U.S. Eases Vietnam’s Route to WTO

The United States and Vietnam have reached an agreement in principle paving the way for the Communist-run country to join the World Trade Organization this year, U.S. and Vietnamese officials said Sunday.

The pact lowers Hanoi’s tariffs on U.S. industrial and farm products and removes other barriers that block U.S. companies in sectors such as telecommunications, retailing, banking, insurance and energy from doing business in Vietnam, the U.S. trade representative’s office said.

U.S. officials hailed it as a milestone in the two-decade process of normalizing relations severed by the Vietnam War and said it would boost U.S. exports to one of the fastest-growing markets in Asia.

In Hanoi, the state-run Tuoi Tre, or Youth, newspaper quoted a Vietnamese Embassy official in Washington as saying the two countries were expected to sign the agreement in early June.

Vietnam’s ability to reach a deal with the United States contrasts with the experience of Russia, which has been pushing for years to join the world trade body but remains at odds with Washington over the terms of accession.

“Vietnam recognizes that broad-based reform and economic liberalization are essential to its integration into the global economy,” outgoing U.S. Trade Representative Rob Portman said. “We intend to work hard with Vietnam to complete the process of its full accession to the WTO.”

Once a deal is completed, Congress must vote on giving the Southeast Asian country of 83 million people permanent normal trade relations status. Then Vietnam would submit its final request for WTO membership later this year. Sen. Max Baucus, a Montana Democrat whose constituents could export more beef under the deal, said he would push for approval of the trade relations status before August.

Vietnam agreed to eliminate WTO-prohibited industrial subsidies as part of the pact, including in its textile sector, U.S. trade officials told reporters. That would be enforced through a special mechanism allowing the United States to reimpose quotas on Vietnam’s textile and clothing shipments if it does not abolish the prohibited subsidies before joining WTO, they said.

The actual amount of Vietnam’s textile subsidies are nowhere near “the billions of dollars that have been bandied around,” a senior U.S. trade official said. “We believe ... it’s a very small program. But whatever it is, it needs to be eliminated and the Vietnamese have committed to us that it will be eliminated,” he told reporters on condition of anonymity.

However, U.S. textile producers said the pact was too weak and would lead to American job losses by allowing Vietnam to flood the U.S. market with heavily subsidized exports.

The two countries could sign a final agreement when Vietnam hosts the annual APEC (Asia Pacific Economic Cooperation) trade ministers’ meeting in early June.

U.S. trade officials said they did not expect the congressional vote on establishing permanent normal trade ties with Hanoi to be contentious.

The United States and Vietnam restored diplomatic relations in 1995, 20 years after the end of the Vietnam War.

Since the countries signed a business deal in 2001, Vietnamese exports to the United States have grown to more than $6.5 billion in 2005. The United States exported more than $1.2 billion of goods to Vietnam last year.

Hanoi wants to be a WTO member by the time it hosts President Bush in November for the annual summit of the 21-member APEC forum.

Vietnam has completed deals needed to join the Geneva-based WTO with its other leading trade partners but still needs to finish work on a multilateral agreement bringing its overall trade regime in line with global rules.