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

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Normal US trade ties key step as Vietnam heads into WTO era

HANOI - Full trade ties with the United States and WTO membership will bring profound changes to Vietnam, a communist country that is now embracing the free market, analysts and business groups say.

Greater exposure to the harsh winds of the global economy will create new winners and losers in the small but fast-growing economy whose leaders have vowed to speed up two-decade-old "doi moi" (renewal) market reforms, they say. Opening the Vietnamese economy further to large American and other foreign companies under WTO rules will have "profound consequences in the long term," said Carl Thayer, a Vietnam expert with the Australian Defence Force Academy. "In strategic terms, the Vietnam Communist Party will have to give way to market forces in the running of the economy."

The US Congress has granted Vietnam the status of a full trade partner, removing the last obstacle between the former enemies as companies on both sides gear up for a new era when Vietnam joins the World Trade Organisation later this month, cutting many tariffs and subsidies. Passage of permanent normal trade relations (PNTR) in an 11th hour vote by the outgoing Senate Saturday ensured that US companies will now enjoy the same market access as those of other WTO partners when Vietnam becomes a member. US businesses have strongly lobbied for Vietnam's WTO admission and PNTR, eager to produce and sell in an economy expected to grow by over eight percent this year and which is now often touted as a hot new investment destination.

The chairman of the American Chamber of Commerce in Vietnam, David Knapp, applauded the "historic" vote, which had been delayed and challenged for months due to procedural problems and concerns over human rights and US jobs. "American investors are attracted to Vietnam's strong GDP growth, rapid industrialization, huge labour force, stable political situation and the prospect of a better business climate under WTO rules," Knapp said. Vietnam's 84 million people, he said, "will benefit from the better choice, higher quality and lower prices that will result from increased openness and competition under WTO rules. "Vietnam's 40 million workers will also benefit from an expanding economy, greater participation by the private sector and better training as Vietnam becomes more competitive," he said.

Hoang Van Dung, deputy chairman of the Vietnam Chamber of Commerce and Industry, also hailed the PNTR passage and said it would benefit both sides, but warned of tough times ahead for many businesses at home. More than 90 percent of Vietnamese companies are small and medium sized, he said. "When we open the market they will be under pressure from overseas companies. The companies are very newly established, in the last 20 years or less. They still lack experience in international business. They are very fragile, and many companies have not yet operated outside Vietnam." Thayer said that "whatever the pain of short-term adjustments... the people of Vietnam will have a better choice of high quality goods. The private sector will strengthen especially as it meets world standards." Vietnam's economic growth has already sharply reduced poverty and created a new affluent class, especially in the cities -- but the United Nations on Sunday urged Vietnam not to forget those who are being left behind.

Ethnic minority groups had benefited least from the new boom, a growing number of internal migrants were falling through social safety nets, and fees for education and health were placing a high burden on poor households, the United Nations said in a statement marking International Human Rights Day. "In Vietnam, rapid economic growth has improved the living standards of millions," the UN team said. "Yet as in much of the world, inequalities and the gap between the nation's richest and poorest are widening. It is clear that economic growth alone does not guarantee wider human development."

By Frank Zeller - Agence France Presse - December 10, 2006.


US approves bill to normalize trade with Vietnam

WASHINGTON - The US Congress has given final approval to a bill to restore normal trade ties with Vietnam after a delay that marred President George W. Bush's maiden visit to the former enemy state. The bill granting "permanent normal trade relations" (PNTR) status to Vietnam sailed through the Senate as part of an omnibus measure that was approved 79-9 during an all-night session. The US House of Representatives voted for it 212-184 late Friday.

Bush was supposed to have signed the bill into law before he left for a visit to Vietnam last month to open a new era of bilateral ties but the House failed to pass it in the absence of a required two-thirds majority. The rejection of the bill was seen as a rebuff to Bush, coming after his Republican party lost control of Congress following a humiliating loss to Democrats. In the debate on the bill Friday, some lawmakers criticized the move to boost trade ties with Vietnam, citing what they called the communist-ruled state's poor human rights record and crackdown on dissent.

"PNTR will not be a panacea for instantaneous eradication of the challenges of human rights violations and other issues," said Republican Representative from California, David Dreier. But, he said, "by doing this, there will be further engagement that will help propel Vietnam forward in the path of political and economic reforms," he said. Dreier rejected suggestions that Washington was rewarding Hanoi for alleged human rights abuses. "This is not a gift to them," he said. "It will increase pressure on them to live up to international norms."

Hanoi, whose human rights record has come under frequent criticism by Western groups, is currently ineligible for PNTR because it is subject to provisions of US law which withhold the status from certain communist or ex-communist countries. The United States typically terminates such legal provisions and grants countries PNTR as part of their accession to the World Trade Organization. Without approval of PNTR, Vietnam would still join the WTO in early 2007, but the United States would not enjoy the sharp tariff cuts and other benefits that Vietnam will grant to other WTO members. The bill also establishes a subsidies enforcement mechanism to ensure that the US government "acts quickly and decisively" if Vietnam grants any prohibited subsidies to its textile and apparel industry in violation of the terms of its WTO accession.

United States Trade Representative Susan Schwab said she was pleased at the passage of the "critical" legislation. The measure would "afford the United States access to Vietnam's fast growing market and launch a new era in the relationship between our two countries," she said. The US Chamber of Commerce likened the passage of the package of trade bills, including the one on Vietnam, as an early Christmas present for American companies and workers expected to benefit from enhanced trade. "Legislators have a chance to give American workers, companies, and consumers an early Christmas present," said Bruce Josten, the US Chamber's executive vice president for government affairs.

"This trade package is squarely in America's national economic interest," he said. The package also included the extension of the Generalized System of Preferences (GSP) scheme, which provides duty-free treatment to selected imports from more than 130 developing countries, expiring on December 31.

By P. Parameswaran - Agence France Presse - December 10, 2006.