SOUTH EAST ASIA - Despite Vietnam’s huge potential, House puts Free Trade Vote on hold

By: | at 07:00 PM | Channel(s): International Trade  

By Karen E. Thuermer, AJOTPolitics or no politics, Vietnam is poised as a mighty tiger ready for global trade. While on November 7th the World Trade Organization (WTO) published a notice announcing that the WTO’s General Council had decided to approve Vietnam’s accession agreement, on November 14th the US House of Representatives shelved the long awaited US-Vietnam Bilateral Free Trade Agreement —this on the coattails of President George W. Bush’s visit to the Asia-Pacific Economic Cooperation (APEC) summit in Hanoi.
Vietnam can join the WTO 30 days after its National Assembly signs the accord, which it is expected to do swiftly. When that happens, the Communist country will become the WTO’s 150th member.
But until the United States grants Vietnam permanent normal trade relations (PNTR), the US cannot benefit from any WTO commitments made by Vietnam. Meanwhile, China, Europe, Japan, and other WTO members will receive the benefits of Vietnam’s WTO accession, including increased trade with Vietnam’s businesses and citizens.
Foreign Ministry spokesman Le Dung, in a statement, calls the US political development “very regrettable” and says that the vote went against the “interests and aspirations of the two countries, particularly the interests of US businesses.”
Nicole Venable, director of international trade for the US Chamber of Congress, remarks, “Quite frankly, we were shocked. It does leave us wondering what this means for the new Congress in terms of trade.”
In the words of US Senator Max Baucas (D-MT), Ranking Democrat on the Senate Finance Committee, “This is incredibly disappointing, particularly in light of the President’s visit to Vietnam. Vietnam is a country of 83 million consumers, and their accession to the WTO can help boost American businesses and create jobs here at home. It’s long past time to grant Vietnam permanent normal trade relations. I guess we could say better late than never, but in this case late is not good.”
The proposal also faces obstacles in the Senate, where the administration has had to offer textile-state senators assurances that it will impose penalty tariffs on Vietnamese textile products if the country should be found to be selling those products at unfairly low prices. Vietnam’s garment exports to the US have already skyrocketed, and the industry is hoping to reap even greater profits after joining the WTO, which will require the United States to lift quotas on Vietnamese exports.
Stunning progressAt the heart of Vietnam’s progress has been more than 20 years of “doi moi” (renovation) market-oriented reforms. These reforms have made Vietnam APEC’s fastest expanding economy after China. If the US Congress passes the bilateral agreement in December, the free trade agreement will open a well-documented growing market for American agricultural goods, a range of services, and manufactured products. It will also open the door for Vietnam to join the international rules-based trading system.
“Through this agreement, Vietnam will become more transparent in its regulatory trade practices, enhance the economic freedoms enjoyed by its people, and establish a more level playing field between Vietnamese and foreign companies,” says Ambassador Karan K. Bhatia, Deputy US Trade Representative.
Since the United States and Vietnam implemented a bilateral trade agreement five years ago, trade between the two has grown from $1.2 billion in 2000 to $7.8 billion in 2005. US agricultural exports to Vietnam exceeded $192 million in 2005, almost 17% of total US exports to Vietnam and over 20% more than in 2004.
As part of its WTO accession, and under the pretense of a successful passage of the US-Vietnam bilateral trade agreement, the Vietnamese government has agreed to significantly reduce tariffs on a number of US exports once it joins the WTO. It also agreed to adopt numerous improvements in its implementation of sanitary and phytosanitary measures, including on shelf-life requirements and other non-tariff measures that have the pot

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