Fund for Reconciliation and Development

Washington Update #18

September-October, 2003

 

 

 

US relations with Cambodia are in a state of suspended animation awaiting the resolution of a political deadlock after the July elections, but movement with both Vietnam and Laos is accelerating, especially on the trade front.

 

 

Trade and Economic Development

 

 

Laos NTR: McCollum Proposes, Green Opposes

 

            Two major obstacles in the extension of Normal Trade Relations with Laos were removed in September.  On the 20th the United States and Laos signed the Bilateral Trade Agreement, which was initialed in 1998.  The formal signing, which was necessary in order for Congress to act on NTR,  took place in Vientiane between Laos Trade Minister Sulivong Daravong and US Ambassador Douglas Hartwick.  On September 29 Representative Betty McCollum introduced H.R. 3195, to extend NTR treatment to products of the LPDR, and the bill was referred to the House Ways and Means Committee for action.  The legislation was co-sponsored by Robert Matsui.  Both McCollum and Matsui represent districts (in Minnesota and California, respectively) with significant percentages of Laotian-American and Hmong-American constituents. The McCollum bill offers a vehicle for Congressional action, the lack of which had stymied Hill supporters of NTR for Laos for several months.  However, some NTR proponents believe that the stand-alone legislation may not survive in its present form, and place greater confidence in approving NTR for Laos as a rider on another bill whose passage is assured.  McCollum’s own office believes it is possible that their initiative may be folded into a larger measure to grant NTR to several countries, including Armenia and Moldova.

 

However, this distinction is academic:  public support for the McCollum bill would likely insure that the measure is passed whatever the legislative form.  An apathetic or predominantly negative response to the McCollum bill could end near-term hopes for NTR for Laos. 

 

            On October 1 Representative Mark Green sent a letter to President Bush opposing NTR for Laos.  In the letter, as well as the cover that accompanied it, Green offers a variety of arguments, some of which take recent developments in Laos out of context.  For example, the letter criticizes Laos for maintaining relations with Myanmar, but fails to mention that Myanmar’s membership in (ASEAN) all but guarantees full relations with every nation in Southeast Asia.   In a similar vein, the letter points out that the State Department’s “Voting Practices in the United Nations” -- mandated by Congress to compare each country’s UN votes against those of the United States – rates Laos very poorly in its agreement with US votes, but fails to mention that virtually every other Southeast Asian nation ranks in the lowest quadrant.  Moreover, it ignores the State Department’s own caution that UN votes are less important than bilateral cooperation with the US; on that score, the Bush administration and such organizations as the National League of POW/MIA families cite consistent improvement in Laotian cooperation across a range of issues.  The letter maintains as fact that “a substantial majority of Laotian-Americans…are strongly opposed to offering NTR to Laos,” but offers no data or other evidence to support this contention. The Green letter was co-signed by 21 Members of Congress, including Chris Smith, Ileana Ros-Lehtinen, Lincoln Diaz-Balart, Dana Rohrabacher, Patrick Kennedy and Barney Frank.

 

            The Fund for Reconciliation and Development is circulating a letter of support for signature by representatives of non-governmental organizations as well as experts on the region.  Those interested in signing should contact ____________________________.

shammond@ffrd.org.

 

 

Vietnam and US Open Direct Flights

 

            On October 9 the US and Vietnam agreed to permit direct passenger and cargo flights between the two countries, both a substantive and symbolic move forward in bilateral relations.  Coupled with this landmark was Vietnam’s purchase of American aircraft.  Vietnam estimates that 10 percent of its aviation market is American, but that is likely to increase significantly with the direct flight agreement.   Both trade and tourism will benefit from the upgrade.

 

 

Southern Shrimpers Preparing to Strike?

 

            If the direct flight agreement was a milestone in US-Vietnam trade, southern US shrimp producers appear poised to remind Hanoi that an ongoing trade relationship is a roller coaster.  Observers believe that the Southern Shrimp Alliance will attempt to capitalize on the momentum of the Commerce Department’s catfish ruling against Vietnam with a similar anti-dumping suit.  Such action, however, would be against several shrimp exporters, including Thailand, Brazil, Indonesia and China.  The presence of so many defendants, some of which are designated as having market economies, will make for a slower and more difficult process than the catfish ruling.   In recent weeks Hanoi and Jakarta have speculated publicly about combining forces to fight the action, and others targeted countries could join in.  Imports account for 80 percent of the shrimp consumed in the United States. 

 

 

Cambodia Enters WTO Amidst Cancun Chaos

 

            In late September Cambodia, along with Nepal, became the one of the first “least-developed” countries to be admitted to the World Trade Organization.  (Some LDC’s, such as Myanmar, were automatically given WTO membership because of their previous status under the GATT.)   Phnom Penh’s induction was overshadowed by the challenge launched by an emerging movement of developing countries a major bloc movement at the WTO talks in Cancun, which motivated Mexico to abort the conference before its scheduled conclusion.  The new block, the Group of 21 -- which included mid-level economies in Southeast Asia (Thailand, the Philippines, Indonesia) -- was sharply critical of the developed economies for lack of progress after the 2001 WTO meeting in Doha pledged to link the next round of talks to the special problems of the poorest countries. 

 

            It was in this environment that Cambodia completed negotiations for WTO entry, a process which had taken a total of eight years.  Critics of the WTO and of global trade regimes in general have charged that, rather than lowering barriers to admit Cambodia, the WTO raised the bar for entry.  They worry that LDC members such as Cambodia are being pushed into providing market access prematurely to richer members and will suffer economically as a result.  They contend, for example, that Cambodia’s garment industry will not be able to compete with its Chinese counterpart. 

 

            Cambodia’s response to these concerns was to acknowledge them but to point out that delay in joining the WTO carries with it a serious risk of being left further behind in the international economy.  Vietnam evidently agrees, and is pressing forward with plans to submit a proposal for WTO entry to Geneva in October.  Hanoi too is mindful of the costs of delay, with respect to specific countries as well as the overall WTO community.  The collapse of the Cancun talks could push back the abolition of textile tariffs under WTO planned in 2005, which is Vietnam’s target date for entry.   Tariffs are taking a bite out of Vietnam’s garment exports to the US following the textile agreement signed between the two countries earlier this year, and Hanoi had been counting on Vietnam’s entry into the WTO to provide relief.

 

A webcast of the WTO speech by Cambodia’s Commerce Minister Cham Prasidh can be found at http://wto.mvs.com/min03_webast_e.htm.  Oxfam International has published a report entitled  “Cambodia’s accession to the WTO:  How the law of the jungle is applied to one of the world’s poorest countries” which can be downloaded from www.oxfam.org/eng/ pdfs/doc030902­_cambodia_accession.pdf

 

 

Partners Seesaw on Nam Theun II for Laos

 

            In early October, France’s EDF reversed its decision earlier this year to withdraw from Nam Theun II in Laos and announced it would invest in the $1.3 billion hydroelectric project.  However, the announcement came two days before the Energy Generating Authority of Thailand (EGAT) was to sign a 25-year power purchasing agreement for Nam Theun with Laos.  Although the news from Paris was warmly received in Vientiane, Bangkok was irritated at the uncertainty it created in the process, complaining that the French had released the news through the media rather than notifying the parties directly.  A week later, Thailand cancelled the signing and removed Nam Theun from it longterm power plans.  The two countries will have to return to the table to renegotiate a new agreement, and most likely a new price schedule.  Laos fears that Thailand, which was the sole buyer for power from the dam, will attempt to identify cheaper sources in the interim.  Although France has not provided Laos with official confirmation of its re-entry into the Nam Theun II consortium, to date it confirms that it will stay with the project.  With an investor in but a buyer out, it is unclear whether the World Bank funding guarantees considered to be necessary to the project will be forthcoming in the near future.

 

           

Human Rights and Political Development

 

           

Positions on Human Rights in Vietnam Harden on Both Sides

 

            Short-term tensions between the United States and Vietnam over conflicting perspectives on human rights issues appear to be increasing.  In September the State Department cancelled the fall round of the bilateral human rights dialogue, a fixture in the relationship for nearly a decade, criticizing Hanoi for lack of progress.  Shortly thereafter, the US Commission on International Religious Freedom renewed its call for the administration to designate Vietnam as a “country of particular concern,” which label would impose sanctions.  This new effort coincided with a report by the European parliament critical of Vietnam’s treatment of Hmong Christians, a group that is also the focus of the US Commission.  Neither institution was likely to have been pleased by Hanoi’s decision a few weeks later to refuse recognition of a new cardinal appointed by the Vatican for Ho Chi Minh City.  Although Hanoi does not categorically reject all of the Vatican’s appointments, it prefers to be consulted on them beforehand, which the Vatican frequently declines to do.  This The rushed nature of the announcement of a large group of new Cardinals worldwide, and the consequent non-consultation with Hanoi, appears to be the result of in-church concerns over the prospective Papal succession. However the incident is likely to slow the momentum of relations between Vietnam and the Vatican, which had been cautiously warming. 

 

            In this worsening climate, the Senate Foreign Relations Committee continues to ponder its response to the Vietnam Human Rights Act, which passed in the House earlier this year.  Most observers continue to believe that the Senate will counter with a non-binding resolution which criticizes Vietnam on human rights grounds but removes the threat of sanctions. 

 

             Heightened criticism in the US provokes a comparable negative attitude among Vietnamese leaders who believe a healthy long term relationship requires mutual respect for national sovereignty as manifested in different cultures and socio-political systems.

 

 

Security

 

Washington and Hanoi Take Incremental Steps Toward Security Cooperation

 

            Vietnamese Defense Minister Pham Van Tra is reported to have accepted US Secretary of Defense Donald Rumsfeld’s invitation to make an official visit to the United State.  The trip is tentatively scheduled for November, marking the first visit to the US of a defense minister from unified Vietnam.  This is accompanied by reports that a US naval vessel will cruise up the Saigon River for the first time since the end of the war.  A third development has drawn less attention, but nevertheless advances the still-cautious defense military relationship between Vietnam and the United States.  The US will provide funding for senior Vietnamese intelligence officers to examine classified Vietnamese government files for any information on US POW’s in the war. 

 

            American analysts are inclined to attribute movement in US-Vietnamese defense relations to an attempt to counter growing Chinese influence in Southeast Asia.  In this regard, Washington is more likely to view the situation as more of a zero sum game than are the countries in the region.  While the US may be tacitly urging Southeast Asian countries to choose between external powers, the Southeast Asian response is likely to lean more toward seeking a balance.  They may be aided in this by the formation of an ASEAN Security Community, proposed at the ASEAN Summit in Bali in early October.  The Security Community is envisioned as a forum rather than a defense alliance.  However, the increase in defense solidarity, if only in image, could give ASEAN slightly more room to maneuver between Washington and Beijing.

 

 

Legacy Issues

 

Viet Kieu Trends Show Differing Directions

 

            A resolution approving the use of the flag of the former South Vietnam in a small town in Washington brings the number of such local actions in the United States close to twenty.  The momentum in this movement within the Vietnamese-American community shows no immediate signs of abating.  However, an article in the October 12 edition of the Washington Post examines another trend among the Viet Kieu, of returning to Vietnam to live.  The article describes a small but growing trend among older generation Vietnamese-Americans who have had successful careers in the United States and who are now taking advantage of new laws in Vietnam which permit former refugees to own real estate.  Special subdivisions for this purpose are appearing in the suburbs of major Vietnamese cities; not surprisingly, Ho Chi Minh City is the favored location.  This trend is buttressed by the Vietnamese government’s relaxation of some regulations for overseas Vietnamese beyond the change in property rights law.  For example, Viet Kieu are charged local rather than foreigner prices for internal travel, and receive some preferential treatment for business investments.  It speaks to the complications ofcomplexities within the Viet Kieu community that both of these trends – the flag issue and returning retirees – originate in the older generation.

 

 

 

     The Washington Indochina Update is published by the Fund for Reconciliation and Development (FRD), 355 West 39th Street, New York, NY 10018. 

      It is compiled and written by Catharin Dalpino who is representing FRD in Washington on a consultant basis. She can be reached at <washington@ffrd.org>

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