Joint Circular No. 19/2000/TTLT/BTM/BKHDT/BCN dated October 16, 2000 of the Ministry of Trade, the Ministry of Planning and Investment and the Ministry of Industry guiding the allocation and implementation of the quotas of textiles andgarments for export to the EU, Canadian and Turkish markets for 2001 and 2002

JOINT CIRCULAR

GUIDING THE ALLOCATION AND IMPLEMENTATION OF THE QUOTAS OF TEXTILES ANDGARMENTS FOR EXPORT TO THE EU, CANADIAN AND TURKISH MARKETS FOR 2001 AND 2002

In furtherance of the Prime Minister’s direction in OfficialDispatch No.6228/KTTH dated December 5, 1997 of the Government Office:
Pursuant to the agreements on the textile and garment trading with the EU, Canada and Turkey, the Ministry of Trade, the Ministry of Planning and Investment andthe Ministry of Industry hereby jointly guide the allocation and implementation of thequotas of textile and garments for 2001 and 2002 as follows:

I. GENERAL PROVISIONS

1. Quotas of textiles and garments

In order to encourage the full use of the quotas of textiles andgarments for export to the quota-setting countries and create favorable conditions forexporting enterprises, from January 1^st, 2001 textiles and garments arecategorized into two groups.

Group I: including the categories with the use percentage of under 90%.Specifically, they are:

- The EU market: Categories 9, 10,12, 13, 14, 18, 20, 21, 26, 28, 35,39, 41, 68, 76, 97, 118 and 161.

- The Turkish market: All 29 categories controlled by quotas.

For the categories of this group, the enterprises stated in Clause 2below may export them according to demand and carry out the export procedures at theregional export and import management bureaus of the Ministry of Trade in Hanoi, HaiPhong, Da Nang, Vung Tau, Dong Nai and Ho Chi Minh city. Every week the Ministry of Tradeshall announce the situation of E/L allocation and the remaining quota volumes in the"Thuong Mai" (Trade), "Dau Tu" Investment) and "Cong Nghiep"(Industry) newspapers as well as at the regional export and import management bureaus and,at the same time, provide detailed guidance on the management of goods categories likelyto be exported in excess of their quotas for the enterprises’ awareness andimplementation.

Group II: Including categories with the use percentage of 90% or more.Specifically, they are:

- The EU market: Categories 4, 5, 6, 7, 8, 15, 29, 31, 73, 78 and 83.

- The Canadian market: Items/categories 1/3a, 2a, 3c, 4a, 4c, 5a, 5b,7/8a, 8c, 8d, 9a, 10a, 11a, 12a, 13 and Item B.

The export of the goods items of this Group shall be conducted on thebasis of the quota allocation notices of the Ministry of Trade or the People's Committeesof Hanoi, Hal Phong and Ho Chi Minh cities (or the agencies authorized by the People'sCommittees of these cities).

In June and September every year, or in cases where arises anunforeseeable change in the use of the quotas of one or several certain categories, theministries shall consider and adjust the goods categories between Group I and Group II ina way suited to the situation of quota implementation and control.

2. Subjects to be allocated quotas

They shall be enterprises which were allocated quotas in the yearpreceding the quota-implementing year or enterprises which produce textiles, garments,embroidered and knitted articles, have business registration certificates for appropriatebusiness lines and have registered export and import business enterprise codes or obtainedinvestment licenses under the Law on Foreign Investment in Vietnam.

3. Industrial quotas

For the EU market, 30% of the quota of each category in Group II shallbe allocated to enterprises which have signed contracts directly with their customersbeing European industrialists recommended by the European Commission every year. Theallocation of industrial quotas shall be considered for contracts signed prior to April 30each year. The enterprises signing industrial quota contracts must ensure a minimumpercentage of 30% of the officially-allocated quotas. Those allocated official quotas ofunder 50,000 products, for categories 4, 5, 8 and 31; under 30,000 products, forcategories 6, 7, 29 and 73; of under 3,000 products, for category 15 and under 3 tons forcategories 78 and 83, shall not be required to sign industrial quotas.

4. The Ministry of Trade, the Ministry of Planning Investment andthe Ministry of Industry shall delegate the People's Committees of Hanoi, Hai Phong and HoChi Minh city the responsibility to directly allocate quotas to enterprises under theirrespective management according to this Joint Circular and the record on theresponsibility delegation between the above said ministries and the People's Committees ofthese cities.

5. About 5% of the quotas of Group II textile and garments forexport to the EU, particularly 10% for T-shirts and polo shirts (category), shall bespared as incentive rewards to the enterprises that:

- Use home-made fabrics to produce garments for export to the EU in thequota-implementing year.

- Export textiles and garments to the markets which do not set quotasin the preceding year.

The quota reward shall comply with a separate regulation.

6. About 25% of the commercial quotas of textiles and garments forexport to the EU, including categories 4, 5, 6, 7, 8, 15, 31 and 73, shall be bid amongenterprises in the whole country.

The quota bidding shall comply with the Regulation on the bidding forquotas of textiles and garments for export to the quota-regulated markets, issued togetherwith the Trade Minister’s Decision No.1405/1998/QD-BTM dated November 17, 1998 andDecision No.0036/2000/QD/BTM dated January 10, 2000.

7. About 5% of the quotas of Group II textile and garments forexport to the EU shall be allocated to new enterprises.

II. PROVISIONS ON THE ALLOCATION OF QUOTAS OF GROUP II CATEGORIES

1. Basis for quota allocation

The to be-allocated quotas shall be equal to the enterprises’official quotas implemented in the preceding year, exclusive of the rewarded, bid,adjusted and/or supplemented quotas.

For enterprises which have just begun to produce textile and garmentsfor export, the to be-allocated quotas shall be considered on the case-by-case basis,depending on their production and export capacity but shall not exceed 15,000 men shirts(category 8), converted according to the relevant agreements. Particularly for categories4 and 5, the Circular - issuing ministries shall consider and allocate quotas toenterprises producing embroidered and knitted articles for export.

2. The quota allocation time

a/ For commercial quotas

The quota allocation shall be divided into two phases:

Phase 1: Within October of the year preceding the quota-implementingyear.

- For enterprises required to sign industrial quota contracts, the tobe-allocated commercial quotas shall be equal to 70% of the volumes implemented in thefirst nine months of the year preceding the quota-implementing year.

- For enterprises not required to sign industrial quota contracts, theto be-allocated commercial quotas shall be equal to 100% of the volumes implemented in thefirst nine months of the year preceding the quota-implementing year.

Phase 2: Within January of the quota-implementing year

- To allocate the remaining commercial quotas according to theprovisions at Point 3, Section I.

- To allocate quotas to new enterprises.

- To allocate quotas as incentive rewards to enterprises (according toa separate regulation).

b/ For industrial quotas

Prior to May 15 of the quota-implementing year, enterprises which havesigned industrial quota contracts shall send such contracts to the Ministry of Trade orthe People’s Committee of Hanoi, Hai Phong or Ho Chi Minh City (for enterprises underthe management of the People's Committees of these cities) for being allocated industrialquotas.

If enterprises fail to sign industrial quota contracts, they mayreceive commercial quotas instead, with a volume equal to 70% of their industry quotanorms.

For enterprises which are allocated industrial quotas under the signedcontracts but do not use them due to their customers' refusal and therefore need to changethem for commercial quotas, they shall make written requests enclosed with theirindustrialist-customers' contract cancellation letters (or goods orders). They shall bere-allocated commercial quotas equal to 70% of industrial quotas.

3. Advance allocation of quotas for the subsequent year

Enterprises shall be advanced about 5% of the subsequent year’squotas of categories for the quota-implementing year. For categories only few enterprisesregister for advance allocation of their quotas, a higher percentage of advance quotas maybe awarded to such registering enterprises and the advanced quota volumes shall bededucted into the subsequent year’s quotas.

4. In the course of quota allocation and implementation if anymatters arise, such as support for enterprises meeting with difficulties, exchange ofquotas among categories and among enterprises...; the inter-ministerial executive teamshall study and make proposals to the leadership of the Ministry of Trade forconsideration and settlement.

III. QUOTA REGISTRATION PROCEDURES

Enterprises that need to use quotas of textiles and garments for exportto the EU and Canadian markets, which belong to Group II categories, shall send writtenregistrations (according to set forms) to the Ministry of Trade (the Import and ExportDepartment), 21 Ngo Quyen street, Hanoi or the People's Committees (the Trade Services) ofHanoi, Hai Phong and Ho Chi Minh city.

The registration deadline shall be:

- For commercial quotas: Before October of the year preceding thequota-implementing year.

- For industrial quotas: Before May 15 of the quota-implementing year.

For new enterprises, the deadline for quota use registration shall beDecember 31 of the year preceding the quota-implementing year.

IV. IMPLEMENTATION REGULATIONS

1. Quotas shall be valid from January 1 to December 31 of the quota-implementing year.

2. Return of quotas

Enterprises which are unable to implement their allocated quotas shallhave to return them to the Ministry of Trade or the People's Committees of the cities forallocation to other enterprises.

Enterprises that return such quotas before September 30 of thequota-implementing year shall have such returned quotas included in the subsequentyear’s quotas. Enterprises that fail to use up their quotas and to return unusedquotas before September 30 of the quota-implementing year, shall have an equivalent quotavolume deducted from the subsequent year’s quotas.

3. Quota charges

Quota charges for specific categories are included in the enclosedappendix. Enterprises shall pay quota charges for each notice on the assignment of thequota use right or for each lot of export goods. When carrying out the procedures for thegranting of export license, enterprises must produce to the regional export-importmanagement bureaus vouchers certifying their payment of quota charges into the TradeMinistry’s account No.945-01-475 at the State Treasury of Hanoi.

4. Entrustment and entrustment-taking

Enterprises with allocated quotas may entrust other enterprises toconduct export on the principle that the goods must be produced at the quota-owningenterprises. The entrustment and entrustment-taking shall comply with current regulations(the Government’s Decree No.57/1998/ND-CP dated July 31, 1998).

V. IMPLEMENTATIONS PROVISIONS

The Ministry of Trade, the Ministry of Planning and Investment and theMinistry of Industry shall guide the implementation of the provisions of the signedagreements and the promulgated regulations, coordinate with the concerned Vietnamese andforeign agencies in handling in time any problems arising in the course of implementation.

Enterprises shall strictly comply with the provisions in this JointCircular and the agreements on the trading of textile and garment goods signed with theEU, Canada and Turkey. If committing any violations thereof, they shall, depending on theseriousness of their violations, be subject quota withdrawal, quota allocationcancellation or handled according to law provisions.

The inter-ministerial executive team of the Ministry of Trade, theMinistry of Planning and Investment and the Ministry of Industry shall have to inspect,supervise and regularly report on the situation in the "Thuong Mai" (Trade),"Dau Tu" (Investment) and "Cong Nghiep" (Industry) newspapers so thatthe enterprises can acquire necessary information in time.

This Circular takes effect 15 days after its signing and replaces JointCircular No.29/1999/TTLT-BTM-NKHDT-BCN dated September 7, 1999 of the Ministry of Trade,the Ministry of Planning and Investment and the Ministry of Industry.

APPENDIX 01

(issued together with Joint Circular No.19/2000/TTLT/BTM-BKHDT-BCN dated October 16, 2000)
LEVELS OF CHARGES COLLECTED FOR QUOTAS OF TEXTILES AND GARMENTS FOREXPORT TO THE EU MARKET

APPENDIX 02

(issued together with Joint Circular No.19/2000/TTLT/BTM-BKHDT-BCN dated October 16, 2000)
LEVELS OF CHARGES COLLECTED FOR QUOTAS OF TEXTILES AND GARMENTS TO BEEXPORTED TO THE CANADIAN MARKET