INTERMINISTERIAL CIRCULAR

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

Pursuant to the Decree No. 29/2004/ND-CP dated January 16^th. 2004 by the Government detailing functions, duties, responsibilities, and organization of the Ministry of Trade;

Pursuant to the Decree No. 55/2003/ND-CP dated May 28^th, 2003 by the Government detailing functions, duties, responsibilities, and organization of the Ministry of Industry;

Pursuant to the Document No. 708/VPCP-KTTH dated February 7^th, 2005 by the Government Office on the Prime Minister’s approval of the Ministry of Trade’s proposal as specified in the Circular No. 0134/TM-DM for transfer of quotas for textile and garment exports to the US market in year 2005;

Pursuant to the Document No. 1536/VPCP-KTTH dated March 28^th, 2005 by the Government Office on the Prime Minister’s guidelines on establishment of regulations for transfer of quotas for textile and garment exports to the US market among enterprises;

Pursuant to the Interministerial Circular No. 4/2004/TTLT/BTM/BCN dated July 28^th, 2004 by the Inter-Ministry of Trade and Industry providing guidance on allocation and realization of quotas for textile and garment exports to the US market;

Based on the Vietnam Textile and Garment Association’s proposal, The Inter-Ministry of Trade and Industry hereby provides guidelines on transfer of quotas for textile and garment exports to the US market in year 2005 as follows:

I. GENERAL PRINCIPLES

1. Scope and object of quota transfer

The quotas for transfer are those for textile and garment exports to the US market in year 2005 which the Inter-Ministry of Trade and Industry allocates or pre-allocates to enterprises based on their export achievements.

Chain quotas which are allocated based on export achievements of enterprises which join a valid chain can be transferred between members of that chain.

Quota transfer of other quotas which are not achievement quotas and chain quotas is not allowed.

Quota transferer is an enterprise which is allocated quotas which can be transferred and has the need for quota transfer.

Transferee is an enterprise which has capacity of manufacturing textile and garment products and has the need for export of textile and garment categories for which quotas can be transferred.

Transfer Contract is a deal in writing on transfer, exchange, credit, and move of quotas between transferer and transferee, between subsidiary companies of a corporation, between holding company and subsidiary companies, and between members of a chain in accordance with Form 01 of this Circular.

2. Principles for quotas and enterprises involving with quota transfer

2.1. Principles on quota transfer

2.1.1. Volume of quotas for transfer of one enterprise cannot exceed volume of its allocated quotas which are allowed to be transferred and unused.

2.1.2. Quota transfer must be implemented voluntarily, directly, and in public  between transferers and transferees through Transfer Contracts.

All broker actions are prohibited.

2.13. Transferred quotas cannot be used for further transfer.

2.1.4. Transferred quotas cannot be used for exchange.

2.2. Principles for quota transferer

Quota transferer which has quota allocation announcement with its name and is able to transfer quotas can transfer a part of the whole of its allocated quotas to one or more enterprises.

2.3. Principles for quota transferee

If quota transferee does not used up its transferred quotas, it shall inform the Inter-Ministry of Trade and Industry for its settlement.

3. Exports of textile and garment products with transferred quotas shall be added to quota transferee’s export achievements.

4. All incomes from quota transfer must be declared fully and added to enterprises’ revenues. All negative doings in quota transfer are prohibited.

5. Enterprises which wish for quota transfer are recommended to enter the website of the Vietnam Textile and Garment Association at www.textilevietnam.org.vn to post the information about their need.

II. PROCESS OF QUOTA TRANSFER

6. The transferer and transferee make Quota Transfer Contract in writing. The Transfer Contract is considered valid if its subjects and objects meet conditions as specified in Provision I of this Circular.

The transferer brings dossier to the Export – Import Division for certification. The dossier includes:

- Valid Quota Transfer Contract (04 originals)

- Minutes of the Interministerial Inspectorate (in accordance with Form 02 of this Circular) verifying capacity of the transferee (if the transferee is a new textile and garment enterprise or has not had achievement in exporting categories with the quotas to be transferred).

- Announcements on quota allocation to the transferer (original and 02 copies)

7. The Export – Import Division in charge of the transferer:

- Verifies validity of all the aforesaid documents

- Verifies volume of quotas to be transferred based on Quota Transfer Contract and quota allocation announcements provided (both original and copies) provided by transferer and Export – Import Division with clear name and address of transferer.

8. After certification by the Export – Import Division, the dossier is:

- Sent to the transferee

- Sent to the Export – Import Division where the quota transferee goes through procedures for textile and garment exports (if it is different from the Export – Import Division in charge of the transferer).

- Kept as archival at the Export – Import Division in charge of the certification.

9. Grant of visa to textile and garments lots with the transferred quotas is implemented by the Export – Import Division in charge of the transferee.

In the dossier applying for visa, besides documents in accordance with regulations of current practice, the certified dossier for transfer is required.

The Export – Import Division in charge of the transferee grants visa to the transferee in volume and category in the Transfer Contract and the copy of the announcement on quota allocation as certified by the Export – Import Division in charge of the transferer.

10. Export – Import Divisions follow up quota transfers by enterprises, keep transfer dossiers as archival and report to the Textile and Garment Quota Regulating Division in accordance with Form 03 attached to this Circular.

11. Information for quota transfer (names, number of enterprises, categories and volume of quotas to be transferred, prices) is updated weekly on the website of the Ministry of Trade and sent to the Vietnam Textile and Garment Association for update in its website.

III. IMPLEMENTATION, SUPERVISION, AND SANCTION ON VIOLATIONS

12. The Vietnam Textile and Garment Association shall improve its key role in enhancement of transparency of quota transfer, deliver assistance to enterprises performing this activity, facilitate full use of quotas for textile and garment exports of Vietnam, ensure reasonable transfer prices in the spirit of mutual help.

13. Corporations, holding companies, and chain heads shall actively regulate quota transfer and give priority to transfer of quotas between their subsidiary companies and members so as to minimize costs.

14. New enterprises or enterprises having not had achievement in exporting categories with quotas under allocation which wish to be transferee of quotas for the respective categories and have request shall have their production capacity investigated by Interministerial Delegations of Textile and Garment Inspectors presided over by local Department of Trade/Trade and Tourism in conjunction with Departments of Industry and Departments of Planning and Investment in accordance with guidelines by the Inter-Ministry of Trade and Industry.

15. The Interministerial Textile and Apparel Administration Division shall coordinate with the Textile and Apparel Quota Regulation Division and the Vietnam Textile and Garment Association to carry out regular or random investigations on transfer of quota.

16. Violations in quota transfer shall suffer from sanctions as follows:

- Enterprises with such violations, their owners, leaders, and staff shall suffer from revocation of all their allocated quotas, suspension of quota allocation and/or sanctions by competent bodies in accordance with the law.

- Cadres with wrongdoings in verifying production capacity of enterprises, volume for transfer and visa grant related to quota transfer shall suffer from disciplines in accordance with the law of current practice.

This Interministerial Circular shall come into effect in 15 days from it is publicized on the Gazette.

To:
- Prime Minister and Deputy Prime Ministers
- National Assembly Office
- Presidential Office
- Government Office
- Party Central Office and Sub-ordinate Units
- Ministries and Ministerial-level Bodies
- People’s Committees of provinces and cities under direct management of central government
- Supreme People’s Inspectorate
- Supreme People’s Court
- Central Bodies of Associations
- Managing Boards of Industrial and Processing Parks of provinces and cities
- Gazette
- Vietnam Textile and Garment Association
- Provincial Departments of Trade and Industry
- Vietnam Chamber of Commerce and Industry
- Enterprises (for implementation)
- Export – Import Divisions (for implementation)
- Archival

THE SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
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... (place) … (day) … (month) … (year)

CONTRACT

Transfer of achievement quotas/chain quotas for textile and garment exports to the US market in year 2005 between enterprises, between subsidiary companies of corporations, between holding and subsidiary companies, members of chain

No: …

Pursuant to the Interministerial Circular No. … /TTLT-BTM-BCN dated … (day) … (month) … 2005 by the Inter-Ministry of Trade and Industry providing guidelines on transfer of quotas for textile and garment exports to the US market in year 2005.

Party A: Transferer: (name of enterprise) …

Address:

Telephone Number: (of person in charge of export – import)           Fax Number:     Email:

Representative:                                                              Position:

Proceeding for export of textile and garment products at Export – Import Division of …

Party b: (name of enterprise) …

Address:

Telephone Number: (of person in charge of export – import)           Fax Number:     Email:

Representative:                                                              Position:

Proceeding for export of textile and garment products at Export – Import Division of …

The two parties are member of chain: … (if transfer of chain quotas)

The two parties are subsidiary companies of Corporation, Holding company – subsidiary companies … (if transfer of quotas between subsidiary companies of Corporation or Holding company/subsidiary companies)

On upon voluntary agreement, the two sides sign this contract for transfer of achievement/chain quotas for textile and garment exports to the US market in year 2005 with the following terms:

Article 1: Volume – Category:

Party A transfers to Party B:

Volume of quotas transferred: … (in words)

Transfer price (VND … per dozen/kg) * Volume of quotas transferred = VND … (in number and in words)

This amount of money shall be moved to Party A’s banking account: … at … Bank within … days from … (date) or have been paid …/ … deposited … remaining

Party B transfers to Party A:

Volume of quotas transferred: … (in words)

Transfer price (VND … per dozen/kg) * Volume of quotas transferred = VND … (in number and in words)

This amount of money shall be moved to Party B’s banking account: … at … Bank within … days from … (date) or have been paid …/ … deposited … remaining

Article 2: Responsibilities of the parties

The transferer has to provide the transferee with copy(ies) of the quota allocation announcement(s) (for enterprise) with certification (signature and seal) by the Export – Import Division for its application for visa.

The transferer or the transferee, depending on their negotiation, has to pay quota fee at banking account of the Ministry of Trade in accordance with regulations of current practice.

Article 3: General principle:

The two sides commit to properly implement principles as specified in this contract as well as relevant regulations by the Inter-Ministry of Trade and Industry for transfer and management of quotas.

This contract has 04 copies with the same legal value (each side keeps 01 copy, the Export – Import Divisions keeps 02 copies)

The Export – Import Division (in charge of the transferer …) of … certifies:

Volume of quotas transferred: … (dozens/kgs) of cat. … in accordance with this contract has been certified in the original of the Announcement No. … dated … on quota allocation of the transferer. It hereby requests the Export – Import Division (in charge of the transferee) of … to grant visa to … (name of the transferee).

FORM 02

MINUTES ON INVESTIGATIONS ON ENTERPRISE’S EQUIPMENTS FOR PROCESSING TEXTILE AND GARMENT PRODUCTS FOR EXPORT

Name of Enterprise: …………………………………………                          … (place), … (day) … (month) … (year)

Address of factory: ……………………………………………                         Number of equipments declared: …………

- Number of equipments excluding Item 5: … (units)                      - Number of equipments including Item 5: … (units)

- Number of production lines: …                                                  - Productivity of each production line: …   - Total productivity

                                                                                                                                                (unit: products/period of time)

- General assessment on condition of equipments:.................................................................................................................

..........................................................................................................................................................................................

and those equipments are qualified for manufacture of the following categories: ........................................................................

Representative of Entity                                               Minutes Maker                                                 Head Inspector

FORM 03

… (place), … (day) … (month) … (year)

REPORT

On: Certification for transfer of quotas

To: Textile and Apparel Quota Regulation Division, Ministry of Trade

 The Export – Import Division of … reports on certification of transfer of achievement quotas 2005 between enterprises exporting textile and garment products to the US market from … (date) to … (date) as follows:

… (place), … (day) … (month) … (year)

REPORT

On: Grant of visa to textile and garment lots with transferred quotas

To: Textile and Apparel Quota Regulation Division – Ministry of Trade

The Export – Import Division of … reports on grant of visa to textile and garment lots with transferred quotas to be exported to the US market in year 2005 from … (date) to … (date) as follows: