HANOI - If everything had gone according
to plan, Vietnam and the United States would have
ended 2005 celebrating Hanoi's long-sought-after
entry to the World Trade Organization (WTO), and
Washington would have removed the Southeast Asian
country from the list of
governments it says represses religious freedom.
Instead, neither objective was achieved,
but officials on both sides are encouraged by the
quick start they have made to negotiations this
year to complete the most important deal Vietnam
needs to become a member of the world's biggest
free-trade club during 2006.
"The future
approaches and it is bringing many opportunities
in exports and attracting foreign investment, so
we should make preparations as early as possible,"
said Deputy Trade Minister Luong Van Tu, who
headed three days of talks with US trade officials
in Hanoi this week. "Both sides narrowed their
differences considerably."
Any agreement
requires approval by the US Congress, where some
legislators have said they want to link WTO
admission with their demands over religious rights
in the communist-run country. In November, the
State Department included Vietnam on its list of
"countries of particular concern for religious
freedom". The Vietnamese government strongly
objected, saying it respects the rights of its 82
million people to freedom of belief or non-belief.
Among the eight countries listed were
China, already a WTO member, and Saudi Arabia,
which acceded to the WTO at last month's
ministerial meeting in Hong Kong.
Political and economic analysts believe
Congress will grant Vietnam the required permanent
normal trade relations (PNTR) status even though
some legislators will raise the rights issue.
"The issue will be there but the
administration will get through it," said
Professor Carl Thayer, a Vietnam analyst and
director of the University of New South Wales
defense studies forum in Canberra.
At a
point in its history when Vietnam wants to become
a full-fledged participant in international trade
and diplomacy, the United States is pushing for
more market access for businesses before it signs
a deal that would help smooth the way to join the
WTO. Vietnam first applied in 1995. Vietnam's
exports to the United States were US$6.5 billion
last year compared with $800 million four years
ago in the first year of a bilateral trade
agreement.
Vietnam has completed 22 of 28
deals needed to join the WTO, including those with
significant trade partners China, Japan and the
European Union. The main missing pieces of the
puzzle are the United States, Australia and New
Zealand.
Hanoi's self-imposed deadline of
the mid-December WTO ministerial meeting in Hong
Kong increased the pressure, and the government
has not set a new target. However, the desired
timetable that emerged after this week's
US-Vietnam trade talks aims at putting final
touches to an agreement when negotiators meet
again in March, legislative approval after
Congress convenes in April and WTO accession for
Vietnam in mid-year.
US and Vietnamese
trade officials said they made progress on the
sticky issues of market access for US businesses,
agricultural and industrial subsidies, and
financial services. Washington is unique in that
it combines multilateral issues in its
negotiations with trading partners. Some of these
issues include subsidies, trading rights,
intellectual property rights and commercial
activities of state-owned enterprises.
Assistant US trade representative Dorothy
Dwoskin said Washington was negotiating "very
hard" with Vietnam on "commitments to
transparency, openness and due process, all of
these elements that are key to having an economy
fully integrated into the global economy".
Dwoskin would not be drawn into whether
there was direct linkage in the WTO talks with
human-rights issues.
"Vietnam and the
United States have a very broad relationship that
governs not just economic issues but the whole
range of issues and obviously we will continue to
make our views known with respect to some of the
concerns, particularly as the relationship
continues to be strengthened over the course of
the next year," Dwoskin said.
Relations
between the two countries - once enemies in the
war fought in Vietnam in the 1960s and early 1970s
- have matured and become more complex in the 10
years since diplomatic ties were restored. The
initial period focused on the recovery of military
personnel missing in action. Now, there is
cooperation on trade, science, education and
military matters, combating crime and terrorism,
and two serious health issues, avian flu and AIDS.
Michael Marine, the US ambassador to
Vietnam, acknowledges the challenge of managing
differences without damaging the overall friendly
relationship, which reached a high point in June
with the visit to the White House of Prime
Minister Pham Van Khai.
"In fact - and, to
some extent, counter-intuitively - the closer two
countries become and the broader their
relationship is, the greater the number of areas
in which contention can arise. I think this is
where the United States and Vietnam now are, but
it's not something we should rue or seek to
change," Marine said in a speech in October to the
Los Angeles World Affairs Council, which hosts
expert speakers on global issues.
The
Communist Party of Vietnam is entering its 20th
year of economic renovation known as doi
moi and is expected to affirm that process at
this year's party congress, which is held every
five years. The government shed a command economy
and introduced some market liberalization and
quasi-privatization of state companies, but not
fast enough for some foreign investors.
"The United States wants to see a better
commitment on market access for American companies
in Vietnam," said Adam Sitkoff, executive director
of the American Chamber of Commerce chapter in
Hanoi, which supports Vietnam's WTO membership
bid. "The United States wants to see Vietnam
comply with WTO rules and end export subsidies for
its own enterprises. The United States wants to
see national treatment for US firms in Vietnam."
Foreign business leaders and diplomats say
that while Vietnam has one of the fastest-growing
economies in the world after China, with annual
gross domestic product growth estimated at 8.4% in
2005, it trails other Southeast Asian countries in
openness and allure to foreign investors.
The Vietnamese have argued, however, that
the pace of economic change would quicken if
countries such as the United States, Australia and
New Zealand inked WTO trade deals sooner rather
than later.
Vietnam's goal is to maintain
growth so it will no longer be considered a less
developed country by 2010. The World Bank
estimates its per capita income at $500 a year.
Seventy-six percent of its population lives in the
countryside and is involved in agricultural
production.
Some economists say that in
pursuing free trade, it has to avoid "the Mexico
trap". Mexico has free-trade deals and a huge
trading partner on its border (the US) just as
Vietnam does with China, but it was unable to add
value to products made domestically and missed its
potential economic growth, said Jonathan Pincus,
an economist with the United Nations Development
Program in Hanoi.
"The risk for Vietnam if
it opens its borders to trade but does not upgrade
technically to make value-added products, it
becomes an assembly factory and producer of raw
materials for China," Pincus said. "You have to
remember how poor Vietnam actually is. I'd be
worried over the long term whether it can achieve
an increase in value-added products the way that
Malaysia, Taiwan and South Korea did. It does not
yet have the policy tools to provide a national
program of technology upgrading."
Grant McCool is a freelance
journalist who lives in Hanoi.
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