Delay Rattles Certainty of U.S.-Vietnam Trade Accord
Economy: Deadlines for signing the deal have passed. Years of effort could be wasted if the Communist nation is not prepared for change.
HANOI--Three months after Hanoi and Washington struck a landmark deal to
normalize economic ties, two deadlines for signing the formal agreement
have passed, raising fears both sides could end up empty-handed after
years of tough negotiations.
To many political analysts, the delay is confirmation that the debate
rages on between reformists and conservatives in the secretive Politburo
over the fundamental question of whether Vietnam really wants to commit
itself to a free-market economy. All indications are that it has not made
up its mind.
Despite the delay, Vietnam and the United States say the trade
agreement could still be realized pending clarification of technical
issues. But, Western economists say, it's clear that the clock is ticking
and that Vietnam stands to lose an important economic opportunity if its
ruling Communist Party continues to dither over how free and open it
wants its markets to be.
"In conversation after conversation I've had, the Vietnamese say
they're going through the review process," said Peter Ryder, an
independent investor and chairman of the American Chamber of Commerce in
Hanoi. "They say: 'Don't worry. We'll get it signed by the end of the
year.' All we can do is hope that is truly the case."
Vietnam is the only country with which Washington has full diplomatic
relations but not normalized trade relations. The U.S. ambassador, former
prisoner or war Douglas "Pete" Peterson, has made the Bilateral Trade
Agreement a cornerstone of his reconciliation mission here, believing it
represents one of the last steps in ending the mutual distrust stemming
from the wartime years.
One reason the all-powerful Politburo--a group of 19 elderly
Communists whose collective psyche is still shaped by Vietnam's long
battle for independence--is having doubts is that the trade agreement
cuts to the very quick of issues about maintaining control, protecting
state enterprises and vested interests, and limiting foreign influence in
order to protect local culture.
The trade deal, the most comprehensive and stringent the U.S. has ever
negotiated, would require Vietnam to fundamentally change the way it
relates to the world. Trade barriers would be lowered, markets opened to
competition, the role of state companies reduced and investment standards
raised to international levels. U.S. negotiators argue that their demands
are no tougher than those Vietnam will have to meet to gain entry to the
World Trade Organization.
In addition to internal policy differences, Vietnam--which seeks
equilibrium in relations between China and the United States--knows it
could be bad timing to sign the agreement when Washington and Beijing are
at odds and Hanoi and Beijing are trying to settle a border dispute. In
addition, Vietnam has grown weary of the country it defeated militarily
sending a stream of officials from Washington to lecture on human rights
and free markets.
The matter of signing the agreement was further complicated by a visit
Secretary of State Madeleine Albright made to Hanoi in early October. In
meeting with Le Kha Phieu, secretary-general of the Communist Party, she
sidestepped items on the agenda--human rights and the trade
agreement--and asked about Vietnam's plans to implement true democracy
and multiparty politics (of which it has none). Phieu, said a
knowledgeable official, was surprised and peeved to be receiving more
advice from another American about how to run Vietnam.
By the time Albright got to New Zealand, where the agreement was to
have been signed at an economic summit, Vietnam decided the 70-page
document needed more clarification. The delay was particularly odd
because Vietnam and the United States had signed a memo of understanding
in July, accepting all points of the deal and making the signing only a
Although Vietnam's 77 million people represent an attractive long-term
market for U.S. business, at this point Vietnam needs the trade agreement
much more than the United States does. Foreign investment was down 60%
for the first six months of 1999 compared with the same period last year,
and except for the oil, garment and agricultural sectors, the economy is
flat after years of heady growth.
Ryder, quoting World Bank figures, said a trade agreement would
increase Vietnam's exports to the world's largest consumer market by $800
million the first year. "And for us," he added, speaking of Vietnam's
small U.S. business community, "it would give a meaningful psychology
boost, which we badly need. Over time it would stimulate the local
economy and make Vietnam a lot more attractive to American investors."
Once signed, an agreement would have to be ratified by Congress. U.S.
diplomats said if it isn't signed by March, about the time Congress will
slip into election mode, the deal could be scrapped and that a new
president would probably be much less attentive to Vietnam than President
Clinton has been.
Clinton lifted the trade embargo against Vietnam in 1994, granted
diplomatic recognition in 1995 and in 1997 sent an ambassador to
Vietnam--the first since Graham Martin fled Saigon in 1975. Clinton plans
to visit Vietnam next year. The trip would make him the first U.S.
president to set foot on Vietnamese soil since President Nixon spent a
few hours with American troops here in 1969.
Search the archives of the Los Angeles Times for similar stories about:
United States - Trade - Vietnam,
United States - Foreign Relations - Vietnam,
Vietnam - Government.
You will not be charged to look for stories, only to retrieve one.