U.S.-Vietnam Momentum

Vietnam has sought full economic and trade relations with the United States since the two countries--bitter military enemies in the 1960s and ‘70s--resumed diplomatic relations in 1995. In hopes of expediting the process, the Hanoi government has now agreed to repay to the United States more than $145 million in wartime debts of the former South Vietnam regime. The decision will remove an obstacle to closer ties with Washington, but it is not enough.

Vietnam needs to undertake major economic reforms before the United States makes the next step: a bilateral trade pact. That point was stressed by U.S. Treasury Secretary Robert E. Rubin when he was in Hanoi earlier this month to sign the repayment agreement. Rubin urged Vietnamese leaders to open the communist economy to more foreign investment, reduce tariff and nontariff trade barriers, create a legal framework for the private business sector and ensure that foreign business can play by the same rules as domestic business.

The trade map that Washington laid out for Vietnam sets the course for full normalization of economic ties, which were resumed in 1994 when the Clinton administration lifted a trade embargo. A bilateral trade pact would clear the way for Vietnam to qualify for most-favored-nation trading status, putting the onetime foe on the same footing as Washington’s other trading partners in booming Southeast Asia. The leaders in Hanoi may intend to follow that path, but progress could be slow because of stiff opposition from state-owned companies that do not want to lose their trade advantages.

The Hanoi leadership had initially refused to repay the loans that South Vietnam negotiated with Washington. U.S. officials argued that the communist government assumed the debts when the north and south merged in 1976. About $76 million of the debt constitutes unpaid principal from agricultural and development loans made in the late 1960s and early 1970s for road construction, power projects and grain purchases. The balance is interest due. None of the money went to military operations.

Warren Christopher, former secretary of State, once told The Times that he hoped the United States could eventually reach the point at which Vietnam was thought of as “a country, not a war.” Hanoi recognizes that with a trade pact, that goal would be a step closer. Le Van Bang, Vietnam’s ambassador to Washington, concurred, saying his country is trying its best to meet U.S. requirements.

Diplomatically, the two nations are poised to exchange ambassadors now that the Senate has confirmed former Rep. Pete Peterson (D-Fla.), a prisoner at the infamous “Hanoi Hilton” during the war, as the first American ambassador to Vietnam. It’s taken two decades to get to this stage, but now momentum is clear.