New WTO rules might derail Vietnam-U.S. trade deal

New WTO rules might derail Vietnam-U.S. trade deal

HANOI (Reuters): The possible adoption of tighter global trading rules over the next few years might scuttle a delayed trade pact between Vietnam and the United States if it remains stalled for much longer, sources close to the deal said.

They said unless Hanoi signed the pact soon, thus giving the U.S. Congress time to approve it before America's political calendar becomes dominated by next year's presidential election, the whole issue could be sidelined until 2001.

By that time tougher trading rules might have emerged -- if not on paper, at least in discussions -- from a new round of global trade talks that begin at a World Trade Organization (WTO) ministerial meeting in Seattle on Nov. 30.

That might prompt Washington to renegotiate key parts of the trade pact -- which Hanoi has hesitated to sign -- in accordance with any new WTO rules, the sources said.

"It can be assumed that at some point in time the document the Vietnamese have in front of them will be essentially null and void and that there would not be a willingness on the part of the United States to sign," one source told Reuters.

"The reality is the document is specially designed for Vietnam. It is not a strong WTO document."

The longer communist Vietnam has no trade agreement with the United States, the longer it remains one of the few nations denied preferential access to the giant U.S. market. The deal is also considered critical to Hanoi's desire to join the WTO.

Any lengthy delay is also likely to worsen sentiment of foreign businessmen, who see the U.S. trade agreement as a key to opening Vietnam's economy and liberalizing its investment regime.

WTO ministers meet in Seattle from Nov. 30 to Dec. 3, where they are expected to launch a fresh round of trade liberalization talks that may run for a few years.

The focus is expected to be on agriculture, services, tariffs, investment and labor and environmental standards. Vietnam has been criticized on all fronts.

"Whatever they have negotiated on the trade pact could be overtaken by events (at the WTO)," said Carlyle Thayer, a Vietnam expert at the Asia-Pacific Center for Security Studies in Hawaii.

"A hefty portion of the document would still probably be intact but the most sensitive areas are going to be even more sensitive," Thayer said by telephone.

Washington has not commented on why Hanoi has balked at signing the pact, and has said it is unclear when the country's leadership will be ready to put pen to paper.

The former enemies in the Vietnam War reached agreement in principle on the pact last July, and U.S. officials had expected it would be co-signed and enacted by the year-end.

But sources say the elite Communist Party politburo is still debating the merits of the agreement.

U.S. officials have said the best-case scenario would be for the two sides to sign the pact before Congress adjourns this year and have it heard and approved early next year.

Congress is scheduled to adjourn on Oct. 29, although its session might extend into November. Analysts expect the deal to take several weeks to move through Congress.