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| November 17, 2000 | atimes.com | ||
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Special Reports
Beyond ceremony, Clinton has much to talk about By Tony Allison Summary United States President Bill Clinton was due to begin a four-day visit to Vietnam Thursday night during which time he will visit the capital Hanoi and Ho Chi Minh City in the south. Clinton, who is accompanied by his wide and daughter and senior government officials, will meet with Prime Minister Phan Van Khai and President Tran Duc Luong behind closed doors. Human rights, freedom of religion and differing definitions of democracy are the most contentious topics that will be canvassed during meetings between the two governments, while in the long term the gradual strengthening of a strategic dialogue between the two countries could be the most important aspect of the visit. High on the agenda will be discussions of the Bilateral Trade Agreement (BTA) which the countries signed in July 2000 after almost five years of negotiations. It covers trade in goods, intellectual property rights, trade in services, investment, business facilitation and transparency, and is the most detailed and far-reaching trade agreement ever signed by either country. It still has to be ratified by the legislatures of both countries, and the US will stress that Vietnam needs to lay the groundwork for its implementation so the country can reap the rewards of greater access to US markets, and, ultimately, accession to the World Trade Organization. Further, the BTA will counterbalance the landmark trade accord that the US has reached with China. If it is implemented strictly, the BTA could influence the course of reform in Vietnam as significantly as the original adoption of the doi moi (renovation) policy in 1986 which set the county on the road to a market economy. Other areas talks might cover include labor rights, the treatment of Vietnamese immigrants in the US, landmines and other explosives, as well as Agent Orange, the toxic defoliant the US used during the Vietnam War. Clinton's visit coincides with that of a heavyweight US trade delegation representing more than 30 major US companies. In meetings with business and government officials in Hanoi and Ho Chi Minh City, the US trade delegation will discuss opportunities in Vietnam, as well as existing obstacles to investment there. The BTA agreement will also feature prominently as it is expected to provide the impetus for renewed foreign investment activities. Trade levels between the US and Vietnam have historically been low, with US exports averaging about US$250 million a year, which is about the same as the value of US exports to Japan over the period of a few days. However, from January to August this year trade with Vietnam was valued at $783 million, up from $510 million in the same period of 1999. The World Bank estimates that Vietnam's exports to the US will increase by $800 million (more than double 1999 levels) in the first year the BTA comes into effect. Most of the growth will come from footwear and textile exports, since coffee and seafood are already exempt from US import duties. Schedule President Clinton was scheduled to begin his four-day visit in Hanoi late on Thursday night, making him the first US president to travel to the Vietnamese capital. He will then travel to Ho Chi Minh City, formerly Saigon. A previous plan to visit the central city of Hue was scrapped. Clinton will be accompanied by, among others, his wife senator-elect Hillary Rodham Clinton, their daughter Chelsea and mother-in-law Dorothy Rodham. Also in attendance will be several cabinet secretaries, most likely state, commerce, health and human services, veterans affairs, and the United States Trade Representative (USTR). A congressional delegation is also planned - as well as several hundred media representatives. In Hanoi, Clinton will meet the immediate successors of the architects of North Vietnam's victory in the Second Indochina War, Vietnamese Communist Party (VCP) General Secretary Le Kha Phieu, Prime Minister Phan Van Khai and President Tran Duc Luong, who extended the invitation when he met Clinton in New York in September. This triumvirate, in concert with 15 other members of the Politburo, effectively rules Vietnam. President Clinton will ride through Ba Dinh Square in Hanoi where Ho Chi Minh, on September 2, 1945 quoted the American Declaration of Independence in proclaiming the birth of a communist Vietnam. On Friday Clinton's speech to students at the Hanoi National University will be broadcast live on national television to millions of viewers. The visit coincides with a trade mission of about 30 leading US firms seeking business opportunities. Companies include Boeing, Coca Cola, General Motors Corp, Nike, Lucent Technologies Inc, Motorola Inc, Oracle Corp, Cisco Systems, Citigroup, DaimlerChrysler, Federal Express, Procter and Gamble and United Parcel Service. In meetings with business and government officials in Hanoi and Ho Chi Minh City, the US trade delegation will discuss opportunities in Vietnam as well as existing obstacles to investment there, according to the US-Vietnam Trade Council, one of the organizers of the mission. Business obstacles include excessive red tape and a discriminatory pricing system that forces foreign firms to pay more than local companies for basic services. US companies have been authorized by Washington to operate in Vietnam since 1994, when the US courier giant Federal Express entered the country. FedEx recently signed a new deal with local partners to provide the first direct express transportation service between Vietnam and the rest of the world. What to expect While President Clinton will shake hands with hundreds of Vietnamese at receptions and during walkabouts, his policy discussions will be with the Vietnamese Communist Party power brokers. The VCP Politburo holds preponderant power and makes decisions by consensus. Its 18 members are elected by the 170-member Central Committee at VCP congresses every five years. Behind the scenes, three retired party leaders are influential: former VCP General Secretary Do Muoi, former Prime Minister Vo Van Kiet and former President Le Duc Anh. US officials have avoided the word "reconciliation" to describe the purpose of the visit, saying rather that it is meant to symbolically cap a five-year-old process of diplomatic and economic normalization and to open the door to a new era of closer relations. As such, it is a visit of consolidation, not of hard negotiation. Regardless of the agenda, a major American donation in money or disaster relief material to victims of the recent worst flooding in a generation in central Vietnam and the Mekong River delta is expected to kick off the visit. Human rights, freedom of religion and differing definitions of democracy are the most contentious topics that will be canvassed during meetings. Members of the congressional delegation are certain to make comments critical of the government and the Communist Party, especially on religion. The Vietnamese, as is their custom, will listen, point out the anomalies in America's own human rights record, stress their need for stability, and firmly resist any specific proposals to change their ways. The Vietnamese will agree that the BTA can be useful to Vietnam, but they will note that American business can make a lot of money in Vietnam and that the agreement is not one-way. They may propose continued legal and educational assistance on matters pertaining to implementation of the BTA. Progress is already being made on POW/MIAs, emigration, HIV/Aids, and curbing the international drug trade, and the Vietnamese appear to have no major policy differences in these areas. Formal announcements on any or all of these issues could come out of the visit, for example an understanding on US medical or advisory assistance on HIV/Aids, or a formal agreement on anti-drug trafficking measures. The Vietnamese will assure the Americans of their devotion to the resolution of all humanitarian issues, and rhetoric on these topics could be the advertised highlights of the visit. The Vietnamese may agree to discuss specific measures regarding the treatment of Vietnamese Americans after the visit. There will likely be a quid pro quo, perhaps a reiterated American disavowal of support for expatriate groups who advocate a violent overthrow of the Hanoi regime. Finally, the idea of a strategic dialogue is an area of common interest that the Vietnamese well recognize. It will be pursued in a low-key fashion. Enough will be said publicly to get the point across that the US and Vietnam are talking to each other about regional security matters. In the long term, the gradual strengthening of a strategic dialogue could be the most important aspect of the visit. The main issues Washington and Hanoi already engage in an annual "human rights dialogue" at the assistant secretary-vice ministerial level. The US Embassy in Hanoi is in continuous communication with the government on individual human rights cases; it protests treatment of specific individuals as necessary and represents American groups seeking redress of perceived human rights abuses. On occasions the Vietnamese have released from prison individuals identified by the US or international human rights groups as priority cases. The Department of State believes that the Vietnamese attitude is changing slowly, and that the central government has "substantially reduced its intrusive behavior" and has tried to restrain "heavy-handed provincial governments". In its recent annual report on religious rights around the world, the State Department criticized Vietnam for holding more than a dozen religious prisoners, although it cited some improvement in Hanoi's record. Vietnam condemned the criticism as interference in its internal affairs. Vietnam has released 20 religious or political prisoners from jail so far this year, including 12 Hmong Protestants and three Catholic priests. Dissidents released from prisons still face harassment but they can meet outsiders and supporters. However, freedom of religious expression in its full form is not allowed. Any Catholic, Protestant, or Buddhist leader who suggests political pluralism or openly criticizes government or party policy risks arrest. Also, the number of Catholic priests who may enter seminary training each year is limited. No one expects the Vietnamese leadership's views or policies to change markedly as a result of the visit. The visit may spur the development of more sophisticated consultations on a regular basis, although plans for expanded military-to-military cooperation are unlikely to emerge. More than 58,000 Americans and 1.5 million Vietnamese were killed during the Vietnam War, which ended in 1975 with a communist victory over the US-backed South Vietnam. The remains of 283 Americans have been repatriated since Clinton took office in 1993. He will visit the site where US and Vietnamese teams are searching for remains of Air Force Captain Lawrence Evert, missing since his plane was shot down in November, 1969. The president will express the US's appreciation for Vietnam's efforts to resolve the remaining cases, notably the 41 American servicemen in the "last known alive" category. That is, known to have been captured but their fate not revealed by the Vietnamese. Joint US-Vietnamese MIA field operations (a total of five were scheduled in 2000) have moved to rugged and dangerous terrain in mountains and deep sea, which are the only places left unsearched. In response to an American request, the Vietnamese began unilateral activities on their own in 1994. The POW/MIA problem seems likely to last until the US decides that the "fullest and most comprehensive possible accounting" has been reached. The issue has become a pillar of the bilateral relationship and the president will make much of Vietnam's cooperation while pressing for further progress. In 1999, according to the Vietnamese Central Bank, overseas Vietnamese officially remitted $1.2 billion, most of it from the US; unofficially, remittances are probably twice that amount. Despite nice words by top-ranking communist officials and some recent quiet overtures, Hanoi has yet to remove the political, psychological and legal barriers preventing Vietnamese Americans from playing a constructive role in Vietnam. The overseas community is an immense resource on which Vietnam can draw. Under these refugee programs, Vietnamese have been able to emigrate relatively freely (or immigrate to Vietnam and resettle under ROVR). More than 1.2 million have resettled in the US since 1980. The president will express appreciation and urge that the few remaining candidates under these programs either be cleared for exit from Vietnam or be interviewed by the Vietnamese government for return and resettlement. The president's delegation will most likely explore ways to strengthen and expand these aspects of the relationship. US-Vietnam relations Relations between the US and Vietnam have been overshadowed for decades by the Vietnam War (as Americans call it), or the American War (as Vietnamese call it), and by fundamental ideological differences. Political and diplomatic relations were only established with the lifting by the US of its trade embargo against Vietnam in 1994, and the establishment of diplomatic missions the following year. The next step in the "normalization" process occurred in 1998, when Clinton waived for the first time the Jackson-Vanik amendment. This amendment (a section of the US Trade Act) prevents the US from normalizing trade relations with selected socialist countries that restrict emigration. Vietnam abolished its "exit visa" requirements for Vietnamese citizens in late 1997. The Jackson-Vanik amendment is subject to annual review, and the President has waived it (with Congressional approval) each year since 1998. In July of this year, after nearly five years of negotiations, Vietnam signed a Bilateral Trade Agreement (BTA) with the US to be implemented over three years. It still has to be ratified by the legislatures of both countries. If it is implemented strictly in accordance with its terms, the BTA will most likely influence the course of reform in Vietnam as significantly as the original adoption of the doi moi (renovation) policy in 1986. While the accord is not expected to be ratified in the new US Congress until early next year, Vietnamese authorities have already begun to work on the necessary legal, regulatory and procedural reforms demanded by the agreement. Under the BTA, Vietnam will enjoy normal trade relations (NTR) with the US, known in the past as most favored nation (MFN), and vice versa. Only a small number of countries do not enjoy NTR with the US, such as North Korea, Cuba, Serbia, Laos and Afghanistan. The final step in the normalization process will occur when the US and Vietnam agree on the terms of permanent normal trading relations (PNTR) between them. The US and China agreed on PNTR in May of this year. At over 120 pages, covering trade in goods, intellectual property rights, trade in services, investment, business facilitation, and transparency and the right to appeal administrative decisions, the BTA is the most detailed and far-reaching trade agreement ever signed by either country. The BTA will operate on two main fronts. First, each country will grant the other NTR (or MFN) status with respect to trade in goods, trade in services and investment. This means, for instance, that the average US rate of duty on imports from Vietnam will drop from 40 percent to 3 percent. Second, the BTA obliges Vietnam to phase in a wide range of market-oriented reforms designed to further open the domestic market to foreign investment and competition. Signing the BTA should also bring Vietnam closer to receiving additional trade benefits offered by the US to developing countries under its Generalized System of Preferences (GSP). The process of negotiating and implementing the BTA, and gaining some measure of support from the US, should also bolster Vietnam's prospects of joining the WTO within the next few years. Once the BTA comes into effect, it will remain so for only three years, but will automatically be extended for successive terms of three years unless terminated by either party at least 30 days before the end of a term. Under the BTA, the parties agreed to establish a Joint Committee on Development of Economic and Trade Relations between Vietnam and the US. This committee, which will meet annually or at the request of either party, will be responsible for monitoring compliance with the BTA. If Vietnam fails to implement the BTA properly the US would probably terminate it in its first term. The US could also use the annual waiver of the Jackson-Vanik amendment as an opportunity to send a message to Vietnam regarding its compliance with the BTA. Slow process: During the almost five years of negotiations over the BTA the Vietnamese blew hot and cold. What undoubtedly spurred the Vietnamese was the signing late last year of a bilateral commercial trade agreement between the US and China that opens the door for China's entry into the WTO. In terms of manufactured exports, Vietnam has no greater competitor than China. With most tariff barriers to go down for Chinese exports to the US, Vietnamese factories stand to lose hundreds of millions of export dollars because they will not be able to compete on price. This is especially the case with several key export earners, such as garments and footwear. Estimates are that five years after joining the WTO China will earn an additional $24 billion from exports to the US, European Union, Canada and Japan. Companies producing goods for the Vietnamese domestic market will also face increased pressure from the US accord with China. The deal will encourage foreign investment and higher production in China. That means smugglers will be able to bring in even more goods from China, a severe problem impacting domestic companies already. Since the beginning of doi moi in 1986, Vietnam's leadership has closely watched China, seeing it as something of a model. Vietnam has often based its policy decisions on the success, or lack thereof, of those made in China as the two countries are engaged in the same kind of process - blending party-based political rule with market-based economics. In the light of developments in China and the general depressed economic conditions in Asia, the economic consequences of not signing were outweighed by signing it, and the fears of some Vietnamese policy makers of opening too quickly were overridden. Investment in Vietnam Attracted by Vietnam's enormous potential (including cheap labor and high literacy rate among the 79 million-strong population), foreign investors poured capital into Vietnam during the early and mid 1990s, peaking at $8.3 billion for 1996. Foreign investment dwindled to $1.5 billion in 1999. Over the same period, annual economic growth fell from 9.5 percent to less than 5 percent. The Asian crisis takes much of the blame. US and European investors, fund managers and media alike lumped Vietnam with the struggling countries in Asia. But Vietnam has its own problems. Foreign investors have become increasingly impatient over the lack of real progress with promised legal and economic reforms. However, Vietnam has slowly worked to improve conditions over the years. Most recently, the Law on Foreign Investment was amended in June 2000 and new implementing regulations were issued at the end of July. Together, these provide a clearer legal framework and generous incentives for foreign investment. Room for improvement Trade levels between the US and Vietnam have historically been low, with US exports averaging about $250 million a year, which is about the same as the value of US exports to Japan over the period of a few days. However, from January to August this year trade with Vietnam was valued at $783 million, up from $510 million in the same period of 1999. Vietnam's exports to the US, the world's largest national market, account for only 5 percent of the country's exports. Vietnam ranks 72nd in terms of the value of its exports to the US and US investments in Vietnam are also very low, around $1.2 billion, making the US only the ninth largest source of foreign investment in Vietnam. The World Bank estimates that Vietnam's exports to the US will increase by $800 million (more than double 1999 levels) in the first year the BTA comes into effect. Most of the growth will come from footwear and textile exports, since coffee and seafood are already exempt from US import duties. Food products account for half of US imports from Vietnam, notably fish, tea, coffee and spices. Vietnam also exports shoes, textiles and petroleum products. The US sells electrical equipment, chemical products, fertilizer and parts for nuclear power stations to Vietnam. Overall, Vietnam's export turnover for 2000 is expected to rise 7 percent over the year to an estimated $10.7 billion. As of October, export value was $8.19 billion - up 17.2 percent over the same period last year. The main export items include footwear, garments, electronics, appliances for computers and crude oil. In 1999 footwear companies earned $1.35 billion in exports, up 30 percent over 1998. Projections for 2000 are $1.45 billion to $1.5 billion. Currently the European Union is the largest importer, accounting for 80 percent. However, following the implementation of the trade agreement, the US share is expected to increase dramatically. Garment export sales for 2000 are estimated at $1.65 billion. The figure for the first nine months was $1.25 billion, an 11.9 percent rise on the year-earlier period. With an expected coffee robusta output of between 450,000 tons to 500,000 tons in the 2000 crop season, Vietnam will surpass Indonesia as the biggest coffee producer in the world. Indonesia's output of coffee robusta is likely to drop from 460,000 tons to 430,000 tons. Vietnam has 350,000 hectares of coffee, 95 percent of which is robusta. (Special to Asia Times Online) |
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