Pursuant to July 17, 2003 Vietnam - U.S. Agreement on the Trading of Textiles and Garments and July 22, 2004 Memorandum of Understanding;

Pursuant to the Prime Minister's Decision No. 46/2001/QD-TTg of April 4, 2001 on the management of goods import and export in the 2001-2005 period;

Based on the situation of textile and garment export into the U.S. market in 2004 and the evaluation of export situation in 2005;

After consulting Vietnam Textile and Garment Association,

The Ministry of Trade and the Ministry of Industry hereby jointly guide the assignment and implementation of textile and garment quotas for export into the U.S. market in 2005 as follows:

I. GENERAL PROVISIONS

1. Quota-application scope

Textile and garment quotas for export into the U.S. market comprises 38 categories (Cat.), including 13 double Cat. and 12 single Cat. as prescribed in Appendix 1 to this Circular.

2. Quota assignment and implementation subjects

To be assigned and implement quotas, traders must fully satisfy the following conditions:

- Having business registration certificates, having already registered import/export business codes or having investment licenses under the Law on Foreign Investment in Vietnam;

- Having textile- and garment-production capability;

- Having not violated current regulations as well as the Agreement's provisions in 2004.

- Traders may receive export quotas independently or in chained links (with their quota levels to be inscribed in the chained links. Traders may join in chained links after fully receiving quotas).

II. REGULATIONS ON QUOTA ASSIGNMENT

1. Assignment of quotas

The textile and garment quotas for export to the U. S. shall be assigned publicly, without any discrimination, and to the right subjects, concretely as follows:

- 80% of the original quotas (including 2% and 7% of growth rate, depending on each category) are reserved for those traders that have exported corresponding goods items (referred collectively to as export achievement) from January 1, 2004 to December 31, 2004.

- 20% of the quotas are reserved for additional assignment to traders (referred collectively to as development quotas), of which:

+ 3% are for textile and garment export contracts with the use of home-made fabrics/raw materials.

+ 3% are for traders that export to the US non-quota textile and garment categories from July 2004 to June 2005.

+ 1% is for traders having factories located over 500 km away from Hai Phong port or Ho Chi Minh City international port.

+ 4% are for traders that voluntarily join in chained links and traders that already implemented their quotas in 2004 and are investing in large weaving or dyeing projects.

+ 7% are for traders that have signed contracts with clients being major U.S. textile and garment importers having import turnovers of USD 20 million or more for Vietnam-made textiles and garments in 2003 or 2004, and clients possessing big and prestigious brands.

+ 2% are for reserve.

2. Bases for quota assignment

2.1. Achievement quotas: The categories are divided into two groups

- Group I comprises 9 Cat.: 334/335, 338/339, 340/640, 341/641, 342/642, 347/348, 359/659-S, 638/639 and 647/648.

These achievement quotas assigned to traders shall be the percentage portion of the actually implemented quotas of each category in 2004 minus the 2005 quotas already advanced for use in 2004.

- Group II comprises 16 Cat.: 200, 301, 332, 333, 345, 351/651, 352/652, 359/659-C, 434, 435, 440, 447, 448, 620 and 645/646.

These achievement quotas assigned to traders shall be the volume of actually implemented quotas of each category in 2004 minus the 2005 quotas already advanced for use in 2004.

- The 2005 quotas already advanced for use in 2004 shall not be accounted into the export achievement of 2004.

- The quota-registration dossiers shall comply with the set form.

2.2. Development quotas:

2.2.1. Quotas for textile and garment products involving the use of home-made fabrics/raw materials:

- Contracts on the export of textile and garment products made of domestic fabrics/raw materials suitable for export products;

- Contracts on the purchase of home-made fabrics/raw materials;

- Receipts of payment for purchase of fabrics/raw materials, issued by the Finance Ministry.

The dossiers shall comply with the set form.

2.2.2. Quotas for traders that export to the US non-quota categories from July 2004 to June 2005:

- The lists of goods categories and volumes, and traders' export turnovers;

- Statistical data of customs offices (provided by customs offices to the Ministry of Trade).

The dossiers shall comply with the set form.

2.2.3. Quotas for traders that voluntarily join in chained links and traders that have already implemented their quotas in 2004 and are investing in large weaving or dyeing projects.

- For traders that voluntarily join in chained links: Vietnam Textile and Garment Association shall coordinate with traders in organizing chains of links. Based on the volume of achievement quotas of traders in the chains, it shall report on the specific operation mechanism of the chains, including cooperation in production, import and export of raw and auxiliary materials, quota-regulated garments and non-quota goods items to be exported into the U.S. market in 2005 through members' agreement on participation in the chained links (similar to an economic contract between involved parties).

- For traders that have already implemented their quotas in 2004 and are investing in large weaving or dyeing projects: The bases for quota assignment shall be their investment capital amounts, quantity of new machines and equipment already installed or to be installed under plan in the period from January 2004 to December 2005.

The dossiers shall comply with the set form.

2.2.4. For traders having factories located over 500 km away from Hai Phong port or Ho Chi Minh City international port:

- Having contracts on textile and garment processing and/or production for export to the U.S.

- Having production capability suitable for the ordered goods categories.

2.2.5. For traders that have signed contracts with clients being major U.S. textile and garment importers and clients possessing big and prestigious brands.

- Vietnamese traders must have production capability suitable to the ordered goods categories and have contracts signed with clients being major U.S. distributors or clients possessing big and prestigious brands.

The dossiers shall comply with the set form.

- Major importers as well as those with big and prestigious brands shall forward written proposals to the Ministry of Trade (Import- Export Department) by September 30, 2004 at the latest, stating the detailed lists of goods-providing traders in Vietnam, goods categories, their volumes and value in 2003, 2004 and plans for 2005.

3. Quota-assignment time limits

3.1. Achievement quotas shall be assigned in two phases:

- Quotas for traders having recorded achievements in export into the U.S. market from January 1, 2004 to July 31, 2004 shall be assigned by early September 2004.

- Quotas for traders with export achievements recorded between August 1, 2004 and December 31, 2004 shall be assigned by late January 2005.

3.2. Development quotas:

- Quotas for export contracts involving the use of home-made fabrics/raw materials shall be assigned in two phases: Phase I in December 2004 and phase II in April 2005.

- Quotas for traders recording achievements in the export of non-quota categories into the U.S. market in the last 6 months of 2004 and the first 6 months of 2005 shall be assigned by February and July 2005.

- Quotas for traders having factories located over 500 km away from Hai Phong port and Ho Chi Minh city international port shall be assigned by October 2004.

- Quotas for traders voluntarily joining in chained links shall be assigned after the Ministry of Trade, the Ministry of Industry and Vietnam Textile and Garment Association have inspected the actual operations of the links.

- Quotas for traders having signed contracts with clients being major U.S. importers and clients possessing big and prestigious brands shall be assigned by October 2004.

III. QUOTA-REGISTRATION PROCEDURES

Traders having demand for textile and garment quotas for export into the U.S. market in 2005 shall send their registrations (made according to the set form) to the Trade Ministry (Import - Export Department, 21 Ngo Quyen street, Hanoi) and must be responsible for the accuracy and truthfulness of the criteria declared in the quota-registration applications.

Registration time:

- Achievement quotas: Registration dossiers shall be made according to the set form and sent to the Trade Ministry before September 1, 2004.

- Development quotas: Dossiers shall be sent to the Trade Ministry before September 30, 1994. Particularly:

+ For export quotas of textiles and garments manufactured with home-made fabrics, the dossiers must be submitted by March 31, 2005 at the latest.

+ For quotas for traders recording achievements in the export of non-quota categories into the U.S. market in the last 6 months of 2004, the dossiers must be submitted before January 30, 2005 at the latest; and before July 20, 2005 at the latest, for achievements recorded in the first 6 months of 2005.

+ For quotas for traders voluntarily joining in chained links and traders investing in new large weaving or dyeing projects, the registration dossiers must be submitted before June 30, 2005 at the latest.

IV. IMPLEMENTATION PROVISIONS

1. Implementation effect

- The 2005 quotas shall be effective as from January 1, 2005 to December 31, 2005.

- The dossier-submission time limit shall be counted from the date inscribed in the stamp on documents sent to the Trade Ministry.

2. Granting of visas

The granting of visas shall comply with the Trade Ministry's Circular No. 03/2003/TT-BTM of June 5, 2003 guiding the granting of visas for export of textiles and garments into the U.S. market under Vietnam- U.S. Textile and Garment Agreement and adjustments (if any).

Visas shall not be granted to lots of semi-finished products to be exported into a third country for assembly into finished products or to lots of semi-finished products imported into Vietnam for assembly into finished products for export to the US.

3. Return of quotas

Traders incapable of implementing the assigned quotas must make written documents to return them to the Trade Ministry.

- Quotas returned before September 2005 shall be accounted into the set quotas of the following year.

- Quotas returned from September 2005 onwards shall be accounted as equal to half (50%) of the set quotas of the following year.

- Quotas assigned but not actually implemented or not fully implemented, if not returned, shall be cleared against the set quotas of the following year.

- Traders are not allowed to sell their quotas to other traders.

- Traders joining in chained links that have already registered the link mechanisms (including links for quota and non-quota import and export, and production links) and have been certified jointly by the two mentioned ministries as operating strictly according to the mechanisms, may transfer quotas within their own links.

4. Conversion of quotas

If having demand for conversion of quotas between categories (Cat.) for direct export, traders shall send documents to the Trade Ministry, requesting the appropriate handling according to the Agreement’s provisions.

5. 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.

6. Quota charges

The quota charge rate for each category shall comply with separate regulations of the Finance Ministry.

Traders shall pay quota charges (if any) for each quota-assignment notice or export goods lot. When filling in the visa-granting procedures, traders shall produce to the regional Import- Export Management Offices receipts of quota charge payment into the Trade Ministry’s account coded 920.01.023 at Hanoi-based State Treasury.

V. IMPLEMENTATION PROVISIONS

1. The Ministry of Trade and the Ministry of Industry shall guide the implementation of the signed Agreement’s provisions and promulgated regulations; coordinate with the concerned agencies at home and overseas in promptly settling problems arising in the course of implementation. The quota assignment results and quota-implementation situation shall be announced on the mass media and at the Trade Ministry's website: www.mot.gov.vn.

The provincial/municipal Trade Services or Trade-Tourism Services shall have to coordinate with the inter-ministerial administration teams in inspecting and determining traders' production and export capability, and combating trade frauds so as to ensure the implementation of Vietnam-U.S. Textile and Garment Agreement.

2. Traders must strictly comply with the provisions of this Joint Circular as well as Vietnam-U.S. Textile and Garment Agreement. In case of violations, they shall, depending on the seriousness of their violations, have their quotas withdrawn, be subject to termination of quota assignment or other sanctions under law provisions. Concretely:

2.1. Traders illegally transshipping goods, making and using fake visas, fake C/O or falsifying their dossiers shall have all their quotas withdrawn and not be assigned new quotas for the following year and the dossiers thereon shall be transferred to the law-protection agencies for handling.

2.2. Traders falsely declaring contents of quota or visa applications, shirking quota control by the Ministry of Trade and the Ministry of Industry shall have their quotas withdrawn and not be assigned additional quotas.

2.3. Traders falsely declaring their production capability or export turnovers in order to be assigned additional quotas shall have the quotas additionally assigned due to falsification withdrawn and subject to a fine equal to 30% of the assigned standard quotas.

This Joint Circular takes effect 15 days after its publication in the Official Gazette.

For the Minister of Trade
Vice Minister
MAI VAN DAU

For the Minister of Industry
Vice Minister
BUI XUAN KHU