Tran Dinh Thanh Lam

HO CHI MINH CITY, May 6 2005 (IPS) — With the painful chapter of war between them closed, both Vietnam and the United States seem to be moving to new horizons in the realm of business relations.

On Jun. 21, Vietnam Prime Minister Phan Van Khai will meet President George W. Bush during a historic visit to Washington, the first for a Vietnamese leader since the Vietnam War ended 30 years ago.

In 2000, Bill Clinton became the first American president to visit Vietnam since the war ended in 1975. A year later, the countries signed a landmark trade deal that has grown far beyond both sides’ expectations – netting 6.44 billion dollars in two-way trade last year.

Other high-level visits have also taken place, including Vietnam Defense Minister Pham Van Tra’s historic meeting in November 2003 with Secretary of Defense Donald H. Rumsfeld in Washington. Tra became the first senior military official of Hanoi’s government to visit the United States.

Deputy Foreign Minister Le Van Bang was sent early last month to the U.S. to prepare for the historic event, and his announcement followed the celebrations last weekend of the 30th anniversary of Vietnam’s victory.

”The purpose of my trip is to prepare for PM Khai’s visit and to lobby for Vietnam’s entry into the World Trade Organisation (WTO),” Bang said.

International observers had been speculating on the visit since early this year, but this is the first time that Vietnam officially has fixed a date for it.

Tran Du Lich, director of the Economic Institute of Ho Chi Minh City said the success of the U.S.-Vietnam Bilateral Trade Agreement and the ASEAN (Association of South-east Asian Nations) Free Trade Area was proof that the country was ready for WTO membership.

Bang said during his stay in the U.S., he had met with senior officials in the State Department, Department of Transport and the Office of the President, including Republican Senator John McCain – a strong advocate for Vietnam.

The deputy foreign minister told reporters U.S. senior officials agreed that relations between both countries were ”the best in the past 30 years on the political, diplomatic and economic fronts.”

There are now direct flights from the U.S. to Vietnam, with United Airlines flying straight from San Francisco to Ho Chi Minh City. The current communist government seems ready to forgive its past enemies and even allowed former South Vietnam Premier Nguyen Cao Ky to return home after 29 years of exile in the U.S.

But Bang recognised that ”the U.S. is still concerned about Vietnam’s efforts to revise its legal systems in accordance with WTO laws as well as some particular issues, like tariffs and services”.

For this, according to Nguyen Duc Kien, director of the National Assembly’s Economics and Budget Commission, Vietnam must amend the Law on Value-Added Tax and the Law on Special Consumption Tax; simplify procedures and reduce barriers that prevent foreign investors from entering markets so far reserved for state-owned companies only.

”We have much to do, but not a lot of time left to do them,” Kien told IPS.

Multilateral negotiations are scheduled for later this month in Geneva and Hanoi has to strike bilateral agreements with other WTO members, including the United States, Japan and China.

On Friday the United States urged Vietnam to press on with economic reforms if it wants to compete against neighboring China and become a part of the world economy.

”Vietnam has done tremendous amount of work in a very short time,” U.S. Deputy Secretary of State Robert Zoellick told a news conference in the Vietnamese capital Hanoi.

But ”it can’t rest because as part of the global economy it is competing with China or the other countries in South-east Asia or Latin America,” he said. ”The United States wants to be supportive in that act.”

According to Professor Nguyen Manh Hung, an international relations lecturer at George Mason University, the U.S. has promised to help Vietnam gain entry into the WTO, but it wants to avoid the bad experience it had with China.

For that reason, he said, the U.S. is pressing Vietnam to carry out some concrete measures before signing the WTO agreement.

One of these concrete measures, according to international observers, is to show the draft of the amended value-added-tax, special consumption tax and foreign investment laws to the U.S. before they are presented to the Vietnamese National Assembly for approval.

Vietnam hopes to join the WTO this year, but for that, the country needs to have the support of two thirds of WTO members when they meet in December in Hong Kong.

Speaking to the Hanoi media, Peter Mandelson, the European Union Trade Commissioner said, “I don’t think there’s any reason for preventing Vietnam to become a WTO member at the Hong Kong meeting this December.”

Becoming a WTO member will help boost the country’s competitiveness, particularly in the field of textiles and garments.

Garment quotas for members of the WTO expire at the end of this year. If Vietnam does not join WTO this year, it will not enjoy quota-free access for its garments. Already, the prospect of Vietnam’s competitive disadvantage is leading to cancelled garment orders and a slowing of exports.

According to industry experts, garment exports to the U.S. rose 8.5 percent in the first half of 2004 from a year earlier, but “there are signs of slowing down”. In the first quarter of 2005, Vietnam exported 1.32 billion U.S. dollars worth of garments, mostly to the United States, a rise of six percent from the same period a year ago. But industry experts still say the sales are small if a target of 5.2 billion dollars is expected for the year.

Another hurdle in the path of Vietnam joining the WTO, according to Professor Hung, is the issue of human rights. ”The U.S State Department wants to speed up relations with Vietnam, but at the same time it must reconcile its economic necessities with the demands of human rights groups,” Hung said.

Last year, the U.S State Department listed Vietnam as ”country of particular concern” (CPC) in relation to religious freedom, a designation that could lead to economic sanctions. Authorities in Vietnam reacted by releasing a handful of political and religious dissidents, but still banned churches not approved by the government.

This prompted human right groups to cry out that Vietnam’s government was dodging sanctions by offering ”token” gestures and making empty commitments to improve religious freedom.

This year, to avoid the same situation happening again, Deputy Foreign Minister Bang suggested the two countries must continue their exchanges not only economically, but also culturally to build mutual trust.

”How far will Vietnam go in its commitment to religious freedom and human rights to convince the U.S. of its goodwill remains unknown,” remarked Nguyen Quan, an analyst at a Ho Chi Minh City law firm.