US, Vietnam Sign Landmark Trade Deal
Thursday, July 13th 2000, 12:00 am
By: News On 6
WASHINGTON (AP) â€” The United States and Vietnam, after resolving final differences, signed a landmark trade agreement Thursday, marking what the administration called ``an historic reconciliation between the United States and Vietnam.''
The deal was signed by U.S. Trade Representative Charlene Barshefsky and Vietnam's Trade Minister Vu Khoan shortly before a scheduled White House ceremony with President Clinton.
According to an administration fact sheet, the deal provides Vietnam with access to the world's largest market on the same terms the United States grants to most other nations.
Vietnam agreed to sharply lower tariffs and other trade barriers on a wide range of American-manufactured products, farm goods and financial and other services, the fact sheet said.
``This constitutes for the first time a broad opening of Vietnamese markets for the United States and will provide a major stimulus to Vietnam's economic reform efforts,'' the administration said in a statement.
A year ago, a similar ``agreement in principle'' collapsed when Vietnam's communist government balked at the market-opening provisions its negotiators had reached. The countries have worked toward a trade agreement since Clinton restored full diplomatic relations in 1995.
The deal, if approved by Congress, would reduce U.S. tariffs on Vietnamese products from the current average of about 40 percent to less than 3 percent, the same rate Washington extends to most other nations.
In return, Vietnam would lower its tariffs on American products, provide copyright protection to U.S. companies and reduce restrictions on investment by American companies in Vietnam.
``I think you will see a quick pickup in trade going both ways once the deal is approved,'' said Franklin Vargo, vice president for international affairs at the National Association of Manufacturers.
Because Vietnam is communist, its trade relationship with the United States would be subject to an annual renewal vote in Congress until Hanoi won membership in the World Trade Organization, which could take many years.
The World Bank has estimated the deal would boost Vietnam's exports by $800 million annually.
Some U.S. companies, including Cargill, Caterpillar and Nike, have invested in Vietnam and analysts believe operations such as Nike's likely would move to increase production once the tariffs dropped.
The deal is expected to face opposition from many of the same foes of the administration's effort to grant China permanent normal trade relations, ending the annual congressional review.
Labor unions oppose market-opening deals with low-wage countries like China and Vietnam because they fear the loss of U.S. manufacturing jobs, especially in the shoe and textile industries.
Analysts said that Vietnam's decision to withdraw from last year's agreement reflected the intense debate between reformers and conservatives over whether to commit Hanoi to a free-market economy that would remove barriers protecting inefficient state-run enterprises.
The administration's deal with China, which has cleared the House but still must win Senate approval, was seen by analysts as a major reason the Vietnamese decided to resume negotiations for a trade deal with the United States.
Vietnam fears it could be overshadowed by the larger Chinese economy, which manufacturers many of the same goods that Vietnam would want to sell to the United States.
Vietnam has been struggling economically. Foreign investment has fallen by 85 percent since a peak of $8 billion in 1996 as investors have grown skeptical about the speed with which the Vietnam is willing to make economic changes.