Fund for Reconciliation and Development

WASHINGTON UPDATE

May 10, 2005

This issue marks the return of the Fund’s monthly Washington Update, to report on and analyze events and trends in U.S. relations with Vietnam, Cambodia and Laos. The Update is one element of the Fund’s Washington policy dialogue program, made possible by generous support from The Henry Luce Foundation and managed by FRD’s Washington Representative, Catharin Dalpino. Comments and suggestions can be directed to frd-dc@earthlink.net.

Diplomacy

Anniversary Summitry

As the United States and Vietnam approach the tenth anniversary of the normalization of relations in July, two high-level visits are in train.. State Department Deputy Secretary Robert Zoellick visited Vietnam May 6-7, as part of his first tour of Southeast Asia (which also included Indonesia, Thailand, Malaysia, Singapore and the Philippines) in his new position. As U.S. Trade Representative in the first term of the Bush administration, Zoellick oversaw implementation of the US-Vietnam Bilateral Trade Agreement.

The Zoellick trip was designed in part to build upon the momentum of US relief to the December tsunami. On a deeper level, Zoellick has also raised the issue of increasing competition between the United States and China in Southeast Asia - his early lap of the region is intended to signal a more activist American policy. He drew a direct connection between US-Sino competition and relations with Vietnam when he was quoted in the Washington Post as saying that “[The Vietnamese] want to have a very good and strong relationship because they don’t want to be totally dependent on China.” While few Vietnam analysts would foresee a scenario of such dependence, Zoellick was probably referring more broadly to China’s growing role in Southeast Asia. Economists estimate that in 2005 the volume of ASEAN trade with China will eclipse that of US-ASEAN trade for the first time.

During his Hanoi visit, Zoellick issued an official invitation to Vietnamese Prime Minister Pham Van Khai to visit the United States, the first U.S. visit of a Vietnamese Prime Minister after 1975. A full itinerary is still being under discussion, but Prime Minister Khai is scheduled to meet with President Bush on June 21. In June FRD will publish a policy brief on issues in the US-Vietnam relationship, keyed to the Prime Minister’s visit. The brief will also be available on the Fund’s website.

(FRD will place a selection of the best articles and reflections about the 30^th anniversary on its web site www.ffrd.org/anniversary. Suggestions are welcome.)

Trade and Economic Development

Normal Trade Relations Granted for Laos

On November 19, 2004 US Normal Trade Relations for Laos was approved as a rider on the Miscellaneous Trade Bill (MTB). Seven years in the making, NTR status for Laos was largely the result of greater organization of support by members of the Laotian-American community on this issue in recent years. It was as well a bipartisan effort in Congress, with Democratic House Representatives Betty McCollum and the late Robert Matsui’s introduction of stand-alone legislation (HR 3195) which, although unsuccessful, served to put the issue formally on the Congressional agenda.

In Fall 2004, the measure survived attempts by Wisconsin Senators Herb Kohl and Russell Feingold to place holds on the MTB, which would have prevented its approval before Congress adjourned. Senators Charles Grassley and Max Baucus, Senate Finance Committee chair and ranking member respectively, were able to push the measure through by cloture vote. However, as a companion to the vote, the Senate passed Resolution 475, expressing concern about human rights conditions in Laos. Normal Trade Relations status was ratified by the Lao PDR National Assembly in February 2005, and the arrangement went into effect shortly thereafter.

FRD is coordinating the first visit to the US by a trade and tourism delegation led by Minister or Commerce Soulivong Daravong, working in close cooperation with Lao and Hmong-Americans and with support from the Rockefeller Foundation. The delegation will hold meetings in Fresno California, New York City, Washington DC, Chicago, St. Paul Minnesota and San Francisco between May 12 and 27

(For more information, visit http://www.ffrd.org/laos.html )

Nam Theun II Dam Guarantees Approved

In late February the World Bank agreed to provide $50 million as a partial loan guarantee to allow the Nam Theun II dam project in Laos to go forward. The project, which is expected to cost $1.3 billion, is led by Electricite de France and will enable Laos to sell electricity to Thailand under a guaranteed contract that is expected to provide Laos with $2 billion a year for 25 years. One pressure upon the Bank to approve the guarantees was the perception that China would help finance the project if the Bank did not.

Prior to the approval, Bank officials had expressed concern about whether proceeds from sale of the dam’s electricity would be applied to development needs in Laos. The government has pledged that revenues will be spent on education, health and rural development and, as one condition for the guarantees, has agreed to an external audit of the use of proceeds. The Bank has also imposed conditions on external funders of the project, who must provide housing for 6,000 people who will be dislocated when the Nam Theun river is dammed, and pay compensation to an estimated 40,000 people who fish the Xe Bang Fai river and whose livelihood will be affected when the Nam Theun is diverted to the Xe Bang Fai.

US-Vietnam Flights Inaugurated

On December 10, 2004 United Airlines opened the first commercial US route to Vietnam when UA Flight #869, originating in San Francisco, landed in Ho Chi Minh City, on the third anniversary of the US-Vietnam Bilateral Trade Agreement (BTA). Because the flight went through Hong Kong, it was not technically a direct route. However, Vietnam Airlines plans to inaugurate direct flights to the United States in late 2005 or early 2006. The International Air Transport Association estimates that the air travel industry in Vietnam will grow by 10.5% per year for the year ten years. From 1988-1999, it grew 29.5%. The United flight was symbolic not only of reconciliation between the United States and Vietnam, but also of the dynamism in trade between the two countries. Bilateral trade is expected to exceed $6 billion in 2005, and the United States has become Vietnam’s largest export market.

Vietnam Moves Closer to WTO Entry

With the dramatic expansion of US-Vietnam trade since the BTA went into effect in late 2001, the United States and Vietnam are now negotiating Washington approval for Vietnam’s entry into the World Trade Organization. Vietnam applied for WTO membership in 1995, and hopes to enter by the end of this year. Trade officials from the two countries held a series of negotiations in 2004, and Hanoi is hopeful these can be concluded with a final round this May. Thusfar, Vietnam has completed talks with 6 out of 27 trading partners. (Some negotiations – with the EU, Brazil and Singapore – have required only one or two rounds to complete). To enter in 2005, all negotiations will have to finish by the fall, to enable the WTO secretariat to complete entry procedures.

However, trade analysts point out that some 89 laws will have to be drafted or amended to bring Vietnam’s legal system into compliance with the WTO framework. Some Vietnamese economists have expressed fears that dismantling export subsidies too quickly to enter the WTO could cause Vietnamese products to be less competitive in the international market. On the other hand, the Vietnamese textile industry is liable to suffer the longer Vietnam remains outside the WTO, since textile quotas were abolished for WTO members on January 1 of this year. The garment industry in Vietnam employs approximately 25% of the industrial labor force and accounts for $4.5 billion in exports, roughly half of which go to the United States.

Legislation Under Consideration for Asian “Left Behind” Countries

Although already a WTO member, Cambodia stands to feel the brunt of the abolition of textile quotas even more. Compared to Vietnam, Cambodia’s export sector is not well-diversified, and is heavily concentrated in textiles. Eighty percent of Cambodia’s textile exports go to the United States. Laos has announced its intention to join the World Trade Organization, but the state of its textile export industry is even more fragile than Cambodia’s. The absence of Normal Trade Relations with the United States has not allowed Laos to develop a strong export connection so the abolition of WTO textile quotas is more likely to inhibit the development of an export sector with the United States than to hurt existing trade. Moreover, with designations as least-developed-countries (LDC’s), Laos and Cambodia are both disadvantaged by the trade preferences given to LDC’s in other regions. In fact, Asian and Pacific LDC’s are the only ones not protected by a regional trade preference regime in their trade with the United States. These Asian LDC’s have been informally labeled the “left behind” countries.

To address this inequity, Congress is considering a bill to extend trade preferences on some apparel items to Asia’s least-developed-countries. S191, sponsored by Senator Gordon Smith and co-sponsored by Senators Baucus, Hutchison, Santorum, Feinstein and McCain, was introduced in late January. HR 886, sponsored by Representative Jim Kolbe, was introduced in February. Both bills are presently under consideration in committee. The bill would extend preferences to Cambodia, Laos, Afghanistan, Bhutan, Bangladesh, Kiribati, the Maldives, Nepal, Samoa, Solomon Islands, East Timor, Vanuatu, Yemen and Sri Lanka. Afghanistan ( because of the war against terrorism) and Sri Lanka (because of tsunami relief) are likely to buoy the bill’s prospects. Nepal, with a high degree of internal instability, could be an obstacle. No specific comment on either Laos or Cambodia has yet been noted in relation to the proposed legislation.

Human Rights and Political Development

United Nations Signals Launch of Khmer Rouge Tribunal

In late April the United Nations announced that legal requirements had been met to enable a war crimes tribunal for surviving leaders of the Khmer Rouge to go forward. The tribunal represents a unique form of mixed national-international judicial body, the first internationalized exercise to give majority control of the legal proceedings to the government on whose territory the offenses were committed. The tribunal is estimated to cost $56.3 million over a three-year period, $21 million of which has been pledged by Japan. Cambodia is expected to contribute $13 million. Although the United States played a major role in bringing the tribunal to fruition, funding for it is presently prohibited under a Congressional ban initiated by Senator Mitch McConnell. FRD will publish a policy brief on the Khmer Rouge tribunal in May, which will be available on the Fund’s website.

State Places Vietnam on CPC List But Declines to Impose Sanctions

On September 15, 2004, the State Department designated Vietnam as a “country of particular concern” (CPC) under the Religious Freedom Act of 1998. Saudi Arabia and Eritrea were also new designees for 2004, joining China, Sudan, Iran, North Korea and Myanmar. The US Commission on International Religious Freedom (USCIRF) had campaigned to have Vietnam added to the CPC list since 2001. However, the addition of Vietnam in 2004 puzzled many observers, since the State Department freely admitted that the status of religious freedom in Vietnam had “remained fundamentally unchanged” in the past year. This suggests that the decision to name Vietnam a CPC was due more to tensions in the bilateral relationship on this issue or domestic political pressures in the US than to actual dynamics on the ground in Vietnam. Some analysts have speculated that the State Department move was intended to head off Congressional sanctions on Vietnam in the last Congress under the Vietnam Human Rights Act then under consideration. More likely, the designation was viewed as a means of increasing Washington’s leverage over Hanoi on an issue of growing importance in the American political environment.

Under the CPC framework, fifteen measures are specified for Presidential action, although none are mandatory. These range from private demarches, to the cancellation of diplomatic visits, to votes to deny loans and credits to a CPC country in international financial institutions. (Further information on the CPC process can be found on the FRD website by clicking on “Religious Freedom Debate.”) By law the State Department had six months to decide upon one or more actions, but on March 15 the Department requested an extension for Vietnam (as well as Saudi Arabia and Eritrea). In the meantime, the USCIR pressed State to impose travel sanctions on Vietnamese leaders suspected of violating religious freedom.

Despite this urging, the State Department announced on May 5 that it will not impose sanctions on Vietnam under the CPC framework this year. This is most likely because of several developments in Vietnam in recent months that demonstrate greater religious freedom. Most important was the promulgation of a new religious code, which could lead to legal recognition of additional Buddhist and Protestant groups. As well, in January, two of Vietnam’s most high-profile dissidents, Roman Catholic priest Thaddeus Nguyen Van Ly and physician Nguyen Dan Que, were released from detention along with 8000 other prisoners in the Tet amnesty. Also notable was the return of Buddhist leader Thich Nhat Hanh to Vietnam after a 38-year-long absence. Nhat Hanh arrived in Vietnam in January, accompanied by 200 followers, on a four-month visa which allowed him to teach. The government also granted permission for four of his books to be published.

Although Vietnam has avoided sanctions this year, it will remain a designated “country of particular concern,” and the USCIRF will doubtless press for sanctions and other punitive measures. To date, the only country to have been removed from the CPC list was Iraq in 2003, after the American invasion.

Omnibus Democracy Bill Would Impact V/L/C

In March Congress received draft legislation for a sweeping democracy promotion policy. If passed, the Advance Democratic Values, Address Nondemocratic Countries and Enhance Democracy Act of 2005 (known in shorthand as the Advance Democracy Act) would represent the most comprehensive democracy measure to date. Senator John McCain introduced the Act into the Senate (S516), while Frank Wolf is its main sponsor in the House (HR 1133), along with Representatives Chris Smith, Nancy Pelosi, Patrick Kennedy, Tom Lantos, Howard Berman and Ileana Ros-Lehtinen.

The major provisions of the bill include a requirement that (1) the State Department submit an annual Democracy Report to Congress which categorizes countries according to their degree of democratic government; (2) the United States attempt to establish Democracy Caucuses in every international organization to which it belongs; (3) American chiefs of mission in nondemocratic countries devise strategies to encourage democratization; (4) the United States urge the establishment of Helsinki Committees in every region; (5) the State Department establish “beachhead” countries in each region to encourage the spread of democracy; and (6) the White House create the position of Director for Nondemocratic Countries in the National Security Council. The proposed legislation also lists measures the President may take to criticize or sanction nondemocratic countries, and would increase funding for democracy promotion.

The State Department tends to resist new reporting requirements categorically, and could rightly point out than an annual Democracy Report could overlap significantly with the annual Human Rights Reports. A formal process of categorization will prove problematic for several reasons, and political considerations are likely to create built-in conflicts and inconsistencies. If the bill is approved, it is likely that the State Department will follow the lead of groups such as Freedom House and categorize Vietnam, Laos and Cambodia as “nondemocratic” countries. Freedom House has consistently ranked these three countries as “not free,” the lowest category. However, bills as broad and encompassing as this are often cut down to smaller size in the legislative process.

Legacy Issues

Prospects for Assistance to Agent Orange Victims Worsen

Two efforts to resolve the issue of the continued impact of Agent Orange on Vietnam foundered in March. Judge Jack Weinstein of the US District Court for the Eastern District of New York dismissed a 2004 class action suit against American manufacturers of Agent Orange and other defoliants brought by the Vietnamese Association for Victims of Agent Orange/Dioxin (VAVA) and individuals whose disabilities were believed to have resulted from exposure to dioxin. Judge Weinstein had also made the ruling on Agent Orange lawsuits brought by American Vietnam War veterans twenty years ago. Those suits were also dismissed, but the decision was crafted in ways to encourage the parties to come to an out of court settlement. Legal analysts point to significant differences between the two cases, one being that the Vietnamese plaintiffs were suing under the Alien Tort Claims Act, which allows foreign citizens to recover damages for violations of international human rights, a different standard than the product liability basis for the Veterans’ case. Judge Weinstein did not find that Agent Orange poisoning fit the definition of crimes against humanity. Moreover, he did not believe that sufficient proof existed of a connection between Agent Orange and the plaintiffs’ injuries. (Extensive analysis of Judge Weinstein’s decision and other aspects of the Agent Orange issue can be found on the FRD website http://www.ffrd.org/agentorange.htm ) Luu van Dat, lawyer and VAVA Central Committee member, believes that the plaintiffs’ appeal will be considered in June.

Ironically, the same month the US-Vietnam joint research project on Agent Orange, which might have provided data on a connection between Agent Orange and disabilities, was cancelled. Under the 2002 Memorandum of Understanding between the two governments, the research was to focus on the percentage of the Vietnamese population with levels of dioxin exposure; the impact of Agent Orange on the environment; and identification and remediation of AO “hot spots” where chemicals may still be seeping into the soil. Accounts vary on the reasons for the cancellation, but observers generally agree that the project did not proceed as quickly as hoped. Washington-based State Department officials reject charges by some scientists of deliberate cancellation, and indicate that project funding simply lapsed before it could be spent. This implies that the project could be resumed if funding were restored.

On a more positive note, in April folksinger and activist Peter Yarrow visited Vietnam and became the first American celebrity to draw attention to Vietnamese victims of Agent Orange. Yarrow gave a concert cosponsored by FRD and the Ministry of Culture and Information at the Hanoi Opera House to benefit the Vietnamese Association for the Victims of Agent Orange. The March 2005 issue of Critical Asian Studies also highlighted the Agent Orange issue with a cover story and photo essay on Vietnamese children whose disabilities are linked to dioxin exposure.

Flag Resolution Bill in California Assembly

To date, some 80 US localities and 8 states have adopted resolutions that designate the flag used in the southern Vietnamese provinces from 1954 to 1975 as the one to be flown at local events that include Vietnamese- Americans. These resolutions were promoted by local Vietnamese-American groups, with political support from the California-based Vietnamese-American Public Affairs Committee (VPAC). Although it is official US policy to recognize the government in Hanoi as the legitimate authority in Vietnam, and therefore to recognize the Vietnamese flag, local entities have been able to sidestep this issue by labeling the southern flag the “Freedom and Heritage Flag,” thereby stripping it of national connotation, and specifying that it be used for activities involving Vietnamese-Americans.

A draft resolution in the California State Assembly will, if passed, be the most comprehensive of these local initiatives. SCR-17, introduced in the 2005-2006 session, would urge the state to give formal recognition to the southern flag as the “symbolic flag” of the Vietnamese-American community, for use in state-sponsored or state-controlled events. More than 430,000 Vietnamese-Americans live in California. However, testimony by some Vietnamese-American witnesses against the resolution has created a delay in the bill’s passage. Before further consideration, committee leaders have instructed the bill’s sponsors, one of whom is Republican State Assemblyman Van Tran, to draft language reflecting a greater diversity of views within the Vietnamese-American community about the resolution.