China WTO deal puts heat on neighbouring Vietnam
HANOI - China's WTO deal with the United
States has raised the stakes for Vietnam as it grapples with the
merits of signing its own landmark trade agreement with
Washington.
Analysts said China's commitment to liberalise and embrace
competition -- combined with the region's general economic
recovery -- highlighted how unappealing communist Vietnam's
inefficient and high-cost economy was to investors.
But few agreed on how Vietnam would react to Monday's
agreement that paves the way for China to join the World Trade
Organisation, which sets global trade rules.
Some financial sources said Vietnam would take heart that
neighbouring China, a socialist ally despite their long history of
animosity, had gone the final yards with the United States.
Others said Vietnam had its own agenda, which focused
primarily on a group of ageing Communist Party leaders trying to
reconcile the risk to one party control that opening up to the
world economy and embracing competition would bring.
After maintaining near silence for months, last week Hanoi said it
wanted more talks with former enemy the United States on their
trade pact, which was agreed in principle last July.
Foreign investors who took those comments at face value said
the immediate future of the agreement looked bleak, but other
financial sources have said Hanoi was still keen to resolve the
issue over the next two or three months.
Pham Chi Lan, executive vice-president of the Vietnam
Chamber of Commerce and Industry, said local firms were
always worried about the competitive threat posed by China.
But since Beijing's WTO deal, that fear had heightened.
``Of course China's move will affect us. Besides being a tougher
competitor for exports, China will be very competitive in
attracting foreign investment,'' Lan told Reuters.
Lan said Vietnam should use the China deal as a spur to
enhance its competitiveness and accelerate integration with the
world economy.
Jean-Pierre Verbiest, resident representative of the Asian
Development Bank in Hanoi, said the China deal put Vietnam in
danger of falling further behind other Asian economies over the
medium term.
``WHOSE ADVICE CAN VIETNAM TRUST?''
One source close to the party said there was some surprise --
even irritation -- at how quickly talks on reaching the WTO deal
between Beijing and Washington were concluded.
The source said that was because a Chinese Communist Party
delegation to Hanoi had recently warned Vietnam to be wary
about Washington's intentions in pushing a trade deal.
``Then China went off and signed this deal with the United
States. Whose advice can Vietnam trust?'' the source asked.
Financial sources have said Hanoi had made known its
misgivings over the stalled trade pact to the United States, its
adversary during the Vietnam War.
But Washington has yet to comment officially.
Foreign donors and investors have urged Vietnam to sign the
U.S. trade deal, saying this would send a much-needed signal
that Hanoi was prepared to open up to the world economy.
Besides the benefits of increased investment and more
competitive industries, the trade deal would give local exporters
access to the giant U.S. market at the same preferential tariff
rates accorded to most nations.
Reuters - November 18, 1999.
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