In furtherance of the Prime Minister’s direction in the Government’s Document No. 669/CP-KTTH of May 21, 2003 on the implementation of the Vietnam-U.S. Textile and Garment Agreement;

Pursuant to the Vietnam-U.S. Textiles and Garments Trading Agreement and the export in 2002 and the first 3 months of 2003 by traders;

Based on the traders’ capability to produce and/or export textiles and garments into the U.S. market;

The Ministry of Trade, the Ministry of Planning and Investment and the Ministry of Industry hereby jointly guide the assignment and implementation of quotas of textiles and garments for export to the U.S. in 2003 as follows:

I. GENERAL PROVISIONS

1. Scope of application of quotas

Quotas of garments and textiles for export to the U.S. comprise 38 categories (Cat.) (including 13 double Cat. and 12 single Cat.) as prescribed in Appendix No. 1 to this Circular.

2. Implementation subjects

Traders of all economic sectors engaged in textile and garment production, which have business registration certificates, have already registered import/export business codes or have investment licenses under the Law on Foreign Investment in Vietnam, exported textiles and garments into the U.S. market in 2002 and the first 3 months of 2003 and/or are capable to produce and export products into the U.S. market.

II. REGULATIONS ON MANAGEMENT OF QUOTAS

1. Assignment of quotas

1.1. Bases for quota assignment

- Export results in 2002 and the first 3 months of 2003 as well as producing and exporting capability (number of workers, equipment, contracts,...) on the basis of traders’ reports. In cases where reports are deemed to be inaccurate, the inter-branch supervising team shall conduct post-inspection thereof.

- Contracts on exporting garments made of home-made fabrics.

- Traders in areas meeting with economic difficulties, that have contracts on producing and/or processing textiles and garments for export to the U.S.

1.2. Assignment of quotas

The assignment of quotas of textiles and garments to be exported into the U.S. market shall be carried out publicly, transparently, reasonably and for the right objects, concretely as follows:

a/ 65-70% of the 2003 quotas shall be set aside for assignment to traders on the basis of their export results in 2002 and the first 3 months of 2003;

b/ 23-28% of quotas shall be set aside for assignment to:

- Traders that have large producing and/or exporting capability but have just been engaged in the export thereof since late 2002 or early 2003;

- Traders that did not conduct export in 2002 or the first 3 months of 2003 but have export contracts in 2003, on the basis of their producing capability, they shall be given priority to invest in modern technologies and equipment for production of high-value textiles and garments for export.

The accurate percentages stated in Items a and b shall be determined after obtaining the inter-branch supervising team’s inspection results.

- 3% shall be set aside for assignment to traders that sign production and export contracts directly with the U.S.’s large importing or distributing groups.

c/ 7% of quotas shall be set aside for support to traders that use home-made fabrics raw materials for exports production and support to traders in areas meeting with economic difficulties that have producing capability and export contracts.

1.3. Time limit for quota assignment

In Phase I, 80% of quotas shall be temporarily assigned:

a/ At the end of May 2003, to traders that have been exporting textiles and garments to the U.S. with complete and valid dossiers under the Trade Ministry’s Documents No. 0677-TM/XNK of March 18, 2003, No. 0962-TM/XNK of April 28, 2003 and No. 1024-TM/XNK of May 7, 2003.

b/ At the end of June 2003, to traders that have been exporting textiles and garments to the U.S. without complete and valid dossiers for Phase I under the Trade Ministry’s Documents No. 0677 TM/XNK and No. 0962 TM/XNK, and to traders that did not yet conduct export in 2002 and the first 3 months of 2003 but have producing capability and contracts on exporting textiles and garments to the U.S. in 2003, have reports as prescribed by the Ministry of Trade.

Phase II: The remaining 20% of quotas shall be assigned to the above-said 2 subjects after the inspection results are available.

2. Granting of visas

As from July 1, 2003, all 38 categories (Cat.) prescribed in Appendix No. 1 to this Circular, when being exported to the U.S., must have visas granted by the Trade Ministry’s Import/Export Bureaus in Hanoi, Hai Phong, Da Nang and Ho Chi Minh cities, as well as Vung Tau provincial city and Dong Nai province.

The granting of visas shall be stipulated by the Trade Ministry in a separate document.

III. IMPLEMENTATION REGULATIONS

1. Implementation effect

The export of textiles and garments to the U.S. shall be effected on the basis of the Trade Ministry’s notice on quota assignment, which takes effect from May 1, 2003 to December 31, 2003. This notice is published on the Thuong Mai (Trade), Cong Nghiep (Industry) and Dau Tu (Investment) newspapers and in the Trade Ministry’s Regional Import/Export Management Bureaus. Traders having notices on quota assignment shall directly contact the Regional Import/Export Management Bureaus in order to carry out export procedures (apply for export certificates or visas). The Trade Ministry’s Regional Import/Export Management Bureaus shall inspect the volume of quotas already granted export certificates (E/C) to traders as from May 1, 2003 and subsequently deduct it in the volume of quotas in the Trade Ministry’s notice on quota assignment according to the provisions in the Trade Ministry’s Official Dispatch No. 1024 TM/XNK of May 7, 2003 on quotas of textiles and garments for export into the U.S. market.

2. Returning of quotas

Traders that are incapable of implementing the assigned quotas must make written documents on returning them to the Ministry of Trade for assignment to other enterprises. If enterprises return them before October 1, 2003, such shall be calculated in the subsequent year’s quotas; If they do neither implement the assigned quotas nor return them, they shall not be distributed corresponding quotas for the following year. Quotas must not be purchased, sold or transferred.

3. Conversion of quotas

In the course of assignment and implementation of quotas of export textiles and garments, if wishing to convert quotas of categories (Cat.), traders shall send documents thereon to the Ministry of Trade for consideration and settlement in conformity with the Agreement’s stipulations.

4. Consignment and consignment acceptance

The consignment and consignment acceptance shall comply with the Government’s Decree No. 57/1998/ND-CP of July 31, 1998 and Decree No. 44/2001/ND-CP of August 2, 2001.

Quotas shall be assigned only to producing traders but not to consignment-accepting traders.

5. Quota charges

Traders assigned quotas of textiles and garments for export to the U.S. shall have to pay charges. The specific charge rates shall comply with the Finance Ministry’s decision.

IV. IMPLEMENTATION PROVISIONS

1. The Ministry of Trade, the Ministry of Industry and the Ministry of Planning and Investment shall coordinate with Vietnam Textile and Garment Association in assigning quotas. The assignment results and the situation of implementation of quotas shall be published on the mass media and the website of the Ministry of Trade: www.mot.gov.vn.

2. Traders must strictly implement this Circular’s provisions and the provisions of the Vietnam-U.S. Textile and Garment Agreement. If traders violate the provisions of this Circular or the Vietnam-U.S. Textile and Garment Agreement, make untruthful reports or commit trade fraud (make illegal transshipment or abuse Vietnam’s visas or C/O for exporting goods made in other countries,...), depending on the seriousness of their violations, quotas (if any) shall be subtracted by three-fold of the violation level, withdrawn or suspended from assignment, or such traders shall be prosecuted according to law provisions.

3. The Ministry of Trade, the Ministry of Industry and the Ministry of Planning and Investment shall set up an inter-branch inspection team, which is composed of representatives of the Ministry of Trade, the Ministry of Planning and Investment, the Ministry of Industry, the General Department of Customs, the provincial/municipal Trade Services, and Vietnam Textile and Garment Association, in order to supervise the implementation of the Vietnam-U.S. Textile and Garment Agreement as well as inspect and combat trade fraud committed by traders.

This Circular takes effect till December 31, 2003.

For the Minister of Trade
Vice Minister
MAI VAN DAU

For the Minister of Planning and Investment
TRUONG VAN DOAN

For the Minister of Industry
Vice Minister
BUI XUAN KHU