US and Vietnam Approve Trade Agreement
by Tara McAuliff
After 3 years of arduous negotiations, the United States and Vietnam have agreed "in principal" on a bilateral trade agreement. This historic step comes at a time when Vietnam's economy continues to falter, and investment confidence is sorely needed. This important breakthrough will no doubt prove a boost to investment in Vietnam.
This bilateral trade agreement is the most comprehensive the U.S. has ever negotiated, and covers issues such as tariffs, quotas, banking and other key areas of interest to U.S. investors. This is also one of the last hurtles in U.S.-Vietnam relations before the two treat each other as they do other nations, helping to continue to heal the wounds of the ten-year conflict they fought against one another. As U.S. negotiator Richard Fisher put it "This agreement would, of course, represent an historical event, representing the final chapter in the transformation of our relationship from adversary to trading partners."
Once this agreement has been signed and ratified by the two legislative bodies, Vietnam will not only benefit from having access to the biggest market in the world but also become a much more attractive place for foreign investors from other countries hoping to manufacture goods for export to the U.S. Normal Trade Status (NTS) will likely follow in both countries, and Vietnam's bid to enter the World Trade Organization (WTO) will be greatly enhanced.
The next steps before this agreement is signed by the two governments are as follows; agreement on language and technical details must be reached, the agreement must be signed by representatives of the two governments, and then the document must be approved by the Vietnamese National Assembly and the U.S. Congress (Congress has 60 legislative days). This is expected to happen "in a timely manner" according to negotiators on both sides.
This article was originally prepared as an International Market Insight issued by the office of the US Commercial Service in Hanoi. International Copyright, U.S. & Foreign Commercial Service and US Department of State, 1999. All rights reserved outside of the United States.
Trade Agreement will Require Approval by Congress.Normal Trade Status (NTS), formerly known as Most Favored Nation (MFN) for both Vietnam and Laos as well as the Vietnam trade agreement may be before the Congress this fall. It will help to have a letter of support signed by the heads of not-for-profit institutions working in the two countries, i.e. institutions that are disinterested in terms of their own benefit but concerned that for development reasons both countries receive equal treatment with others. If you would like to be involved in the drafting process of such a statement, which would also address the need for positive conditions for both investors and workers, please let me know. -John McAuliff |
Ambassador Peterson Speaks on the Trade Agreement and Bilateral Cooperation
[Excerpted from remarks at the International Economic _ Cultural Exchange Club's workshop on "Cooperation and Investment Activities Between American and Vietnamese Enterprises" in Hanoi July 22, 1999]
Our biggest initiative is the bilateral trade agreement. The United States and Vietnam have been negotiating this agreement for the last two years. I believe that this agreement is the most important document our two countries will sign together during the lifetime of most of us here. It will yield significant economic benefits to both nations. For Vietnam, the most important benefit will be America's granting of Normal Trade Relations status. This will give Vietnamese exporters access to the biggest consumer market in the world. This access will in turn enhance Vietnam's attraction as a location for foreign firms to produce goods at competitive prices.
The World Bank estimates that this agreement could lead to increased value of Vietnamese exports to the US of almost $800 million. Actually, I think this is a very conservative prediction, and it is likely to be much more than that, especially over time. I urge you all to think about the Trade Agreement as something of great value from which Vietnam will benefit for decades into the future.
The US market can seem immense and confusing to Vietnamese business people, just as the Vietnamese market looks uncertain to an American business person who views it from afar. Our Commercial Service offices in Hanoi and Ho Chi Minh City seek to help business people of each country to understand the market they are interested in entering, and introduce them to business partners they can trust and work with fruitfully.
The US Embassy is also assisting in the rural areas of Vietnam, through our Agricultural Service. This important component of the mission provides Vietnamese farmers with access to top quality US agricultural expertise in a variety of sub-sectors. US companies are leaders in the area of both food production and processing, and their experience will prove invaluable to the Vietnamese farmer and exporter as working relationships are strengthened.
Our Information Service office helps assist Vietnam's future growth and integration into the world economy through the International Visitor's Program and organizing other exchanges and educational programs. Every year, scores of Vietnamese government officials travel to the US to meet with business people who work in a variety of sectors to see if these industries might be established in Vietnam in the future. This also helps them to understand better how the US economy, government and society works, which in turn we hope enhances cooperation between the two governments on economic issues.
We are working diligently with the State Bank of Vietnam and other interested government offices to conclude an agreement with the US Export-Import Bank. EXIM financing will help Vietnamese companies purchase top-quality US products at more competitive prices. The Overseas Private Investment Corporation is up and running in Vietnam, and is currently providing financing for several projects in the country, in manufacturing and in the expansion of already existing US projects. The US Trade and Development Agency is funding a large number of feasibility studies in Vietnam; ranging from power to ports to weather forecasting. Its programs are bringing valuable American expertise to assist in Vietnam's development.
The US-Asia Environmental Partnership Program has just begun in Vietnam. This program funds activities related to the introduction of environmentally friendly technologies, which I know is a top priority of Vietnam's decision-makers. A bilateral Copyright Agreement has been ratified by both governments, and is being implemented. This important agreement will ensure that the transfer of technology to Vietnam will be a mutually beneficial exchange.
These are activities of the US Government, but the US non-governmental private sector makes many valuable contributions to Vietnam's growth. In fact, the non-governmental private sector is much more important to Vietnam's economic development than is our government, as it is back home in the USA. US firms have won more than 30 investment licenses totaling approximately $1.1 billion, and the US is ranked as the 9th biggest investor in your nation. Investment ranges from banking to hospitals to power projects. US investors are active in all parts of Vietnam, bringing benefits to regions that have not prospered as much as Hanoi and Ho Chi Minh City. US companies support and even initiate many social programs through making donations of money and their expertise. Many US based non-governmental organizations are training Vietnamese entrepreneurs in both the cities and the countryside, and they implement a huge number of valuable projects in everything from micro-enterprise to health care, at the grassroots level.
An increasing number of Vietnamese are studying in the US both in undergraduate and post-graduate programs. Last year, approximately 1,200 Vietnamese went to the US for study. They are in business, science, social work, and numerous other programs. The expertise they will repatriate to Vietnam is immeasurable, and as these numbers grow, so inevitably will our trade.
Watching Indonesia, Russia and Brazil suffer from the devastating effects of the last two years has made Vietnamese officials more reluctant to implement the reforms that are needed if Vietnam is to move ahead and build on their country's strengths. It must be understood that if reforms are implemented within an appropriate legal and regulatory framework, Vietnam will be successful. Without economic reform, the country will lose its chance to become a prosperous nation.
In conclusion, although difficulties may lie ahead and the process of economic reform involves building a consensus on the strategy to follow, I have no doubt that Vietnam can emerge as an important player on the world's economic stage. Cooperation with American companies will help in this process, as they are important repositories of technology, financial resources, and managerial skills.
We, the American people, look forward to having an increasingly positive role in the history that will be written here at the beginning of the next century. This is just the beginning of our peaceful and prosperous relationship. Bilateral trade between our two countries will grow exponentially as the trade agreement comes into effect and your economy matures. This mutual reliance will help to heal old wounds, ease suspicions, and add to Vietnam's growing strength and importance on the global stage.