U.S.-Vietnam trade deal still unfinished

U.S.-Vietnam trade deal still unfinished

HANOI (AP): Even as U.S. Ambassador Pete Peterson presided over celebrations Tuesday marking the 5th anniversary of U.S.- Vietnamese diplomatic relations, the final step towards normalization - a bilateral trade agreement - remains just out of reach.

But foreign investors and veteran analysts are cautiously hopeful that high-level talks, reopened in Washington D.C. this week, will clinch the long-stalled deal.

Vietnam's Trade Minister Vu Khoan is heading up the Vietnamese delegation in talks with U.S. Trade Representative Charlene Barshefsky.

"There's certain signs that Vietnam is ready to do business," said Vietnam expert Carlyle Thayer, of the Center for Asian Pacific Security Studies in Hawaii. "They realize that if they don't get their act together now, they'll simply have to renegotiate a brand new deal later.

"The U.S. side also made it clear that they wouldn't have a meeting unless Vietnam was ready to deal," he said.

U.S. officials have repeatedly insisted that they are unwilling to renegotiate the entire pact, but Khoan is traveling at the invitation of Barshefsky to "clarify" remaining issues.

One senior Vietnamese official, who spoke on condition of anonymity, said Khoan has been given orders to conclude the deal if talks go well.

Vietnam and the U.S. reached an agreement in principle on a comprehensive trade accord last July, but Hanoi subsequently backed away from the deal at the last minute.

Analysts said the 11th-hour jitters reflected the intense debate raging between reformers and conservatives in Vietnam's all-powerful Politburo over whether to commit the country to a free-market economy.

The trade deal, which the World Bank estimates could add $800 million to Hanoi's annual export revenues by allowing Vietnam access to the world's largest market, would also fundamentally change the way Vietnam does business.

bIt requires that trade barriers be lowered, state industries forced to compete with foreign companies, and investment standards raised to international levels - all things that the Vietnamese government has been slow to do on its own for fear of undermining Communist Party control.

But the blunt realities of a faltering economy is forcing Vietnam to reconsider. The gross domestic product growth is half of what it was five years ago, foreign investment pledges have tumbled 85 percent from a peak of $8 billion in 1996 to less than $2 billion last year and job prospects are dim for the 1.2 million new job seekers that enter the market annually.

A U.S.-Vietnam trade agreement could well jump-start a fresh flow of much-needed foreign investment into the country, similar to the rush that accompanied the trade embargo being lifted in 1994.

"If the deal is signed, even if it's not ratified immediately, it sends a strong psychological message that it's the intent of government to do business," said Anthony Foster, managing partner for international law firm Freshfields, which works with foreign businesses in Vietnam.

China's recent trade deal with the U.S. and its imminent entry into the World Trade Organization is another prod. The two countries, historical rivals and competitors, produce many of the same goods.

A bilateral trade agreement, once approved by Congress, would be the final step in the slow reconciliation process between former wartime foes.

It was not until 1994 that President Bill Clinton lifted the trade embargo against Vietnam. Diplomatic recognition came in 1995 and in 1997 Ambassador Peterson was sent to Vietnam.

Peterson, who gave an interview with the official English- language Vietnam News that ran Tuesday, praised Vietnam for its efforts over the last five years on a number of issues, including America's missing in action.