Vietnam Has Sights Set on Financial Benefits of Normalizing Ties to U.S.

What is about to happen in Vietnam will give new meaning to the idea that history is full of irony.

For three decades, Vietnam’s Communist leaders fought one of history’s most successful, determined and bloody guerrilla wars, at an astounding cost of about 3 million lives. At the time, the goal was not only to win national independence but also to free the economy from foreign domination and the supposed evils of capitalism.

Now, in 1995, what do the new leaders of Hanoi want most of all? They are desperate to attract foreign companies to Vietnam, openly encouraging them to set up factories where Vietnamese workers can be exploited by modern-day capitalists at wage rates of $35 to $50 a month.

In short, Vietnam wants to join the Asian parade to wealth. It is tired of being one of the poorest countries in its neighborhood. And Hanoi’s leaders have calculated that the way for Vietnam to get rich is to let companies make low-cost products such as shoes and clothes for export, particularly to the United States.

Their dream is to stock the shelves of America’s stores, now filled with goods from the likes of China, Sri Lanka and Guatemala, with goods that say “Made in Vietnam.”

Get ready. Companies such as Nike are starting to move into Vietnam. Maybe one of the big footwear companies will eventually introduce new lines of running shoes named for Vietnamese heroes, such as Uncle Ho Lytes or Air Giaps.

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Interviews in Hanoi convince me that Vietnam is now pressing for full diplomatic relations with the United States not just for its own sake, or as a symbol that the war with America is really over. Rather, diplomatic ties with Washington are viewed as a prelude to the practical benefit Vietnam wants most of all, which is most-favored-nation trade status.

At the moment, without MFN benefits, anyone who wants to import Vietnamese products into the United States has to pay prohibitively high tariffs. But if Vietnam had MFN status, its goods could enter the United States with the same low duties most other nations enjoy.

“If Vietnam enjoyed MFN status, its economy will develop very fast,” Le Van Sang of Vietnam’s Institute of World Economy, a government-funded think tank, told me. He believes that once the nation had MFN status, there would be what economists call a multiplier effect: Not only American companies but those from Taiwan, South Korea and elsewhere in Asia would rush to set up shop in Vietnam to manufacture goods for the American market.

This may be a route to wealth, but it also carries a disturbing undertone, as workers elsewhere in the world have found out in recent years. Across the border in China, for example, in many of the factories set up to make use of low-cost labor, employees are required to work long hours, at extremely low pay, under poor or unsafe working conditions.

In short, after half a century of first war and then isolation, Vietnam may be about to enter the era of the sweatshop. Yet when I raised this problem with officials in Hanoi, they answered, in effect: Who cares? Vietnam’s labor is available for hire, and we’ll worry later about the wages, hours and working conditions.

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“As an economist, I think that such problems are unavoidable,” quipped Sang. “Every developing country has to pay some sacrifice, and labor is the first victim.”

Vietnam’s leaders are pinning their hopes on gaining access to the American market because of its huge size. And who can fault their logic? They look around the rest of East Asia and they see that the route to rapid economic development, blazed first by Japan and most recently by China, rested to a considerable degree on selling to America.

Right now, to its embarrassment, Vietnam finds itself at the bottom of what might be called Asia’s new Great Chain of Being: the sliding scale of prosperity that runs from the wealthy Japanese at the top, to Taiwan, South Korea, Hong Kong and Singapore on the next rung, to the middle tier of Thailand and Malaysia, to fast-developing China and Indonesia and, at the bottom of the heap, to Vietnam, Myanmar and North Korea.

Those at the top of the chain sell their high technology and management skills. Those at the bottom sell their unskilled labor. It is a process fraught with conflict. The Philippines nearly broke off relations with Singapore recently in a nasty row over the execution of one of the thousands of Philippine maids working in Singapore.

Vietnam has its own maids for export. The Hanoi regime, which used to send people to work in other Communist countries such as East Germany, has been finding other markets for labor contracts.

A big scandal erupted here this spring over a group of Vietnamese women who were sent by the Ho Chi Minh City Labor, Invalids and Social Affairs Department to work as family servants in Lebanon. Some complained that they were being treated like slaves, beaten or denied pay. After an investigation, the Vietnamese women were brought back home.

When you compare it with being sent to Lebanon, or working in the poverty of the Vietnamese countryside, then maybe making sneakers and T-shirts for 12 hours a day at rates of $40 a month doesn’t sound so bad.

And anyway, Vietnamese workers may not yet realize what working in the new factories is going to be like.

“Right now, a lot of people in Vietnam still think that working for a foreign company means sitting in some glossy office, maybe working for an oil company for wages of $400 a month,” said one representative of Hanoi’s foreign business community.

In fact, as the investors rush in, many more Vietnamese are going to find themselves on the assembly lines rather than in offices. “Over the next year or so, a lot of factories are going to open up,” the business executive predicted.

In talking about getting MFN benefits, Vietnam is still a step or two ahead of itself. It first needs to persuade the Clinton Administration to establish diplomatic relations. The leadership in Hanoi is so worried that President Clinton may be too politically weak to do this on his own that it has begun to talk about making quiet approaches to top Republican leaders.

Even after diplomatic relations are restored, it will still take congressional approval for Vietnam to win MFN benefits. The United States established formal diplomatic relations with China on Jan. 1, 1979; exactly 10 months later, then-Deputy Secretary of State Warren Christopher asked Congress to clear the way for MFN benefits.

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And who’s to say that the United States won’t attach some human rights conditions to Vietnam’s MFN benefits, as the Clinton Administration tried to do with China? After all, despite recent economic reforms, Vietnam remains an often repressive regime that continues to lock up political and religious dissidents, such as leaders of the Unified Buddhist Church.

Vietnamese officials insist they aren’t worried. They point to their big neighbor to the north. China has more human rights problems than we do, they say--and it has still managed to win both diplomatic relations and MFN status from the United States.

There are hints here that beneath the surface, some of the country’s older leaders are unhappy with where Vietnam is heading.

Former Communist Party General Secretary Nguyen Van Linh, one of Vietnam’s revolutionary heroes, warned in a recent speech about the dangers of “state capitalism” and of “cooperation with foreign companies.” It is important, Linh said, to “safeguard our independence and national sovereignty.”

Yet for now, such worries are being brushed aside. Vietnam’s message to foreign firms is: Bring in those assembly lines, and as quickly as possible.

“There exists a big gap between us and neighboring countries,” Vice Foreign Minister Tran Quang Co told me. “This is a headache for us, and we have to solve it by working harder and harder.”

The International Outlook column appears here every other Monday.