral commercial agreement with Vietnam.
The landmark trade
agreement entered into with Vietnam in July of this year is most fundamentally
an economic agreement which opens markets to American goods, services and
agriculture, and promotes economic reform and greater opening to the world in
Vietnam. It also represents a decisive stage in the process of reconciliation
with Vietnam.
With the approval of this agreement, we begin a fully
normalized economic and trade relationship, capping a series of decisions made
over the past decade which have been difficult and emotional at times in both
countries but which have served Americans and Vietnamese together.
Throughout this period, as the Clinton administration has approached
America's relationship with Indochina, we have set as our first priority a full
accounting for American service personnel listed as missing in action or who
were POWs. As Ambassador Pete Peterson has noted, this work is proceeding with
full cooperation from Vietnam through joint field activities and review of
material evidence.
With this continuing, we have also worked toward
normalized trade between the United States and the three nations of Indochina,
beginning with the end of the trade embargoes and continuing through the
conclusion of formal bilateral trade agreements with Cambodia, Laos, and now
Vietnam.
This, we believe, serves America's broad interests in the
Pacific. The integration of China into ASEAN and the larger Pacific economy
contributes to the cohesion and economic health of Southeast Asia, which is, in
turn, of great importance to peace and stability in Asia more generally. Our
developing trade relationship with Vietnam helps us achieve this basic goal, as
it also creates substantial new opportunities for American businesses, farmers,
workers, and for Vietnamese as well.
Our trade investment relationship
with Vietnam today, however, remains hampered by two major features. First, as a
country covered by the Jackson-Vanik Amendment, Vietnam remains only one of six
in the world that lacks NTR status. As a result, Vietnamese products face
tariffs approximately 10 times higher than those of virtually all other trading
partners. Second, economic reform within Vietnam has progressed slowly,
particularly in recent years, owing to the Asian financial crisis, weakening the
economy's overall potential and creating obstacles for American exporters.
The U.S.-Vietnam trade agreement addresses both of these issues. It
marks a major shift of economic policy direction for Vietnam, setting a course
for greater openness to the outside world, promoting internal reform and market
principles, transparency in law and regulatory policy, and helping Vietnam to
integrate itself into the Pacific regional economy and build a foundation for
future entry into the World Trade Organization.
The agreement itself
includes six chapters: Goods, including agricultural goods, intellectual
property, services, investment, business facilitation, and transparency. To
highlight a few specifics, in goods trade, Vietnam will cut tariffs by a third
to a half across a wide range of high-tech goods, farm products and industrial
goods. Vietnam will also abolish non-tariff restrictions such as quotas,
eliminate discretionary import licensing, and, for the first time, guarantee
trading rights for both Americans and Vietnamese over a phased-in schedule.
With respect to intellectual property, Vietnam will implement WTO-level
standards of protection within one year for patents and trademarks and within 18
months for copyright and trade secrets. Vietnam will also take certain
additional steps in newer areas, such as the protection of satellite signals.
As for services, Vietnam will liberalize a broad range of service
sectors, opening for the first time opportunity for American firms to compete in
basic telecommunication services, value-added telecom such as Internet services,
banking, insurance and other financial services, the professions, including
legal services, architecture, engineering and others, and a range of other
sectors, from audiovisual to health, distribution to private education and more.
With respect to investment, Vietnam will make commitments that include
the phasing out of such measures as local content and export performance
requirements, the abolition of almost all investment screening, discriminatory
pricing, and protection against expropriation.
As to business
facilitation, Vietnam will guarantee the right to conduct routine but essential
practices such as setting up offices, advertising and so on.
Finally,
Vietnam will make an extensive set of commitments to transparency. In sharp
contrast to past practice, Vietnam will reform its administrative policies. It
will now provide advanced notice of all laws, regulations and administrative
procedures relating to any matter covered by the agreement. It will now publish
all laws and regulations and inform the public of the effective dates and
government contact points. And Vietnam will establish appeals processes.
All together, the agreement addresses many of the principal concerns of
Americans seeking to export to or invest in Vietnam and spur a deepening and
acceleration of economic reform within the Vietnamese economy. Over time, that
should help create sustainable growth and greater opportunity for the Vietnamese
people.
The agreement is an economic achievement that will have shared
and substantial benefits. It will also have beneficial political consequences,
contributing to the development of a more unified and stable Southeast Asia as
it integrates Vietnam once again into the broader world of Asia-Pacific trade
and investment. And it is an agreement with historic meaning for the United
States.
When Congress approves this agreement with the grant of annual
normal trade relations, we will take the critical step in developing a
relationship with Vietnam that looks to the future rather than the past. And we
will do so in a fashion in which I believe everyone who remembers the era of the
Vietnam War can take pride, both cementing peace and reconciliation between the
two governments and advancing reform and freedom for the Vietnamese people.
In that regard, I would point to a recent statement made by Vietnam's
leading independent -- or rather leading and most visible dissident, Dr. Quay
(ph), and he said, quote, "Opening the country economically will increase the
people's power to make their own economic decisions. Integrating into the global
economy and increasing contact with developed countries will increase the
people's awareness of what it means to be modern. The sooner the trade agreement
is ratified and put into effect, the better." End quote.
We look forward
to working with you, Mr. Chairman, members of the committee, to developing a
consensus for the best way to secure rapid approval of the agreement. Thank you.
REP. BEREUTER: Thank you very much. We have only 15 minutes remaining. I
want to hear from all members. I would ask unanimous consent that the normal
five-minute rule be changed to three minutes so that all members may be heard.
Is there objection? Without objection, that will be the order.
I have
one question that relates to the difference between the agreement in principle
and the final agreement that was in '99 and the final agreement, July 13, 2000,
Ambassador, with several sub- questions. But I'll submit that in writing in
order to save time.B. BARSHEFSKY: Fine. Thank you.
REP. BEREUTER: And
the gentleman from California, Mr. Lantos, is recognized under a three-minute
rule.
REP. LANTOS: I was listening very carefully to your usual concise
and impressive presentation. But I didn't hear any response on your part to Ms.
Ros-Lehtinen's catalogue of human rights abuses. Now, we have had a
long-standing dialogue of the deaf ones -- "dialogue de sourd," as the French
call it -- between the administration and those of us who feel that human rights
criteria should receive a far more important level of consideration than, in
fact, they have.
Would you mind, Ambassador Barshefsky, dealing with the
issues raised by my friend from Florida, because while some of us are conscious
of the fact that we have a very heavy responsibility vis-a- vis Vietnam, for
obvious historic reasons, we will not stand by as the human rights abuses are
swept under the rug and the truly outrageous persecution of religious groups and
others continues.B. BARSHEFSKY: I think you will hear more about this from the
panel that follows me, but if I could make a few points. I do not disagree with
the characterizations made by the chairwoman with respect to the Vietnamese
regime or with respect to substantial concerns about human rights, religious
freedom and the like in Vietnam. These are quite amply documented in the State
Department Human Rights Report and in other materials, including from the United
Nations. And I certainly have no basis to disagree with them, nor would I
attempt to do so.
The question presented is, how do we best change the
mentality among the governing body in Vietnam as to the expected conduct with
respect to human rights, as to international norms and the vast importance of
Vietnam meeting those norms with respect to human rights, worker rights, and
with respect to issues surrounding human dignity.
The quote I read to
you from Dr. Quay speaks to one approach to that question, and it is the
approach generally that the administration has followed in the case of China,
and now wishes to follow in the case of Vietnam, and that is integrating Vietnam
--
REP. LANTOS: If I may stop you on that, since you raised China, which
I was trying hard to avoid.B. BARSHEFSKY: I know.
REP. LANTOS: The
administration policy has been a total failure with respect to China on the
human rights issue. As a matter of fact, the administration's own documents,
both the religious documents, the human rights documents, underscores quite
accurately the deterioration of the human rights situation in China. So if what
we can look forward to vis-a-vis Vietnam is a repetition of the China pattern,
that would raise very serious questions in the minds of many of us with respect
to our ability to support this legislation.B. BARSHEFSKY: If I may say, in
connection with both countries, because I think it's probably hard to avoid the
comparison -- I'd prefer to handle it straight on. The question is how one
builds internal momentum and a larger internal dynamic for reform within a
country. We know from experience it is very difficult to change countries from
the outside if there is not, inside the country, a critical mass of reformers in
order to speed the process; indeed, to generate the process of reform.
Integration into the global community is the way in which this
administration has decided to approach that problem. It comports, in the case of
China, with the views of such respected dissidents as Martin Lee and Bao Tong
and Dai Chiyi and any one of a number of people on the ground in China who
believe that integration into the global community will further the process of
internal reform. And just as Dr. Quay has indicated similar views in Vietnam, we
believe this is really the best way to approach the problem.
Isolation,
whether of China or of Vietnam, tends to increase repression, tends to decrease
the accountability of --
REP. LANTOS: I know my time is up. But since
you've used the word isolationism, I have to respond to that. Those of us who
disagree --B. BARSHEFSKY: No --
REP. LANTOS: -- with the
administration's policy are not recommending either isolating China or isolating
Vietnam, but of using our enormous leverage to improve the human rights
conditions.
REP. BEREUTER: I thank the gentleman. And I thank the
gentlelady, the ambassador, for her response. This is of major interest to every
one of us, so if you wish to extend your remarks in written form, it would
certainly be most welcome.B. BARSHEFSKY: Thank you very much.
REP.
BEREUTER: I'd like now to call upon the gentleman from California if he has
questions under the three-minute rule.
REP. DANA ROHRABACHER (R-CA):
Yes, I associate myself with Mr. Lantos, especially with his last observation.
With this administration, every time that we insist that there be some
consideration of human rights given to various trade issues with dictatorships
and tyrants, we always are thrown back with "Well, it's either isolation or some
sort of engagement that doesn't include human rights." I resent that. I think
that Mr. Lantos put that very well.
Under the agreement that you are
proposing today or that we have negotiated with Vietnam, will the tariffs be the
same on our products going in as their products coming here?B. BARSHEFSKY: No,
our tariffs are among the world's lowest, so our tariffs will be lower than
their tariffs.
REP. ROHRABACHER: Would you say substantially lower than
their tariffs?B. BARSHEFSKY: Likely so, but that's the case with respect to our
relations with much of Europe as well.
REP. ROHRABACHER: Okay. Well, so
you're saying now with this dictatorship, we're going to really influence them
to go in the right direction by letting them ship in their goods to our country
with a dramatically lower tariff than they're permitting our goods to flow into
their country. I think they can look at us as being rather stupid for making
such an agreement.B. BARSHEFSKY: If I can make a comment on the question of
human rights, we have had a substantial human rights dialogue with Vietnam for
the past eight years.
REP. ROHRABACHER: Ma'am, I can't let you on in my
time. I only have three minutes, so I would like to ask a question. If you want
to put a statement about that in the record, that's fine. Let me ask a little
bit about -- will it still be illegal under the new agreement for anyone in the
Vietnamese government to release economic information that now is a criminal
offense in Vietnam?B. BARSHEFSKY: That I would have to get back to you on. I
don't know the answer.
REP. ROHRABACHER: Does this agreement include --
will it result in the fact that -- in some type of taxpayer subsidies in the
form of loan guarantees through Export-Import Bank or OPIC that would be made
available to this communist dictatorship, to businessmen who are building
factories in Vietnam?B. BARSHEFSKY: The president has waived Jackson-Vanik,
which entitles Vietnam to OPIC and Ex-Im Bank financing.
REP.
ROHRABACHER: All right. And this agreement --B. BARSHEFSKY: And the Congress has
not overturned that decision.
REP. ROHRABACHER: Right. This agreement,
then, sort of puts that in cement, into law.B. BARSHEFSKY: No, this agreement --
REP. ROHRABACHER: Makes that law.B. BARSHEFSKY: Well, this agreement
does not do anything until Congress approves it.
REP. ROHRABACHER:
Correct. But it will make that part of the law permanently.B. BARSHEFSKY: It
will make sure that those remain available.
REP. ROHRABACHER: So, let's
see. We're going to end up with this communist dictatorship. We're going to give
them the right to export into our country at lower tariffs than they will permit
our products to go into their country, plus we're going to subsidize American
businessmen to set up factories in their country with taxpayer money. I don't
think that the communist dictators are going to miss the message about that at
all. They're going to probably think we're a bunch of saps, and I do too.
REP. BEREUTER: The gentleman has expired. The gentleman from Florida,
Mr. Davis, is recognized.
REP. JIM DAVIS (D-FL): Thank you, Mr.
Chairman. And welcome, Ambassador Barshefsky. Could you elaborate a little bit
on what you see as the condition of the rule of law today in Vietnam and how you
see that being influenced by this trade agreement, once it's ultimately approved
by Congress?B. BARSHEFSKY: The condition of the rule of law is very weak -- the
arbitrary exercise of government power, unfettered bureaucratic discretion, a
non-transparent trade and economic regime; an economic regime, indeed, which is
in need of substantial restructuring.
Under this agreement, Vietnam will
have to make transparent a number of things it has never made transparent before
-- for example, laws and regulations; advance notice of laws; the uniform
application of a trade regime. These things are very basic to us, but don't
exist today in Vietnam. We need to build legal institutions in Vietnam. This is
a very long-term prospect.
And we need to expect Vietnam to adhere to
the kinds of commitments it has made with respect to transparency and the
initial rule of law issues to which it has committed in the agreement. This will
require a substantial technical assistance. We are working now with USAID, which
will assist Vietnam in technical terms in implementing the commitments,
including with respect to transparency and rule of law related issues, but the
creation of a rule of law in Vietnam is going to take a number of years.
REP. DAVIS: Could you talk about what you think will be the major issues
we need to be bird-dogging as we oversee implementation of the trade agreement?
MS. BARSHEFSKY: I think we'll have to pay close attention to the
entirety of the agreement. Vietnam has never entered into an agreement of this
comprehensive nature before with any country in the world -- communist or
non-communist. This agreement will be new to them. Of course, the NTR that would
be granted by Congress when it approves the agreement is annual only, and this
will give the Congress the ability to review Vietnam's implementation step by
step. The agreement itself is also subject to renewal after three years. That is
to say, the agreement expires in three years unless it is affirmatively renewed.
That will also provide us very positive opportunities to assess implementation.
REP. DAVIS: Thank you.
MS. BARSHEFSKY: Thank you.
REP.
BEREUTER: Thank you very much, Ambassador. I appreciate your remarks about the
two latter points. And Chairman Ros-Lehtinen is waiving, at least temporarily,
her time for questioning. We'll move to Mr. Rice, the gentleman from California.
REP. RICE: Thank you, Mr. Chairman. I want to thank you, Mr. Chairman,
and I want to thank our witnesses for this critical hearing. But Ambassador
Barshefsky, before getting to the agreement with Vietnam, I would like to
briefly discuss the Africa trade bill, because within the next few weeks there's
some decisions to be made. The bill is now law, and of course it means a great
deal to Africa. And, Ambassador, this legislation was written in a way that
gives trade benefits to those African countries that are reforming their
economies to be good trade and investment partners with us. The administration
is charged, in consultation with Congress, with determining which countries are
making this progress. And that's the same type of progress we're pushing for in
Vietnam.
And I've written you expressing my concerns, and now I'd like
to raise one country in particular, and that is Zimbabwe. Many of us have sadly
followed Zimbabwe's implosion as the government of President Mugabe has made war
on its economy, launching a systematic attack on the property rights of a wide
array of Zimbabweans. And today in the Washington Times there's an account by a
commercial farmer who is leaving her land, having seen it looted and illegally
taken over, and she writes, Commercial agriculture in Zimbabwe seems to be
drawing to a close. That's very true. The farms are all closing. And this will
be devastating to the country, including its food security. And maybe our
influence is limited, but I know now -- now is certainly not the time to be
validating this economic destruction by qualifying the country for the Africa
Growth and Opportunity Act. And that's more of a statement than a question, but
I welcome any response.
And my other question concerns the trade
agreement with Vietnam that we're looking at. And I wanted to ask there, what
areas do you expect Hanoi to have the most difficulty with, politically and
logistically, in implementing? Do you expect to see trouble from Hanoi in some
of the implementation process?
So, thank you, Ambassador.
MS.
BARSHEFSKY: Congressman, I don't have any specific comment to make about
Zimbabwe. The interagency team on AGOA eligibility is meeting even as we speak.
Final decisions on countries have not yet been made. And of course, we merely
provide the president with recommendations, and ultimately he will make
decisions as to eligibility. Certainly, I am pleased to directly look into the
question of Zimbabwe and to get back to you on that.
REP. RICE: I
appreciate that, because my concern was that it would be in consultation with
Congress, and I very much appreciate you doing so.
MS. BARSHEFSKY: I
understand that. Absolutely.
With respect to difficulties Hanoi may
have, as I said to Congressman Davis, I think we're going to have to watch
implementation overall very, very carefully. I think it's to be expected,
particularly in a communist country, that liberalization related to information
technologies, for example, telecom or the Internet, which this agreement also
covers, are areas of the agreement that will have to be very, very carefully
monitored and scrutinized. To be sure, Vietnam has several, for example, cyber
cafes. But we're talking about quite a bit broader liberalization than that in
the agreement. But in general, I would say we're going to have to watch
implementation very, very closely. Annual Congressional review will be of great,
great importance in that regard. The three-year review of the agreement will be
of great importance in that regard.
REP. BEREUTER: Thank you,
Ambassador. The time of the gentleman has expired. The gentleman from North
Dakota, Mr. Pomeroy, is recognized.
REP. POMEROY: Mr. Chairman, thank
you, and I want to congratulate you for your legislative victory in the House
this morning, passing the Overseas Cooperative Bill, which encourages the use of
co-ops in the expanding overseas development activities.
REP. BEREUTER:
And I thank you for being our original co- sponsor.
REP. POMEROY: Well,
my pleasure. That's a good bill, and I'm hoping that that's going to make it
this session yet. Ms. Barshefsky, it's good to see you again. My brother, the
summer before last, participated in a U.S. Commerce Department training session
for insurance regulators in Vietnam. He serves presently as the insurance
commissioner in North Dakota. He came back quite enthused about the potential
for the services market there -- when we get a fair shot at that market. Would
you have a comment on that?
MS. BARSHEFSKY: I think he's absolutely
right to be enthused. The services markets in Vietnam are grossly
under-developed and under- funded. There's a lack not only of capital, there's a
lack of expertise. There's a lack of information and know-how with respect, for
example, to what a modern financial instrument looks like, or what modern
insurance looks like. So there's very substantial -- substantial opportunities.
REP. POMEROY: With this session winding down, this may be my last chance
to publicly commend you in a hearing setting for the job you have done as our
trade representative. You have been a tenacious advocate and the howls from of
our trade competitors of the concessions you have wrought at the table I think
shows third-party validation of your effectiveness. I would be remiss in this
last exchange, potentially, with you, not to mention the North Dakota Wheat
Commission 301 Petition --
MS. BARSHEFSKY: Yes.
REP. POMEROY: --
filed with you on September 8th. Just a little background. Congressman
Nethercutt, myself, many others of both parties, have urged that the petition be
acted upon and an investigation launched. 301, as you know, is designed to
combat unjustifiable, unreasonable, and discriminatory acts. And in that
petition, we outlined, the to extent that we can pull together anecdotal
evidence that that's precisely what's occurring. Of course, the back-drop of
this is very severely depressed markets, and horrible grain prices, and we don't
think, as we go up against the Canadian Wheat Board that this -- that the trade
competition has been fairly conducted. The -- the -- we think that an
investigation to the full extent of the Canadian Wheat Board's discriminatory
pricing activities is required. I would remind you of their adamant refusal to
allow the full audit that you and I have urged over the last two years. Like I
always say, if somebody's got -- if they don't have anything to hide, why are
they so adamantly opposed to the audit? The investigation would let us basically
unilaterally proceed to get the Canadian Wheat Board the look that it deserves.
So, I hope that with your help we can take a strong stand against these
unfair trade practices and support our farmers and move forward to launch the
investigation. Do you have a comment just to the status of the administration's
review at this time?
MS. BARSHEFSKY: Once a 301 case is filed, it goes
to an interagency group which looks at the allegations and which gives counsel
and the petitioners an opportunity to appear before the interagency group to
discuss the case. The interagency group will make a recommendation to me as to
the disposition of the case, that is, whether we initiate it or not, by
mid-October. And I then need to make a decision by October 23rd. Certainly we
are very familiar with the activities of the Canadian Wheat Board. You and I
have discussed many, many times our mutual frustration at the secrecy
surrounding Wheat Board transactions and the fact that state trading in this
sector produces extremely negative consequences for our producers. I look
forward to receiving the interagency recommendation, and am certainly delighted
to speak with you about it as well.
REP. POMEROY: Thank you very much.
MS. BARSHEFSKY: Thank you.
REP. BEREUTER: Mr. Pomeroy, I join
you in your commendations for the public service that Ambassador Barshefsky has
rendered, and her tenaciousness as a negotiator. And like you, I just handed her
a letter about non-tariff barriers in the Philippines about American meat
exports, and why I have your same concerns about the Canadian Wheat Board.
The gentle lady from Florida, the chair lady of the IEPT subcommittee,
is recognized.
REP. ROS-LEHTINEN: Thank you. I'll make it brief because
I know the ambassador's time is limited.
In your testimony, Ambassador,
you referred to the commitments that Vietnam will undertake. What commitments
and steps has this country already taken and truly adhered to that raises
investor' confidence in a country with a communist, socialist economy? How can
the U.S. investor really feel secure about property rights, about deregulation,
about rule of law, avenues for redress?
MS. BARSHEFSKY: I think U.S.
investors need to proceed with great caution and care. Vietnam was making some
important progress in the early '90s to roughly in 1995, 1996, in terms of
economic reform, at least passing some rudimentary but important laws with
respect to the operation of companies, with respect to investment, with respect
to what they call "equitization," which is privatization. When the Asia
financial crisis hit, Vietnam was severely and negatively impacted, because
about two-thirds of all of its trade and all of its investment is with the rest
of Asia, and of course, the rest of Asia wasn't trading and they weren't
investing. So, Vietnam experienced rapid outflow of funds and very, very poor
export performance, a slowed economy -- and that then slowed the reform effort,
the passage of laws and so on.
There is much to be done in Vietnam. It
is a country in which an American businessperson would be advised to proceed
slowly and very, very cautiously.
REP. ROS-LEHTINEN: Thank you very
much. Thank you, Mr. Bereuter.
REP. BEREUTER: Thank you. And I thank all
of the members. Ambassador Barshefsky, thank you very much for your testimony.
You will be pleased but not surprised to know that the wheels of the Senate
debate are grinding more slowly than projected, so you will be in time.
MS. BARSHEFSKY: Thank you so much, Mr. Chairman. Thank you.
REP.
BEREUTER: Thank you.
MS. BARSHEFSKY: Thank you, Madam Chairwoman.
END
LOAD-DATE: September 20, 2000
