~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

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Hanoi formally recognises private sector equality

HANOI - Former enemies Vietnam and the United States have put into force a historic bilateral trade agreement, finally allowing Vietnamese exporters to compete on level terms in the world's biggest market. Letters implementing the pact, which was signed in July 2000 after years of negotiations, were exchanged in Washington on Monday by U.S. Trade Representative Robert Zoellick and Vietnam's Trade Minister Vu Khoan, Zoellick's office said. A Vietnamese trade official said the signing meant the pact took effect from 3 p.m. Washington time on Monday (2000 GMT).

It grants Vietnam normal trade relations status with the United States, removing it from a small list of countries denied this, including North Korea, Afghanistan, Serbia and Cuba. The World Bank says the pact would boost Vietnam's exports to the United States by $1 billion in four years. Hanoi and Washington were bitter enemies in the Vietnam War, which ended with a communist victory in 1975. Until 1994, Washington imposed a punishing trade embargo that seriously restricted Vietnam's economic development and did not restore diplomatic ties until a year later.

The USTR called the trade pact a "key step" in the process of normalisation of relations. Vietnam's Foreign Ministry said the process had been "more fully implemented". "Our agreement represents progress for the United States, but also for the world trade system," Zoellick said. "This is an example of how two nations, once divided by war, can employ trade as a tool to work towards reconciliation." Symbolising the new era, Boeing Co and Vietnam's government signed a deal on Monday for the purchase of four Boeing 777-200ER airliners capable of flying non-stop between the two countries. Boeing put the value of the deal at $680 million.

Equal rights for private sector

Communist-ruled, but increasingly market-driven Vietnam gave a further boost to the private sector on Tuesday when its National Assembly approved a constitutional amendment formally guaranteeing private firms equal treatment. An assembly official told Reuters a supplement to Article 16 read: "All economic sectors are important components of the socialist-orientated market economy." Deputy Prime Minister Nguyen Tan Dung told Reuters last month the message of the amendment to the private sector was "they will be treated completely equally to other sectors".

The trade pact means Vietnam can now ship goods to the United States at the lowest possible tariff rates, while U.S. firms get gradually improved access to Vietnam. Also, provided the terms are properly observed, U.S. firms should get protection of intellectual property rights, which are widely abused in Vietnam. Tariffs on Vietnam's exports are slashed to around four percent from an average of about 40 percent, allowing it to compete equally in the world's biggest market. The Vietnamese trade official said the tariffs would be reduced immediately. But he said it normally took several days to computerise the new rates, so refunds would be given to anyone having to pay the old tariffs.

Chris Tragakis, chairman of the American Chamber of Commerce in Vietnam, said the business community was "very, very pleased" an agreement had finally been reached. He said it would be a boost for Vietnamese industries ranging from footwear to textiles and furniture, and provide opportunities for U.S. service providers in areas such as telecoms and banking.

He said implementation of the terms would be tough, especially in areas like intellectual property. "I think the Vietnamese have been very wise not to over expect and the U.S. side does not over expect," he said. "We all recognise there's a great deal of work, a lot of technical assistance that's going to have to go both ways for business people to take full advantage of the opportunities."

Another potential fly in the ointment is human rights, with Hanoi fearing pressure from Washington on this front given that its normal trade relations status needs to be renewed annually. Zoellick said Washington hoped the pact would speed Vietnam's integration into world economies and said it provided a solid basis for its bid to join the World Trade Organisation. "We look forward to contributing to that effort," he said.

By USTR figures, U.S. firms exported more than $368 million worth of goods, including industrial machinery, fertilisers and semiconductors to Vietnam last year, while Vietnam exported $821 million of goods to the United States.

By David Brunnstrom - Reuters - December 11, 2001.