Vietnam Watershed

The U.S.-Vietnam trade deal signed on Thursday, after four years of negotiation and political foot-dragging, is a watershed in post-Vietnam War relations between the two countries. For U.S. companies, this opens new export and investment opportunities and provides greater copyright protection for filmmakers, musicians and others. For the people of Vietnam, the deal offers a way out of economic isolation and the best hope for radical changes in the government’s rigid economic policies.

Political change will be slower in coming, however, and Washington must keep Hanoi engaged on such issues as human rights, emigration and a full accounting of the 2,000 or so U.S. military personnel still missing.

The relationship between the two countries has been full of promise and disappointment in recent years. A trade embargo against Hanoi was lifted in 1994, and a year later the two countries established diplomatic relations. The Hanoi government pursued an economic renewal program, called doi moi, propelling annual growth to double digits. U.S. investors, attracted by 77 million potential consumers, followed on the heels of U.S. diplomats.

Then, last year, Hanoi’s leaders reached but backed away from an trade deal similar to this week’s accord, which forces the government to cede control over broad swaths of the economy; doi moi languished, annual growth slowed to 3% and investors left as fast as they came. The economy remains largely in the hands of incompetent, corrupt bureaucrats applying capricious rules.

Clearly, Hanoi accepted the U.S. terms calling for sweeping economic reforms because it feels the heat of competition from China, which struck a similar deal with Washington earlier this year. Congress, which must approve or reject this deal, should be swift to act in its favor.

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Vietnam trade

Top Vietnamese exports to the United States in 1999. In millions

*

Footwear: $146

Fish, Crustaceans*: $114

Crude Oil: $101

Coffee, Coffee substitutes: $100

*

*combines two categories

Source: U.S. Commerce Department