Economic Factors in Vietnam - US Relationship

Expanding Vietnam - US economic cooperation is of important significance because the development of their trade and relations and investment ties in fact coincides with the process of economic transition of Vietnam, and more importantly, it will help adjust the growth model thanks to new conditions.

 

In just fifteen years, the relationship between the United States and Vietnam has evolved from one of deep-seated mutual distrust, to a robust partnership based on mutual respect and cooperation. Where both sides once saw little or no common ground upon which to base our diplomatic relations, today we collaborate on a wide range of issues, from trade and investment, to education and health, to security and defence.

 

Needless to give official figures, we can confirm that economic and commercial relations are the foundation for the vast diplomatic relations between Vietnam and the United States. This relationship is built on the basis of mutual benefit. In the medium and long-term horizon, contracts and agreements which create the framework of economic and commercial partnerships may be a durable basis to intertwine relations diplomatic ties between the two countries.

 

After 15 years of the full normalization of diplomatic relations, breakthroughs in bilateral relations have usually seen in economic realms. For example, in 2003, after several years of stagnation, the first breakthrough was the Agreement on Civil Aviation allowing the United States or Vietnam’s airlines to provide transport services between the two nations.

 

Then, the Agreement on Textiles and Garments laid the framework for the textile and apparel import into the United States. This did not open another market of more than 80 million people but 500 million people and ASEAN nations.

 

The Vietnam - US Bilateral Trade Agreement in 2001 and the cargo Open Skies agreement in 2008 were spectacular pushes. Recently, Vietnam, the US and six other partners completed the first round of talks on the Trans-Pacific Partnership (TPP) regional free trade agreement. This can serve as a potential platform for economic integration across the Asia-Pacific region.

 

During a visit to Thailand in July 2009 for the ASEAN regional forum, Secretary Clinton joined with the foreign ministers of the Lower Mekong Countries of Cambodia, Laos, Thailand and Vietnam to establish the Lower Mekong Initiative, as a vehicle for U.S. engagement in the region in environment, health, and education.

 

Vietnam is co-hosting a Mekong Infectious Disease Conference with the United States in Hanoi next month, and will host the Lower Mekong Initiative Ministers’ Meeting this July. Over the next several years, we plan to work with Vietnam and the other Lower Mekong nations to support their responses to climate change.

Progress in our bilateral trade and investment relationship has coincided with a tremendous economic transformation in Vietnam. Real incomes in Vietnam grew an average of 7.2 % per year over the last decade, and GDP per capita went from US$189 in 1993 to US$1,052 in 2009. Vietnam’s poverty rate fell from 58 % in 1993 to 12 % in 2009.

 

Looking beyond the record of the past fifteen years towards the prospects for our relationship in coming years, US ambassador said he continued to see huge potential for further growth in the economic relationship between the United States and Vietnam. He said President Obama recently designated Vietnam as one of six “next tier markets” under his new National Export Initiative, along with China, India and Brazil.

 

Ongoing discussions on trade and investment are expected to create great opportunities for US companies and for Vietnamese companies as well. In particular, US companies can, and will, make a critical contribution as Vietnam builds out its infrastructure and looks for products, technologies and education systems that will help bring Vietnam firmly into and beyond “middle income” status.

 

For Vietnam, to practice the three breakthroughs (institution, human resources and infrastructure) and five development standpoints (sustainability, synchrony, democracy, harmony and deep integration) in the socioeconomic strategy for 2011 - 2020, apart from promoting internal forces, the international economic cooperation, particularly the expansion of Vietnam - US economic relations, has a special significance.

The United States works with Vietnam in jointly interested areas through the US Government-funded STAR programme, the Project 30 on administrative reforms, and the Vietnam Competitiveness Initiative (VNCI). The Provincial Competitiveness Index (PCI), produced in cooperation with VNCI, is now a widely recognized measure of improved governance.

 

This year’s PCI results suggest that most Vietnamese provinces became more competitive than last year, and that local governments continue to reduce the barriers to starting and doing business. Foreign investors will continue to invest in those provinces that provide the best business environment by protecting foreign intellectual property and by providing a climate for open, transparent and efficient investments. (Liberated Saigon)