(Updates with House action set for Friday) By Donna Smith WASHINGTON, Dec 7 (Reuters) - The U.S. Congress was preparing to take up a patchwork economic package on Friday that would open trade with old foe Vietnam, give new life to some popular tax breaks and open parts of the Gulf of Mexico to new oil and gas drilling. The U.S. House of Representatives was poised to take up the legislation on Friday, with the Senate expected to act this weekend as the Republican-led Congress rushed toward adjournment, clearing up some outstanding issues before Democrats take control of a new Congress in January. House Republican leaders had hoped to bring the measure to a vote in the House late on Thursday but leaders put off action for a day to round up support, congressional aides said. The legislation would extend a number of expired tax breaks for education, research and development, hiring welfare recipients and other popular causes. It also includes tax breaks for energy conservation and the use of alternate energy and cancels a scheduled pay cut next year for doctors in the Medicare health-care program for the elderly. The package would cost about $45 billion over 10 years. Measures that would liberalize trade with Vietnam and give some new trade benefits to Haiti raised concern among Southern lawmakers about textile imports, and leaders sought ways to ease final passage. "This package could face obstacles to passage in the Senate, and I will be working with senators to find the smoothest path for the Senate to decide to take final action," said retiring Senate Majority Leader Bill Frist, a Tennessee Republican. It would be the second attempt by House Republican leaders to approve normal trade relations for Vietnam. The measure failed last month when leaders tried to push it through under a procedure that required more than a simple majority. PUTTING COLD WAR TO REST Congress wants to set aside Cold War trade restrictions that require periodic review of Vietnam's record on religious rights and approve so-called Permanent Normal Trade Relations. The goal is to allow U.S. farmers, bankers and other businesses to share in the market-opening benefits of Hanoi's entry into the World Trade Organization next month. The House proposal would also renew duty preferences for six months for four Andean nations under the Andean Trade Preference and Drug Eradication Act, or ATPDEA, which expires at the end of the month. Some lawmakers had proposed restricting those preferences to Peru and Colombia, which have signed free-trade deals with Washington, and excluding Bolivia and Ecuador. The current plan will cut off preferences after six months to countries that do not have deals in place with Washington. The legislation also opens parts of the Gulf of Mexico to new offshore oil and gas drilling. Some 8.3 million acres (3.4million hectares) in the eastern Gulf of Mexico near Florida would be opened under the bill, which redistributes billions of dollars in federal royalties to four nearby Gulf Coast states. Before adjourning, Congress must also pass legislation to keep the government running, since nine of 11 spending bills that finance various government programs are unfinished. A stopgap spending bill expires on Friday, requiring the extension into the new Congress. (Additional reporting by Missy Ryan in Washington)
