U.S. Firms Cautious on Viet Trade : Commerce: Businesses say the Bush Administration’s policy change is positive, but they want to see the embargo against Hanoi dropped entirely.
American business is reacting cautiously to a move by the Bush Administration on Monday to partially relax restrictions on doing business in Vietnam, characterizing the gesture as positive and significant but maintaining that real inroads cannot be made until the U.S. trade embargo against Hanoi is dropped entirely.
The Administration announced that American companies are now free to establish offices in Vietnam and conclude contracts that are contingent on an eventual lifting of the trade ban. But the change in policy--which acknowledges good faith efforts made by the Vietnamese to resolve pending questions about Americans missing in action during the Vietnam War--stops short of giving U.S. companies a green light and an equal footing to compete with international rivals.
Nor is it clear whether the concessions signal prompt normalization of relations between the United States and Vietnam. U.S. officials suggested that further steps will be taken before Bush leaves office in January should Vietnam respond with greater cooperation on the MIA issue. But analysts had mixed opinions on the prospects for rapid progress, and large firms remained skeptical about deal making.
“We really can’t judge the commercial implications at this time,” said Richard Stober, spokesman for the heavy equipment maker Caterpillar, which has been lobbying the State Department for lifting of the economic sanctions. “But our point is that much more, clearly, has to be done to open up this market. Japan has been selling there for several years, while we’re being denied immediate opportunities.”
Opportunities for contracts in oil and natural gas production are also being carefully scrutinized, and generating far less excitement than has been widely reported. Mobil, which discovered two major offshore oil fields during the Vietnam War, was approached by Hanoi officials in 1989 but cut off sporadic talks last year.
Mobil spokesman John Lord noted that major Western oil companies that have been recently active in Vietnam, free from U.S. restrictions, have had disappointing results. He said reports that Mobil has been lobbying in favor of lifting the ban are “baloney.”
“We’re not going to enter into any discussions (with the Vietnamese) until the embargo is lifted,” Lord said. “But that doesn’t necessarily mean we’re going to be interested in it then.”
The United States banned economic links to the Hanoi regime under the Trading With the Enemy Act in 1964, and extended sanctions to the whole country when Saigon fell to the communist north in 1975. Under a “road map” for normalization announced by Washington at the time of the Paris peace accord on Cambodia in 1991, some preliminary steps have been taken to relax sanctions, such as allowing direct telecommunication links and humanitarian aid.
Vietnamese officials were also somewhat guarded about the latest concession.
“This is an active step toward the normalization of relations between Vietnam and the United States,” Hanoi’s Foreign Ministry said in a statement. “However, Vietnamese companies find it difficult to really expand relations with U.S. companies if contracts they sign . . . do not take immediate effect.”
However, Virginia Foote, director of the U.S.-Vietnam Trade Council in Washington, said the loosening of the rules will help American trade consultants and lawyers who want to establish a presence on the ground in Hanoi to better represent their clients. She believes that the move is a breakthrough for American business.
“All the gestures that the United States made to Vietnam over the past two years have been humanitarian, but this crosses over into the commercial side,” Foote said. “Taking this plunge is very important. It sends a very clear signal . . . that we are on the road to normalization.”
Analysts noted that restrictions imposed on lending to Vietnam by institutions such as the International Monetary Fund and the Asia Development Bank remain in effect, which will continue to stymie crucial investment in infrastructure projects, limiting economic growth.
“It’s less than it might have been, and more than it could have been,” said Douglas Pike, director of Indochina Studies at UC Berkeley. “But it’s still a significant move.
“President Bush believes a hard line on Hanoi is the best way to promote reforms, and I think this is as far as he’s prepared to go,” said Pike, a former State Department official. “He’s missing a big opportunity to close the last chapter in the Vietnam War.”
Doing Business in Vietnam 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. What events led to Monday’s decision?
1975: After North Vietnamese forces took over Saigon, ending the war and reunifying the country, Washington extended the 1964 embargo of Hanoi to all of Vietnam.
1991: Washington presented Hanoi with a “road map” plan for phased normalization of relations and lifting of the U.S. embargo.
April, 1992: Washington eased the embargo by allowing commercial sales to Vietnam that meet basic human needs, lifted restrictions on projects by American non-governmental and nonprofit groups and allowed establishment of telecommunication links with Vietnam.
May, 1992: Vietnamese residents in the United States began to make direct money transfers to relatives in Vietnam after relaxation of U.S. restrictions.
October, 1992: Retired Gen. John Vessey, a U.S. presidential envoy on the MIA issue, made a sixth trip to Hanoi and obtained a Vietnamese agreement on wider MIA cooperation, which Washington described as a breakthrough.
December, 1992: John Kerry, chairman of the Senate Select Committee on POW/MIA affairs, visited Vietnam and recommended that President Bush make a gesture to Hanoi in return for stepped-up cooperation in accounting for the missing.
Investment Commitments in Vietnam by Country
While U.S. firms have been locked out, other nations earmarked about $300 million in capital for investment in Vietnam since economic reforms took hold in the late 1980s. U.S. companies are still prohibited from implementing contracts and investing funds.
Value of No. of investment* Rank Country Licenses (Millions) 1 Taiwan 46 $600 2 Hong Kong 90 400 3 Australia 18 280 4 France 27 276 5 Holland 4 173 6 Britain 10 149 7 C.I.S.** 32 147
*As of Dec. 31, 1991 **Commonwealth of Independent States
Source: Vietnam Investor Magazine, Hong Kong.
