U.S. Firms Get OK for Closer Viet Ties : Diplomacy: Bush clears way for companies to sign contracts and open offices in Hanoi. The action could hasten further steps toward normalized relations.

The Bush Administration on Monday took the first major step in 17 years toward restoring American business links with Vietnam, clearing the way for U.S. firms to sign contracts and open offices in Hanoi.

Administration officials said they hope to move even closer to normal relations before leaving office next month.

The action, announced by White House Press Secretary Marlin Fitzwater, keeps the U.S. trade embargo against Hanoi in effect but permits American companies to hire staff in Vietnam, make deals, get licenses and plan for work that can be done after the embargo is lifted.

“It’s a tremendous step, a great signal for the American corporate community and the Vietnamese, an indication that we do indeed intend to restore relations with Vietnam,” said Virginia Foote of the U.S.-Vietnam Trade Council.

One Administration source said that top-level officials are now “pretty eager to wrap things up before (President) Bush leaves office,” and, “if Hanoi responds, this is surely not the last step.”

The possibilities for further U.S. moves toward normal relations might include letting the International Monetary Fund begin moving to establish a lending program in Vietnam and lifting the U.S. trade embargo.

But officials emphasized that these further steps will come only if there are reciprocal moves from Hanoi in accounting for U.S. servicemen missing from the Vietnam War.

Vietnam recently released about 4,800 photos of missing Americans and promised to open its official archives to U.S. researchers. Administration officials, many of whom believe Vietnam is still holding back on returning the remains of Americans missing in action, are now hoping that Hanoi will quickly turn over whatever remains and other evidence it has.

Sen. John Kerry (D-Mass.), chairman of the special Senate committee on POW-MIA affairs--who Administration officials say is working closely with President-elect Bill Clinton on Vietnam policy--is about to return to Hanoi. He will be accompanied by Sen. Robert C. Smith (R-N.H.), the panel’s vice chairman. Senate sources confirmed that the trip is linked to the Administration’s new move and that the legislators hope they will now be given remains of MIAs.

In what appeared to be an effort to give Vietnam an excuse for not already having handed back any remains it has, Fitzwater’s statement pointed out that Hanoi recently had called for individual Vietnamese to turn in to the government any American remains they might possess. In effect, Administration sources said, officials will accept remains, no questions asked.

So far, other nations have invested about $3 billion in Vietnam, with Taiwan and Hong Kong in the lead. Japan recently announced it was renewing bilateral aid to Vietnam. The Administration’s action opens the way for U.S. firms to compete with other foreigners in developing Vietnam.

U.S. oil companies are particularly eager to do business in Vietnam, believed to have oil deposits in its coastal waters. A recent study by the Overseas Development Council, a nonprofit group, said Vietnam has announced plans to expand crude-oil production at a rate of 10 million tons a year through the year 2000, at annual investment costs of $200 million.

Last April, the Administration let U.S. telecommunications companies set up direct phone links to Vietnam. Until Monday’s announcement, that was the only substantial business permitted between the two countries.

From 1975 until Monday, U.S. companies were barred from signing any contracts with the Vietnamese government or any Vietnamese enterprises. They were prohibited from opening offices in Vietnam, although they were allowed to spend up to $200 on business trips in the country.

The White House statement said the new rules take effect immediately.

Foreign governments, including Japan and France, have urged the Administration to move toward normal relations with Vietnam. John W. Vessey Jr., special presidential envoy, recently said publicly that “we need to take some steps forward” to reward Vietnam for turning over the photographs and opening its archives.

Last month, before Kerry made an earlier trip to Vietnam, Administration officials talked about opening the way for U.S. firms to sign contracts and open offices in Vietnam. It also weighed giving approval for the International Monetary Fund to begin working with Hanoi.

Before starting a new lending program, the IMF and other world lending agencies must help Vietnam clear up its past debts, and the United States has been blocking that step.

American companies have said they want to be sure the U.S. trade embargo is lifted before the IMF starts lending money to Vietnam so that American companies will be in a position to reap benefits when the now-impoverished Hanoi government has money to spend.

Times staff writer Michael Ross also contributed to this report.