Vietnam - US Building Trust for the Future

 

From 1975 to 1995, although Vietnam and the US made certain efforts, the relations made no significant progress due to lack of mutual understanding.

 

On July 11, 1995, Vietnamese Prime Minister Vo Van Kiet and US President Bill Clinton jointly signed a treaty declaring an end to the US embargo put in place following the war and formally established diplomatic ties, and since then the relations have been rapidly expanded for mutual interests and development. Particularly, on a visit to the US on July 25, 2013, Vietnamese President Truong Tan Sang and US President Obama signed a declaration establishing a Vietnam-US comprehensive partnership, opening a new stage in bilateral cooperation relations.

 

After two decades, Vietnam - US relationship has changed from two former enemies to normalisation of relations and establishment of multifaceted cooperation, partnership ties, thereby formulating the comprehensive partnership for development of the two peoples and for peace, stability and cooperation in the Asia-Pacific.

 

In the light of fundamental principles in bilateral relations (respect for independence, sovereignty and political system of each other, respect for the Constitution and the Charter of the UN, international laws, and the spirit of leaving the past behind, overcoming differences and advancing similarities for the future) confirmed in the Vietnam-US Joint Vision Statement, Vietnam - US relationship is definitely seeing a nice prospect and development to new highs.

 

The two countries have established partnerships in almost all fields, including economy, politics, education, science, technology, environmental protection, security and defence, and joined forces to safeguard peace and security in the region.

 

Particularly, during the historic visit to the US by General Secretary of the Communist Party of Vietnam (CPV) Nguyen Phu Trong from July 6 to 10, 2015, the warm and respectful welcome and reception from the US showed that the US wanted Vietnam to strengthen and both sides were willing to cooperate to boost mutual understanding and strategic confidence and elevate this relationship to a new level of comprehensive and profound cooperation.

 

Economic and trade cooperation is always the foundation for practical benefits for both sides.

 

A new milestone was placed when the two sides inked the Bilateral Trade Agreement (BTA) on July 13, 2000 in Washington, which came into force in 2001, a new-style agreement based on the principles of the World Trade Organisation (WTO) that Vietnam accepted and implemented for the first time after overcoming so many bitter internal disputes, which resulted in a one-year delay in signing. That agreement not only opened up great opportunities for Vietnam’s exports but also rehearsed its reform and got prepared for its entry to the WTO in 2007.

 

Remarking on the importance of Vietnam - US economic ties, Mr Tran Tuan Anh, Deputy Minister of Industry and Trade, said that trade and economy are important contents for bilateral sustainable relationship development. Joining the TPP Agreement, Vietnam - US partnership will be raised to a new high. Opportunities and challenges as well from this agreement are enormous, demanding from the government and the business community to the masses to be active to seize these good opportunities for development and integration.

 

In 2000, Vietnam's exports to the US reached only US$800 million. Since the signing of BTA, its exports have grown very fast. Currently, in external trade, Vietnam runs the biggest trade surplus in trade with the US. In 2014, the two-way trade revenue grossed over US$35 billion, of which Vietnam earned US$30.6 billion, 13 times more than that of 2002, one year after the two countries signed BTA.

 

In 2014, Vietnam was also the biggest ASEAN exporter to the US, surpassing other countries in the region such as Thailand and Malaysia. The bilateral trade turnover was estimated at US$40 billion in 2015 and US$100 billion three years after the signing of the TPP Agreement. Vietnam is now the least developed country but it is believed to be the biggest beneficiary in improving domestic product (GDP) growth among 12 signatories.

 

To increase export shipments to the US, Vietnam’s products must meet very strict regulations on rules of origin and food safety.

 

However, according to experts, if Vietnam’s products do not hold significant market shares (usually less than 8 percent), its competitors in the US will not act aggressively. But, if the market share of a commodity rises above 8 percent, they will seek ways to limit Vietnam’s exports as they do with basa fish, which is not called catfish as theirs although the biology is completely the same.

 

With the TPP signing, Vietnam will enjoy a lot of opportunities from tariff reductions in the US (down to 0 percent). Thus, the country is expected to jump high in export shipments to the US while the tariff on rice of its non-TPP competitors like Thailand or India is still 7 percent. The strong leap in apparel, seafood and coffee exports is also envisaged.

 

Remarking on the two-way trade ties, many economists said that the rapid growth in trade performances between the two nations comes from their complementary economies, a wide gap in development levels, and little reciprocal competition. Vietnam has advantages in cheap labour and labour-intensive production like textile, apparel, seafood, coffee, pepper, shrimp and basa fish. Meanwhile, Vietnam imports what it cannot make like Boeing aircraft and computer software. These products have enabled Vietnam to modernise its aviation industry and renovate software technology.

 

The TPP Agreement will help Vietnam magnetise more foreign investment, renovate technologies, accelerate economic restructuring process, advance institutional reform, and expand the GDP in the next 10 years. US firms have invested over US$11 billion in Vietnam, ranking 7th among economies investing in Vietnam. They focused on high-tech industries such as Intel, Ford Apple and General Electric.

 

The US said that many US companies registered in Hong Kong and Singapore have also invested in Vietnam but their investments are not included to the US investment.