If approved by the American Congress and Vietnam's National Assembly, a Bilateral Trade Agreement could be signed by the end of the year.

Three years, eight rounds.   The agreement ends three years, eight rounds and a supplemental round of intensive trade talks.

US Deputy Trade Representative, Richard Fisher, who had two-and-a-half days negotiating the in-principle agreement in Hanoi, praised it as a significant result.

Once signed, the trade accord would represent a turning point for both nations. "This agreement would, of course, represent a historical event, representing the final chapter in the transformation of our relationship from adversary to trading partners," he said.

The in-principle bilateral trade agreement deals with trade in goods and services, protection of intellectual property and investment relations between two countries.

Fisher said that Vietnam had also agreed to a series of measures to ensure the transparency of regulations and rules affecting trade.

Technical details.   Both Vietnam and the US would work to analyze the technical details of the agreement in order to submit a formal document for their government’s approval.

The trade agreement, if approved by the US Congress and Vietnam’s National Assembly, would open a new trade status between two countries under the normal trade relation which is officially called the Normal Trade Relations (NTR).

It would also take Vietnam a step closer to admission to the WTO.

In order for the agreement to become law after the negotiations are concluded, 60 legislative days would be needed for Congress to deal with the agreement. If approved, it would then be sent to the President for signing.

Two-way trade between Viet Nam and the US has heavily increased since the US lifted its economic embargo of Viet Nam in 1994. It rose from US$225 million in 1994 to about $1 billion last year.

Estimates for further increase in trade with Vietnam are that exports to America could generate from $100 million to $800 million in additional hard currency in the first year alone.

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The next few steps forward. There will not be any flood-tide of new business entrants to Vietnam resulting from the BTA to be signed between Vietnam and the United States. 

The media hype that followed the lifting of the US trade embargo against Vietnam in February 1994, and all the subsequent steps, always brought forth a rash of news reports about great new times coming just down the road.

If the media have not learned, the investors have.  Sea changes in the attitude of the people of Vietnam towards foreigners are required.  We are not all wealthy, and we are not willing to simply throw money away out of sympathy because Vietnam is poor.

Greater changes in the attitude and the positions of the government employees of Vietnam are required.  Mindless restrictions (e.g. overseas physicians needing to review medical reports of wards seeking free foreign medical intervention have been denied on the grounds that they are "matters of State Secrets) on all matters of business must be eliminated, as well as the ever present corruption of minor officials at immigration and customs offices.

American investors are by their very nature, cautious.  Investments are rarely boldly taken, and when the investor believes it is acting bold, others would not recognize their action as other than the most conservative.

Sales into the American market will not be easy: there is low-priced competition from other nations, and the marketing system of the world's largest economy is difficult both to understand and to break into.

In favor of Vietnam (in spite of negative media hype) is the low cost wage of manufacturing employees (minimum wage $35 to $45 per month, mid-level worker including all benefits earn under $125 per month).   Shop and compare: there is no competition given the education, loyalty, productivity, and friendliness of the Vietnamese work force. 

Nowhere in Africa, Asia, Australia, Europe, or the Americas is there a comparable work force for a lower overall wage then in Vietnam today.

Now the world waits to see if the agreement will be completed, and then if Vietnam has the ability to meet the very difficult provisions requiring change and growth of economic freedoms.

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Some banks will seek equity positions in Daewoo.  Others are calling in all loans as fast as they mature and may seek to break up the monster company into its component parts which include 22 affiliated companies and 12 separate listings on the Korean stock exchange.

Vietnam can only sit by and hold its collective breath.

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Headline Samples: not a bright spot.  Often the media in the western oriented nations paint a picture of Vietnam that is not always accurate.  A trait of this nation is to print good news with the bad.  We seek to follow that trend.  The following sampling of headlines taken from the 2-8 August issue of VIR gives an interesting picture of the changes this developing nation is struggling with:

• Tax break to revive ailing zircon giants
• $20 million sought for 'Destination Vietnam' tourism campaign
• Trade deficit shrinks as exports surge strongly
• Vietnam marks fruitful 4 years as part of ASEAN
• Death sentences sought as largest corruption trial ends
• Signs of recovery in industrial stats
• Lower food prices fuel deflationary trend
• Red tape strangles ad firms
• Stymied plastics makers issue plea
• Hopes for US trade pact before year end
• $300 million private power plant contract on horizon
• Sales slump pushes car makers to brink
• New regulations grind bus production to sudden halt
• Poor supply plagues canned fruit sector
• Rubber farmers scrap crop as market prices plummet
• In the shadow of a black market trade mountain

Readers desiring details on any of these stories are encouraged to write to us for details.

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Vietnam Vignettes is a periodic report distributed since early 1994. It is NOT a newsletter although for the ease of linkage we have called it that.  It is a summary of domestically published  media reports from more than 17 industrial sectors that we at VVG follow and report upon for our clients. * Due to the importance of certain topics of key importance to trade with Vietnam, we will occasionally include some wire and other media reports.

Prior Issues On Line:  No. 1 - November 1997  |  No. 2 - December 1997  |  No. 3 - January 1998 | No.4 - March 1998 | No.5 - April 1998 | No.6 - May 1998 | No.7 - June 1998 | No.8 - Mid-June 1998 | No.9 - July 1998 | No.10 - Mid-July 1998 | No.11 - August 1998  | No. 12 - September 1998 | No. 13 - October 1998 | No. 14 - November 1998 | No. 15 - December 1998 | No. 16 - January 1999  | No. 17 - February 1999 | No. 18 - March 1999 | No. 19 - April 1999 | No. 20 - May 1999 | No. 21 - June 1999 | No. 22 - July 1999 |

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