Vietnam trade bill fails in U.S. before Bush visit

[Ron Burgundy]

Reuters - The U.S. House of Representatives on Monday failed to pass a bill establishing permanent normal trade relations with Vietnam, in a setback for President George W. Bush, who is visiting Hanoi this weekend.



WASHINGTON (Reuters) - The U.S. House of Representatives on Monday failed to pass a bill establishing permanent normal trade relations with Vietnam, in a setback for President George W. Bush, who is visiting Hanoi this weekend.

The surprise result followed an announcement by the State Department that it had dropped Vietnam from its list of nations that severely violate religious freedom, citing an improvement in its tolerance for religious expression.

The setback on the trade bill raises the possibility that Bush could go to this weekend's Asia Pacific Economic Cooperation summit in Hanoi without delivering on a trade initiative his administration made a major priority.

That threatened to overshadow other efforts to ensure Bush's visit would be a success, including Vietnam's removal from the U.S. list of countries that violate religious freedom.

Supporters of the Vietnam trade bill failed to get the two-thirds vote needed to approve it on the House "suspension calendar," usually reserved for noncontroversial legislation.

But since lawmakers voted 228-161 in favor of the bill, Republicans leaders were expected to try to win approval later this week through a procedure that requires only a simple majority to pass.

"The vote showed there is strong support in the House for this bill and it will pass eventually," said Adam Sitkoff, the executive director of the American Chamber of Commerce chapter in Hanoi.

It is still possible that both the House and the Senate could approve the bill before Bush is in Hanoi.

The chances of a Senate vote on the trade bill improved after Hanoi announced it was deporting a U.S. citizen convicted of plotting violence against the Vietnamese government.

Sen. Mel Martinez, a Florida Republican, had been blocking Senate action on the to win the release of Thuong Nguyen Foshee, who lives in his state and was in a Vietnamese prison for 14 months before she was convicted last week.

DEMOCRATS DIVIDED

The House vote showed many Democrats remain strongly opposed to trade agreements. Republicans supported the Vietnam bill by a two-to-one margin, but Democrats were almost evenly divided for and against the measure.

That raises questions about whether Rep. Charles Rangel (news, bio, voting record), a New York Democrat expected to become chairman of the powerful House Ways and Means Committee in January, can follow-through on promises to work with the White House on trade.

Rangel had predicted the Vietnam trade bill would pass and urged other Democrats to support it.

"We're just dumbfounded and confounded by this vote," said Nicole Venable, a trade lobbyist with the U.S. Chamber of Commerce. "What does this mean? Does it mean the (Democratic) caucus really isn't where (Rangel) is? Does it mean that he really doesn't have any sway?"

A late push by the AFL-CIO labor federation might have been a factor in persuading many Democrats to vote against the bill, Venable said.

Congress needs to approve permanent normal trade relations with Vietnam for U.S. farmers, bankers and other business to share in the market-opening benefits of Hanoi's entry into the World Trade Organization next month.

The United States normalized trade relations with Vietnam in 1995 and signed a bilateral trade deal in 2001 that opened Vietnam's market to more U.S. exports. Two-way goods trade between the countries totaled about $7.8 billion last year, including $6.6 billion in imports from Vietnam.

However, U.S. trade relations with Hanoi have remained subject to a Cold War provision known as the Jackson-Vanik amendment, which links favorable tariff treatment for products from several countries such as Vietnam and Russia to the rights of religious minorities to emigrate freely.

Vietnam's WTO deal requires Hanoi to reduce tariffs on almost all U.S. manufactured goods and on nearly 75 percent of U.S. farm exports. Hanoi also pledged to open sectors like telecommunication, financial services and energy to more U.S. and foreign firms.