JOINT CIRCULAR No.10/1997/TTLT-BTM/BKHDT/BCN OF DECEMBER 6, 1997 STIPULATING THE MANAGEMENT AND USE OF THE 1998 QUOTAS OF TEXTILE AND GARMENT EXPORT TO THE EU, CANADA, NORWAY AND TURKEY

According to the tasks assigned by the Prime Minister,

Pursuant to the Textile and Garment Trading Agreement with the EU for the 1998-2000 period, initialed on November 17, 1997 and the current agreements with Canada, Norway and Turkey, the Ministry of Trade, the Ministry of Planning and Investment and the Ministry of Industry jointly issue the following regulations on the State management over the use of the textile and garment quotas:

I. GENERAL PROVISIONS:

1. The assignment of the right to use quotas shall be made on the principle of openness, equality and non-discrimination and priority to be given to areas facing economic difficulties after consideration.

2. Subjects to be assigned the right to use the quotas are enterprises having the capacity to produce textiles and garment and the business permits for the export and import thereof or the permits for investment in textiles and apparel industry (under the Law on Foreign Investment in Vietnam).

3. The ground for the assignment of the right to use quotas shall be the volumes achieved by the enterprises in the preceeding year. Such volumes shall be calculated on the basis of the officially delivered volumes, excluding the addition or adjustment made due to the enterprises' extraordinary demands.

For enterprises which register to use quotas for the first time and make new investment in the expansion of their production, consideration and settlement shall be made only on the basis of their actual capabilities and the increased quotas.

Enterprises are encouraged to export products not managed by quotas to non-quota markets.

4. A proportion of 30% of the total quota for each category shall be reserved as priority given to the signing of contracts with European industrialists recommended by the European Commission. This priority shall be considered to be given to those contracts signed no later than April 30, 1998. The enterprises given the right to use quotas must ensure that the above-said proportion shall be reserved from the quotas assigned to them, except for those enterprises assigned small quotas such as: less than 20,000 products for categories of 4, 8, 21, 28 and 31; less than 10,000 products for categories of 5, 6, 7, 26 and 29; less than 5,000 products for categories of 14 and 73; less than 3,000 for category 15 and less than 3 tons for categories of 68, 78, 83 and 161. The enterprises shall not be entitled to convert industrial quotas into commercial quotas without permission.

5. A proportion of the quota (about 5%) shall be reserved as bonus for:

- Enterprises exporting products made of materials available in the country; the maximum bonus level shall not exceed 20% of the assigned quotas of the same type.

- Enterprises exporting products by mode of F.O.B. (buying materials and selling products); the maximum bonus level shall not exceed 10% of the assigned quotas of the same type.

6. A part of the quota (about 5%, particularly for T-shirt and polo-shirt (cat. 4): 10%) shall also be reserved as bonus for enterprises exporting products in large quantities to non-quota markets.

- The bonus levels for the last two months of 1997 shall comply with Joint Circular No.08/1997/TTLT-BTM-BCN of November 17, 1997 of the Ministry of Trade and the Ministry of Industry.

7. Five (5) percent of the total jacket (cat.21) quota shall be reserved as support for enterprises in localities facing economic difficulties and industrial underdevelopment such as: mountainous areas, areas in the Central Vietnam, remote and deep-lying areas... The support level shall depend on the actual production capability of each enterprise.

II. PROCEDURES FOR REGISTERING THE USE OF QUOTAS:

Those enterprises wishing to use the quotas of textile and garment export to the EU, Canada, Norway and Turkey markets shall have to register in writing with the Ministry of Trade (the Export and Import Department), at 21 Ngo Quyen street, Hanoi.

The registration time limits:

- For commercial quotas: Before November 30, 1997.

- For industrial quotas: Before October 5, 1998.

III. ASSIGNMENT OF THE RIGHT TO USE QUOTAS:

The right to use quotas shall be assigned in 3 stages:

1. Stage 1: The commercial quotas shall be announced in mid-December 1997, (the Agreement was signed on November 17, 1997). The volume of the quotas assigned in the first stage shall be: 50% of the volumes achieved in the first 10 months of 1997. Enterprises with small volumes achieved in 1997 as mentioned in Point 4, Section I above, shall be given 100% of the quotas.

A certain part of the industrial quotas shall be assigned on the basis of the achievement of industrial quotas in the first 10 months of 1997 and the enterprises' demands.

Commercial quotas shall be temporarily assigned to the new enterprises with a volume of no more than 10,000 jacket products or other jacket-equivalent products.

2. Stage 2: The announcement shall be made in February 1998, the remaining commercial quotas shall be assigned on the principle prescribed in Point 3, Section I, and at the same time, about 50% of the industrial quotas shall also be assigned.

Bonus for enterprises exporting large quantities of products to non-quota markets shall be considered and awarded.

3. Stage 3: The announcement shall be made in May, 1997, the remaining industrial quotas shall be assigned, bonus shall be considered and given on the principle prescribed in Point 5 and considered for additional bonus according to Point 7, Section I. Those industrial quotas that have not been used up shall be converted into commercial quotas for additional allocation to enterprises in accordance with provisions in Section I.

IV. IMPLEMENTATION PROVISIONS:

1. Returning:

If enterprises, after being given quotas, are unable to fulfill them, they must return such quotas to the Ministry of Trade and the Ministry of Industry for additional allocation to other enterprises. The trading in and transfer of quotas are strictly forbidden.

Those enterprises that have not used up their quotas and failed to return them shall not be allocated quotas for the following year.

2. Quota fee:

Those product categories put out of the quota list shall not be subject to quota fees. Other product categories shall be subject to fees collected according to the attached appendix.

The enterprises shall pay fee upon each quota announcement or each export lot. When receiving export licenses at the regional export and import management office, enterprises shall produce vouchers of quota fee payment for their lots of goods.

The fee for all the allocated quotas must be paid no later than October 15, 1998. Past that time limit, those enterprises failing to pay fee shall have their quotas automatically withdrawn by the three said ministries. Those enterprises receiving additional quotas after October 15 shall pay the fee immediately after receiving announcement.

The Ministry of Trade's account for fee remittance has its number: 362.111.370.725 at the Central Vietcombank.

The inter-ministerial management group set up by the Ministry of Trade, the Ministry of Planning and Investment and the Ministry of Industry shall have to inspect, monitor and periodically report the implementation results and publicize the situation on "Bao Thuong Mai" (the Trade Newspaper), "Tap Chi Thuong Mai" (Trade Review), "Bao Dau Tu" (Investment Newspaper) and "Bao Cong Nghiep" (the Industry Newspaper) so as to provide the enterprises with necessary information.

This Circular takes effect after its signing and replaces Inter-ministerial Circular No.13/TM-CN of September 19, 1996 of the Ministry of Trade and the Ministry of Industry.

For the Minister of Planning and Investment

Vice Minister

LAI QUANG THUC

For the Minister of Industry

Vice Minister

LE HUY CON

For the Minister of Trade

Vice Minister

NGUYEN XUAN QUANG

APPENDIX

(Attached to Joint Circular No.10/1997/BTM/BKHDT/BCN of December 6, 1997)

Number Product types Category Fee level

1 T-shirt, Polo-shirt... 4 0.02 USD/piece

2 Woolen sweater,

felt clothes, pullovers,

cardigans... 5 0.05 USD/piece

3 Pants, shorts... 6 0.05 USD/piece

4 Women's shirts... 7 0.05 USD/piece

5 Men's shirts... 8 0.05 USD/piece

6 Towels, bathrobes... 9 20.00 USD/ton

7 Gloves... 10 0.01 USD/pair

8 Shocks... 12 0.01 USD/pair

9 Briefs 13 0.01 USD/piece

10 Men's coats... 14 0.20 USD/piece

11 Women's coats... 15 0.50 USD/piece

12 Clothes of woven fabrics... 18 50.00 USD/ton

13 Jackets... 21 0.30 USD/piece

14 Ladies' dresses... 26 0.05 USD/piece

15 Knitted drawers... 28 0.02 USD/piece

16 Women's suits... 29 0.10 USD/piece

17 Brassiere... 31 0.05 USD/piece

18 Bedspread... 20 40.00 USD/ton

19 Embroidered table linen... 39 40.00 USD/ton

20 Children's clothing... 68 50.00 USD/ton

21 Sports suits... 73 0.10 USD/set

22 Labor protective clothing...76 50.00 USD/ton

23 Assorted garment... 78 200.00 USD/ton

24 Knit wears... 83 50.00 USD/ton

25 Synthetic fabrics... 35 50.00 USD/ton

26 Synthetic fibers... 41 50.00 USD/ton

27 Nets of various kinds 97 50.00 USD/ton

28 Flax linen... 118 40.00 USD/ton

29 Clothes of coarse fabrics

or tussore... 161 50.00 USD/ton