- The Washington Times - Friday, July 14, 2000

The United States and Vietnam Thursday signed a historic agreement to open trade between the former enemies, capping a nearly five-year-long roller coaster of efforts that began when the Clinton administration lifted the decades-old American economic embargo on Vietnam in 1995.

President Clinton welcomed the deal at a ceremony at the White House Rose Garden Thursday afternoon, saying it would hasten the reconciliation between two nations that were at war only a quarter-century ago.

"From the bitter past, we plant the seeds of a better future," Mr. Clinton said. "This agreement is one more reminder that former adversaries can come together to find common ground in a way that benefits all their people, to let go of the past and embrace the future, to forgive and reconcile."

U.S. Trade Representative Charlene Barshefsky predicted that American companies would see broader business opportunities in Vietnam for agricultural and industrial products as well as get a shot at its fledgling market for banking, telecommunications and other services.

"This is the first agreement of its kind that Vietnam has done with any country," Mrs. Barshefsky said.

Mindful of the bitter feelings many Americans still harbor toward Vietnam, Mr. Clinton also emphasized that the former adversary is still cooperating extensively with the United States to learn the fate of the roughly 2,000 American servicemen missing in the war. Veterans groups, who have supported reconciliation with Vietnam, welcomed the step as well.

"It's great, and it's about time," said John Terzano of the Vietnam Veterans of America. "After World War II we swooped in and rebuilt Germany. This time, it took 25 years."

Mr. Clinton, though often criticized for his lack of military service in Vietnam, has done more to normalize relations with the communist country than all his predecessors combined. After lifting the embargo, the Clinton administration restored full diplomatic relations in 1995 and opened trade negotiations in 1996.

The agreement still must be approved by both houses of Congress. Few observers expect a contentious battle similar to this year's fight over expanded trade with China. But Congress already faces a tight timetable for handling its existing workload, so the pact with Vietnam could fall by the wayside until next year.

"I don't see this as particularly controversial, but there is a serious timing question here," said Rep. Robert T. Matsui, the California Democrat who has been a leader on trade issues. "It can be done, but it is going to take a real focus and effort."

Under U.S. trade law, Congress can consider agreements like the one with Vietnam on an expedited basis, but approval likely will turn on how aggressively the White House pushes the pact.

The deal would improve Vietnam's access to the U.S. market dramatically as tariffs dropped from an average of 40 percent to the 3 percent rate that the United States applies to virtually all its trading partners. That change also would make Vietnam more attractive for international investors, who could export manufactured products to the United States.

American companies, in return, would get a crack at Vietnam's 78 million consumers, holding potential for consumer goods companies such as Eastman Kodak and Procter & Gamble. Manufacturers of infrastructure equipment like General Electric and Motorola would get a foot in the door of a modernizing economy.

Trade between the two countries is currently a trickle, with $609 million worth of Vietnamese goods mainly apparel, footwear and shellfish coming to the United States. American exports, primarily equipment for factories, were worth $291 million in 1999.

The agreement signed Thursday includes commitment across a broad range of business sectors, the fruits of a long-term American strategy that sought to prepare Vietnam for eventual accession to the World Trade Organization. The United States also sought to buttress Vietnam's stalled domestic reform efforts.

"The agreement will help Vietnam keep pace on economic reform and investment compared to its neighbors in Asia," Mrs. Barshefsky said.

The United States and Vietnam had reached an agreement in principle last year, but Hanoi got cold feet and asked the United States to renegotiate parts of the agreement that it believed were inappropriate for developing countries. American trade officials reluctantly reopened the negotiation and ultimately agreed to allow Vietnam to phase in its market-opening commitments in some areas.

"They turned an A-plus agreement into an A-minus agreement, but that's no big problem," said Andrew Durant, a consultant with the District of Columbia-based Samuels International.

Vietnamese trade minister Vu Khoan arrived in Washington last week to wrap up the negotiations with Mrs. Barshefsky. After putting the finishing touches on the deal late Wednesday, the Clinton administration waited to announce the deal until the president could return from the Middle East peace talks at Camp David.

Even after Congress approves the agreement, few observers expect a rush of trade and investment with Vietnam. The country's population remains one of the poorest in the world, despite a 30 percent increase in per capita income since 1996.

Free-market reforms led to substantial strides in the early 1990s, but growth slowed to a single-digit crawl later in the decade as communist hard-liners put the brakes on further changes. Mr. Durant said that the decision by China to embrace thorough economic reform over the past several years increased the pressure on Vietnam to follow suit or risk losing international investment to its neighbors.

Investment in Vietnam peaked at roughly $5 billion in 1996 before plunging to about $500 million last year. U.S. companies that have invested in Vietnam include Cargill, Caterpillar and Nike.

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