Joint Circular No. 04/2004/TTLT/BTM-BCN dated July 28, 2004 of the Ministry of Industry and the Ministry of Trade guidelines on allocation and realization of quotas for textile and garment exports to the US market in year 2005

INTERMINISTERIAL CIRCULAR

GUIDELINES ON ALLOCATION AND REALIZATION OF QUOTAS FOR TEXTILE AND GARMENT EXPORTS TO THE US MARKET IN YEAR 2005

Based on the Vietnam - US Garment and Apparel Agreement dated July 17th, 2003 and the Memorandum dated July 22nd, 2004;

Based on the Decision No 46/2001/QD-TTg dated April 4th, 2004 by the Prime Minister on management of exports and imports in the phase 2001 - 2005;

Based on situation of textile and garment exports to the US market in year 2004and forecast for the exports in year 2005;

Upon studying of proposals of the Vietnam Textile and Garment Association, The Inter-Ministry of Trade and Industry hereby provides guidelines on allocation and realization of quotas for textile and garment exports to the US market in year 2005 as follows:

I - GENERAL PRINCIPLES:

1. Scope of quota imposition:

 Quotas for textile and garment products to be exported to the US market are imposed on 38 categories including 13 couple categories and 12 single categories as specified in Appendix 1 attached.

2. Subjects to quota allocation and realization

Enterprises which meet the following conditions are qualified for quota allocation and realization:

- Having business license, registration for export - import code or investment license according to the Foreign Investment Law of Vietnam;

- Capable of manufacturing textile and garment products;

- Having no record of violating the Agreement’s regulations of current practice and in year 2004;

Enterprises have the right to obtain quotas to individually export their products or obtain quotas in

II - PRINCIPLES ON QUOTA ALLOCATION

1. Quota allocation

Quotas for textile and garment export to the US market are allocated publicly without any discrimination, as follows:

- 80% of quotas (including growth rate of 2% and 7% depending on each textile and garment category) are allocated to enterprises with export achievements from January 1st, 2004 to December 31st 2004.

- 20% of quotas are supplementary quotas, in which:

+ 3% are allocated to enterprises exporting textile and garment products manufactured of domestic cloth/materials.

+ 3% are allocated to enterprises exporting quota-free textile and garment products from July 2004 to June 2005.

+ 1% Ho Chi Minh City international port.

+ 4% are allocated to enterprises which are voluntary to join chains and enterprises realizing 2004 quotas with records of new investment dyeing and weaving projects.

+ 7% are allocated to enterprises with contracts with US large importers which have import turnover from Vietnam of US$20 million and over in year 2003 or 2004 and enterprises having clients with well-known brand names.

+ 2% are spare quotas.

2. Basis for quota allocation

2.1. Award quotas: Categories are divided into 2 groups:

- Group I includes the following 9 categories: cat.334/335, cat.338/339, cat.340/360, cat.341/361, cat.342/362, cat.347/348, cat.359/659-S, cat.638/639 and cat.647/648.

Enterprises’ allocated award quotas for cat.C = (Award quotas for cat.C realized in year 2004 - 2005 award quotas pre-obtained in year 2004) / 100

- Group II includes the following 16 categories: cat.200, cat.301, cat.332, cat.333, cat.345, cat.351/651, cat.352/652, cat.359/659-C, cat.434, cat.435, cat.440, cat.447, cat.448, cat.620, cat.645/646.

Enterprises’ allocated award quotas for cat.C = Award quotas for cat.C realized in year 2004 - 2005 award quotas pre-obtained in year 2004

 - 2005 award quota pre-obtained

- Application for allocation of the quotas is in accordance with Form 5 attached.

2.2. Supplementary quotas

2.2.1. Quotas for textile and garment products manufactured of domestic cloth/materials

- Contracts for exporting textile and garment products made of domestic cloth/materials

- Contracts for purchase of domestic cloth/materials

- Invoice for purchase of domestic cloth/materials issued by the Ministry of Finance

Application for allocation of the quotas is in accordance with Form 1 attached.

2.2.2

- List of category, exported and export turnover of exported products

- Statistics of Customs authorities (provided to the Ministry of Trade by Customs authorities)

Application for allocation of the quotas is in accordance with Form 2 attached.

2.2.3. Quotas for enterprises joining chains and enterprises realizing 2004 quotas with records of new investment in and weaving projects

- For enterprises voluntarily joining chains: The Vietnam Textile and Garment Association

- For enterprises realizing 2004 quotas with records of new investment in dyeing and weaving projects: Based on investment capital, number of equipments which are new or going to be installed in the phase from January 2004 to December 2005.

Application for allocation of the quotas is in accordance with Form 3 attached.

2.2.4. Quotas for enterprises with factories above 500 km from Hai Phong port or Ho Chi Minh City international port:

- Contracts for processing, exporting textile and garment products to the US market

- Capable to manufacture requested categories

2.2.5. Quotas for enterprises with US large clients and clients with well-know brand names:

- Vietnamese enterprises are capable of manufacturing requested categories and have contracts signed with US large importers or clients with famous brand names.

Application for allocation of the quotas is in accordance with Form 4 attached.

- Large importers and clients with famous brand names shall send to the Ministry of Trade (the Export - Import Department) no later than September 30th, 2004 lists detailing Vietnamese textile and garment exporters, textile and garment categories, volume and turnover in year 2003, 2004 and of 2005 plan.

3. Time for allocation of quotas

3.1. Award quotas are allocated in 2 intakes:

- For enterprises with export achievements in the phase from January 1st, 2004 to July 31st, 2004, award quotas are allocated in early September 2004.

- For enterprises with export achievements in the phase from August 1st, 2004 to December 31st, 2004, award quotas are allocated in late January 2005.

3.2. Supplementary quotas:

- The quotas for enterprises exporting textile and garment products using domestic cloth/materials are allocated in 2 intakes. The first in take is in December 2004 and the second intake is in April 2005.

- The quotas for enterprises with achievements in exporting quota-free textile and garment products to the US market in the second haft of year 2004 and the first half of year 2005 are allocated in February and July of year 2005.

- The quotas for enterprises with factories over 500 km far from Hai Phong port or Ho Chi Minh City international port are allocated in October 2004.

- The quotas for enterprises which voluntarily join chains are allocated after the Inter-Ministry of Trade and Industry and the Vietnam Textile and Garment Association investigate actual operation of chains.

- The quotas for enterprises with US large importers or clients with famous brand names are allocated in October 2004.

III. QUOTA APPLICATION PROCEDURES

Enterprises which wish to export textile and garment products to the US market in year 2005 shall send application (according to the form attached) to the Ministry of Trade (the Export - Import Department, No 21, , Hanoi) and be liable for accuracy of information provided in the application.

Time for application:

- Award quotas: Applications shall be sent to the Ministry of Trade prior to September 1st, 2004

- Supplementary quotas: Applications shall to be sent to the Ministry of Trade prior to September 30th, 2004. Except for:

+ Applications for quotas for textile and garment products manufactured by domestic cloth/materials shall be sent to the Ministry of Trade no later than March 31st, 2005.

+ For the quotas for enterprises with achievements in exporting quota-free textile and garment products to the US market in the second half of year 2004, applications shall be sent to the Ministry of Trade prior to January 30th, 2005 and in the first half of year 2005, applications shall be sent to the Ministry of Trade prior to July 20th, 2005.

+ For the quotas for enterprises which voluntarily join chains and for enterprises with records of new investment in dyeing and weaving projects, applications shall be sent to the Ministry of Trade prior to June 30th, 2005.

IV. PRINCIPLES ON IMPLEMENTATION

1. Effect

- 2005 quotas are effective from January 1st, 2005 to December 31st, 2005

- Time of application receipt is according to the Ministry of Trade’s stamp on incoming correspondence

2. Visa grant

Visa is granted according to the Circular No 03/2003/TT-BTM dated June 5th, 2003 by the Ministry of Trade providing guidelines on grant of visa for textile and garment products to be exported to the US market in conformity with the Vietnam - US Garment and Apparel Agreement and its amendments (if there are).

Visa shall not be granted to textile and garment lots to be exported for a third country for completion or textile and garment lots imported into Vietnam for finalization for export to the US market.

3. Return

Enterprises which are not capable to realize their allocated quotas shall return the unused quotas to the Ministry of Trade:

- Unused quotas returned prior to September 2005 shall be added to enterprises’ 2005 allocated quotas.

- 50% of unused quotas returned from September 2005 shall be added to enterprises’ 2005 allocated quotas.

- Unused quotas not returned shall be deducted from enterprises’ 2005 allocated quotas.

- Enterprises are not permitted to transfer their allocated quotas.

- Enterprises joining chains with mechanism (including cooperation for export and import of quota and quota-free categories, production cooperation) and certified by the Inter-Ministry of Trade and Industry are permitted to exchange their allocated quotas with enterprises of their chains.

4. Quota exchange

Enterprises which wish to exchange quotas for different categories for the purpose of exporting shall

5. Entrusting

Entrusting is implemented in accordance with the Decree No 57/1998/ND-CP dated July 31st, 1998 and the Decree No 44/2001/ND-Cp dated August 2nd, 2001 by the Government.

6. Quota charges

Quota charges apply to particular categories according to stipulations by the Ministry of Finance.

Enterprises pay quota charges (if there are) for each Announcement on allocation of quotas or each textile and garment lot. When applying for visa, enterprises shall declare to Export - Import Divisions invoice for their payment of quota charges at the Ministry of Trade’s account No 920.01.023 at Hanoi State Treasury.

V. PRINCIPLES OF IMPLEMENTATION

1. The Ministry of Trade and the Ministry of Industry guide the implementation of the Agreement and established regulations and cooperate with domestic and foreign relevant bodies to quickly settle uncertainties arising during the implementation. Information on quota allocation and realization is available on mass media and on the website of the Ministry of Trade at www.mot.gov.vn.

Local Trade Department or Trade and Tourism Department cooperate with the Interministerial Garment and Apparel Administration Division to define production and export capacity of enterprises, prevent trade fraud to ensure the implementation of the Vietnam - US Garment and Apparel Agreement.

2. Enterprises obey to regulations of this Circular and those of the Vietnam - US Garment and Apparel Administration Division. Enterprises with frauds shall suffer from sanctions of quota revocation to quota allocation ceasing depending on level of guilty as follows:

2.1. Enterprises with illegal goods shipment, making and using counterfeit visa, C/O and dossiers shall suffer from revocation of their all allocated quotas, not be allocated quotas for next years and be judged by security authorities.

2.2. Enterprises providing wrong information in their applications for quotas allocation, visa and refusing quota supervision by the Inter-Ministry of Trade and Industry shall suffer from quota revocation and ceasing of supplementary quota allocation.

2.3. Enterprises providing wrong information on their production capacity and export turnover in order to obtain supplementary quotas shall suffer from revocation of the quotas and a quota deduction as many as 30% of their allocated quotas.

This Interministerial Circular comes into effect once it is published on the Gazette.

APPENDIX I

(Attached to the Interministerial Circular No 04/2004/TTLT/BTM/BCN dated July 28th, 2004)

FORM 1

1. Enterprise:

2. Business License No:

3. Enterprise Code:

4. Telephone:                                                                 Fax:

5. Email:

6. Office address:

7. Factory address:

8. Number of equipment units:

9. Number of workers:

Date:

To: The Ministry of Trade

ON: APPLICATION FOR QUOTAS TO BE ALLOCATED IN PRIORITY TO ENTERPRISES EXPORTING TEXTILE AND GARMENT PRODUCTS USING DOMESTIC CLOTH/MATERIALS TO THE US MARKET IN YEAR 2005

Based on the Interministerial Circular No 04/2004/TTLT/BTM/BCN dated July 28th, 2004 by the Inter-Ministry of Trade and Industry providing guidelines on allocation and realization of quotas on exports of textile and garment products to the US market in year 2005, (name of enterprise) requests the Inter-Ministry of Trade and Industry to allocate quotas in the following volume to it for exporting textile and garment products manufactured of domestic cloth/materials to the US market in year 2005:

The enterprise is liable for accuracy of figures and information provided in its application.

Head of entity

(Signature and stamp)

-------------------------------

Note:

1. This application is to be sent together with original copies of documents in column (4), (6), (7) with certification for origin and head of entity’s signature.

2. For enterprises using its produced cloth, documents in column (6) and (7) can be replaced by original copies of stock-in or stock-out notes from weaving section to sewing section (or equivalent documents) with certification and head of entity’s signature.

3. Contracts/invoices for purchase of cloth from cloth trading companies which are not able to weave are not to be put in the table.

4. Cloth/materials specified in contracts and invoices must be the suitable with exported categories.

5. Only invoices for purchase of cloth after June 30th, 2004 are to be put in the table.

FORM 2

1. Enterprise:

2. Business License No:

3. Enterprise Code:

4. Telephone:                                                     Fax:

5. Email:

6. Office address:

7. Factory address:

8. Number of equipment units:

9. Number of workers:

Date:

To: The Ministry of Trade

ON: APPLICATION FOR QUOTAS TO BE ALLOCATED TO ENTERPRISES WITH ACHIEVEMENTS IN EXPORTING QUOTA-FREE TEXTILE AND GARMENT US MARKET IN YEAR 2005

Based on the Interministerial Circular No 04/2004/TTLT/BTM/BCN dated July 28th, 2004 by the Ministry of Trade providing guidelines on allocation and realization of quotas for textile and garment products to be exported to the US market in year 2005, (name of enterprise) requests the Inter-Ministry of Trade and Industry to allocate 2005 quotas for its achievements in exporting quota-free textile and garment products to the US market in the second half of year 2004 (the first half of year 2005):

(*) Quota-free categories in the above table are textile and garment categories to be exported to the US market not controlled by the quantitative limits.

Products applied for the quota allocation:

(1) For example: Men’s and women’s cotton knitted coat (cat.338/339)

(2)

(3)

…

The enterprise requests the Inter-Ministry of Trade and Industry to allocate quotas according to the above priority order.

The enterprise is liable for accuracy of figures and information provided in its application.

Head of entity

(Signature and stamp)

-------------------------------

Note: This application is to be sent together with copies Customs entries (Export entries for exported quota-free categories applied for the quota allocation issued in valid period of time. The entries have been paid for, exporter is the applicant) with certification for origin and head of entity’s signature.

FORM 3

1. Enterprise:

2. Business License No:

3. Enterprise Code:

4. Telephone:                                            Fax:

5. Email:

6. Office address:

7. Factory address:

8. Number of equipment units:

9. Number of workers:

Date:

To: The Ministry of Trade

ON: APPLICATION FOR QUOTAS TO BE ALLOCATED TO ENTERPRISES WITH RECORDS OF NEW INVESTMENT IN DYEING AND WEAVING PROJECTS

Based on the Interministerial Circular No 04/2004/TTLT/BTM/BCN dated July 28th, 2004 by the Ministry of Trade providing guidelines on allocation and realization of quotas for textile and garment products to be exported to the US market in year 2005, (name of enterprise) reports on its new investment in dyeing, weaving projects as follows

(Name of enterprise) requests the Inter-Ministry of Trade and Industry to allocate quotas for categories according to the following priority order:

(1) For example: Men’s and women’s cotton knitted coat (cat.338/339)

(2)

(3)

…

The enterprise is liable for accuracy of figures and information provided in its application.

Head of entity

(Signature and stamp)

-------------------------------

Note: This application is to be sent together with licenses or decisions relating the projects, reports on investment plan, Customs entries for equipment imports (for already installed projects)

FORM 4

1. Enterprise:

2. Business License No:

3. Enterprise Code:

4. Telephone:                                                     Fax:

5. Email:

6. Office address:

7. Factory address:

8. Number of equipment units:

9. Number of workers:

Date:

To: The Ministry of Trade

ON: APPLICATION FOR QUOTAS TO BE ALLOCATED TO ENTERPRISES US LARGE CLIENTS/ CLIENTS WITH LARGE, FAMOUS BRAND NAMES (*)

Based on the Interministerial Circular No 04/2004/TTLT/BTM/BCN dated July 28th, 2004 by the Ministry of Trade providing guidelines on allocation and realization of quotas for textile and garment products to be exported to the US market in year 2005, (name of enterprise) requests the Inter-Ministry of Trade and Industry to allocate 2005 quotas for it to realize contracts signed with US large clients/ clients with large, famous brand names as follows

(*) US large clients are importers with textile and garment import turnover from Vietnam of$20 million and more in year 2003 or 2004.

This application is sent together with original copy of valid exporting contracts with certification for origin and signed by head of the enterprise.

The enterprise is liable for accuracy of figures and information provided in its application.

Head of entity

(Signature and stamp)

FORM 5

1. Enterprise:

2. Business License No:

3. Enterprise Code:

4. Telephone:                                                                 Fax:

5. Email:

6. Office address:

7. Factory address:

8. Number of equipment units:

9. Number of workers:

Date:

To: The Ministry of Trade

ON: APPLICATION FOR QUOTAS TO BE ALLOCATED TO ENTERPRISES WITH ACHIEVEMENTS IN EXPORTING TEXTILE AND GARMENT PRODUCTS TO THE US MARKET IN YEAR 2004

Based on the Interministerial Circular No 04/2004/TTLT/BTM/BCN dated July 28th, 2004 by the Inter-Ministry of Trade and Industry providing guidelines on allocation and realization of quotas on exports of textile and garment products to the US market in year 2005, (name of enterprise) requests the Inter-Ministry of Trade and Industry to allocate quotas based on its export achievements as follows:

The enterprise is liable for accuracy of figures and information provided in its application.

Head of entity

(Signature and stamp)

(*) This translation is for reference only