VIETNAM: Unquiet Economics Shapes Search for U.S. Market

By IPS Correspondents Reprint | | Print |

Tran Dinh Thanh Lam

HO CHI MINH CITY, Vietnam, Nov 14 2003 (IPS) - Vietnamese Minister of Defence Pham Van Tra says his just-finished trip to the United States ”will pave the way for further visits by military delegations of the two countries”, but far beyond that it is the latest sign of warmth in ties between the former enemies.

Tra’s visit, from Nov. 8 to 12, will have an immediate effect – later this month a U.S. naval vessel will visit southern Ho Chi Minh City in the first such port call since the war between the two trading partners.

Indeed, for Vietnam in the years since market reforms, the trade numbers are most important. The United States has become the biggest importer of Vietnamese goods, having racked up an import bill of 3.1 billion U.S. dollars from January to August this year, according to the U.S. Trade Service Agency in Hanoi.

That now puts the United States ahead of Vietnam’s long-time key export destinations, the European Union and Japan, and is a huge increase over its own total imports from Vietnam last year of 2.4 billion dollars.

Vietnam’s Ministry of Trade is even more bullish, and has predicted that exports to the United States would increase 130 percent per annum in coming years, with garments and textiles recording the highest gains.

The numbers and the expectations are the gloss on Tra’s visit, which came against the backdrop of recent revelations of more atrocities committed by U.S. soldiers during Vietnam’s war against the United States.

The exposes, documented in the U.S. newspaper, the ‘Toledo Blade’, have shocked readers worldwide, but the government in Vietnam has appeared disinterested in dwelling on these tragic episodes.

Instead, veteran Nguyen Dinh, 67, termed Tra’s visit ”very encouraging news”. He sees it as helping ”push forward mutual understanding between our countries”.

Military relations between the U.S. and Vietnam have shown signs of improvement since the visit of U.S. Defence Minister William Cohen three years ago, the first such visit since the end of the war.

”At the time, he (Cohen) affirmed that the issue of those missing-in-action remained the top priority issues in military relations between the United States and Vietnam,” said Dinh. ”Now that the two countries have reached significant results, military relations could be improved.”

As of May 2003, Vietnam has already handed over to U.S. officials the remains of some 805 soldiers killed in action in Vietnam.

Before his visit, Gen Tra made assurances that his meetings with U.S. Defence Secretary Donald Rumsfeld and U.S. National Security Adviser Condoleezza Rice would focus entirely on ”ensuring peace and security in the region and in the world”.

Observers say Vietnamese military officials would like the U.S. government to have a more active role in the South-east Asian region, and even so are wary about China’s reaction to the same. Both Vietnam and the United States want to maintain friendly economic and diplomatic ties with China, which is viewed in Hanoi and Washington as an extremely valued trading partner.

Despite the bonhomie that surrounded Tra’s visit, it is not a relationship without its irritants.

The U.S. International Trade Commission last July endorsed a finding by the country’s Commerce Department which concluded that Vietnam had dumped catfish in the U.S. market, following which duties of up to 64 percent were slapped on Vietnamese frozen fillets.

This hurt the fish industry here. Last year, Vietnam exported shrimp worth more than 400 million dollars to the United States and yet now it is facing legal action from U.S. shrimp farmers who claim the Vietnamese exports are undercutting their industry.

However, the two countries believe they can still do business. Last month, they signed an agreement to start direct flights between the two countries.

Besides, U.S. exports to Vietnam are also on the rise thanks to large orders. From January to August 2003, U.S. exporters sent more than 944 million dollars worth of goods to Vietnam, a huge increase from the previous year’s 580 million dollars.

From Vietnam’s point of view, that is not all. The country and its World Trade Organisation (WTO) trading partners have scheduled a new round of negotiations for December 2003.

Vietnam is focusing on WTO entry in a bid to have quotas lifted on its clothing exports to the United States – quotas for WTO members will be dropped at the end of 2004. However, access to the U.S. market allowed garments to bypass oil as Vietnam’s top export this year.

Vietnam applied for WTO entry in 1995. At the sixth round of talks in May, some WTO members said Vietnam had not offered enough market access or information. There was concern expressed about issues that ranged from trading rights for foreign companies in Vietnam to intellectual property rights, according to the WTO website.

Just as much as developing economic relationships with the United States and within the WTO framework, Vietnam wants regional stability. Encouraging signs of these developing ties between the United States and Vietnam have long been in the air.

According to the U.S. ambassador to Vietnam, Raymond Burghardt, ”The United States and Vietnam have seen an impressive growth in two-way trade, and the long-term outlook for relations between the two countries is ‘almost positive’.”