Vietnam Unable to Capitalize on New Ties With U.S. for Economic Benefits

Is Vietnam once again miscalculating in its dealings with the United States?

This month marks the first anniversary of President Clinton’s decision to establish relations with Hanoi, and the rulers of Vietnam are irked and perplexed. They had hoped that the new ties would bring new economic benefits--especially the most-favored-nation trade benefits that would give their exports regular low-tariff access to the American market.

It hasn’t happened. Negotiations with the Clinton administration on a trade agreement are moving slowly. And even after a deal is reached, it will have to be approved by Congress.

One factor is certainly American politics. There is no way Clinton is going to award trade privileges to Vietnam in the middle of an election year. That would amount to handing an emotional issue to his likely Republican challenger, Bob Dole.


So far, Dole has concentrated on the past, the legacy of the Vietnam War, in his campaign remarks on the Southeast Asian nation. But he could focus on the future by asking Clinton whether he plans to extend trade benefits to Vietnam after the November elections and, if so, under what conditions.

Yet American politics is not the only reason for the current stalemate. Disappointed Vietnamese leaders need to look at themselves too. Not much is changing in Hanoi. The Vietnamese Communist Party just conducted its first party congress in five years, and the dominant theme was preserving the status quo. A few younger people were moved into second-tier positions, but at the top ranks the leadership remained the same.


American businesses in Vietnam are still having the same problems with delays, bureaucracy and closed markets. While seeking the right to sell goods from Vietnam at low-tariff rates in the United States, the leaders in Hanoi are maintaining duties of as much as 50% on American products in Vietnam.


There is not the slightest sign of change in Vietnam’s political system either. The ruling Communist Party represses political and religious dissent, maintains its old ideology and emits ideological diatribes against foreign influence. “There is nothing more dangerous than cultural infiltration,” one party stalwart from Hanoi told the recent party congress.

Vietnam has misjudged the United States before, at great economic cost. Soon after the end of the Vietnam War, President Carter explored the idea of establishing normal relations with Hanoi. But Vietnam held out too long for more than $3 billion in war reparations, and the deal fell through.

So Carter concentrated instead on upgrading ties with China, and Vietnam was left to rely for economic help on the Soviet Union. Last year, Vice Foreign Minister Tran Quang Co acknowledged in an interview that Vietnam’s tough negotiating stance with Washington during that 1977-78 period had been a big mistake.

Vietnamese leaders fail to understand a basic truth that seems obvious in Washington but apparently not in Hanoi: When it comes to American foreign policy, Vietnam isn’t China. Geopolitics is unfair. Vietnam isn’t as powerful as China and its market isn’t as big. Leaders in Hanoi cannot just sit back, do nothing and wait for the Americans to come, bearing tribute.

So what should Vietnam do? Let’s look at four possible strategies Hanoi could pursue. What might work?

* The U.S. Chamber of Commerce Strategy. Rely on the American business community--notably companies eager to do business in Vietnam--to help get economic benefits from Washington.

This is the approach that helped Vietnam win diplomatic recognition from the United States last year. However, there are pitfalls in simply sticking to the same strategy once again. The American business community is growing disenchanted with Vietnam. There are plenty of other places to invest just in Southeast Asia.

It’s not clear how much clout the American business community will have with the new Congress either.


The Republican Party is badly divided on trade and economic issues. The Democrats are covering up their intraparty differences during this presidential year, but, if Clinton wins, internecine warfare will probably break out within the party after election day.

There will be a corporate wing, centered in the White House, and an organized-labor wing led by House Minority Leader Richard A. Gephardt (D-Mo.). One big labor issue will probably be the transfer of American jobs overseas. Vietnam’s most-favored-nation trade benefits could get swept up in the larger congressional battles.

* The Southern Strategy. Get economic benefits from Washington by holding out the prospect that Vietnam will be a counterweight in Southeast Asia to growing Chinese power.

Both the United States and Vietnam occasionally toy with the idea of a military or strategic relationship. A few American officials have talked about how nice it would be to use the Vietnamese port and base at Cam Ranh Bay. In April, Vietnam allowed a Canadian naval ship to pay a three-day visit to Ho Chi Minh City--the first Western ship to sail into the port of Saigon since the end of the Vietnam War.

But for now, this is more flirtation than anything else. The Clinton administration is in the process of mending fences with China. And Vietnam’s foreign policy seems to be based on balancing the United States and China, not siding with one or the other.

Moreover, this approach would be hard to stomach for the old guard in Hanoi. Who won the war, anyway? Teaming up with the United States to contain Chinese power seems like a strategy for such South Vietnamese leaders as Ngo Dinh Diem or Nguyen Van Thieu.

* The Taiwan Strategy. Win over American sympathy--and support--through democratic reforms.

It works. In the 1980s, the late Taiwan President Chiang Ching-kuo made a strategic decision to open up to democracy. One of the main reasons he did so was for the impact it would have on American policy toward Taiwan. This year, we can see the results: When China fired missiles toward Taiwan, the United States sent two aircraft carriers to the region.


Of course, there’s no way Vietnam is about to follow Taiwan’s path. The idea is preposterous; changing the political system is the last thing Hanoi wants to do. This is a theoretical option but not a realistic one. Still, every bit of political change in Vietnam would help in Washington.

* The Pan-Asia Strategy. Forget about trade benefits and a close relationship with the United States and concentrate instead on building ties with the rest of Asia.

On the surface, the strategy sounds plausible. Vietnam’s economic growth rate has averaged more than 8% annually for the past five years and reached 9.5% last year, even while it was effectively barred from the American market.

Investment money is coming in from the rest of Asia. Last year, Japanese companies began to put money into Vietnam in a big way, jumping from No. 7 to No. 3 on the list of countries with the largest investments in Vietnam. So who needs the Americans?

But history shows that none of the countries in East Asia has made the jump to prosperity without being able to sell in the American market. Every one of the so-called four tigers--Taiwan, South Korea, Hong Kong and Singapore--had most-favored-nation benefits and so does China. Maybe Vietnam can get rich by selling its sneakers, T-shirts and tape decks strictly in other markets outside the United States but, if so, it will be blazing a new path.

In other words, if Vietnam wants to emerge quickly from poverty, it has to obtain most-favored-nation trade benefits. And to get them, it probably will find that it needs to change more than it has so far. If Hanoi is going to rely on a Chamber of Commerce approach to Washington, it needs at least to begin opening its markets.


Le Mai, the former Vietnamese deputy foreign minister who died earlier this year, used to admonish Americans that Vietnam is “a country, not a war.” It was such a good line that Clinton administration officials such as Secretary of State Warren Christopher borrowed it regularly.

The question now is: What kind of country does Vietnam want to be?

The International Outlook column appears here every other Monday.