[sixties-l] United States, Vietnam Sign Historic Trade Pact

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Date: Sat Jul 15 2000 - 23:22:25 CUT

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    United States, Vietnam Sign Historic Trade Pact

    Thursday, July 13, 2000

    By Adam Entous

    WASHINGTON (Reuters) - Former enemies the United States and Vietnam signed
    a landmark trade agreement on Thursday, clearing the way for normal trade
    relations for the first time since the Vietnam War and boosting communist
    Hanoi's bid to join the World Trade Organization.

    The agreement, signed by U.S. Trade Representative Charlene Barshefsky and
    Vietnam's Trade Minister Vu Khoan after four years of negotiations, would
    reduce tariffs on goods and services, protect intellectual property and
    improve investment relations between the two countries.

    "From the bitter past, we plant the seeds of a better future," President
    Clinton told reporters on the White House South Lawn before returning to
    Camp David, Maryland, for a Middle East peace summit.

    "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 to reconcile," he
    added, with Arizona Republican Sen. John McCain, a former Navy pilot who
    spent 5-1/2 years in a Hanoi prison camp, at his side.

    The trade agreement was one of the most important economic milestones for
    Vietnam since the country embarked on market-oriented reforms in the late
    1980s, and could help Hanoi in its efforts to join the Geneva-based WTO,
    though Barshefsky said accession was a "number of years off.

    It also marked a major step toward completing the normalization process
    that began on July 11, 1995, when Clinton extended diplomatic ties to
    Vietnam. America lost 58,000 lives in the Vietnam War, which ended in 1975.

    The trade agreement must still be approved by the U.S. Congress. Though
    Republican congressional leaders support closer trade ties with Vietnam, it
    remained to be seen whether lawmakers would approve the pact before this
    year's abbreviated legislative session ends.

    In terms of commerce, the trade agreement would mean far more for Vietnam
    than for the United States. With Congress' approval, Hanoi would win
    Washington's coveted normal trade relations (NTR) status.

    According to a recent World Bank report, the agreement could more than
    double Vietnam's exports to the United States to $768 million from $338
    million in 1996.

    It could also boost foreign investment in Vietnam, which fell to around
    $500 million a year from peaks of $2.8 billion in 1996 and 1997 when Hanoi
    was viewed as Asia's next dynamic tiger economy.

    For the United States, the impact was harder to gauge. Under the pact,
    Vietnam agreed to cut tariffs in most cases by one-third to one-half on a
    wide range of products, from toiletries to mobile phones to pasta.

    U.S. companies like shoemaker Nike Inc. and agribusiness giant Cargill Inc.
    stand to benefit from increased access to the Vietnamese marketplace, but
    analysts said the gains may be slow to materialize since Vietnam would
    reduce trade barriers over a three-to-seven year period in many cases.


    Thursday's signing came one year after Washington announced an "agreement
    in principle" with Vietnam, only to have Hanoi back away, arguing that
    certain provisions were unfair.

    Analysts believed Vietnam balked in 1999 because it feared the loss of
    economic control that would come with market opening. The delay darkened
    the mood among investors, fed up with Vietnam's closed economy and high costs.

    But U.S. officials and business leaders said Vietnam was emboldened to sign
    the agreement in part by U.S. House of Representatives' approval of a
    landmark trade agreement with China. Beijing is expected to join the WTO
    later this year, and Vietnam has similar aspirations.

    "Once China concluded its very large bilateral agreement with us, Vietnam
    feared it would be left behind in Asia," Barshefsky said.

    Clinton, who avoided serving in the military and joined protests against
    the Vietnam War, was also eager to complete the normalization process
    before he leaves office in January. Popular with business, a market-opening
    agreement with Vietnam would help cement Clinton's free-trade record
    following the 1999 deal with China.

    Under the pact Vietnam would lower its tariffs and undertake a broad range
    of measures to open its markets to U.S. goods, services and investment. For
    example, Hanoi agreed to eliminate all restrictions on auto parts, citrus
    and beef within seven years.

    After as little as two and as many as six years, U.S. firms would be
    allowed to enter into joint telecoms ventures in Vietnam. But access would
    be restricted in some cases, and U.S. equity stakes would be capped at 49
    percent for telephone, mobile and satellite services. U.S. equity in
    Internet services would be capped at 50 percent.

    In return, Hanoi would get access to the U.S. market under the same system
    of low tariffs accorded most nations, assuming Congress approved normal
    trade-relations status.

    Vietnamese exporters could benefit almost immediately, with tariff rates
    averaging 40 percent being cut to less than 3 percent, but Hanoi's NTR
    status would be subject to annual congressional reviews.

    Copyright )2000 Reuters Limited. All Rights Reserved.

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