Vietnam: A More Businesslike Policy : Does the Trade Embargo Make Any Sense Now?

Fifteen years ago, as the last fleeing helicopter left the roof of the U.S. Embassy in Saigon, Washington angrily slapped economic sanctions on Hanoi and wished it the worst.

But now the Bush Administration is making overtures to Vietnam to discuss the mutual and festering problem of Cambodia. There’s another problem it should discuss, too.

The United States stands alone in its rigid trade embargo against Vietnam, which prohibits any American from doing business with the Southeast Asian country. U.S. allies, which include France, Britain and Japan, have quietly resumed economic ties with Hanoi. But meanwhile, American business interests, though welcomed by Vietnam, have been shut out by U.S. policy. U.S. business has been pleading with Washington to lift the ban, warning that America could lose another war in Vietnam--an economic one.

Restoring some, not all, economic ties with Vietnam could be achieved without conferring a tacit blessing on its Communist government. For instance, Washington can block International Monetary Fund or World Bank funding for Vietnamese development projects even if U.S. firms are allowed to do business there.

Washington’s Cambodian policy shift stems from the need to enlist Hanoi’s help to stop the murderous Khmer Rouge from returning to power. Vietnam, in turn, needs new trading partners as it teeters on a shaky economy starved by its traditional patrons, the Soviet Union and Eastern Europe.

Vietnam’s economic troubles threaten its support for the Cambodian government of Prime Minister Hun Sen. Modifying the trade ban would help the nation’s market reforms. Although Hanoi has been pushing economic reforms without any political changes, a free market might fire up pro-democracy sentiments, as it did in China.

Vietnam already has signed joint venture agreements valued at $859 million with 100 foreign firms. Japan is Vietnam’s second largest trading partner after the Soviet Union. Singapore, despite its tough anti-communist stand, does $200 million worth of business annually. But the Soviet Union and Eastern Europe, which together accounted for 60% of Vietnam’s annual trade, have drastically cut back as they restructure their own economies. As a result, thousands of Vietnamese are out of work, and unemployment has skyrocketed to 20%.

U.S. businesses are itching for the opportunity to get at Vietnam’s oil, tropical hardwoods, minerals, coal and coastal fisheries. Doing business will not be easy given the country’s poor infrastructure, inadequate banking, unemployment and high inflation. But Washington should get out of the way and let America’s entrepreneurs compete as they wish.