U.S., Vietnam Enter a New Era of Relations

A quarter of a century after their war came to an end, the United States and Vietnam on Thursday launched a new era of normal economic ties with a trade deal that would grant Americans sweeping rights to do business in a land where they once shed blood, while giving Vietnamese much easier access to the rich U.S. marketplace.

President Clinton took time out from Middle East peace talks in rural Maryland to return to the White House, where he was joined by Vietnam’s trade minister, ambassador, chief trade negotiator and commercial counselor for a ceremony in the Rose Garden.

“This is another historic step in the process of normalization, reconciliation and healing between our two nations,” Clinton declared after the deal was signed. “This agreement is one more reminder that former adversaries can come together to find common ground in a way that benefits all their people, to let go of the past and embrace the future, to forgive and reconcile.”

White House officials Thursday released details of the accord, which could transform Vietnam’s modest commercial landscape into a place dotted with U.S. retailers, bank branches and ATMs, all using computer technology supplied by the West.

The deal, which capped nearly five years of talks and requires congressional approval, would slash tariffs on both sides of the Pacific, bind Hanoi to global rules concerning intellectual property and allow U.S. investment in telecommunications, advertising, travel, health care and other long-restricted services.

Vietnam would phase out import barriers on U.S. auto parts, citrus, beef and other products; allow American ownership of hotels and restaurants; and pledge Hanoi to economic freedoms long restricted in its state-controlled economy.

In many cases, however, Americans would be required to enter joint ventures with Vietnamese partners, and U.S. control would be limited to 49% in such areas as cellular phones, satellite and other telecommunications services.

For its part, the United States agreed to sharply reduce tariffs to 3% on Vietnamese imports from the current average of 40%--a goal that has become urgent for Hanoi in the wake of China’s move toward normalized trade ties with the U.S. The neighboring Asian nations are rivals in the production of low-cost export products, ranging from pots and pans to gloves and underwear.

The agreement “will deepen and accelerate Vietnam’s economic reforms,” said U.S. Trade Representative Charlene Barshefsky. “It will strengthen the development of rule of law.”

Barshefsky and Vietnamese Trade Minister Vu Khoan signed the accord moments before the Rose Garden ceremony. Several Vietnam War veterans serving in Congress also attended, as did Douglas “Pete” Peterson, a veteran who is now U.S. ambassador to the Southeast Asian nation.

The agreement is a dramatic step toward normalizing relations between the former enemies and comes after the 1994 lifting of a U.S. economic embargo against Vietnam and the opening of diplomatic ties a year later. Clinton said Thursday that Vietnam has continued to cooperate in the effort to identify missing U.S. military personnel, a condition for closer relations. Even now, he said, “we are in the process of identifying 150 possible sets of remains.”

Despite enduring wartime memories, few observers Thursday doubted that Congress will approve the closer economic relationship, although the timing remained uncertain, given the election-year calendar.

“This sets up rules of the road for global transactions,” said Sen. John F. Kerry (D-Mass.), a Vietnam veteran and an advocate of engagement. “I think members on both sides of the fence will believe this is in our interest.”

Under the landmark deal, Vietnamese officials would accept World Trade Organization rules for many types of transactions, undercutting their nation’s entrenched bureaucrats and pushing a struggling economy closer to global standards. Among the many provisions, Vietnam would:

* Allow all of its companies, and gradually U.S. firms, the right to freely import and export. It also promised to follow global guidelines in such areas as granting import licenses and applying customs rules.

* Adopt WTO standards for protecting intellectual property, a far-reaching U.S. interest that includes software, films, videos, pharmaceutical formulas and other products.

* Phase in U.S. entry into many service industries--including distribution, legal, accounting and engineering--typically in a three- to five-year period.

* Promise not to expropriate U.S. investments or demand Vietnamese content requirements for American products.

* Move toward modern legal procedures for international business, such as issuing drafts of laws and rules for comment and allowing Americans the right to appeal such proposals.

Vietnam would get rid of the 50% surcharge it applies to American products, enhancing U.S. export opportunities in such areas as telecommunications equipment, electrical power systems and computer hardware and software, according to trade officials.

The normalization of economic ties could have far greater economic significance for Vietnam. Trade between the two nations totaled $900 million last year, with Vietnamese exports representing more than two-thirds of the total, according to administration figures. Like other impoverished nations that seek prosperity through greater exports, Vietnam looks at the gigantic U.S. consumer marketplace with awe.

Nonetheless, Vietnam has moved toward open commerce with halting steps. It began trade talks with the U.S. in 1996. In July 1999, when the outlines of the accord first became apparent, the leadership in Hanoi refused to endorse it, shying away from the far-reaching introduction of market forces and trade rules that posed a direct threat to entrenched monopolies.

“Globalization being what it is, these last six years have shown that they won’t make any progress by sticking to the old ways,” observed Douglas H. Paal, president of the Asia Pacific Policy Center, a nonpartisan Washington think tank.

News of the trade pact was greeted with reluctant acceptance in Orange County’s large Vietnamese community. In Little Saigon, emigres said they hoped that the two nations’ trade relations will take into account the issues of human rights, political diversity and religious freedom in Vietnam.

Even so, there was widespread agreement that it was time for greater economic opportunity that could benefit Vietnam as well as emigres who want to do business there.

“You have to forget the past and move on,” said Thanh Truong, an accountant who recently moved to Garden Grove. “We have to move on and make money.”

Orange County physician Co Pham, who has advocated reconciliation and free trade between the two nations for more than a decade, called the pact a “win-win agreement for everybody.”

Pham, who incurred the wrath of much of the local Vietnamese community when he led a delegation of two dozen U.S. businesspeople to Hanoi in 1994, said he expects trade to increase exponentially.

“Vietnam needs a lot of products from the U.S. to rebuild its economy, including medical supplies, construction materials and machinery,” he said. “And the U.S. will import rice, coffee, seafood and clothing from Vietnam. The impact will be tremendous.”

Pham said he is considering starting a business to import seafood, clothing and other products from Vietnam.

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Times staff writers Jennifer Mena and Marc Ballon in Orange County contributed to this report.