WASHINGTON (AP) – House Republicans, after suffering a surprising defeat on legislation to normalize trade relations with Vietnam, put off until December any effort to make another attempt to pass the bill.

Rejection of the measure, which had been expected to move smoothly through Congress, could be a signal that President Bush’s agenda of trade liberalization is headed for tough times in a Congress that will be controlled next year by Democrats.

The measure failed Monday night to win the necessary two-thirds majority it needed to pass under a procedure House Republicans adopted to rush it through with limited debate.

It received 228 votes in support – 32 short of what was needed. There were 161 votes against it.

GOP leaders decided Tuesday to wait until after the House returns from its Thanksgiving break in December to bring the measure up again under normal procedures that require only a simple majority for passage. If there are no vote changes, the measure should pass since it gained 10 more votes than the 218-majority needed under the normal process.

Setback for Vietnam

Vietnam on Tuesday called it a setback.

Foreign Ministry spokesman Le Dung, in a statement, called the development “very regrettable” and said it went against the “interests and aspirations of the two countries, particularly the interests of U.S. businesses.”

Business lobbyists did not hide their surprise at Monday’s vote, given that the proposal had the backing of top Democrats including Rep. Charles Rangel of New York, in line to be the next chairman of the Ways and Means Committee.

“Quite frankly, we were shocked,” said Nicole Venable, director of international trade for the U.S. Chamber of Congress. “It does leave us wondering what this means for the new Congress in terms of trade.”

The Vietnam trade bill is heavily supported by U.S. business executives who are eager to get into one of the fastest-growing markets in Southeast Asia. It represents the latest milestone in the effort to normalize relations severed by the Vietnam War, which ended more than three decades ago.

The administration was hoping to gain approval of the measure before Bush meets this week with Vietnamese leaders in Hanoi. The proposal also faces obstacles in the Senate, where it is easier for individual lawmakers to create roadblocks.

The White House has had to offer textile-state senators assurances that it will impose penalty tariffs on Vietnamese textile and clothing products if the country is found to be selling these goods at unfairly low prices, a practice known as dumping, an agreement that has raised concerns among American retailers.

The House debate Monday occurred on the first day Congress reconvened after last Tuesday’s elections, in which Democrats picked up enough seats to gain control of both the House and the Senate in the new Congress next year.

Many trade experts said the setback for the Vietnam deal could be a hint of the trouble facing the rest of Bush’s trade agenda, which includes a string of free trade agreements and global trade liberalization talks.

“It looks like the administration is in for hard battles,” said Gary Hufbauer, an economist at the Peterson Institute for International Economics in Washington. “So many of the new members excoriated free trade deals during their campaigns for taking jobs overseas.”

Business lobbyists still believe they will be able to salvage the Vietnam agreement, given that U.S. companies will lose out to foreign competitors if it is not approved, since Vietnam has already won membership in the World Trade Organization.

That membership means the United States must grant Vietnam normal trade relations, scrapping the annual congressional review of the country’s U.S. tariff benefits.

Under the terms of its membership in the Geneva-based WTO, Vietnam will be required to reduce its tariffs on American and other foreign goods and open up its telecommunications, financial services and other sectors to U.S. and other foreign firms.

Through September, the United States is running a $5.7 billion trade deficit with Vietnam.

Opponents cited this gap and America’s soaring trade deficit, which is on track to set a new record close to $781 billion this year, as reasons to oppose giving Vietnam normal trade status, warning that approval would add to the nearly 3 million U.S. manufacturing jobs lost since 2001.

“Haven’t we lost enough jobs in this country?” asked Rep. Dennis Kucinich, D-Ohio. “We have close to an $800 billion trade deficit and this bill just keeps going in the same direction.”

—

On the Net:

Councilors agreed, by a 4-2 vote. Only Councilors Ron Jean and Norm Rousseau voted against passing the measure along to the planning board.