U.S. Close to Signing Vietnam Trade Pact

The United States and Vietnam have reached broad agreement on a sweeping economic deal meant to turn the former military foes into trading partners, sources said Wednesday.

Even as trade negotiators continued to work on a few technical details, the Clinton administration was turning its attention to plans for a signing ceremony that could take place within the next several days.

Under the accord, the United States would ease restrictions on imports from Vietnam, which include low-cost manufactured products, such as shoes, and agricultural commodities. In addition, the administration has pressed Vietnam to ease its restrictions on American goods and services, and to ease barriers on foreign investment.

U.S. trade officials late Wednesday declined to provide details of the talks, which have been led by U.S. Trade Representative Charlene Barshefsky and Vietnamese Trade Minister Vu Khoan.

The latest round of negotiations began last Thursday and was scheduled to last two days, but officials chose to extend the talks.

The two sides had apparently settled all major issues late Wednesday, but political considerations on both sides of the Pacific were delaying a final announcement.

The Middle East peace talks at Camp David, Md., have preoccupied President Clinton and top administration aides as the negotiations with Vietnam have approached their conclusion after more than four years of tortured progress. Beyond that, both sides have clear memories of an embarrassing episode last July, when negotiators publicly announced an agreement in principle, only to have it vetoed by the Vietnamese leadership.

As a result, negotiators for both countries are trying to avoid any repeat of that incident, waiting as technical provisions are recorded in English and Vietnamese and approved by Vietnamese political leaders.

According to recently published reports in Vietnam, Hanoi last year agreed to abide by World Trade Organization guidelines in its business ties with the United States and to slash barriers to foreign services, foreign investment and foreign goods. But the opening would be gradual, with U.S. companies granted limited access to Vietnam’s markets in banking, insurance, telecommunications, tourism, consulting and other areas.

Although the agreement never took effect, the details are revealing because U.S. officials have indicated that they do not plan to overhaul that accord.

According to the World Bank, Vietnam exported about $338 million in goods to the United States in 1996, and economists believe that the figure could soar under a trade deal. The economic implications of such a deal would be much bigger for Vietnam than for the United States, given America’s lucrative consumer marketplace, although the political significance of such a deal could reverberate in this country.

From the outset, U.S. officials underlined their reluctance to toss out much of last year’s agreement in principle.

Khoan “understands the limits within which we are willing to deal,” Deputy U.S. Trade Representative Richard Fisher said at the start of the talks last week. “We’ll see how things go.”

Some Western observers explained Vietnam’s decision to back off from last year’s agreement as a backlash by entrenched bureaucratic interests and state-run monopolies that would be threatened by global market forces and new competition.

Since then, however, China’s push to enter the WTO and Beijing’s own trade deal with the United States exerted new pressure on Hanoi. Vietnam is an economic competitor with its giant neighbor, as a producer of cheap exports and in its need for foreign investment.

The United States lifted its trade embargo against Vietnam in 1994, but it still votes annually on whether to renew trade relations with the former enemy. The U.S. would be expected ultimately to grant Vietnam permanent normal trade ties as part of a trade deal.

Under WTO rules, Vietnam would have to comply with a broad web of rules that are strongly supported by the United States, such as respect for intellectual property, which includes films, videos, computer software, pharmaceutical formulas and other products important to advanced economies.