The forty-fold expansion in Vietnam’s trade with the US didn’t ‘just happen.’ The foundation was set by a series of market-opening agreements beginning ten years ago. Susan Schwab, the US trade policy chief during negotiations leading to Vietnam’s joining the World Trade Organization, talked about those days with VietNamNet reporter Xuan Linh.

 

Since the US-Vietnam Bilateral Trade Agreement (BTA) was signed in 2001, the results have been “astonishing,” says Susan Schwab, the second George W. Bush administration’s chief trade negotiator. She notes that from $450 million in 1995, two-way trade has soared to $15 billion in 2009 and continues to expand strongly.  In the last five years, Vietnam has doubled its exports to the US, passing $12 billion last year.

“I still remember that last round of negotiation [in 2007],” Schwab said. “Both sides sat tensely for hours. The negotiation last until midnight in our meeting room in Washington. Vietnam’s delegation was led by a senior negotiator, Trade Minister Truong Dinh Tuyen, while  Assistant Trade Representatives Dorothy Dwoskin and Barbara Weisel co-led the US delegation. There was a lot of arguing, but in the end we all crossed the finish line together.”

 

VietNamNet:  The WTO negotiation between our countries was difficult, wasn’t it?

 

Schwab: The negotiation was difficult, as tense as during the BTA [Bilateral Trade Agreement] talks six years earlier. We had different viewpoints but the same objective: clearing the way for American agreement to Vietnam’s joining the WTO. We understood that if we were successful, both nations would be winners.

During breaks in our talks, the Vietnamese side shared with us some amazing stories and displayed their ardor to rebuild good relations.  We who participated in that historic event have not only a sense of accomplishment but also feelings and friendships that will last forever.

 

VietNamNet:  How did changes in political relations during the normalisation process affect the trade negotiation?

Schwab:  Most of the time, we were focused on the nitty-gritty details of healthy trade relations.  That wasn’t all, however. Both delegations were very aware on the political will of top leaders on both sides. Both sides wanted to overcome the difficult past and do something positive for bilateral ties. That context motivated the leaders on both sides to make compromises in order to reach agreement.

By its very nature, trade negotiation is a win-win activity. Both sides seek to advance economic interests and lay a foundation for trade growth.  It would therefore have be bad for both the US and Vietnam if purely political objectives propelled the negotiation. Vietnam would never accept a bad trade agreement for itself, nor could the US. Both sides had to benefit economically.

VietNamNet:  What explains the missed opportunities to sign the BTA in 1999 instead of 2001, and the WTO bilateral agreement in 2005 rather than 2007?  Our trade negotiations with the US were the most difficult of all, though, as you said, both sides aimed at the same goal.

Schwab: That is the nature of trade, as I’ve said.  Each side has objectives, conditions that it considers essential.  These conditions must be addressed in the negotiating process. See how many years China spent negotiating before attaining WTO membership in 2001. Russia has been negotiating for 15 years but still is not a WTO member. The US really wants Russia to become a member of WTO and so does the EU. I’m sure that’s what Russia wants, too. But agreement has been elusive because fundamental trade conditions have not been satisfied.

VietNamNet:  After BTA, PNTR and the WTO agreement, our two countries have gone further in trade cooperation by concluding the Trade and Investment Framework Agreement (TIFA).  Now both nations are considering membership in the Trans-Pacific Partnership Agreement (TPP). What are the prospects for trade cooperation from these agreements?

Schwab: Vietnam has already achieved amazing results from its trade negotiations, both bilateral and multilateral, like the ASEAN Free Trade Agreement.  TPP is another opportunity.

TIFA is an unprecedented political agreement, setting up a serious way to solve bilateral issues and build favourable trade conditions for both sides.  Both sides address these consultations with good will and determination to succeed.

TPP is another good opportunity. It would set up a free trade agreement involving eight nations, perhaps more later on, and considerably change the framework of our bilateral trade relations. There’s a lot of potential interest but a lot of negotiating yet to be done.

Vietnam will have to make its own decision whether it wishes to become a member of TPP, based on its own interests, not because some other countries advise it to take part.

Vietnamese producers have had a good market in the US. I think that Vietnamese economic policy makers are thinking how Vietnam can go on its own path, different from China’s. Vietnam is not China. American investors are paying a lot of attention to Vietnam, to opportunities here. There is big potential for direct investment in this market.

VietNamNet: We have expected that past agreements would cause a boom in American investment in Vietnam. So far, however, FDI from the US hasn’t lived up to our expectations. Why is that?

Schwab:  The results have admittedly been better in trade than in investment.  The Vietnamese economy still faces many challenges like corruption, poor transport facilities, underdeveloped seaports and power shortages. These worry American investors.

About corruption, for example: under US law, if an American firm bribes a foreign individual or government, it will be punished severely. That’s why American investors avoid markets where business would be difficult without bribery. But I think the Vietnamese Government clearly understands these challenges and how it can resolve them.

Finding ways to make markets more transparent, to make contracts really competitive, to upgrade infrastructure, promote technology – things like that should be the priorities of your Government. If they are solved, more foreign direct investment will flow to Vietnam and your own companies will also mobilize more investment in the economy.

 

Vietnam-US trade acronyms

·        BTA – Bilateral Trade Agreement (2001) – created a framework for non-discriminatory trade and investment relations between the US and Vietnam. A side agreement provided for US advisory assistance to Vietnam on issues related to its joining the WTO.

 

·        WTO – World Trade Organization (US-Vietnam negotiations, 2005; Vietnam joins WTO, 2007)

·        PNTR – Permanent Normal Trade Relations (2006) – American acknowledgement of Vietnam’s commitment to abide by international trade (WTO) rules; the basis for reciprocal extension of ‘most-favored nation’ treatment.

 

·        TIFA – US-Vietnam Trade and Investment Framework Agreement (2007) – sets up a mechanism to guide further trade expansion, for example, negotiation of a Bilateral Investment Treaty (BIT) and consultations on Intellectual Property Rights (IPR).

 

TPP – Trans-Pacific Partnership (2009) – negotiations aiming toward a free trade agreement among eight Pacific rim nations including Vietnam and the United States.

Vietnamnet/ XL