On May 31, America
and Vietnam signed a bilateral market access agreement detailing
the requirements for Vietnam's accession to the World Trade
Organization (WTO). Vietnam will now work to finalize a
multilateral draft Protocol of Accession that must be approved by
the WTO General Council before it can become a WTO member. In order
for the U.S. to share in the benefits of Vietnam's accession to the
WTO, Congress must ratify Permanent Normal Trading Relations (PNTR)
for Vietnam. On June 13, legislation was introduced in both the
U.S. Senate and the House to do just that.
Permanent Normal Trading Relations would be an important step in
normalizing the U.S.-Vietnam economic relationship and, no less
significantly, the two countries' political relationship.
The Case for
As a member of the
WTO, the United States is generally obligated to provide
reciprocal, unconditioned most-favored-nation (MFN) treatment to
all other WTO members. The U.S., then, must either vote to extend
PNTR to Vietnam or must invoke the non-application provision of
Article XIII of the WTO Agreement. The non-application provision
allows for member countries to exclude other members from MFN
benefits at the risk of reciprocal treatment.
If the U.S. opts
to invoke non-application, Vietnam would have the right to deny the
U.S. equal treatment under the WTO agreement. The U.S. would be
left on the sidelines to watch other countries reap the benefits of
the hard work done to execute a strong agreement for Vietnam's
accession. Vietnam is one of the fastest growing economies in
Southeast Asia, and the U.S. is Vietnam's largest investor, as well
as a major trading partner. The cost of exclusion would be
significant to both countries.
In an effort to
avoid the compliance problems associated with China's accession to
the WTO, the countries negotiating Vietnam's membership have
required it to make solid commitments to liberalization and to show
proof of progress on those commitments as a condition of moving
forward in the accession process.
negotiated U.S.-Vietnam bilateral agreement is especially effective
in ensuring that accession will result in greater trade
opportunities for all WTO countries. Farmers, manufacturers, and
service exporters will gain meaningful market access in Vietnam.
Tariffs and non-tariff barriers to trade will have to be reduced or
dismantled. Vietnam will have to operate according to international
rules of trade or be subject to action under the WTO dispute
settlement process. Intellectual property rights protection will be
strengthened. Importantly, Vietnam's ability to push forward with
continued domestic economic reform will be enhanced, adding to the
competitive benefits of freer trade for the country.
Failing to approve
PNTR for Vietnam would mark a distinct reversal of the opening of
trade between the U.S. and Vietnam and would have real consequences
for the strategic relationship between the two countries. As
Senator Max Baucus explained at the introduction of the Vietnam
PNTR bill, "Granting permanent normal trade relations status to
Vietnam will complete the process of reconciliation begun 15 years
ago and worked for by Democrats and Republicans alike, on Capitol
Hill and in the White House. This step will allow America to deepen
its relationship with one of the most dynamic and successful
emerging markets in a key region of Asia."
in Vietnam extend beyond trade. The United States is intensely
interested in fully accounting for American soldiers missing in
action during the war, improved human rights conditions, and
democracy for the beleaguered Vietnamese people. Normal trade
relations will assist in obtaining these objectives.
The government of
Vietnam has been a strong partner in attempts to recover the
remains of America's fallen soldiers. In fact, hundreds of remains
have been recovered since the effort began, and the Department of
Defense has stated that it would not have had that success without
active cooperation of the Vietnamese government and people.
And while no trade
agreement, no matter how comprehensive, can itself install
democracy or solve a country's human rights problems, trade
agreements can force governments to enforce the rule of law. The
rule of law only works when the government is held accountable.
There are signs that this is happening in Vietnam.
In recent years,
he Communist Party has significantly reduced its formal involvement
in government operations, leaving government officials wider
latitude to implement policy. Although elections in Vietnam are
neither free nor fair, there have been some improvements. For
example, the 2002 national elections marked the first time
non-Communist candidates were elected to the national
Human rights in
Vietnam have made steady, albeit slow, improvement since the
bilateral trade agreement came into force. The national legislature
has passed laws protecting Vietnamese from religious persecution
and physical abuse by police. Unfortunately, however, enforcement
of those laws is inconsistent. The improvements to date have not
been not earthshaking or even sufficient, but without Vietnam's
active pursuit of WTO membership, it would still be locked in North
trade relations with Vietnam will successfully conclude 15 years of
diplomacy and negotiations. The United States will gain greatly
enhanced access to Vietnam's markets and place Vietnam in an
international rules-based trading system that can also help attain
American political objectives in that country.
Dana R. Dillon is Senior
Policy Analyst for Southeast Asia in the Asian Studies Center, and
is Jay Van Andel Senior Analyst in Trade Policy in the Center for
International Trade and Economics, at The Heritage Foundation.