Decade of free trade with US a success
This month marks the tenth anniversary of an event which intensely changed nation’s economy: the signing of a bilateral trade agreement between Viet Nam and the US.
On July 13, 2001, just five years after President Bill Clinton announced the normalisation of diplomatic relations with Viet Nam, the US and Vietnamese negotiations signed a bilateral trade agreement (BTA) that now defines the strong economic ties between the two countries.
During the 10 years since the BTA came into force on December 10, 2001, two-way trade between the US and Viet Nam has jumped from US$1.5 billion to over $20 billion.
In addition to the trade and investment benefits, the BTA served as a “stepping stone” for Viet Nam’s accession to the World Trade Organisation in 2007.
“This is good time for the United States and Viet Nam. Over the last 10 years we have made impressive advances in our bilateral relationship, particularly on the economic front,” the US Ambassador to Viet Nam, David Shear, said last Friday at the 10th anniversary celebration of the BTA.
Shear said he would prioritise the promotion of the two countries’ economic relations.
The US has become Viet Nam’s large market for exports and one of its largest suppliers of investment, while Viet Nam has become one of the fastest-growing markets for US exports.
Progress in bilateral trade and investment has coincided with a tremendous economic transformation in Viet Nam that has helped to improve the lives of ordinary Vietnamese citizens.
The BTA is a modern trade agreement, obliging signatories not just to lower import tariffs and eliminate quotas for goods but also to open market access for services, strengthen intellectual property rights protection, develop foreign investment and enhance legislative and regulatory transparency, commercial dispute settlement and business facilitation.
Implementing the commitments made in the BTA also helped Viet Nam to improve its business environment in conformity with international best practices and to accede to the WTO.
“The BTA has significantly contributed to the development of Vietnamese economy,” Hoang Van Dung, vice president of the Viet Nam Chamber of Commerce and Industry (VCCI), said at the opening ceremony of the event.
“It also creates new opportunities to develop market to other countries.
“Viet Nam became a prominent nation in Asia joining the BTA and WTO and the BTA is an experienced and foundation to help Viet Nam deeply penetrate into world market,” he said.
The BTA was a “bridge” to help Viet Nam access the WTO, said Vu Khoan, former Deputy Foreign Minister and Minister of Trade.
It had brought big benefits for Viet Nam with an increased number of foreign investment and cultural exchanges between the two nations, Khoan said.
BTA negotiators for Viet Nam and the US found many difficulties during the negotiation process due to the huge differences between the two economies, said Nguyen Dinh Luong, former assistant to the Minister of Trade, chief BTA negotiator for Viet Nam.
They were still trying their best to complete the remained unfinished points in the agreement, Luong said.
Some asked how come economy like Viet Nam could gain a free trade agreement with a strong nation like the US
“It was Viet Nam’s demand that it develop together with other countries in the world,” Luong said. “An economy is not sustainable unless you are fully integrated into the world trading system.”
Pete Peterson, former US Ambassador to Viet Nam, said the US took pride in the development of Viet Nam’s economy over the years as a result of the BTA.”
The BTA was taken as a starting point for negotiating further market access liberalisation for trade in goods and services.
Viet Nam has locked in its intention to create a more competitive and open economy by committing to several comprehensive international trade agreements, including the Association of Southeast Asian Nations (ASEAN), Asian Free Trade Area (AFTA) and BTA.
Viet Nam’s accession to the WTO further integrated the country into the global economy. In November 2010, it officially joined the Trans-Pacific Partnership (TPP).
Currently, the US and Viet Nam, together with seven other partners, are negotiating a TPP regional free trade agreement, which will serve as a potential platform for economic integration across the Asia-Pacific region.
“The integration will advance the economic interests for both the US and Viet Nam for many years to come, creating jobs and further strengthening our relationship,” Ambassador Shear said.
Viet Nam has announced it will join negotiations for the TPP. The Vietnamese business community has agreed that the country needed to join the new game in global integration, though it understood the agreement would bring both opportunities and challenges.
Pham Chi Lan, economic researcher and former VCCI vice president said Viet Nam would have the opportunity to push up mechanism reforms and business environment improvement, which would help create favourable conditions for socio-economic development.
It was difficult to say now how much time the negotiations would take, she said. With the WTO, it took China 15 years and Viet Nam 12 years to be admitted. As for TPP, Viet Nam had the same opportunities as other members to set up common commitments.
The pressure of competition weighed heavily on Vietnamese enterprises on the way to international integration but the gains were proving to be significant.
The number of Vietnamese enterprises rose from 40,000 to 600,000, increasing 15 times over the past 10 years, Lan said
Ninety-nine per cent of Vietnamese enterprises supported Viet Nam joining the TPP, a VCCI survey.
A multilateral approach would be harder to negotiate, Lan said.
“If Viet Nam wants to join the TPP, it would have to make further reforms to its market economy and administrative system must have determinant changes,” Lan emphasised.
Daniel Price, trade lawyer and former White House economic advisor, said that after 10 years, Viet Nam was feeling brave enough to continue on its path.
Joining the TPP would be a solid foundation to help Viet Nam meet international regulations, Price said.
The question now is will Viet Nam be able to take their chances and cope with the problems they will surely meet. — VNS